Planning Merit Rates

Merit rate increases are added to salary calculations. You can plan merit rates for employees using these methods:

  • Based on the employee's performance rating, for example, Meets Expectations, Exceeds Expectations, or No Merit. (Your administrator can create or import performance ratings.)
  • By setting default percentage rates by entity in the Default Merit member. If the performance rating isn't set for an employee (you can set and view performance ratings on the Employee Details form) or if you want to plan merit rates at a more generic level, you can set default percentage rates for merit increases by entity. The merit increase for the year is included in the base salary calculations of that year and is carried forward into the base salary for subsequent years.

    This method is particularly useful when managers don't yet have performance information, for example, when planning merit increases for future years. To simplify planning when merit rates are the same across entities, you can also copy merit rates from one entity to another using the rule Copy Merit Rates.

To set merit rates:

  1. Click Compensation Planning icon.
  2. Click Assumptions, and then Merit Rates.
  3. From the Point of View links, select the Scenario, Version, and Entity.
  4. Set merit rates using the method you prefer:
    • In the performance rating row, enter the merit percentage rate.
    • If no performance rating is set, enter the merit percentage rate in the Default Merit row. This value is used in salary calculations only if the performance rating is blank.

      Optional: To copy the merit rates from one entity to another, run the rule Copy Merit Rates from the Actions menu. At the rule's prompt, select the parent or child entity member whose merit rate you want to copy and the target level 0 member to copy the rate to. Selecting a source parent member enables you to easily push merit rates. Even after you’ve copied a merit rate to another entity, you can still overwrite the rate in the Merit Rates form.

      Note:

      Merit rates must be set at the level 0 entity level, whether they're based on performance rating or the Default Merit member. If managers enter merit rates at the company Assumptions (No Entity) member, the rates aren't effective until they're copied or added to specific level 0 child members of Total Entity. Individual entity owners can use the rule Copy Merit Rates and then modify the rates if needed.

  5. Click Actions, and then Synchronize Component Definition.

    Running this rule recalculates tax thresholds that may change as a result of merit increases for employees.