Merit Increase Matrix

Run a merit cycle on performance and where each person sits in their range, not a flat percent. Set your matrix, enter your people, and the workbook returns each raise, the cost, and a check against your budget.

A working model, not a blank grid

Set the range-position cut points and the increase percent for each performance rating and band on the matrix tab, then enter each person with their rating, current salary, and range minimum and maximum. The workbook returns where they sit in range, the merit increase that applies, the dollar increase, and the new salary, rolled up to a total cost and a blended increase. A Budget Scenario tab compares the plan to an approved merit budget and returns the headroom, the blended increase against target, and a scale factor to bring the cycle in line. A one-page Summary carries the cost and the new payroll, a Benchmark tab holds current merit and total salary increase budgets from the major surveys, and it opens on a worked example so the logic is clear before you change anything.

A flat percent rewards last year’s salary, not this year’s performance

A flat percent hands the largest dollars to whoever already earns the most and ignores how they performed. A two-axis matrix sizes each raise on performance and on range position: the same rating earns a larger raise low in the range and a smaller one near the top, so underpaid strong performers catch up and people already high in their range do not run past it. Keep merit separate from cost-of-living, market, and promotion adjustments, which come from other budgets, and audit the result before you finalize, since a merit cycle can widen a pay gap as easily as close it.

Built for

• An HR or compensation leader running a merit cycle who wants a defensible matrix, performance against range position, in place of a flat percent or manager discretion.
• A finance or compensation partner who needs the cycle costed against an approved budget, with the headroom, the blended increase, and a scale factor to bring it in line.
• An owner or manager setting raises across a small team who wants consistency and a number they can explain to each person.

If you are looking for building the salary ranges themselves, the Salary Band Builder does that. To run a pay-equity review, see the Pay Structure and Internal Equity Review; to size the promotion budget funded outside merit, the Promotion and Internal Equity tool.

Before you buy

What format is it, and can I edit it?

It is one Excel workbook that also works in Google Sheets. Every input and formula is editable, and the file is yours to keep; add people by inserting rows, change the matrix to your own policy, and duplicate the file to run a second group or next year’s cycle. Checkout delivers an instant download link, with the same link emailed on your receipt.

How accurate is the result?

It is a planning estimate, and the matrix and ranges you enter drive it. Position is range penetration, the salary measured across the whole range from minimum to maximum, so each increase rests on the cut points and percents you set. Every figure foots to your inputs, and the Budget Scenario tab shows whether the plan lands inside your approved budget.

How is a merit increase different from a cost-of-living or market raise?

A merit increase rewards individual performance and is what this matrix allocates. A cost-of-living adjustment keeps pace with inflation across the board, a market or structure adjustment realigns pay or ranges to current rates, and a promotional increase funds a move to a higher level. These come from separate budgets, so keep them apart to hold the merit conversation to performance and range position.

What is the refund policy?

Digital products are covered by a 14-day money-back guarantee. See the refund policy for the full terms. Questions? Email support@truestephr.com.

These are planning estimates, not legal advice. It allocates a merit budget by performance and range position; confirm pay decisions against the equity and pay rules that apply to you, and run a pay-equity review on the result before you finalize it.

How the download works

Your files arrive as a single ZIP download, best opened on a computer: save it, extract it (right-click and Extract All on Windows, double-click on a Mac), and open the Start Here file first. PDFs open in any reader, and the editable files work in Microsoft Word and Excel or their free equivalents, including LibreOffice and Google Docs and Sheets. No other software is needed. Step-by-step help for every device is at truestephr.com/pages/download-help.