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.
One-time purchase, no subscription. Instant download.
Built by expert HR practitioners and leaders
- A two-axis merit matrix: rate performance and the workbook reads where each person sits in their range, then applies the increase you set for that rating and band, so the raise reflects performance and pay position rather than a flat percent
- The cycle costed against your budget: set an approved merit budget as a percent of payroll and the workbook returns the headroom or overage, the blended increase, and a scale factor that brings the plan in line
- Range position made explicit: each person’s salary is placed from the bottom to the top of their range, so you can see who is underpaid for their performance and who is already near the top before you set the raise
- A board-ready summary and sourced benchmarks: a one-page Summary with the total cost, the blended increase, and the new payroll, and a Benchmark tab with current merit and total salary increase budgets to sanity check your numbers
- Open, editable formulas in Excel or Google Sheets, with a worked example pre-filled and the method documented in plain English
The workbook computes from the numbers you enter. Your matrix, ratings, salaries, ranges, and budget are yours to set.
Planning estimates and general business information, not legal or tax 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.
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Last reviewed June 2026
One Excel workbook that turns ratings and range position into a defensible merit cycle
A working model, not a blank grid. You set the matrix once and enter your people, the workbook returns each increase and the cost, and it opens on a worked example so the logic is clear before you change anything.
Merit Increase Matrix
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 on the planning tab. The workbook returns where they sit in range, the merit increase that applies, the dollar increase, and the new salary, with the cycle rolled up to a total cost and a blended increase.
A budget check, a board-ready summary, sourced benchmarks, and the method in plain English
A budget 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 the Notes tab documents how each number is built.
Three steps from ratings to a merit cycle you can defend
You set the matrix, enter your people, and check the cost against your budget. The workbook does the rest.
Set your matrix
Fill the amber cells on the Merit Matrix tab: the range-position cut points that split a salary range into four bands, and the increase percent for each performance rating in each band. The worked example runs from 5 percent for a top performer low in range down to zero, taper it to your own policy.
Enter your people
On the Merit Planning tab, enter each person’s rating, current salary, and range minimum and maximum. The workbook returns where they sit in range, the matrix increase that applies, the dollar increase, and the new salary, and a row with a blank name is ignored, so you can run five people or a hundred.
Check it against the budget
The Budget Scenario tab sets your approved merit budget as a percent of payroll and compares the plan to it: the headroom or overage, the blended increase against target, and a scale factor you can apply to every cell to bring the cycle inside the budget. The Summary rolls up the cost and the new payroll for a leadership conversation.
A flat percent rewards last year’s salary, not this year’s performance
Two shortcuts get merit wrong. The first gives everyone the same percent, which hands the largest dollars to whoever already earns the most and ignores how they performed. The second leans on manager gut, which drifts toward the middle and skews by group. A two-axis matrix sizes each raise on performance and on where the person sits in their range.
Who this matrix fits and where to go if that is not you
It runs a merit cycle on performance and range position and checks the cost against your budget. For building the ranges themselves, a pay-equity review, or the promotion budget, the right tool is next to 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 minimum, midpoint, and maximum. The Salary Band Builder builds those.
- Running a pay-equity or pay-structure review. The Pay Structure and Internal Equity Review does that.
- Sizing the promotion budget, which is funded outside merit. The Promotion and Internal Equity tool covers it.
Before you buy
What format is it and can I edit it?
How accurate is the result?
What is the difference between a merit increase and a cost-of-living or market raise?
What is the refund policy?
What happens after I buy?
Can I expense this purchase to my business?
Most customers buy TrueStep HR tools for business use, and a tool you use for work often qualifies as a deductible business expense. Whether it does for you depends on your situation, so confirm with your accountant or tax professional. Your receipt arrives by email at checkout and works as documentation.
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Run merit on a matrix, not a flat percent
Rate performance, set range position, and the workbook returns the raise, the cost, and the budget check, in a file you keep.
Planning estimates and general business information, not legal or tax advice. Last reviewed June 2026.