Giving Employees Raises

Besides deciding how much to pay new hires, the other major concern of employers related to paying employees is how much of a raise to give an existing employee. There are as many ways of determining this information as there are people determining it.

There are two basic approaches to giving raises:

• give everybody the same percentage or dollar amount raise
• give employees different raises based on:
  • equity between base wages
  • performance, also known as a merit system