Picture this: It’s the Monday before Thanksgiving, your inbox is overflowing, travel plans are in full swing.
Someone casually asks, “Hey, have we set the merit increase budget yet?”
Cue the panic.
Planning annual salary increases shouldn’t feel like throwing together a last-minute holiday potluck.
It’s one of the more strategic moves you’ll make all year, so it deserves more than a rushed spreadsheet and a last-minute decision.
The good news? Starting now gives you the time and space to get it right.
Why It's Important to Determine Merit Increases Now
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Budgets Are Happening Now
Annual budgets aren’t dreamed up in January, they’re being locked in now. If merit increases aren’t part of those early discussions, you risk coming up short. Early planning means your salary budget is realistic and ready, even if market conditions change.
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The Labor Market Is Still Hungry for Talent
Even if hiring has cooled in some areas, your high performers have options. Starting now lets you benchmark pay, address any market gaps, and make sure you’re not losing great people to greener (and better-paying) pastures.
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Year-End is Already Too Busy
Let’s face it, once November hits, it’s a quick blink or two and year-end is upon us. If you wait until then to start planning merit increases, time is tight and pay and performance connections may get overlooked. Start now to give time for thoughtful, performance-based compensation recommendations.
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Pay and Performance Need a Strong Connection
Merit increases are most meaningful when they’re tied to solid performance data. Early planning gives you the runway to review ratings, calibrate results, and make sure your top contributors are awarded appropriately.
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Transparency Builds Trust
Employees care not just what they’re getting, but how it’s decided. Early planning lets you communicate the process in advance, which builds confidence in leadership’s decisions (and reduces rumor mill activity).
Bottom Line
Early merit increase planning isn’t just about being prepared, rather, it’s about making better, more strategic decisions. By starting now, you’ll align budgets with reality, give managers time to connect pay to performance, and show employees that their contributions matter.