A merit raise is a permanent salary increase awarded to employees based on exceptional performance, typically determined through annual reviews. It rewards high achievers with pay bumps tied to measurable contributions, productivity, or skill growth. Organizations use merit raises to retain top talent, boost morale, and foster a results-driven culture. Employees benefit through higher earnings and recognition, while companies gain improved engagement and reduced turnover. This system is ideal for structured workplaces seeking to align compensation with individual output.
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