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Compensation or pay issues generally flow from the performance evaluation – the better the evaluation, the higher the potential rewards. The performance management process informs such decisions by breaking down the elements of a rewards and recognition program and targeting different types of compensation for different kinds of achievements.
Increases or “raises” are determined based on a company or business unit budget and are allocated based on the relative contributions and skill/competency growth of the individual. Generally, a raise is earned when an employee meets or exceeds their job standards while demonstrating an expansion of their technical and/or leadership capabilities. As such, the ratings given to an employee for their position standards and competencies in addition to the achievement or completion of developmental goals should be the primary drivers of a base pay increase.