Equitable Merit Increases

With Oregon’s Equal Pay Law establishing strict guidelines for setting and increasing employee compensation, we often receive inquiries from employers concerned with how they can equitably award merit increases and remain in compliance. Some end up considering simpler approaches like seniority-based increases or cost-of-living adjustments for everyone. While easier to administer, these methods often don’t recognize high performers and can demotivate them. So how can you award merit increases effectively and equitably?

It is possible to administer merit increases and still comply with Oregon’s Equal Pay Law, but a strong performance management system is crucial. This system should establish clear, objective criteria to ensure consistent and fair evaluation for all employees. 

Here are some strategies to remove bias from the merit increase process:

• Standardized Metrics: Develop clear, quantifiable metrics for performance evaluations. This should involve setting goals with measurable outcomes or using data-driven assessments of work quality and quantity.
• Documented Standards: Establish clear, objective performance standards based on job duties. These can be numerical ratings or specific criteria. Develop standardized rubrics for performance evaluations that outline clear expectations for different performance levels.
• Data-Driven Decisions: Rely on documented performance metrics rather than personal opinions when awarding raises.
• Consistency: Apply the standards consistently across all employees in similar positions.
• Calibrated Reviewers: Train managers to conduct performance reviews free from bias. Consider using multiple reviewers to minimize individual subjectivity. Consider conducting 360 Reviews for certain positions, such as those in leadership.
• Transparency: Communicate the standards and evaluation process clearly to employees.
• Regular Reviews: Conduct performance reviews regularly (e.g., annually) to ensure timely merit adjustments.
• Record Keeping: Maintain detailed records of performance evaluations and justifications for merit increases.

Remember: Removing bias is an ongoing process. Regularly review and refine your merit increase system to ensure fairness and address any emerging issues.

Ultimately, the ethics of merit increases depend on how they are designed and implemented. By focusing on fairness, objectivity, and transparency, organizations can create a system that motivates employees and rewards strong performance ethically.