A faster, easier way for HR and management to process merit increases

Merit increases are a vital tool for building employee relations and boosting retention. They also provide a powerful incentive for employees to continually improve their performance. So, it’s no surprise that 58% of companies plan to raise wages specifically to retain employees in the year ahead.

Wages in the US, for example, are projected to increase by 4.6% on average in 2023 (although inflation is another key factor in addition to merit that is driving wage increases right now).

Considering the importance of merit increases, it’s vital for HR and managers to have a smooth, automated process in place for handling this task. Traditional merit increase processes are slow, inefficient and prone to errors and data breaches. In this article, we explain why and how to streamline and automate your merit increase process, so your company enjoys the benefits while avoiding the serious risks.

Traditional merit increase processes are inefficient, risky and error-prone

As an HR professional, you know better than anyone how frustrating it can be to process merit increases. Every year, companies around the world follow a similar process: salary and performance management data is exported from your ERP into Excel spreadsheets. Those sheets are emailed to managers to be approved. It takes ages to round up all the approvals, and then merit increases have to be reconciled with the available budget.

This process generally takes weeks to complete. It’s inefficient and time-consuming, because data has to be entered manually. There’s no automated process in place to keep the approvals process moving along. And there’s an inherent risk that data will be entered incorrectly, managers may be referring to an outdated spreadsheet, or—worst of all—a spreadsheet containing sensitive salary data might wind up in the wrong person’s inbox.

The benefits of automating your merit increase process

To speed up this process and eliminate the risk of errors, companies are increasingly looking for ways to automate their merit increases.

An automated merit increase process offers many benefits, including:

  • Eliminating manual data entry
  • Automated approval workflows
  • Clearer overview of budget allocation

In addition to these benefits, an automated merit increase process can also offer greater transparency. It creates a clear link between the employee’s merit increase and their performance management score.

For multinational companies, HR-tech tools can also improve your merit increase process by enabling you to automatically work in multiple currencies. This means salaries can be automatically increased in the equivalent amounts, regardless of which country/currency an employee works in.

Having a cloud-based “single source of truth” which keeps everyone on the same page and prevents managers from working with outdated information. And using the right automation tool also helps protect sensitive salary data and prevent unauthorized access.

How to automate merit increases

FourVision has integrated advanced merit increase functionalities into our Performance Management Web App. This is a tool that builds upon your existing Microsoft Dynamics F&O core features and gives you a smoother, easier way to manage merit increases.

Instead of having to export data from your ERP into Excel spreadsheets, the FourVision merit increase module automatically captures all the relevant data from your ERP database. It is fully embedded in FourVision’s Performance Management Web App, which means each employee’s performance score is automatically captured.

HR and management have the option of either setting a fixed amount as the merit increase budget, or calculating that amount based on the actual merit increases being issued. The merit increase module gives you a full overview of how the budget is allocated among employees. Managers may decide at their own discretion to offer a higher or lower increase to specific employees. The overview enables them to plan deviations like these without the risk of going over-budget.

The merit increase module fully automates the workflow, so it automatically sends approval requests to the right managers at the right times. You may also set the module to use dotted-line management hierarchies, which means approval requests can be picked up faster and more efficiently.

The tool is fully cloud-based, so data is always up to date and accessible to authorized managers and HR staff to access. There’s no more time wasted flipping through email chains and outdated versions of the same Excel sheet. And the risk of salary data leaking to unauthorized staff members is minimized.

FourVision Performance Management for Dynamics 365 F&O Merit increase table grid


Improve the merit increase experience for everyone

With the right tools, you can turn a time-consuming, labor-intensive process into a positive experience for everyone. Employees enjoy greater transparency with regard to their salary development, and HR and managers enjoy lighter workloads and a more user-friendly experience.

Another key benefit is that a clear merit increase overview ensures that pay raises are being issued fairly. Due to a phenomenon known as the “central tendency bias,” managers tend to assign “average” ratings to most members of their teams when conducting performance reviews. This may lighten the manager’s workload (preventing them from having to justify high or low ratings), but it is unfair to employees who deserve a better appraisal.

Because FourVision’s merit increase module is linked directly to data from the Performance Management Web App, it gives a clear report of which employees are entitled to a higher merit increase than others. This leads to more objective results and helps boost pay fairness. And that’s an important step towards boosting employee retention and getting the maximum benefit out of merit increases for your organization.

FourVision Performance Management for Dynamics 365 F&O Merit increase form

How to process Merit Increase for Microsoft Dynamics 365 HR-F&O

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