raises

A raise is an increase to an employee’s base salary or hourly wage. Raises are typically implemented as part of a formal compensation process and are intended to reflect changes in an employee’s responsibilities, performance, or the external market for talent. Unlike discretionary bonuses, raises modify ongoing pay and affect future earnings and benefits tied to salary.

Common types of raises include merit raises, awarded for high performance; cost-of-living adjustments (COLAs), designed to maintain purchasing power in the face of inflation; promotional raises, given when an employee moves to a higher role with greater responsibilities; market adjustments, aimed at aligning pay with prevailing external rates for similar work; and retention raises, used to retain employees at risk of leaving. Some organizations also implement equity adjustments to address internal pay equity among employees with similar roles and tenure.

Raises are usually determined through performance reviews, market analyses, budget constraints, and internal pay structures such as salary bands or pay grids. They may be expressed as a percentage of base pay or as a fixed amount, and they often come with changes to related compensation components or benefits. The process seeks to balance recognition of individual contributions with organizational equity and financial feasibility.

The impact of raises extends beyond individual compensation. They can influence morale, motivation, and retention, while also affecting perceptions of fairness and wage compression within teams. Transparent criteria and documentation help manage expectations and mitigate equity concerns. In some jurisdictions, legal and regulatory factors shape how raises are implemented, especially concerning minimum wage laws and employment contracts. Alternatives to raises include bonuses, profit sharing, or equity grants.