Salary raises compared: merit money, market adjustment, and promotion

What to take away

Merit, market adjustment, and promotion compared

There are three different transactions people call a raise. Confusing them is why so many pay conversations go nowhere. A merit increase is a share of a pool. A market adjustment is a correction to a band. A promotion is a change of level.

This page separates them and gives public figures where they exist. The calendar and the vocabulary decide the outcome more often than the number you name in the room.

The retention row is the one to be careful with. It is the fastest route to more money and the worst route to a career. It teaches the organization that your pay moves when you threaten to leave and not otherwise.

In fields where a large share of pay is contingent by design, the plan replaces most of this table. the sales pay page covers that case.

The calendar you are not shown

Most of the decision has happened before the conversation you are invited to. The pool is sized in a budget process. Assessments are calibrated in a meeting you are not in, where managers compare their people and defend their ratings against each other. Promotion cases are prepared weeks before the committee sits.

Microsoft's 2023 freeze for salaried employees is a public reminder. A budget decision can remove merit money before any manager writes a review. Federal General Schedule step increases run on a fixed clock instead: within-grade raises of roughly 3% arrive after 1, 2, or 3 years.

The useful conversation happens well before the review. Ask your manager, some months ahead, what evidence they would need to argue your case in that room. That question is easy to answer, and it turns a request into a shared task.

The mechanics of a formal cycle, including how planning, monitoring and rating are supposed to connect, are laid out in the federal performance management cycle, which is a plain description of a process most employers run without publishing one.

Making a case that survives the room

Your manager has to repeat your case to people who have never seen your work. Give them something repeatable.

The fourth point decides most cases. Promotion committees in almost every organization confirm a level you already occupy rather than granting one you have not yet demonstrated. Google's L4 to L5 case is a public version: the committee looks for L5 scope, not a promise of it.

At Amazon, public Levels.fyi ranges put L4 software engineer total pay near $180,000 and L5 near $260,000. The jump tracks scope rather than tenure.

The scope vocabulary that makes this argument concrete is the same one used to level a management job, and it is worth borrowing whether or not you manage anyone.

For a public example of how a system writes down what each grade requires, the federal general schedule qualification policies show the structure of the reasoning. Private employers rarely publish theirs, but the shape is the same and you can usually reconstruct it from their own job postings.

Bonuses, and the difference between a reward and a hook

A bonus is worth what its conditions say it is worth. Three questions settle it: is it promised or discretionary, is it measured on something you influence, and does it require employment on a stated date?

A payment that fails the third test is not compensation for the year that passed. It is a price attached to leaving.

For staff who are paid overtime, some bonuses change what an overtime hour is worth, and the US Department of Labor explains which ones in its fact sheet on bonuses and the regular rate. That interaction is invisible in an offer letter and can be a real part of the package for a covered role.

When the answer is no

Ask what would have to be true for the answer to be yes, and ask for it in specific terms with a date. Three answers are possible and they mean different things.

If you are told what to change and by when, you have a plan. If you are told the money is not there this year but the case is sound, ask for the level to be recognized now and the money to follow. A level survives a budget year and a promise does not.

If you are told nothing concrete twice in a row, you have learned that this employer will not move. The decision in front of you is whether to look elsewhere rather than how to ask better.

Moving reprices you against the outside market in a way that staying does not, which is the uncomfortable arithmetic behind most career pay curves. That is treated at length in the salaries and advancement guide, and the point here is only that it should be a decision rather than a reflex.

Common questions

How far ahead should I start?

Months, not weeks. The evidence has to exist before the calibration meeting, and your manager has to have been repeating it for a while before the room hears it from them.

Should I mention another offer?

Only if it is real and you are prepared to take it. Using one as a lever works once and it changes how you are seen afterward. A counter-offer accepted is a common precursor to leaving within the year anyway.

My manager agrees and says their hands are tied. Now what?

Ask them who holds the decision and what that person would need. Sometimes the honest answer is the compensation function and a band problem, which is a different request entirely: an adjustment rather than a merit increase.

Is a title change without money worth taking?

Sometimes, if the title reflects a real change of level that is recorded in the employer's system, because the money usually follows the level at the next cycle. A title with no level behind it is decoration.

Does any of this work in a small company with no bands?

The vocabulary changes and the substance does not. Without bands, the argument is entirely about scope and about what the owner would have to pay to replace what you do. Make that argument in those terms.