Merit Pay Program Survey Results


1. Does your city provide Merit Adjustments to employees?

2. How is "merit" determination made?

3. Is there a policy outlining your merit increase policy?

28 cities responded;
13 provide Merit Adjustment
15 currently do not provide Merit Adjustment


Does your city provide Merit Adjustments to employees?

How is "merit" determination made?

Is there a policy outlining your merit increase policy?



Performance evaluation process scoring system




Tied to beginning of fiscal year. Employee performance reviews are in May. Once the budget is passed, department heads are allocated a "pot" of money to award as merit raises which is calculated as a % of that department’s payroll. We usually establish a maximum % that a department head can give. We don’t put too many restrictions on how department heads allocate their funds, but we do review them to be sure that the raises are consistent with the evaluation scores.

No written policy, just long standing practice







Step increases in the pay grade are given each year, and can be withheld if job performance does not meet expectations. There is no program that grants additional pay for exceptional performance.

No answer



Based on the annual performance evaluation and is a % of the employee’s current annual salary. The maximum amount has been set as high as 5% but this is determined each year when the budget is set.



Never actually referred to it as merit pay

Annual step increase on, or about, the anniversary date. For outstanding performance, the director may recommend additional steps. This raise can also be withheld for poor performance, or delayed till performance improves. Otherwise, we only get annual COLA adjustments.





Knox County Sherriff’s Office


Employee must score a total of at least 20 points (out of a maximum of 36) and no score of zero (0) for any item (each item, nine total items, is rated 0-4) on the annual evaluation form in order to be eligible for a merit step increase




We do the July 1 raise for all employees.




Annual evaluation of each employee on anniversary employment date

No, adopted by Board of Mayor and Aldermen as part of the budget


Not in the last two years

We are overhauling the evaluation system. We determine merit based upon formal performance evaluations. Before everyone was eligible; I don’t think this will be the case in the future. We will probably give COLA and then the top 15% - 20% will get merit pay.

In progress



Just step increases and COLA




We have an automatic step incrase up to the job rate. It is "A-I". Upon reaching "I", the employee is eligible for merit pay based upon "performance exceeding expectations". For 2003-04 and 2004-05 this has not been funded. Only COLA increases given.

We have an adminstrative policy that states the "performance exceeding expectations". We do not define "performance exceeding expectations" though.



2.5% annually if employee "meets" or "exceeds" on performance evaluation, per ordinace.

No answer




Johnson City

Beginning next fiscal year

Still developing

Still developing


Currently no, but working on implementing

It will be a lump sum payment determined by evaluations and paid annually. It will not attach to the base pay and the employee will truly earn it year to year. We will budget in anticipation that every employee will be eligible.


Knox County



We do have a guideline (not policy) that states a one-step raise is given, contingent on available funds, for all employees who score a 3.0 or higher on the annual performance evaluation.


Previously yes, known as "Performance Pay", currently no due to lack of funding

Who received the performance pay was at the discretion of the department director. The person had to have an above average rating on their last performance appraisal and it had to be within the last year. *See attached document for more information.

*See attached document






Determined by the score on the performance evaluation

Yes. it provides, of course, that if there’s not monies available, employees may not get any pay for performance; we also give a "general increase" so that everyone gets something unless they "do not meet standard" on their performance evaluation.

Mt. Juliet








Made by the supervisor and is shown onthe employee’s performance appraisal. If employee receives a rating of "competent" or above, the employee is eligible to receive a merit raise.



Previously yes, currently no due to political situation

The department head would supply the request in writing to the Mayor with reason for increase. The Mayor would then take it under consideration then approve or deny. Now it would go to Council because the Charter stated that the Council set salaries but none have.




Based on the score from their performance evaluation

score = 2 is 2% merit increase

score = 3 is a 2.5% merit increase

score = 4 i sa 3% merit increase




We have adopted to go into effect July 1, 2004, a pay scale/step pay system. Hope to eventually have an evaluation system that will lead to merit increases as opposed to step increases.




Unfortunately, it is not really "merit" based. Employees receive an annual performance evaluation, and anyone receiving a "satisfactory" score of 3.0 or higher (scale of 0-6) gets a 3.4% increase (otherwords a step increase). However, just under 50% of our employees are "topped out" in their pay grade, which means they don’t get the 3.4%. On the other hand, everyone gets a cost-of-living adjustment annually. This year we get a 2.3% effective July 1st.



Section 2505.10. Processing Performance and Salary Increases/Bonuses
Performance pay increases provide a means of rewarding an employee for above average performance, to encourage careers with the City, to provide employee incentives and to recognize individual differences in the performance of employees. Performance salary increases are not standard or automatic at any time, but shall be based upon the degree to which the employee meets and sustains job and performance standards which include factors such as the type and level of work performed, quantity and quality of the employee’s performance of job functions, ability of employee to assume and discharge responsibilities, the employee’s demeanor and conduct, attendance, and annual performance appraisals.

Performance reviews and processing of merit increases shall be conducted in accordance withthe following procedures:

a) The Civil Service Department provides evaluation forms and dates of review to departments.

b) Supervisors complete evaluations, and along with department directors, make recommendations for performance pay increases or bonuses within guidelines of budget criteria; all such performance pay increases shall be substantiated by specific written justification of the appointing authority.

c) The evaluation and justification for salary increase or bonus are returned to Civil Service Department to be reviewed for completeness and compliance with rules and regulations; performance appraisal on an employee being recommended must support such a recommendation and must be up-to-date (within at least the last 12 months).

d) Recommendations for pay increases that are complete and meet all rules are then forwarded to the Finance Department for budgetary consideration.

e) Recommendations that are not complete or approved by both Civil Service and Finance will be returned to the initiating Department with a written explanation.

f) No performance salary increase or bonus will be effective until both the Civil Service and Finance Departments have approved it. Effective dates of performance increases or bonuses will be at the beginning of the next pay period after receiving final approval.

g) If an employee feels he/she has been treated unfairly with regard to a performance pay increase, he/she may put any concerns in writing to the Head of his/her department.

The department director shall look into the employee’s concerns and shall respond to the employee in writing within 30-days of receipt of employee’s request. Pay issues are not grievable in accordance with the City of Knoxville Administrative Rules and Regulations.

Section 2505.11. Maximum Rate of Pay
All permanent pay increases herein authorized are subject to the requirement that no employee shall receive permanent pay increases whose pay exceeds the maximum rate of pay established for the class the employee occupies. Base salary may not exceed the maximum rate of pay established for the job class except to include longevity pay. Employees may receive performance pay and annual 2.5% increase as bonus payments once their salary reaches the established maximum base rate of pay.

Section 2505.12. Maximum Annual Pay Increase
The total increase (including performance pay, promotional increase, July 2.5% increase, internal equity adjustment, etc.) for an individual employee may not exceed 20% of the employee’s salary for any fiscal year. Longevity pay is not included in the maximum annual increase calculation.

© 2010 Tennessee Chapter: International Public Management Association for Human Resources