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Increment Matrix

An increment matrix (merit matrix) sets the range of increment percentages for each combination of performance rating and the employee's position in the salary band. HR and leadership finalise it before the appraisal cycle so that managers apply raises consistently.

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[Company Logo][Company Name]

INCREMENT MATRIX

Company:: [Company Name]
Applicable Cycle:: [FY 20XX–XX]
Effective Date:: [DD/MM/YYYY]
Approved Budget:: [x]% of eligible payroll

1. Merit Increase Grid (% of Fixed CTC)

Performance Rating	Compa-ratio below 0.85	Compa-ratio 0.85–0.95	Compa-ratio 0.95–1.05	Compa-ratio 1.05–1.15	Compa-ratio above 1.15
5 – Outstanding	[x–y]%	[x–y]%	[x–y]%	[x–y]%	[x–y]%
4 – Exceeds Expectations	[x–y]%	[x–y]%	[x–y]%	[x–y]%	[x–y]%
3 – Meets Expectations	[x–y]%	[x–y]%	[x–y]%	[x–y]%	[x–y]%
2 – Partly Meets	[x–y]%	[x–y]%	[x–y]%	[x–y]%	[x–y]%
1 – Below Expectations	Nil	Nil	Nil	Nil	Nil

2. Definitions

Compa-ratio = current fixed CTC ÷ midpoint of the employee's salary band.
Fixed CTC excludes variable pay, bonus and one-time payments.
Rating = final calibrated rating approved by the appraisal committee.

3. Application Rules

Employees who joined after [DD/MM/YYYY] are eligible for a pro-rated increment or are reviewed in the next cycle.
Employees promoted during the cycle receive the promotion increase as per the promotion policy; the merit increment is applied on the pre-promotion salary unless otherwise approved.
Employees on a Performance Improvement Plan are not eligible until the plan is closed successfully.
No increment may take the salary above the band maximum without approval from [Authorised Signatory]; the excess may be paid as a one-time lump sum.
Managers may go outside the range only with written justification on the Increment Approval Form.

4. Budget Check

Department	Eligible Headcount	Eligible Payroll (₹)	Budget at Matrix (₹)	Approved Budget (₹)	Variance (₹)
[Department]	[No.]	[Amount]	[Amount]	[Amount]	[Amount]
[Department]	[No.]	[Amount]	[Amount]	[Amount]	[Amount]
[Department]	[No.]	[Amount]	[Amount]	[Amount]	[Amount]

Prepared by
[HR Name]
Compensation & Benefits

Approved by
[Authorised Signatory]
[Designation]
Date: [Date]

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What this template includes

Rating rows aligned to the appraisal scale
Compa-ratio or band-quartile columns to reflect position in range
Increment percentage ranges in each cell, kept as placeholders until budget is fixed
Definitions of compa-ratio and quartiles so managers read it correctly
Rules for promotions, new joiners and employees on PIP
Approval block from HR head and management

When to use it

Setting increment guidelines before the annual appraisal cycle opens
Giving managers a fair, rule-based range for each rating
Slowing raises for employees already above the band midpoint while accelerating those below it
Explaining to leadership how the increment budget will be distributed

How to customise this template

1Replace rating labels with your own five- or four-point scale
2Choose quartiles or compa-ratio bands as the column basis
3Fill the percentages only after the total budget is approved
4Add a separate matrix per job family if market movement differs
5Publish a manager-facing version without the budget notes

HR tips

Keep cells as ranges so managers have some discretion within limits
Model the total cost of the matrix against headcount before releasing it
Do not give the same raise to the top two ratings; differentiation is the purpose
Revisit the matrix every year rather than copying last year's figures

For HR & hiring managers

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Frequently asked questions

What is a merit increase matrix?+

It is a grid that links increment percentages to performance rating and the employee's position in the salary band. Higher ratings and lower band position usually get higher percentages.

What is compa-ratio?+

Compa-ratio is the employee's current salary divided by the midpoint of their salary band. A compa-ratio below 1.0 means they are paid below the midpoint.

Should employees see the increment matrix?+

Many companies share the rating-to-range logic for transparency but keep exact budget figures confidential. Decide based on your culture and policy.

All 50 increment, promotion & career →

[Company Logo][Company Name]

SALARY INCREMENT LETTER

Ref. No.:: [Reference Number]
Date:: [Date]

To,
[Employee Name]
Employee ID: [Employee ID]
[Designation], [Department]
[Work Location]

Subject: Increment in Salary

Dear [Employee Name],
Congratulations! In recognition of [Reason – e.g. your successful confirmation / completion of the Certification Name certification / your contribution to Project Name], we are happy to grant you an increment in your salary.

Particulars	Details
Current Gross Monthly Salary	₹[Amount]
Increment Amount (per month)	₹[Amount]
Increment Percentage	[Percentage]%
Revised Gross Monthly Salary	₹[Amount]
Revised Annual CTC	₹[CTC]
Effective From	[Effective Date]

The increment will be distributed across your salary components as per company policy, and a revised salary breakup is available from HR on request. Statutory contributions such as PF will be adjusted in line with the revised Basic.

Letter · Word

Salary Increment Letter

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[Company Logo][Company Name]

INCREMENT RECOMMENDATION FORM

Company:: [Company Name]
Increment Cycle:: [YYYY–YY]
Effective Date:: [DD/MM/YYYY]
Department:: [Department]

Merit Increase Guideline

Final Rating	Compa-ratio below 0.90	Compa-ratio 0.90–1.10	Compa-ratio above 1.10
5 – Outstanding	[%–%]	[%–%]	[%–%]
4 – Exceeds	[%–%]	[%–%]	[%–%]
3 – Meets	[%–%]	[%–%]	[%–%]
2 – Needs Improvement	[%–%]	[%–%]	[%–%]
1 – Unsatisfactory	Nil	Nil	Nil

Recommendations

Emp. ID	Employee Name	Designation	Final Rating	Current CTC (₹)	Compa-ratio	Recommended %	Increment (₹)	Revised CTC (₹)	Remarks
[Employee ID]	[Employee Name]	[Designation]	[Rating]	[CTC]	[Ratio]	[%]	[Amount]	[CTC]	[Remarks]
[Employee ID]	[Employee Name]	[Designation]	[Rating]	[CTC]	[Ratio]	[%]	[Amount]	[CTC]	[Remarks]
[Employee ID]	[Employee Name]	[Designation]	[Rating]	[CTC]	[Ratio]	[%]	[Amount]	[CTC]	[Remarks]
[Employee ID]	[Employee Name]	[Designation]	[Rating]	[CTC]	[Ratio]	[%]	[Amount]	[CTC]	[Remarks]

Deviations from Guideline

Form · Word

Increment Recommendation Form

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[Company Logo][Company Name]

INCREMENT APPROVAL FORM

Form No.:: [Reference Number]
Appraisal Cycle:: [FY 20XX–XX]
Date:: [Date]

A. Employee Details

Employee Name	[Employee Name]
Employee ID	[Employee ID]
Designation	[Designation]
Department	[Department]
Grade / Band	[Grade]
Date of Joining	[Date of Joining]
Work Location	[Work Location]
Reporting Manager	[Reporting Manager]

B. Increment Proposal

Particulars	Current (₹ p.a.)	Proposed (₹ p.a.)	Change (%)
Basic Salary	[Amount]	[Amount]	[x]%
HRA	[Amount]	[Amount]	[x]%
Special Allowance	[Amount]	[Amount]	[x]%
Employer PF Contribution	[Amount]	[Amount]	[x]%
Total CTC	[CTC]	[Amount]	[x]%

Type of Increment: Annual Merit / Off-cycle / Market Correction / Special
Performance Rating	[Rating]
Effective Date	[DD/MM/YYYY]
Arrears Payable: Yes / No – Amount ₹ [Amount]
Position in Salary Band after Increment: Below Min / Within / Above Max

Form · Word

Increment Approval Form

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[Company Logo][Company Name]

INCREMENT CALCULATION SHEET

Company:: [Company Name]
Appraisal Cycle:: [FY 20XX–XX]
Effective Date:: [DD/MM/YYYY]
Prepared by:: [HR Name]

Part 1 – CTC Revision Summary

Emp ID	Employee Name	Grade	Rating	Current CTC (₹)	Increment %	Increase (₹)	New CTC (₹)
[Employee ID]	[Employee Name]	[Grade]	[Rating]	[Amount]	[x]%	[Amount]	[Amount]
[Employee ID]	[Employee Name]	[Grade]	[Rating]	[Amount]	[x]%	[Amount]	[Amount]
[Employee ID]	[Employee Name]	[Grade]	[Rating]	[Amount]	[x]%	[Amount]	[Amount]
[Employee ID]	[Employee Name]	[Grade]	[Rating]	[Amount]	[x]%	[Amount]	[Amount]

Part 2 – Revised Monthly Structure

Emp ID	New Basic (₹)	New HRA (₹)	Special Allowance (₹)	Monthly Gross (₹)	Employer PF (₹)	ESI Applicable (Y/N)	Est. In-hand (₹)
[Employee ID]	[Amount]	[Amount]	[Amount]	[Amount]	[Amount]	[Y/N]	[Amount]
[Employee ID]	[Amount]	[Amount]	[Amount]	[Amount]	[Amount]	[Y/N]	[Amount]
[Employee ID]	[Amount]	[Amount]	[Amount]	[Amount]	[Amount]	[Y/N]	[Amount]

Part 3 – Arrears Computation

Template · Word

Increment Calculation Sheet

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[Company Logo][Company Name]

INCREMENT BUDGET SHEET

Company:: [Company Name]
Cycle:: [FY 20XX–XX]
Version:: [v1.0] dated [DD/MM/YYYY]
Owner:: [HR Name]

A. Pool Summary

Pool	Basis	% of Eligible Payroll	Amount (₹ p.a.)
Merit Increment Pool	Rating-based increments	[x]%	[Amount]
Promotion Pool	Promotion increases	[x]%	[Amount]
Market Correction Pool	Below-band and retention cases	[x]%	[Amount]
Central Contingency	Held by HR Head	[x]%	[Amount]
Total Approved Budget		[x]%	[Amount]

B. Department Allocation and Utilisation

Department	Eligible HC	Eligible Payroll (₹)	Allocated (₹)	Utilised (₹)	Balance (₹)	Utilisation %
[Department]	[No.]	[Amount]	[Amount]	[Amount]	[Amount]	[x]%
[Department]	[No.]	[Amount]	[Amount]	[Amount]	[Amount]	[x]%
[Department]	[No.]	[Amount]	[Amount]	[Amount]	[Amount]	[x]%
[Department]	[No.]	[Amount]	[Amount]	[Amount]	[Amount]	[x]%
Total	[No.]	[Amount]	[Amount]	[Amount]	[Amount]	[x]%

C. Total Cost Impact

Template · Word

Increment Budget Sheet

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[Company Logo][Company Name]

ANNUAL INCREMENT PLANNER

Company:: [Company Name]
Cycle:: [FY 20XX–XX]
Increment Effective Date:: [DD/MM/YYYY]
Cycle Owner:: [HR Name]

Cycle Timeline

Phase	Activity	Owner	Start	End	Output	Status
1. Preparation	Freeze employee master data and eligibility list	HR Operations	[DD/MM/YYYY]	[DD/MM/YYYY]	Eligibility list	[Status]
1. Preparation	Market salary review and budget proposal	Comp & Ben / Finance	[DD/MM/YYYY]	[DD/MM/YYYY]	Budget note	[Status]
2. Approval	Management approves budget and increment matrix	[Authorised Signatory]	[DD/MM/YYYY]	[DD/MM/YYYY]	Approved matrix	[Status]
3. Appraisal	Self-appraisal and manager review	Employees / Managers	[DD/MM/YYYY]	[DD/MM/YYYY]	Draft ratings	[Status]
3. Appraisal	Calibration meetings by department	HRBP / Dept Heads	[DD/MM/YYYY]	[DD/MM/YYYY]	Final ratings	[Status]
4. Proposals	Managers enter increment and promotion proposals	Managers	[DD/MM/YYYY]	[DD/MM/YYYY]	Proposal sheet	[Status]
4. Proposals	HR and finance budget check	HR / Finance	[DD/MM/YYYY]	[DD/MM/YYYY]	Approved list	[Status]
5. Release	Manager conversations with employees	Managers	[DD/MM/YYYY]	[DD/MM/YYYY]	Discussion done	[Status]
5. Release	Increment and promotion letters issued	HR	[DD/MM/YYYY]	[DD/MM/YYYY]	Letters	[Status]
6. Payroll	Revised salary and arrears processed	Payroll	[DD/MM/YYYY]	[DD/MM/YYYY]	Revised payslips	[Status]

Communication Plan

Cycle launch email to all employees with key dates.
Manager briefing on rating guidelines and the increment matrix.
Reminder emails three working days before each deadline.
Grievance window of [x] working days after letters are issued.

Post-cycle Review

Plan · Word

Annual Increment Planner

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[Company Logo][Company Name]

JOB GRADE MATRIX

Company:: [Company Name]
Matrix Version:: [v1.0]
Evaluation Date:: [DD/MM/YYYY]
Panel:: [HR Name], [Department Head], [Member]

1. Factors and Level Descriptors

Factor (Weight)	Level 1	Level 2	Level 3	Level 4	Level 5
Knowledge and Skills ([x]%)	Basic task knowledge	Trained in one area	Professional in a discipline	Expert across a discipline	Recognised authority
Problem Solving ([x]%)	Follows set steps	Chooses from known options	Analyses and recommends	Solves complex issues	Sets strategy
Accountability and Impact ([x]%)	Own tasks	Own work output	Team or process results	Department results	Business unit results
People Management ([x]%)	None	Guides juniors	Leads a small team	Leads managers	Leads a function
Relationships ([x]%)	Within team	Within department	Across functions	External partners	Senior external stakeholders

2. Job Scoring

Job Title	Knowledge	Problem Solving	Accountability	People Mgmt	Relationships	Weighted Score	Grade
[Designation]	[1–5]	[1–5]	[1–5]	[1–5]	[1–5]	[Score]	[Grade]
[Designation]	[1–5]	[1–5]	[1–5]	[1–5]	[1–5]	[Score]	[Grade]
[Designation]	[1–5]	[1–5]	[1–5]	[1–5]	[1–5]	[Score]	[Grade]
[Designation]	[1–5]	[1–5]	[1–5]	[1–5]	[1–5]	[Score]	[Grade]

3. Score-to-Grade Conversion

Template · Word

Job Grade Matrix

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[Company Logo][Company Name]

SUCCESSION PLANNING MATRIX

Company:: [Company Name]
Review Date:: [DD/MM/YYYY]
Reviewed by:: Leadership Team
Confidentiality:: Strictly Confidential

1. Critical Roles Matrix

Critical Role	Incumbent	Vacancy Risk	Ready Now	Ready in 1–2 Years	Ready in 3+ Years	Bench Strength
[Designation]	[Employee Name]	High / Medium / Low	[Employee Name]	[Employee Name]	[Employee Name]	Strong / Adequate / Weak
[Designation]	[Employee Name]	High / Medium / Low	[Employee Name]	[Employee Name]	[Employee Name]	Strong / Adequate / Weak
[Designation]	[Employee Name]	High / Medium / Low	None	[Employee Name]	[Employee Name]	Strong / Adequate / Weak
[Designation]	[Employee Name]	High / Medium / Low	[Employee Name]	None	[Employee Name]	Strong / Adequate / Weak
[Designation]	[Employee Name]	High / Medium / Low	None	None	[Employee Name]	Strong / Adequate / Weak

2. Summary

Total critical roles	[No.]
Roles with at least one ready-now successor	[No.]
Roles with no internal successor	[No.]
Employees named for more than one role	[No.]
Women in successor pool	[x]%

3. Priority Actions

Template · Word

Succession Planning Matrix

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Increment Matrix

Preview of the template

1. Merit Increase Grid (% of Fixed CTC)

2. Definitions

3. Application Rules

4. Budget Check

What this template includes

When to use it

How to customise this template

HR tips

Hire top talent from BetterJobs

Frequently asked questions

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