Merit Cycle

One effective date, hundreds of increases, and three numbers leadership asks for: who was eligible, who received, and what it cost. The report is honest only if the reason codes are.

RuleMerit spend counts merit reason codes only, over the eligible base at cycle start. One numerator rule, one denominator.Neverlet promotions, market adjustments, and equity corrections ride in the merit number. Same window, different reasons, separate lines.

◆ The three numbers— eligibility, receipt, and spend, each with the decision that makes it comparable year over year.

Number	Definition	The decision
Eligible	Workers meeting the cycle's rules on the eligibility date.	Write the exclusions down: hired after the cutoff, on leave, below a performance gate. The eligible count is the denominator for everything else, so it is fixed first.
Received	Eligible workers whose compensation change carries the merit reason code, at the cycle effective date.	Received over eligible is the participation rate. A falling rate with a flat budget means the money is concentrating; say so rather than let the average hide it.
Spend	Sum of merit increases over the eligible population's base at cycle start.	Not over the receivers' base, and not over post-increase base. One denominator, or the budget conversation is two people with two numbers.

◆ The traps, and the audit— reason codes, retro entries, and the compa-quartile matrix that shows whether merit went where the philosophy says.

Item	What it means
Reason codes	Every compensation change carries a reason. Promotions and market adjustments land in the same window as merit; without the code split, merit spend absorbs them and reads high. The rulebar's Never, enforced by one WHERE clause.
Retro entries	Late-approved increases post after the cycle closes, effective-dated back to it. The entry-date delta from effective dating catches them; expect the cycle totals to settle over a few weeks and show the restatement rather than freeze an early number.
The increase base	Increase percent is new base over old base at the same FTE and frequency. A worker whose hours changed mid-cycle needs the comparison on one basis or the percent is fiction.
The compa-quartile audit	Cross merit percent by pre-cycle compa-ratio quartile. Philosophy says low-in-range strong performers get the largest increases; if the matrix shows flat percentages across quartiles, the guidelines were ignored and next year's compression is already booked.

◆ The owned model, and the SQL— merit events over the eligible snapshot, one query, and the tie to the compa recovery.

The numerator reads merit-coded rows from fct_worker_event; the denominator reads the eligible population from fct_worker_snapshot at cycle start. Same population filter both sides, the discipline from Turnover:

-- one cycle, by org: eligible, received, average increase, and spend on one denominator
WITH eligible AS (
  SELECT f.worker_key, o.level_2 AS organization, f.annualized_fte_base AS base_at_start
  FROM fct_worker_snapshot f
  JOIN dim_date d ON f.date_key = d.date_key AND d.full_date = DATE '2026-04-30'
  JOIN dim_org  o ON f.org_key  = o.org_key
  WHERE f.worker_type = 'Employee' AND f.is_primary AND f.is_merit_eligible
),
merit AS (
  SELECT e.worker_key, e.organization, e.base_at_start,
         m.new_base - m.old_base AS increase_amt
  FROM fct_worker_event m
  JOIN eligible e ON m.worker_key = e.worker_key
  WHERE m.event_class = 'Compensation Change'
    AND m.change_reason = 'Merit'
    AND m.effective_date = DATE '2026-05-01'
)
SELECT e.organization,
       COUNT(DISTINCT e.worker_key)                          AS eligible,
       COUNT(DISTINCT m.worker_key)                          AS received,
       ROUND(100.0 * SUM(m.increase_amt) / SUM(m.base_at_start), 1) AS avg_increase_pct,
       ROUND(100.0 * SUM(m.increase_amt) / SUM(e.base_at_start), 1) AS spend_pct_of_eligible_base
FROM eligible e
LEFT JOIN merit m USING (worker_key)
GROUP BY 1

Two CTEs, one population rule, two denominators side by side: receivers’ base under the average, eligible base under the spend. Sample output, the 2026-05-01 cycle behind the compa-ratio recovery on the Compa-Ratio page:

organization	eligible	received	avg_increase_pct	spend_pct_of_eligible_base
Revenue Org	145	128	2.4	2.1

The ties: 145 eligible is the April-end headcount; 2.1% spend lifting the population's base is exactly what moves average compa-ratio from 0.96 to 0.98; receivers hold about 88% of the base, consistent with 128 of 145 receiving. One model, and the merit cycle, the compa recovery, and the headcount series all explain each other. Sample values are illustrative, never client data.

Want merit numbers that survive the budget meeting?

We build the eligibility rules, the reason-code split, and the compa-quartile audit, reconciled against Workday, and you own every line.

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Terms on this page

merit cycle: The annual review producing increases at one effective date.
eligible: Workers meeting the cycle's rules on the eligibility date. The fixed denominator.
participation rate: Received over eligible. Falling with a flat budget means concentration.
merit spend: Sum of merit increases over eligible base at cycle start.
reason code: The classification on every compensation change. The line between merit and everything else.
cycle effective date: The date increases take effect, shared across the cycle.
retro entry: A late-approved increase, effective-dated back to the cycle. Totals settle; show it.
compa-quartile audit: Merit percent by pre-cycle range position. Whether money followed the philosophy.