Performance appraisals and feedback are used to determine how well a job was performed and what improvements should be made. However, a very important aspect of a performance appraisal is to determine merit increases (pay raises). Usually, a performance appraisal and subsequent merit increase are given on an annual basis but the frequency of raises is at the sole discretion of the company.

Annual review

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A pay raise is often connected to a performance appraisal which can be given once per year. On the other hand, a performance appraisal can be given as often as the company determines but may not be connected to a pay raise.

Revenues

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If the company does not have the revenues to support pay raises they are not given. Pay raises are not automatic.

Performance

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Sales professionals that often exceed the sales goals get pay raises. Employees that go "above and beyond" the call of duty and exceed the goals get pay raises. It is entitled pay for performance.

Contractual

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Sometimes pay raises are given according to the contract the employee has with a company. The contract may state that pay raises are to be given once per year, once every two years or during another time period.

Company discretion

Pay raises are provided at the sole discretion of the company. The policy is flexible and can be changed according to the company's needs.