Merit Awards – FY27 Guidance
The below guidance is designed to support merit decisions. Department leadership typically seeks input and perspectives from others, coordinating with HR as needed to ensure a well-rounded assessment of staff performance and impact across the team.
Click here to view the FY26 Year-End Appraisal Training Slides.
Performance & Conduct-Based Guidelines
| Performance Category | Merit Increase | Guidance |
| Does Not Meet Expectations & Employees with Active Disciplinary Action | 0% | Applied when there are documented performance concerns requiring improvement. A merit increase should not be awarded when a formal disciplinary action has been issued in the prior fiscal year (FY26). |
| Meets Some but Not All Expectations | 0%– 1.99% | Reflects partial performance with clear areas for growth. |
| Fulfills Expectations | Target of 2.5% – 2.75% | Recognizes consistent, reliable performance while preserving flexibility to reward higher levels of contribution. This range and rating reflect good, solid performance. |
| Meets and Frequently Exceeds Expectations (Occasionally on Critical Work) | 3% – 4% | See below. |
| Exceeds Expectations (Frequently and Consistently) | 4% – 5% | See below. |
Flexibility for High Performance
The 2.8% – 5.0% range is intentionally broad to allow for manager discretion and meaningful differentiation.
While merit increases should generally align with performance ratings, this range provides flexibility to recognize high-performing employees whose contributions may not be fully captured by a single rating.
When to Consider Higher Merit Increases
Use this range to reflect the scope, consistency, and impact of performance, including when:
- Exceeds expectations in key moments (e.g., high-impact projects)
- Delivers strong results consistently over time
- Creates impact beyond the role (team, department, School)
- Demonstrates growth and development
- Achieves strong results, with some development areas remaining
Additional Considerations
- New or expanded responsibilities
- Role transitions or organizational change
- Team shifts or resource constraints
- Mentoring or supporting others
- Cross-functional collaboration
- Sustained performance despite external challenges
Key Takeaway: A Holistic Approach
Merit decisions should reflect the full picture, including:
- Overall contributions
- Quality and impact of work
- Broader context
Performance ratings are one input, but not the only factor.
Questions or Support: Wharton HR is here to partner with you in applying this guidance consistently and thoughtfully. For questions or support with merit recommendations, please contact whartonhr@wharton.upenn.edu.
Related School & University Guidance and Resources