When your scenario's effective date is a custom date (rather than date-in-position or hire-date) the BalancedComp budget builder allows you to prorate pay increase based on the employee's date in position. But let's deep dive into an example of the math
For this example, let's consider the following circumstances:
- scenario:
- start date: 1/1/25
- end date: 12/31/25
- effective date: 1/1/25
- employee:
- date in position: 7/1/24
We take ({scenario effective date} - {employee's date in position} / 365) x 100 to calculate the ratio of the year to apply.
So in this example, it would be 7/1/24 - 1/1/25 which is (184 days / 365 days) x 100 = 50.41%
If that employee qualified for a 5% raise from the merit increase matrix, we would give that employee 50.41% of the 5% they qualify for, or 2.52%
Negative Pay Increases
Given that our formula subtracts the employee's date in position from the scenario effective date, if the employee's DIP is after the scenario's effective date, the ratio that gets applied to the employee's raise will be negative.
In this situation, we recommend identifying your goal with that employee, and overriding their increase accordingly.