Lump sum merit increases can be a more significant motivator than traditional merit pay because the amount seems greater when received all at once.

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Lump-sum merit increases can also be more dramatic motivators than a traditional merit raise. For example, a 5% lump-sum merit payment to a $30,000 employee is $1,500 cash, as opposed to a traditional weekly merit payout of $29 for 52 weeks.

Lump Sum Merit Increases Can Be a More Significant Motivator