Because pay for performance is an important factor governing salary increases, managers must be able to defend the compensation recommendations they make for their employees. Merit raises granted under a pay$-$for$-$performance policy must be based on objective appraisals if they are to achieve their intended purposes of rewarding outstanding employee performance. As managers know, however, they must deal with other factors that can affect salary recommendations. These may include the opinions of the employee$$s peers or extenuating circumstances such as illness or family responsibilities. The purpose of this exercise is to provide you with the experience of granting salary increases to employees based on their work performance and other information.