I would have warned the new operations manager that he could not offer an 11 percent pay increase when the contract states that employees can only receive a 2% pay increase per year, with a maximum of 6% per year. I would have reminded him that one of the most important aspects of attracting and maintaining the top employees is assessing the remuneration you are now offering current employees and awarding raises as our business and the market demand. The fundamental approaches to calculating the size of a raise are to give everyone the same percentage or dollar amount raise or to give employees various raises based on equity between base wages or performance, commonly known as a merit system. I would have done it in such a way as to avoid an issue and to show the new management the contract's odds and ends. View less Explanation Solved by