(NewsNation) — Walmart is changing how it awards raises to hourly workers at U.S. stores, factoring in both performance and tenure.

Going forward, annual pay increases will be based on years of service and three other metrics — reliability, store performance and employees’ everyday actions — according to a company memo shared with NewsNation. The change was first reported by Business Insider.

The new performance-based approach marks a shift from last year, when annual raises were awarded at a fixed rate that was determined by years of service.

“That recognized loyalty — but it didn’t fully reflect how individual associates’ contributions and actions make the difference,” EVP of store operations Cedric Clark wrote in the memo to managers last week.

Clark said the new “Pay for Performance” program responds to what associates have been asking for — more control over their earnings, more recognition for great work and clearer expectations.

Walmart is the largest private employer in the country, and the new raise program will affect more than half a million hourly store associates across the U.S.

Those who do well across the three performance metrics can earn up to a 5% increase based on their tenure and ratings. Associates will also have access to digital dashboards that provide more transparency about how they’re performing all year long.

“Coaching and feedback aren’t just nice-to-haves — they’re directly tied to growth, opportunity and associate engagement,” Clark wrote.

All U.S. store-based Walmart associates, both full-time and part-time, are eligible for a performance-based annual pay increase if they were hired on or before July 31, 2025. Base pay will not be reduced as a result of performance.

According to Walmart, the average hourly wage for U.S. frontline associates is close to $18.