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It can be both. The manager gets a bucket that is based on the average (4% this year) of the whole team. Then the Manger disburses it based on performance.. . Some more some less. Then they submit their recommendations. The recommendations can be overriden. Last year, my recommended increase was overridden by someone higher up (I have no idea who or why) and my raise was actually increased to 8.5%. That additional did not come from my team bucket. Conversely, if you are in the top quartile of your pay range and get an EE, it is still possible to get a small percentage because you have less room to move. There are a lot of factors.