MERIT PAY: TO REWARD PERFORMANCE OR VALUE TRADITION?

Abstract

Dean George Elliott of the College of Business Administration at Ivy State University was pleased to inform the Department Chairs that there would be a faculty salary increase program next year. This was welcome news since pay raises had been both few and small in recent years. The pay plan included a 2% across-the-board increase and a 3% discretionary component based on merit. Although the Chairs were glad for the flexibility in awarding raises, their challenge was to recommend increases that were fair and justified by faculty performance data. The Dean had exhorted the Chairs to use these dollars wisely to recognize achieving faculty and motivate others for future performance. Also, he told the group that he was not tied to the tradition of giving raises as a percentage of base salary and that the Chairs should consider proposing raises in absolute dollars.
Fred Anderson, Chair of the Marketing Department, was puzzling over how he would determine pay increase recommendations for his department. He reviewed the faculty performance evaluations and thought about how to proceed. Ringing in his ear was the Dean’s exhortation to the Chairs: “Let’s not waste this opportunity!”