Merit Pay for Faculty at Fairfield University Presentation for the Academic Affairs Subcommittee Board of Trustees March 22, 2001.

Merit Pay for Faculty at Merit Pay for Faculty at Fairfield UniversityFairfield University

Presentation for the Presentation for the

Academic Affairs Academic Affairs SubcommitteeSubcommittee

Board of TrusteesBoard of Trustees

March 22, 2001March 22, 2001

Faculty PresentersFaculty Presenters

Paul CasterPaul Caster, Accounting Department, member of the , Accounting Department, member of the Committee on ConferenceCommittee on Conference

Nancy DallavalleNancy Dallavalle, Religious Studies Department, Chair of , Religious Studies Department, Chair of the Committee on Conference the Committee on Conference

Phil LanePhil Lane, Economics Department, member of the , Economics Department, member of the Committee on ConferenceCommittee on Conference

George LangGeorge Lang, Mathematics Department, member of the , Mathematics Department, member of the Committee on ConferenceCommittee on Conference

Irene MulveyIrene Mulvey, Mathematics Department, Chair of the , Mathematics Department, Chair of the Faculty Salary CommitteeFaculty Salary Committee

Kathy NantzKathy Nantz, Economics Department and General Faculty , Economics Department and General Faculty SecretarySecretary

Cheryl TromleyCheryl Tromley, Management Department, expert on , Management Department, expert on organizational psychologyorganizational psychology

Presentation OverviewPresentation Overview

Introduction and purposeIntroduction and purpose Merit pay from an organizational Merit pay from an organizational

perspectiveperspective Merit pay in practice in higher Merit pay in practice in higher

educationeducation Our current merit award systemsOur current merit award systems Merit pay and our compensation Merit pay and our compensation

systemsystem Budgetary implications of merit payBudgetary implications of merit pay Merit pay for Fairfield: An institutional Merit pay for Fairfield: An institutional

perspectiveperspective

Introduction and purposeIntroduction and purpose

Fairfield faculty involvement in discussions Fairfield faculty involvement in discussions of merit pay.of merit pay.

Various memos from AVP GrossmanVarious memos from AVP Grossman Faculty educating itself on role of merit payFaculty educating itself on role of merit pay Vote of General Faculty of 2/23Vote of General Faculty of 2/23

The purpose of this presentation is to explain The purpose of this presentation is to explain the Faculty position on merit pay.the Faculty position on merit pay.

Merit pay from an Merit pay from an organizational perspectiveorganizational perspective

Change: Why or why not?Change: Why or why not? Implementation of changeImplementation of change Compensation structure helps to define Compensation structure helps to define

the culture of an organizationthe culture of an organization• Attention turns to tasks that are rewarded.Attention turns to tasks that are rewarded.• Competition replaces collaboration.Competition replaces collaboration.• Can increase dissatisfaction, feelings of Can increase dissatisfaction, feelings of

inequity, and lack of trust.inequity, and lack of trust.– Surveys show that 70% of employees in any pool Surveys show that 70% of employees in any pool

believe they are believe they are ““above average.above average.””

POINT: Effective change requires a clear POINT: Effective change requires a clear causal connection to strategic objectives.causal connection to strategic objectives.

Merit pay in practice in Merit pay in practice in higher educationhigher education

A sampling of studies and A sampling of studies and responses from other institutions.responses from other institutions.

Problems with merit pay in theory.Problems with merit pay in theory.

POINT: The faculty has an educated POINT: The faculty has an educated position against merit pay that is position against merit pay that is informed by current research.informed by current research.

Report:Report:California State UniversityCalifornia State University

Abacus Associates Report on faculty merit Abacus Associates Report on faculty merit increase program at the California State systemincrease program at the California State system::

The Faculty Merit Incentive system (FMI) The Faculty Merit Incentive system (FMI) discriminates against women.discriminates against women.

In direct contradiction to the mission of the Cal In direct contradiction to the mission of the Cal State system, FMI awards are based more on State system, FMI awards are based more on scholarship and they are not related to quality scholarship and they are not related to quality teaching.teaching.

The overwhelming majority of faculty oppose The overwhelming majority of faculty oppose the FMI program.the FMI program.

Survey:Survey:The University of San The University of San

DiegoDiego

The following are responses to an independent The following are responses to an independent merit survey (n=104):merit survey (n=104):

The criteria for merit pay increases are clear The criteria for merit pay increases are clear to me; I know what constitutes to me; I know what constitutes ““meritoriousmeritorious”” work. work. Slightly disagreeSlightly disagree

Cost of living increases should be separate Cost of living increases should be separate from merit increases. from merit increases. Strongly agreeStrongly agree

I think USD should abandon the current I think USD should abandon the current merit process in favor of a more equitable merit process in favor of a more equitable system. system. AgreeAgree

Other survey resultsOther survey results

From the final report of the CSU Academic Senate From the final report of the CSU Academic Senate merit pay task force:merit pay task force:

• Nearly all CSU faculty intensely disliked the Nearly all CSU faculty intensely disliked the PSSIs (Performance Salary Step Increases).PSSIs (Performance Salary Step Increases).

• Most faculty are deeply suspicious of any form Most faculty are deeply suspicious of any form of merit pay other than that provided of merit pay other than that provided presently through retention, tenure, and presently through retention, tenure, and promotion.promotion.

• No one contacted, including presidents and a No one contacted, including presidents and a former Trustee, could clearly state the former Trustee, could clearly state the rationale for the PSSI.rationale for the PSSI.

Literature analysisLiterature analysis

From the final report of the CSU From the final report of the CSU Academic Senate merit pay task force:Academic Senate merit pay task force:

• Most [articles] pointed out that merit pay, Most [articles] pointed out that merit pay, for various reasons, does not motivate for various reasons, does not motivate people…especially…in education where people…especially…in education where motivations for being in the profession motivations for being in the profession were not primarily monetary.were not primarily monetary.

Other institutionsOther institutions

From the final report of the CSU From the final report of the CSU Academic Senate merit pay task Academic Senate merit pay task force:force:

• Penn State dropped its merit system.Penn State dropped its merit system.• Western Michigan dropped the faculty-Western Michigan dropped the faculty-

run portion of its merit system when run portion of its merit system when faculty threatened a strike.faculty threatened a strike.

• After consideration, CUNY chose not to After consideration, CUNY chose not to adopt a merit system.adopt a merit system.

Comment: Connecticut Comment: Connecticut CollegeCollege

Professor of PsychologyProfessor of Psychology

““I think I can speak for my colleagues here in saying that I think I can speak for my colleagues here in saying that if you can avoid it [merit pay], donif you can avoid it [merit pay], don’’t do it. It has t do it. It has achieved nothing but animosity, it divides the faculty achieved nothing but animosity, it divides the faculty into gets and gets-nots, it is perceived as being unfair…into gets and gets-nots, it is perceived as being unfair…There is a literature in industrial organizational There is a literature in industrial organizational psychology and in economics and management that psychology and in economics and management that shows that merit pay rarely achieved its desired ends shows that merit pay rarely achieved its desired ends and almost always causes anger and dissention. We do and almost always causes anger and dissention. We do not want it here but the trustees and president have not want it here but the trustees and president have insisted upon it, so we struggle to try to do it better -- insisted upon it, so we struggle to try to do it better -- with little success.with little success.”” [Note: The President of Conn College was [Note: The President of Conn College was effectively forced to resign in the face of mounting faculty effectively forced to resign in the face of mounting faculty opposition to the autocratic administrative style at Conn College.]opposition to the autocratic administrative style at Conn College.]

Private communication from Prof. Joan Chrisler, Chair of Psychology Private communication from Prof. Joan Chrisler, Chair of Psychology at Connecticut Collegeat Connecticut College

Experts on merit payExperts on merit pay

From the final report of the Academic Senate From the final report of the Academic Senate merit pay task force -- merit pay task force -- Professor Professor Ed LawlerEd Lawler, , USC, a leading expert on alternative pay models:USC, a leading expert on alternative pay models:

• There have been over 3,000 studies of merit There have been over 3,000 studies of merit pay over the past two decades and only 100 pay over the past two decades and only 100 claim positive results.claim positive results.

• Most merit pay systems fail to have any impact Most merit pay systems fail to have any impact on motivating workers to perform better.on motivating workers to perform better.


From From W.W. Edwards DemingEdwards Deming’’ss ““14 Points for 14 Points for ManagementManagement””::

““12b. Remove barriers that rob people 12b. Remove barriers that rob people in management and in engineering of in management and in engineering of their right to pride of workmanship. their right to pride of workmanship. This means, This means, inter aliainter alia, abolishment of , abolishment of the annual merit rating and of the annual merit rating and of management by objective.management by objective.””

From From Out of the CrisisOut of the Crisis


Robert HenemanRobert Heneman, a leading merit pay , a leading merit pay advocate, describes when advocate, describes when notnot to do to do merit pay:merit pay:

““……merit pay does indeed have some merit pay does indeed have some desirable features, and those who reject desirable features, and those who reject merit pay under all circumstances have merit pay under all circumstances have gone too far. Based on the material gone too far. Based on the material presented…on the feasibility of merit pay, it presented…on the feasibility of merit pay, it can be concluded that those who endorse can be concluded that those who endorse merit pay in all circumstances have gone merit pay in all circumstances have gone too far...too far...

Experts on merit payExperts on merit payRobert Heneman (continued)Robert Heneman (continued)

Merit pay should clearly Merit pay should clearly notnot be used under the following be used under the following three sets of circumstances:three sets of circumstances:

1. The budget is too small or economic conditions are 1. The budget is too small or economic conditions are too tight to allow the granting of large increases to too tight to allow the granting of large increases to good performers,good performers,

2. Employees value leisure, recognition, or some reward 2. Employees value leisure, recognition, or some reward other than pay increases, or they prefer the allocation other than pay increases, or they prefer the allocation of rewards on the basis of of rewards on the basis of equityequity, seniority, or some , seniority, or some basis other than merit.basis other than merit.

3. Institutional arrangements are such that ratings of 3. Institutional arrangements are such that ratings of employee performance do not capture performance employee performance do not capture performance valued by the organization.valued by the organization.””

From From Merit PayMerit Pay

Our current merit award Our current merit award systemssystems

Tenure and promotionTenure and promotion Senior scholar awards, research Senior scholar awards, research

grantsgrants Sabbaticals and summer stipendsSabbaticals and summer stipends Humanities InstituteHumanities Institute

POINT: We already have a structure POINT: We already have a structure that links faculty compensation to that links faculty compensation to performance outcomes.performance outcomes.

Merit pay and our current Merit pay and our current compensation systemcompensation system

Research shows merit increases must be Research shows merit increases must be at least 7% over COLA to be effective.at least 7% over COLA to be effective.

Distinguishing market equity issues from Distinguishing market equity issues from other problems merit pay might address.other problems merit pay might address.

Cost implications of traditional merit pay.Cost implications of traditional merit pay.

POINT: Merit pay cannot take the place of POINT: Merit pay cannot take the place of cost of living increases for all.cost of living increases for all.

Three merit scenarios on Three merit scenarios on this yearthis year’’s salary s salary

incrementincrement

Current distribution: 3.5% = COL + .1%Current distribution: 3.5% = COL + .1%

Salary increase =Salary increase = COL + .1%COL + .1% COL + .1%COL + .1% COL COL + .1%+ .1%

% faculty =% faculty = 5% 5% 70% 70% 25% 25%

Average increase in purchasing power:Average increase in purchasing power:

$3.46/pay period for professors$3.46/pay period for professors

$2.76/pay period for associate$2.76/pay period for associate

$2.32/pay period for assistant$2.32/pay period for assistant

Total cost to the University = $507,662Total cost to the University = $507,662

Scenario 2: Current Scenario 2: Current distribution with merit distribution with merit

scheme imbeddedscheme imbedded

Salary increase =Salary increase = COL + 0%COL + 0% COL COL + .1%+ .1% COL + .12%COL + .12%

% faculty =% faculty = 5% 5% 70% 70% 25% 25%

Average increase in purchasing power for Average increase in purchasing power for ““meritoriousmeritorious”” faculty: faculty:




Total cost to the University = $507,662Total cost to the University = $507,662

Scenario 3: Minimum Scenario 3: Minimum requirements for merit payrequirements for merit pay

Salary increase =Salary increase = COL + 0%COL + 0% COL + 2%COL + 2%COL + 7%COL + 7%

% faculty =% faculty = 5% 5% 70% 70% 25% 25%

Average increase in dollars for 2% faculty:Average increase in dollars for 2% faculty:




Average increase in dollars for 7% faculty:Average increase in dollars for 7% faculty:




Total cost to the University = ??Total cost to the University = ??

Paying for merit pay -- Paying for merit pay -- Budgetary implicationsBudgetary implications

Salary compression issues.Salary compression issues. Market equity issues in compensation.Market equity issues in compensation. The direct cost of a merit pay scheme.The direct cost of a merit pay scheme. The cost to the University of The cost to the University of

administering a merit pay scheme.administering a merit pay scheme.

POINT: Can we afford merit pay at POINT: Can we afford merit pay at Fairfield?Fairfield?

Paying for merit pay – Direct Paying for merit pay – Direct costscosts

Following is a partial list of items in the budget that Following is a partial list of items in the budget that will be directly impacted by a merit pay system:will be directly impacted by a merit pay system:• Merit compensation for approximately 55 faculty Merit compensation for approximately 55 faculty

members (assumes 25% are meritorious each members (assumes 25% are meritorious each year)year)

• Increase in research committee budget to Increase in research committee budget to support faculty researchsupport faculty research

• Increase in faculty travel budgetsIncrease in faculty travel budgets• Increase in library resources (research books, Increase in library resources (research books,

monographs, and journals)monographs, and journals)• Increase in computer database resourcesIncrease in computer database resources• Increase in faculty development costsIncrease in faculty development costs

Paying for merit pay – Paying for merit pay – Indirect costsIndirect costs

Following is a partial list of costs to the university of a Following is a partial list of costs to the university of a merit pay system:merit pay system:

• Administrative time spent determining who is meritorious Administrative time spent determining who is meritorious each yeareach year

• Faculty time spent determining who is meritorious each yearFaculty time spent determining who is meritorious each year• Cost to train evaluatorsCost to train evaluators• Time and effort to provide feedback to each faculty member Time and effort to provide feedback to each faculty member

each yeareach year• Time and cost to appeal unfavorable merit decisions each Time and cost to appeal unfavorable merit decisions each

yearyear• Documentation costsDocumentation costs• Cost to assess the effectiveness of the merit pay systemCost to assess the effectiveness of the merit pay system

Paying for merit pay – Paying for merit pay – Unintended consequencesUnintended consequences

In addition to the above costs, we believe the following In addition to the above costs, we believe the following unintended consequences will result in additional unintended consequences will result in additional costs to the university community as follows:costs to the university community as follows:

• Decline in teaching effectiveness (faculty will be Decline in teaching effectiveness (faculty will be forced to refocus their energies on those aspects forced to refocus their energies on those aspects of their performance that can and would be of their performance that can and would be measured in a merit pay system)measured in a merit pay system)

• Decline in service (same rationale as above)Decline in service (same rationale as above)• Faculty dissatisfaction (as seen at other Faculty dissatisfaction (as seen at other

universities that have merit pay systems)universities that have merit pay systems)• Student dissatisfaction (as teaching effectiveness Student dissatisfaction (as teaching effectiveness

and service to students declines)and service to students declines)

Merit pay at Fairfield: An Merit pay at Fairfield: An institutional perspectiveinstitutional perspective

Compensation scheme helps define the Compensation scheme helps define the ““cultureculture”” of an institution. of an institution.

Unintended incentives buried in merit pay Unintended incentives buried in merit pay systems -- individual over institutional systems -- individual over institutional priorities.priorities.

Collegiality at Fairfield.Collegiality at Fairfield. Downsides to faculty / administration rift Downsides to faculty / administration rift

over merit pay. over merit pay.

POINT: Compensation schemes must fit our POINT: Compensation schemes must fit our institutional goals and objectives. institutional goals and objectives.

General Faculty Motion IGeneral Faculty Motion IFebruary 23, 2001February 23, 2001

IF: a merit system is narrowly understood as "merit pay", and if IF: a merit system is narrowly understood as "merit pay", and if "merit pay" is understood as a change in the allotment of the "merit pay" is understood as a change in the allotment of the annual salary increase - as results from the Salary Committee's annual salary increase - as results from the Salary Committee's discussions with the administration - from an "across-the-board" discussions with the administration - from an "across-the-board" allotment to a system whereby a greater percentage of the allotment to a system whereby a greater percentage of the increase is allotted to those deemed meritorious and a lesser increase is allotted to those deemed meritorious and a lesser percentage of the increase is allotted to those deemed non-percentage of the increase is allotted to those deemed non-meritoriousmeritorious

THEN: the General Faculty asks that the Board of Trustees direct THEN: the General Faculty asks that the Board of Trustees direct the Fairfield University administration not to develop a merit pay the Fairfield University administration not to develop a merit pay system. system.

The motion passed, 93 in favor, 2 opposed, 1 abstention.The motion passed, 93 in favor, 2 opposed, 1 abstention.

General Faculty Motion IIGeneral Faculty Motion IIFebruary 23, 2001February 23, 2001

The faculty requests that the Board of Trustees The faculty requests that the Board of Trustees provide faculty with goals that any change in provide faculty with goals that any change in compensation being considered are intended to compensation being considered are intended to meet and that any vote on compensation changes meet and that any vote on compensation changes be delayed until such time as faculty have an be delayed until such time as faculty have an opportunity to address the Board of Trustees' goals opportunity to address the Board of Trustees' goals along with possible methods of attaining them and along with possible methods of attaining them and their potential impact on our institutional mission. their potential impact on our institutional mission.

The motion was approved, 90 in favor, 1 The motion was approved, 90 in favor, 1 opposed.opposed.

Merit Pay for Faculty at Fairfield University Presentation for the Academic Affairs Subcommittee Board of Trustees March 22, 2001.

Documents

merit increases

discussions of merit

form of merit

faculty merit increase

csu faculty

current merit process

faculty position

independent merit survey