Debating the Merits of Merit Pay

After faculty dispute, Towson compromises on how to distribute raises, while Temple attempts to shift entirely to "pay per performance."
October 10, 2008

The size of an across-the-board raise can reliably send shivers down a faculty's collective spine, especially in times of budget stress. When merit enters the picture, however, alliances can break apart and areas of agreement (that many professors feel underpaid) can suddenly become points of contention.

Those propositions are being put to the test at two universities, one currently in the process of modifying the way merit dollars are allocated and the other in the midst of contract negotiations with an administration proposal to do away with any salary raises that aren't based on performance.

The issues are complex. Many times, they find administrations intent on making strategic use of salary dollars fighting professors who don't necessarily agree with the administration's priorities. But these disputes can also pit faculty members against each other -- higher-paid departments against those with smaller budgets, higher-achieving professors against "dead wood," rapidly expanding disciplines versus those that are stagnating.

Moreover, not everyone agrees what exactly "merit" -- or "performance," or "incentive pay" -- entails.

At Towson University, in Maryland, all those tensions bubbled to the surface when faculty, over the past two years, hashed out an alternative plan to the current method of doling out merit raises based at the department level. But for now, at least, faculty members and the administration seem to have come to a compromise that they can more or less live with, at least for a two-year trial period.

And at Temple University, meanwhile, the administration is attempting to switch entirely to "pay per performance" raises that would not take cost-of-living increases or other factors into account -- a change the faculty union strenuously opposes.

"I think that the institutions are becoming more focused on outcomes and performance, partly as a result of the budgetary issues but also in response to criticisms that they are not necessarily accountable for everything that occurs," said Kathy Hagedorn, a consultant who works with colleges on human resources issues.

Finding the Right Formula

No one at Towson seems to know where exactly the current formula came from. But it's been the way merit has been calculated for years, for better or worse. Recently, the University Senate decided that it was more worse than better, and came up with its own revision of the plan that jump-started a dialogue with the administration.

For years, many weren't aware of how the system worked because professors don't tend to share their salaries with each other. The average faculty salaries at Towson ranged from $59,200 for assistant professors to $88,100 for full professors in the last academic year.

Until now, individual departments determined how many "merit points" would be awarded to each full-time faculty member -- 0, 1 or 2 -- and a dollar amount per point would be calculated by taking 2.5 percent of the sum of all the professors' salaries in the department and dividing by the number of total merit points awarded. The 2.5 figure -- the average merit pool -- is ultimately determined through the state budget process, which means that this year, the percentage could conceivably be zero and there would be no merit pay at all, regardless of how it's distributed.

But faculty members complained that the existing system effectively punished growing departments. Responding to increasing enrollments by hiring new (and likely younger) professors, department chairs would effectively drive down the average salary and, as a result, diminish the amount of money available per merit point. So a professor earning the highest rating in a small department with relatively senior faculty members would earn a larger raise than someone receiving the same merit raise in a growing department -- even though the latter department is more likely to be in a high-demand field.

The University Senate responded earlier this year with a plan that would determine the merit amount by combining all faculty salaries and averaging across the entire institution. Professors would get an additional percentage of merit based on their rank, such as full or associate. But that struck some professors at higher-paying departments as unfair. In departments within the College of Business and Economics, for example, an absolute merit increase based on all professors' salaries would still be relatively lower, percentage-wise, than for a faculty member with a lower salary.

The solution brokered by the administration: determining merit amounts at the college level.

"I think it's a reasonable compromise to make," said Timothy Sullivan, chairman of the University Senate and a professor of economics. "It is an improvement over our old system, because our old system was so uneven on one level."

In the compromise system, which will be in place for a two-year pilot, each college will determine how to dole out merit -- adopting the methods for assigning value from either the department- or university-based systems or, alternatively, using a sliding-scale percentage based on merit level (such as 1.5 percent of a professor's salary for level 1 and 2.5 percent for level 2), as is done with university staff, according to James P. Clements, Towson's provost.

That still solves the problem of fast-growing departments receiving lower merit amounts, but some faculty members who supported the University Senate plan won't be satisfied that merit points aren't worth the same for each faculty member on campus.

As Sullivan put it: "If merit rewards for contributions to the university, why not have a merit system that rewards people equally across different disciplines?"

Richard Vatz, a professor of mass communication and communication studies who has been on the Senate for some 30 years, said the college-level system will contribute to the same kinds of gaps previously seen between departments, except that it will take longer to manifest itself. The system "is going to perpetuate the... merit differential, and every year it's going to be a little bit worse."

"We've had a good dialogue," Clements said. "We're not at a point where we have a great answer on how you distribute merit... it's been a really healthy discussion among the faculty."

Going All Merit?

There's less than a week to go for the latest round of contract negotiations at Temple University, and among the usual salary and benefits issues, merit has become a prominent sticking point. The reason: The administration is proposing to make all future raises contingent on performance.

The faculty union, Temple University Associations of Professionals, an affiliate of the American Federation of Teachers, is already planning a protest rally on Tuesday, although it's hinted that a strike isn't likely. The negotiations, which have been ongoing since June, are for a contract to replace the one that expires on Wednesday.

So far, the administration hasn't released many details about its proposed contract to the union except for what it calls "pay per performance" raises and other changes, such as increased faculty contributions for medical insurance. The former prospect, which would roll all potential salary increases under the category of merit -- which at many institutions is given on top of cost-of-living and other adjustments -- has already inspired significant opposition from faculty.

"First of all, we know how many people get merit currently, and it's less than half each year ... [and under the administration's proposal] we don't know whether the proportion would be the same or whether it would be higher," said Arthur Hochner, a professor of human resources management and president of the TUAP. "We're concerned that some people would likely not receive any increase if it was a complete merit system, and while some might say those folks don't deserve anything, our position is everybody deserves to keep up with the cost of living. We've been falling behind."

If a faculty member doesn't do his or her job, he added, "then there are other means to deal with that."

Instead, the union proposes a four-year contract with a 5 percent cost-of-living increase per year plus merit pay. The median faculty salary is about $79,000.

Deborah Hartnett, vice president of human resources at Temple, said the university is "very interested in pay per performance because we want a system that is more transparent and more inclusive to reward and recognize our faculty for the work and the contributions that they have done over the prior year, that they've made in their work responsibilities."

She acknowledged that Temple was facing some of the same budget constraints that other universities are dealing with this year. She added: "Merit has been in the contract for years, but it's been applied differently and what we're really trying to do is reflect a culture change."

According to the current contract, Hartnett said, 1 percent of the salary pool is divided into "merit units" worth $600 each. Those are distributed based on a multi-level evaluation process that includes faculty committees in each department, deans and the provost.

But some faculty have complained that the process is not transparent enough. "It's a peer review process, but the dean and the provost have ultimate say. And it's not grievable in our union contract," Hochner said.

Still, opposition to the administration's proposed changes to salary increases could only seem uniform by ignoring the faculty at Temple's Beasley School of Law, which has had a fully merit-based raise system for as long as many can remember.

"What's distinctive about our process, and we've had it for about 20 years, is the union has a compensation committee and the compensation committee and the dean and the associate deans collectively set the salaries," said William J. Woodward Jr., a professor on the law faculty and representative for the Temple Law Professors Collective Bargaining Association, to which he was referring. "And the way we do it is the compensation committee and the deans separately read the annual reports, and they separately come to consensus on how to rank, order everybody on the faculty."

"It's a lot of work, it's like grading exams," he said. But the faculty almost uniformly supports it.

The reason, he said, is that the policy developed informally and initially gained its support from the ground up, rather than the other way around.

"You can't impose merit pay, you just can't do it," Woodward said. "They're trying to get buy-in all different ways than a process. They'd be way better off paving the way over one or two contracts and then doing it.... It's a 10-year process."

John Curtis, director of research and public policy at the American Association of University Professors, said it was important for faculty to be directly involved in the development of merit pay plans. "The criteria for determining any salary adjustments that result from merit pay ... need to be stated clearly and need to be objective and measurable," he said.


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