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Merit Pay for Faculty at Fairfield University

Merit Pay for Faculty at Fairfield University. Presentation for the Academic Affairs Subcommittee Board of Trustees March 22, 2001. Faculty Presenters. Paul Caster , Accounting Department, member of the Committee on Conference

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Merit Pay for Faculty at Fairfield University

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

  2. Faculty Presenters • Paul Caster, Accounting Department, member of the Committee on Conference • Nancy Dallavalle, Religious Studies Department, Chair of the Committee on Conference • Phil Lane, Economics Department, member of the Committee on Conference • George Lang, Mathematics Department, member of the Committee on Conference • Irene Mulvey, Mathematics Department, Chair of the Faculty Salary Committee • Kathy Nantz, Economics Department and General Faculty Secretary • Cheryl Tromley, Management Department, expert on organizational psychology

  3. Presentation Overview • Introduction and purpose • Merit pay from an organizational perspective • Merit pay in practice in higher education • Our current merit award systems • Merit pay and our compensation system • Budgetary implications of merit pay • Merit pay for Fairfield: An institutional perspective

  4. Introduction and purpose • Fairfield faculty involvement in discussions of merit pay. • Various memos from AVP Grossman • Faculty educating itself on role of merit pay • Vote of General Faculty of 2/23 The purpose of this presentation is to explain the Faculty position on merit pay.

  5. Merit pay from an organizational perspective • Change: Why or why not? • Implementation of change • Compensation structure helps to define the culture of an organization • Attention turns to tasks that are rewarded. • Competition replaces collaboration. • Can increase dissatisfaction, feelings of inequity, and lack of trust. • Surveys show that 70% of employees in any pool believe they are “above average.” POINT: Effective change requires a clear causal connection to strategic objectives.

  6. Merit pay in practice in higher education • A sampling of studies and responses from other institutions. • Problems with merit pay in theory. POINT: The faculty has an educated position against merit pay that is informed by current research.

  7. Report:California State University Abacus Associates Report on faculty merit increase program at the California State system: • The Faculty Merit Incentive system (FMI) discriminates against women. • In direct contradiction to the mission of the Cal State system, FMI awards are based more on scholarship and they are not related to quality teaching. • The overwhelming majority of faculty oppose the FMI program.

  8. Survey:The University of San Diego The following are responses to an independent merit survey (n=104): • The criteria for merit pay increases are clear to me; I know what constitutes “meritorious” work. Slightly disagree • Cost of living increases should be separate from merit increases. Strongly agree • I think USD should abandon the current merit process in favor of a more equitable system. Agree

  9. Other survey results From the final report of the CSU Academic Senate merit pay task force: • Nearly all CSU faculty intensely disliked the PSSIs (Performance Salary Step Increases). • Most faculty are deeply suspicious of any form of merit pay other than that provided presently through retention, tenure, and promotion. • No one contacted, including presidents and a former Trustee, could clearly state the rationale for the PSSI.

  10. Literature analysis From the final report of the CSU Academic Senate merit pay task force: • Most [articles] pointed out that merit pay, for various reasons, does not motivate people…especially…in education where motivations for being in the profession were not primarily monetary.

  11. Other institutions From the final report of the CSU Academic Senate merit pay task force: • Penn State dropped its merit system. • Western Michigan dropped the faculty-run portion of its merit system when faculty threatened a strike. • After consideration, CUNY chose not to adopt a merit system.

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

  13. Experts on merit pay From the final report of the Academic Senate merit pay task force -- Professor Ed Lawler, USC, a leading expert on alternative pay models: • There have been over 3,000 studies of merit pay over the past two decades and only 100 claim positive results. • Most merit pay systems fail to have any impact on motivating workers to perform better.

  14. Experts on merit pay From W.Edwards Deming’s “14 Points for Management”: “12b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual merit rating and of management by objective.” From Out of the Crisis

  15. Experts on merit pay Robert Heneman, a leading merit pay advocate, describes when not to do merit pay: “…merit pay does indeed have some desirable features, and those who reject merit pay under all circumstances have gone too far. Based on the material presented…on the feasibility of merit pay, it can be concluded that those who endorse merit pay in all circumstances have gone too far...

  16. Experts on merit pay Robert Heneman (continued) Merit pay should clearly not be used under the following three sets of circumstances: 1. The budget is too small or economic conditions are too tight to allow the granting of large increases to good performers, 2. Employees value leisure, recognition, or some reward other than pay increases, or they prefer the allocation of rewards on the basis of equity, seniority, or some basis other than merit. 3. Institutional arrangements are such that ratings of employee performance do not capture performance valued by the organization.” From Merit Pay

  17. Our current merit award systems • Tenure and promotion • Senior scholar awards, research grants • Sabbaticals and summer stipends • Humanities Institute POINT: We already have a structure that links faculty compensation to performance outcomes.

  18. Merit pay and our current compensation system • Research shows merit increases must be at least 7% over COLA to be effective. • Distinguishing market equity issues from other problems merit pay might address. • Cost implications of traditional merit pay. POINT: Merit pay cannot take the place of cost of living increases for all.

  19. Three merit scenarios on this year’s salary increment Current distribution: 3.5% = COL + .1% Salary increase = COL + .1% COL + .1% COL + .1% % faculty = 5% 70% 25% Average increase in purchasing power: $3.46/pay period for professors $2.76/pay period for associate $2.32/pay period for assistant Total cost to the University = $507,662

  20. Scenario 2: Current distribution with merit scheme imbedded Salary increase = COL + 0% COL + .1% COL + .12% % faculty = 5% 70% 25% Average increase in purchasing power for “meritorious” faculty: $4.16/pay period for professors $3.31/pay period for associate $2.78/pay period for assistant Total cost to the University = $507,662

  21. Scenario 3: Minimum requirements for merit pay Salary increase = COL + 0% COL + 2% COL + 7% % faculty = 5% 70% 25% Average increase in dollars for 2% faculty: $69.36/pay period for professors $55.35/pay period for associate $46.43/pay period for assistant Average increase in dollars for 7% faculty: $242.76/pay period for professors $193.74/pay period for associate $162.51/pay period for assistant Total cost to the University = ??

  22. Paying for merit pay -- Budgetary implications • Salary compression issues. • Market equity issues in compensation. • The direct cost of a merit pay scheme. • The cost to the University of administering a merit pay scheme. POINT: Can we afford merit pay at Fairfield?

  23. Paying for merit pay – Direct costs Following is a partial list of items in the budget that will be directly impacted by a merit pay system: • Merit compensation for approximately 55 faculty members (assumes 25% are meritorious each year) • Increase in research committee budget to support faculty research • Increase in faculty travel budgets • Increase in library resources (research books, monographs, and journals) • Increase in computer database resources • Increase in faculty development costs

  24. Paying for merit pay – Indirect costs Following is a partial list of costs to the university of a merit pay system: • Administrative time spent determining who is meritorious each year • Faculty time spent determining who is meritorious each year • Cost to train evaluators • Time and effort to provide feedback to each faculty member each year • Time and cost to appeal unfavorable merit decisions each year • Documentation costs • Cost to assess the effectiveness of the merit pay system

  25. Paying for merit pay – Unintended consequences In addition to the above costs, we believe the following unintended consequences will result in additional costs to the university community as follows: • Decline in teaching effectiveness (faculty will be forced to refocus their energies on those aspects of their performance that can and would be measured in a merit pay system) • Decline in service (same rationale as above) • Faculty dissatisfaction (as seen at other universities that have merit pay systems) • Student dissatisfaction (as teaching effectiveness and service to students declines)

  26. Merit pay at Fairfield: An institutional perspective • Compensation scheme helps define the “culture” of an institution. • Unintended incentives buried in merit pay systems -- individual over institutional priorities. • Collegiality at Fairfield. • Downsides to faculty / administration rift over merit pay. POINT: Compensation schemes must fit our institutional goals and objectives.

  27. General Faculty Motion IFebruary 23, 2001 IF: a merit system is narrowly understood as "merit pay", and if "merit pay" is understood as a change in the allotment of the annual salary increase - as results from the Salary Committee's discussions with the administration - from an "across-the-board" allotment to a system whereby a greater percentage of the increase is allotted to those deemed meritorious and a lesser percentage of the increase is allotted to those deemed non-meritorious THEN: the General Faculty asks that the Board of Trustees direct the Fairfield University administration not to develop a merit pay system. The motion passed, 93 in favor, 2 opposed, 1 abstention.

  28. General Faculty Motion IIFebruary 23, 2001 The faculty requests that the Board of Trustees provide faculty with goals that any change in compensation being considered are intended to meet and that any vote on compensation changes be delayed until such time as faculty have an opportunity to address the Board of Trustees' goals along with possible methods of attaining them and their potential impact on our institutional mission. The motion was approved, 90 in favor, 1 opposed.

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