Merit Pay at Carroll University - Winners Take All

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Merit Pay at Carroll Universiy|
Should the Winners Take All?|
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11/19/2010|

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Introduction:
Performance related pay in academia, in particular merit pay, is often a source of controversy. As cited in Value-Related Issues in a Departmental Merit Pay, a faculty-designed merit pay plan is defined as “a process that may produce a pay increase for university faculty who perform a variety of worthwhile work activities according to the practices, policies, criteria and values of certain stakeholders.” (Hanshaw, 2004, p. 57) This process is open to interpretation and therefore may be applied differently by each university and even more specifically by each department. Not all departments value the same practices, policies, criteria and values; even though they cohabitate in the same university structure. Dr. Jeff Foreman, chair of the marketing department at Carroll University, is faced with a similar dilemma. He was given a mere 48 hours to address a new merit pay policy which will aggressively decrease the number eligible for merit pay from 66 percent of the staff to only 25 percent. With this redesign, Dr. Foreman must address concerns about overall retention and morale. He must redefine merit standards and implement a strategic recommendation in the face of a dysfunctional pay structure. As identified by a survey of College and University Personnel Association (CUPA), salary adjustments in the form of merit pay are used by 23.7 percent of the responding institutions. The current pay structure at Carroll University has created unfair pay among equals. Incumbents may be expecting more equity and when it is not forthcoming, leave The University. Any valid recommendation will need to include a review of Carroll University’s history with merit pay and an assessment of current attitudes in relation to pay. His recommendation must include valid standards that include reporting and performance mechanisms. In addition, he must play problem-solver and advocate by addressing implementation concerns and ways to minimize the effect on the reporting and performance processes. There may be additional factors, including the nature of academic culture and the concerns of stakeholders including human resources (HR) that must also be considered.

Background:
Carroll University, primarily a research based institution, is struggling with an unpredictable and error-prone merit pay system that is not aligned with the objectives of The University. In addition, fairness and equality in compensation is a growing concern among faculty. Several top-producing faculty members were offered higher compensation packages at other universities, creating a potential for unwanted turnover. Faculty members believe their performance accomplishments are not valued, appreciated or rewarded fairly. Pay inequalities among instructors, assistant professors, associate professors, and professors vary substantially, with little consideration for tenure. The flaws of the current system include: unequal wages due to higher hire-in salaries; turnover of published and research staff due to lack of compensatory rewards for their specific work; loss of high performers because of recruitment raids from other institutions of higher learning. In addition, annual adjustments to base compensation have not been uniformly applied, merit pay guidelines are unclear, and there have historically been poor communications surrounding compensation. Recommendations:

The recommendation is to install a performance based appraisal system which is tied to merit pay. The CUPA survey information should be the starting point for such an undertaking. That source will provide an assessment of the methods and practices of competitors for the human capital required for a successful and competitive university. One important element of a merit based pay plan is transparency. Compensation that is assigned in secrecy will...
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