Journal of social behavior and personality


The primary purpose of this paper is to look in-depth into the article "Faculty Perceptions of Problems with Merit Pay Plans in Institutions of Higher Education" by David E. Terpstra and Andre L. Honoree. They tried to find relevant data to give more insight on the problems linked with the implementation and design of merit pay plans in higher education institutions. They have identified some significant problems, chosen samples and determined that there is a connection between individual/organizational level variables and members perception of their merit pay plans. I have been able to go through their research paper and have conducted some additional research on their research topic; some of which agree or disagree with their findings. In all, this research paper will give an insight on my point of view as regards to their overall research and my summary of the topic in question.


In order to better understand the topic about to be explored, I will like to give an insight on the overall idea and meaning of a merit pay plan system and why organizations apply this strategy to their policies. A merit pay plan system is "a system based upon the idea of well-communicated, pre-determined standards providing a greater reward for those performing at a higher level. This links between pay and performance symbolically demonstrates to all employees the organization's commitment to reward top performers" (20). In other words the merit pay plan system basically increases the base pay of outstanding performers; it is viewed as some kind of motivational strategy for employees.

In agreement with the authors of this article, very little or no empirical research has been done on the merit pay plan for 4 year colleges, although extensive research has been conducted on that of private sectors/organizations. Teaching is a complicated skill and cannot be based upon reaching targets alone; as thus the authors believe that performance evaluation can be complicated or/and inaccurate, bringing about dissatisfied teachers. They make references to problems that may arise from very little pay raise or surveys that have a one-sided point of view. It is true that analysing a teacher's performance is a lot harder than those of white/blue collar employees; teachers are evaluated based on students' views (which can be biased), research publications or hits per academic year and/or views of fellow colleagues ( with very little time to observe their teaching skills). Nonetheless, despite the authors' emphasis on the negative perception on pay equity, I believe that the merit pay plan system is one that will motivate better performance and bring about higher contributions to the classroom and teaching skills as a whole. There are negative perceptions of bias, lack of funds or inaccuracy in the evaluation, but when efforts are made continuously to have more accurate evaluation methods, I believe the overall impact will be more of positive than negative for the organization as a whole; when employees are aware that they are being evaluated and most importantly can earn more from a better performance, it is more likely that employees will see this as a competitive ground between fellow employees to perform better with each evaluation period and will bring about success for the overall output of that institution. This conclusion I have drawn from the empirical research done on private sectors concerning the merit pay plan, of which, although recognized that the same evaluation methods cannot be used, overall outcomes can have the same results. Such empirical research includes (Heneman, 2002; Heneman, 1992; Huselid, 1995; Jenkins, Mitra, Gupta, & Shaw, 1998; Locke, Feren, McCaleb, Shaw, &Denny, 1980). Despite the issue of evaluation methods varying from higher institutions to private organizations, David & Honoree, during their research discovered the perception of faculty; they view the merit pay plan as one that will have an affirmative effect on teaching efficiency, service levels and research quantity and quality. Another research conducted on a higher institution called " The Merit Pay in Academia: Perceptions from the School of Business" by Lena B. Prewitt , J. Donald Phillips and Khalad Yasin states that "institutions in all segments of the economy are turning to merit pay as a major element in compensation strategies"(19). This new trend, despite its huge acceptance in the higher education institutions, has raised so much debate and controversy; in response to such questions, this research paper has tackled such concerns that affect the system. Generally, I believe that the evaluation method, if carefully structured and/or implemented with close attention to the eradication of bias and cunning politics usually encountered in the work place, can become an innovative new strategy to inspire the best in employees of institutions of higher education in their various responsibilities and skills.

It is incomplete to focus on the pros of this system without recognizing it cons. Some of the cons which have been seen to raise concerns include:

  • The merit pay distinctions between poor, average, and high performers are
  • not large enough: In my opinion, this issue isn't one to cause much confusion. The idea of the system is an increase in base pay; in other words, if you perform right, you get a salary increase. The issue of comparing the amount of increase isn't the goal of the merit pay plan, once a high performer has been recognized by a base pay increase; I believe the essence of the system has been reached.

  • The performance criteria used for determining merit pay
  • Are not appropriate: in some institutions, this maybe a problem, as earlier stated, the method of measuring performance within the higher institution is a complicated one to be structured carefully; as thus the criteria expected should be clearly defined. This should be agreed upon by faculty to ensure that everyone understands what is expected of/from him/her. This is an area that should be looked into carefully; it is not fair to bring any form of bias or lack of expertise in the evaluation of faculty. Everyone should be able to be judged appropriately and according to a common standard.

  • The performance standards vary from year to year: of course it should, how can the standards of an institution increase if performance evaluation expectancy isn't adjusted yearly. I believe that every institution should structure the evaluation standards according to new happenings within the institution and the economy as a whole. Another reason why this should not pose as a problem is the issue of budget. Every institution must perform according to funding available, as thus, cannot award the same way in both good and bad financial standings. A good management will therefore implement evaluation and rewards based on the developments outside and within the institution even while acknowledging the finances available to do such.

Although more issues were raised in the research paper being analysed, these are the few I feel may pose as topics of high controversy. The rest of the paper will focus on how David E. Terpstra and Andre L. Honoree reached their conclusion and my own views in agreement or contrast to their current findings.


Literature Review

The objective of the paper has been clearly defined as finding problems associated with merit pay plans in higher education institutions. The negative and positive perceptions have also been observed, relating such perceptions to some variables such as the individual level variables (such as age, sex seniority and tenure status) and the organizational level variables (such as institutional size and general salary level). These variables delve into sensitivity to perceived pay equity and features that heighten such perceptions.

Also in agreement, I believe that various researches conducted agree with the terminologies used as the basis for this research paper. The variables selected here are standards used to measure the implementation efficiency of this plan. My statement is backed up by chapter 11 of Edwin A. Locke's book "the Blackwell handbook of principles of organizational behaviour" where he discussed pay for performance, and emphasized on the individual and organizational level as key variables to consider when measuring the effectiveness of your merit pay plan implementation (11). I have also studied various articles which feature this topic being discussed in-depth. Thereby, the conclusion is that the authors of this article carefully studied their topic of research, and picked their variables wisely as well. It is not to say that some assumptions are not far fetch, as my further analysis will show, but in all, they are generally well informed on the topic and are depicting their ideologies with clarity and reputable theories.

Research Problem Formulation

Based on my initial conclusion of the merit pay plan being very important in 4year colleges, the topic is indeed an area to be explored. As mentioned earlier, this pay system is already practiced extensively in the private sectors/organizations and as thus have various empirical research conducted to bring about its better implementation in such sectors. This, however, has not been the case with higher education institutions, there has been a lack in the provision of more accurate methods of implementing this strategy in the higher education sectors, as thus, all the negative perceptions mentioned in the article. I believe the strength of this research is based solely on methods of implementation that will bring about the most positive outcome. This is very important, as teachers evaluation is not your regular evaluation, but is affected by various variables. When such methods are realised, very useful information can be derived for a smoother assessment method and better still a more successful implementation of the merit pay plan system in higher education institutions. So, I will say yes, this research problem is of high importance, and will bring about useful information to facilitate the successful implementation of the merit pay plan system in institutions of higher education.


Although the method implemented to carry out the survey for the research is generally adequate, I am not very convinced with the authors' strong emphasis on the negative perceptions based on the quantity of the participants of the said surveys. It is hard to reach such a solid conclusion with so few individuals, and then use it as a general view for the success of merit pay plans in 4year institutions which are numerous in number. As thus, I disagree that such perceptions should be a basis to opt out of the merit pay plan system as a motivation strategy, however, it can be used as a directive to potential loop holes in this system. The sample and data collection are as follows:

  • 600 institutions randomly selected from a list of 1400 four (4) year colleges. Only 219 accepted to take part in the study. Of the 219 institutions that accepted to take part, 135 implemented the merit pay system. Only these institutions that implemented the system were used as sample.
  • 2700 individuals in total were selected from the institutions to take part in the survey. Only 490 did (averages the response per institution to be 2.34) quite little to assume a general conclusion.
  • Some measures were also taken during this research, they include:

    Some potential problems associated with the aim and execution of the merit pay plan was assessed via some of the views below, and my views also depicted:

    I. Pay increases given out are too small to motivate faculty: seen to be the most significant

    II. Pay distinctions between poor, average and high performers are not high enough: ranked 4thin significance

    III. No adjustments are made in during years where little or no money is available: ranked 2nd in significance.

    IV. Performance criteria are not appropriate

    V. Performance criteria is difficult to measure accurately: ranked 3rd in significance

    VI. Performance standards do not accurately communicate what is needed to be rewarded

    VII. Performance standards vary from year to year

    VIII. Performance appraisal used is poor

    IX. Performance appraisal is biased and unfair

    All others not ranked were viewed as the lowest in significance. Individuals used to conduct this research did not deem them as important problems that arise in the design or implementation of the merit pay plan system.

    Also, potential moderators of perceived problems with the system were also determined, they are:

  • Individual level moderators: Age sex, seniority and tenure status
  • Organizational level moderator: institutional size and general faculty salary level


As mentioned earlier, the primary objective of this research paper was to analyse David and Honoree's research topic and critic some assumptions made. It is now safe to say that this research paper is one of high interest and requires more extensive research; however, I believe David and Honoree succeeded in raising key questions of concern, areas that may cause problems between faculties as far as the merit pay plan system is concerned. With this in mind, I believe their methodology was the most appropriate for this research. It is true that the number of individuals that participated in this research will not bring about a solid conclusion, however if this method of research is used in further researches on this topic, it will bring about more substantial conclusions.

As seen, one of the major problems with the Merit pay plan system was that of the salary increase being too small. As thus, the solution is quite straight forward. If the percentage of increase is raised, it will bring about higher employee satisfaction. It is also important to create a scale in percentage of such increases, in other to distinguish properly between poor, average and high performers. When high performers are clearly recognized, they will always work hard to maintain such status, and when low performers are recognized as well, they are prone to work harder also to have better rankings (as keeping their job will be difficult if rankings are not raised). Another problem that got my interest is definitely when measuring performance level is done inaccurately. I believe this system can only be successful if the method of evaluation is fair and applicable. I believe also that faculty should take part in choosing evaluation criteria to avoid bias and/or inappropriateness. These criteria can be adjusted from time to time as the organization evolves and expands, however, this system will only be respected when employees agree with the method of evaluation and implementation being used. It is sort of like democracy; when the individuals concerned have a say in making the rules of how they are governed, and what should be expected of them, they are less likely to complain when they are judged on their own terms, and there will definitely be higher satisfaction for high performers.

Also, one of the moderators seen to be an effect on 8 (eight) of the 9 (nine) problems mentioned was the general salary level under the organizational level. Clearly this assumption is realistic. Employees of an organization with general low base pays already lack motivation; they may not rate the merit pay plan system to be as important as it's supposed to be, since the overall rating of their base is low and insignificant. This will not be so in a company that pays well. Workers are already motivated to keep their jobs based on the pay; however the merit pay plan will come as an additional incentive. Increasing a pay that is already satisfactory is a very high motivation for employees to put in their best for the overall benefit of the organization with better outputs and satisfied workers.

Under the individual level moderators, seniority was seen as the key element. It is their conclusion that younger faculty are usually more achievement oriented than senior faculty, as thus senior faculty may not see the merit pay plan as an avenue to motivate them. These findings are quite agreeable; however, my view on an individual moderator that will affect these problems is that of tenure status. Although very similar to seniority, faculty on tenure are less likely to act competitively. They have little or no risk as far as performance is concerned and may not view the merit pay plan system as a motivation or threat to their to their career.

With very little empirical research done on this topic, it is safe to say that there is still so much to discover about the effects of a merit pay plan system, however, this research has given some empirical insight on the topic, enough to start foundation for future researches. In every plan, being aware of its advantages and disadvantages is the wisest way to inspire the accurate implementation of that plan. This research has attempted to point out these advantages and disadvantages, giving ideas to management on how to adequately implement this system. It is surprising that so many institutions do not practise this system; probably because of all the problems listed earlier, to avoid controversy. I believe that this should not be so. Motivated staff is the key to any successful organization; as thus, this pay plan system is a very good motivational strategy, one that brings about more positive conclusions than negative. The pay plan system should be implemented in institutions of higher education/4 year colleges, even as more extensive researches are being conducted to discover its most appropriate implementation.


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