Merit Pay Forum October 28, 2015

Union staff question the design of college’s new performance management system & merit pay plan.
 

For several months, both President Kim and CFO Michelle Gates have stated their desire to create a merit pay incentive system for staff. Yet no details of this system have been outlined. The launch of the performance evaluation process, much later this year than normal, prompted the USofCC negotiations team to question if there was a connection between the evaluations and merit pay.

Last week, a large group of union staff members gathered for a lunchtime forum to share their questions, concerns, and opinions about the new performance management system and merit pay scheme, and to consider what is known and unknown about it. What is clear: little is known about Columbia’s new system. Either the system and plan are dramatically underdeveloped and full of holes, or the design is being kept a secret. The minimal information that has been provided to managers and staff about the plan is posted on the Performance Management pages in the Human Resources website in IRIS.

According to that information, under Columbia’s new system, each employee must be rated and ranked from top to bottom performers: an employee would be rated as Exceptional, Exceeds Expectations, Meets Expectations, or Below Expectations. Managers were instructed to rate very few of their employees as Exceptional or Exceeds Expectations. Merit pay seems to be linked to that rating, although the program design is unclear and undefined.

This shift was not unexpected to those familiar with the college’s Strategic Plan*  (see link below) approved by the Board of Trustees earlier this year.  That plan includes a wealth of language about “pay for performance” and “rewarding high performers.”

Many compensation scholars have now debunked and dismissed merit pay schemes, which came into vogue in the early 1980s. According to management consultants and other proponents of merit pay systems, if an employer is going to move ahead with a merit pay system, the organization must have several critical elements in place: a clear rubric for performance levels, clear job descriptions, clear pay ranges, transparent information, significant monetary awards that are meaningful, and institution-wide trust in the fairness of the system. Also, employees have to feel that their base pay is good, and supervisors need to be good managers who can coach and develop their staff.

At Columbia right now, those things don’t exist – there is no job study report with pay grades, no finalized job descriptions, wide pay inequity, people who are unhappy about their base pay, and no information about what Columbia’s criteria, process, or merit award amounts would be.

Many institutions that launched merit pay systems abandoned them after they failed to deliver the promised results. One shortcoming to the system: success is a team and not an individual effort; success on the job is an outgrowth of well-designed systems, a sound support structure, etc. Also: compensation scholars have found that merit pay systems lead to discrimination and bias due to race, sex, and other personal attributes, reinforcing existing structures of privilege.

At the forum, staff brought up the following points:

  •  The last round of merit increases at Columbia was in 2007. It used to be that there was an annual cost-of-living adjustment (COLA) every September, and then departments could decide to award merit increases on top of that. Staff commented that the merit awards were so small that they were meaningless and did not raise morale.
  • We need training for managers – it’s rare for supervisors to know how to coach and develop others.
  • A certain amount of money should be set aside and used solely for merit pay. This information should be known and not hidden.
  • What is the position of full-time faculty on merit pay? We should talk to them.
  • Would the college consider performance reviews prior to a year ago? Merit pay systems can average performance over several years because work conditions and resulting achievement might change from year to year.
  • Merit pay increases should be sizable enough to make a difference. They should be stacked on top of adequate base-pay.
  • It would feel good to know that when you work hard and you go above your goals, you’re going to get more than a pat on the back. It seems like merit pay would do that.
  • For the sake of transparency, it would be good to get a definite answer from the college about how much money is being set aside.
  • Columbia’s merit pay rating seems very subjective, and the examples Columbia provided of measurable goals did not seem well designed.

As of now, the college has stopped implementing the new performance evaluation system for bargaining unit members. Union staff do not have to do self-evaluations and their supervisors do not have to do evaluations for them using this new system; rather, staff are required to only set performance goals for FY16. However, all non-union staff will move ahead and be evaluated under the new system, with performance reviews due to Human Resources by the end of November.  Merit pay might be awarded to these employees. (Somehow, these non-union staff will be evaluated, ranked, and rewarded based on goals that were not even in place a year ago. This strikes some observers as putting the cart before the horse.)

The USofCC bargaining team wants to know what members think about the new system and merit pay at Columbia. So far, informal feedback has led  the team to push for COLA first; merit pay would be considered only if the college can adequately present their criteria and process. What do members want? We have three options: 1) merit pay only, 2) COLA only, and 3) COLA plus merit pay. The straw poll at last week’s forum shows a tie between #2 and #3, but questions about what merit pay would look like remain. Let us know what you think.

* Columbia’s Strategic Plan:

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