Merit Pay Plans in Higher Education Institutions: Characteristics and Effects

Abstract

The purpose of this study was to provide some empirical data on the characteristics and effects of merit pay plans in higher education institutions. The sample consisted of approximately 500 faculty members from four-year colleges and universities in the U.S. The results of the study suggested that merit pay plans, in general, had a somewhat positive effect on faculty performance levels in the areas of teaching, research, and service. The merit pay plans used by the institutions were also examined and described in terms of their design and implementation characteristics. Analyses suggested that four characteristics may be especially critical to the success of merit pay plans in higher education institutions.