Reference no: EM131437188

Incident

Merit Increases

Dr. Carl Jones is chairperson of the Department of Management in the College of Business Administration at a large state university in the East. He has been a member of the depart- ment for 14 years and a full professor for five years. Last summer he was asked to assume the chair after a screening committee conducted interviews and reviewed his resume and the resumes of three other candidates.

Dr. Jones was very excited about the new challenges and has begun several innovative projects to enhance faculty research and consulting. The teaching function in the department has always been first-rate while research has been somewhat weaker. Dr. Jones has continued to be very productive as a scholar, publishing three articles, two book chapters, and one proceedings article over the past year. He also made considerable progress on a management text of which he was a co-author. Finally, he remained active in his professional association, the Academy of Management, where he served as chair of one of the professional divisions.

The university’s policy is that all salary increases are based only on merit. Dr. Jones had developed a very sophisticated performance appraisal system for his faculty to help him quantify salary recommendations. His point system considers and weighs different items in the areas of teaching, research, and service. Teaching and research are weighted 40 percent each and service is weighted 20 percent. For the coming academic year, his recommended salary increases averaged four percent and ranged from one to seven percent. Dr. Jones felt he had good documentation for all his recommendations.

Dr. Jones submitted his recommendations to Dean Edmund Smith and was pleased when all these recommendations were accepted. He then proceeded to schedule appointments to meet with each faculty member to discuss his recommendation, the reasons for the recom- mendation, and goals for the coming year. While a few of the faculty receiving lower increases indicated dissatisfaction with his weighting system, particularly the emphasis on research, these meetings generally went well.

Dr. Jones then submitted his own annual report detailing his accomplishments as chair as well as his more personal accomplishments. From his perspective, he felt he deserved at least a 6 percent increase since his department had made major strides in a number of areas while the other departments had been standing still. Moreover, none of the other chairs were professionally active on the national level and none had published in the past year. His teaching evaluations were also in the top 15 percent of faculty in the college.

Dean Smith sent out letters to all the department chairs in August. Dr. Jones was shocked to learn that his salary increase was just 4 percent. Information he received through the ‘‘grapevine’’ was that all the chairs had received the 4 percent increase. He also learned from one of the other chairs that the dean always gave the chairs equal percentage increases each year. Contrary to the official university policy, there were no distinctions based on merit. Dr. Jones was visibly upset about what he considered to be a major inequity. He then called the dean’s secretary to schedule an appointment to discuss the situation with Dean Smith.

Questions:

1. Describe the nature and causes of the compensation problem described in this incident.

2. Are ‘‘merit’’ salary increases always based on ‘‘merit’’? Why or why not?

3. Why has Dean Smith had a policy of equal percentage salary increases for all department chairs despite the stated university policy? Are all the chairs equally meritorious?

4. How do you think Dean Smith’s ‘‘merit’’ increases will affect Dr. Jones and his perform- ance as department chair and faculty member? Why? What can Dean Smith do to motivate him if a large differential pay increase based on performance is out of the question?

5. What are the long-range benefits of a true ‘‘merit’’ program? What are the problems associated with the lack of such a ‘‘merit’’ system for department chairs?