Turning Merit Scores into Salaries

Much has been written in the higher education administration literature about measuring the research, teaching, and service outcomes of faculty members (Braskamp and Ory 1994; Dilts, Haber, and Bialik 1994; Lewis 1996; Centra 1993). How each of many multiple outcomes enters salary determination equations is also well studied, with even similar departments of economics apparently adopting different fixed-weight formulae for assigning a salary index and/or changes to a salary index for multiple research, teaching, and service outcomes (Ragan, Warren and Bratsberg 1999).1 But the methods for allocating salary raises to individuals on the basis of an aggregate merit score, when faced with the constraint of a fixed amount of money for raises, receive little attention. For example, the authors of the four works on higher education administration previously mentioned addressed the measurement of faculty output, the weighting of output, and the assigning of merit points, but they did not address the algebra for converting merit points to salary raises given a fixed-budget constraint.2 A single formula for merit-raise salary schemes based on either a fixed cash amount, a percentage of base salary, or any combination of the two is provided here. What is unique about this formula is that it makes explicit how merit scores, together with prior salaries and the pot of money available for raises, determine individual salaries. There are no arbitrary thresholds or untraceable relationships between merit scores and the pot of money available for merit raises.