Merit Increase Process and Guidelines

The merit increase process is underway.  Financial Officers were notified of their budget allocations in mid-February.  Between now and the end of March, managers will be determining the appropriate merit increases for their employees.  Southern Methodist University rewards outstanding performance through an annual merit increase program for eligible employees whose job performance and productivity consistently meets or exceeds expectations.

 

Employees must have been employed by Southern Methodist University as of January 31, 2008 to be eligible for a merit increase allocation.

 

Merit increases are effective as follows:

o   June 1, 2008 for exempt staff

o   May 24, 2008 for non-exempt staff

o   August 1, 2008 for faculty

 

The budget allocation is determined by taking a certain percentage of base salaries as of January 31, which designates a pool of money for a manager to distribute.  This percentage is generally 3%; the amount is determined each year at the board meeting in February.   We encourage strategic distribution of merit dollars to motivate, reward, and retain high performers.  Across the board increases of 3% should not be given.   Employee performance should be differentiated and rewarded accordingly, as shown below:

o   Employees with extreme performance problems should receive 0%.
o   Employees performing below expectations should receive 0% to less than 3%.
o   Employees with solid, strong performance should receive around 3%.
o   Employees with high, exemplary performance should receive greater than 3%.
o   Consider prorating increases for staff who have been employed less than one year.

See the bell curve below for a visual presentation of this recommended distribution.

Recommended Distribution of Merit Increase Allocation 

Merit pay logic is straightforward:  If pay is contingent upon performance, then employee motivation to achieve high performance is increased.  Conversely, if pay is not contingent on performance, employee motivation to achieve high performance is diminished because employees do not see the connection between performance and reward.

 

Strategic distribution also emphasizes manager empowerment.  Knowing that managers have some control over pay is a further  motivator for employees.

 

This process requires manager accountability and responsibility.  Managers must play an active role in assessing employee performance, having conversations with employees about their performance, and rewarding employees accordingly—demonstrating the link between performance and reward.

 

Timing

 

For further clarification about the merit increase process specific to your area, please contact your Financial Officer.  For general information about the merit increase process, contact  Amy Mittelstet at amittels@smu.edu or 8-1931.