Submitted by: Scott Sibio
I just got a chance to read the PfP documents available on the web. Below are some comments on the PfP merit distribution proposal and performance appraisal process. It is best to keep in mind the following when reading much of it. The real value of an employees salary is in its purchasing power. As a result, an employee must receive a percentage increase in salary every year that is equal or greater to the annual rate of inflation, otherwise, their real salary is decreasing.
Secondly, these comments pertain to the eventual system where increases are based entirely on PfP.
1) In the proposal everyone in a given merit level receives the same
increase in pay regardless of salary. As a result, employees with higher
salaries are at a disadvantage vis a vis staying ahead of inflation.
Consider this example for two employees in the same merit level, one with
a salary of $20,000 and one with a salary of $30,000 both receiving an
increase of $1000.
| Salary | $20,000 | $30,000 |
| Increase | $1000 | $1000 |
| Percentage Increase | 5% | 3.3% |
2) This was billed as an incentive program. However, in the proposal there are levels with no increase. This means those employees have salaries that decrease in value. This is a built in punishment.
3) It stikes me that having the highest increase be 3 times the smallest is extreme.
4) The merit levels above the minimum level receiving an increase stress taking on special projects while continuing to perform one's regular work in an unaffected manner. I feel this encourages staff members to perform their regular work in a hasty manner which will lead to a greater error rate in the work done. It can be said that this is an effect on one's work that would prevent a good performance evaluation. However, in my experience, errors are often not remedied by the people that make the errors and errors are rarely attributed to the people who make them. Thus the appraisal of the person who made the error is unaffected. The staff members who recognize and/or fix errors must be acknowledged and rewarded.
5) The proposal does not address the following issue. Can an employee exceed the maximum value for their pay range via a merit increase?
Proposal
I propose the following distribution which would give all the staff in a given merit category the same percentage increase. Any math professor on campus can verify its correctness in 5 minutes.
For a given size merit pool (POOL), sum the salaries in the three
categories that receive increases. Call these respectively SUM1, SUM2,
SUM3. Analogous to the current distribution give the lowest level one
percentage increase, the next level twice that, and the highest level
three times that percentage. The percentage can be calculated by the
following formula:
Percent = [POOL/(SUM1 + 2*SUM2 + 3*SUM4)] * 100
Part time employees are handled by using their actual salaries to calculate the three sums. For example if a 45% time employee has a FTE of $20,000 then add .45*$20,000=$9000.
Here is an example with six employees and a pool of $7,200.
Employee salaries by merit level
| Level 1 | Level 2 | Level 3 |
| 1 emp. | 2 emp. | 3 emp |
| $25,000 | $25,000 | $15,000 |
Using the formula above:
SUM1 = 25,000; SUM2 = 75,000; SUM3 = 55,000.
Percent = 7,200/(25,000 + 150,000 + 165,000) * 100% = 2.1176%.
Each employee receives the following:
| Level | Current Salary | Percent Inc. | Amount |
| 1 | $25,000 | 2.1176 | $529.40 |
| 2 | $35,000 | 4.2352 | $1,482.32 |
| 2 | $25,000 | 4.2352 | $1,058.80 |
| 2 | $15,000 | 4.2352 | $635.28 |
| 3 | $30,000 | 6.3528 | $1,905.84 |
| 3 | $25,000 | 6.3528 | $1,588.20 |
Comment: In this scheme it is possible for an employee with a larger salary in a lower merit category to receive a larger increase than a person in a higher category with a lower salary. However, the person in the higher category is still doing better relative to inflation.
Thank you,
Scott Sibio