Do Colleges and Universities Really Pay for Performance?
By Jay R. Schuster, Ph.D. and Patricia K. Zingheim, Ph.D., Schuster-Zingheim &
Associates Inc.
Have you ever wondered whether the college or university you went to pays employees
based on their performance? At the 2006 College and University Professional
Association for Human Resources (CUPA-HR) conference, we had the opportunity to ask
attendees about paying for performance. We discovered that while many institutions say
they pay for performance, they actually only have bits and pieces of a program
established. And many face a variety of barriers, as discussed below. In our informal
poll, we asked the following questions:
What type of pay-for-performance program do you have?
 An operational program
 Bits and pieces in place
 Have interest in finding out more
 Not interested/not feasible at this time
What are your main reasons for implementing a pay-for-performance program?
 Employee Satisfaction
 Focus on productivity
 Other
We also discussed why attendees believed that paying for performance either did not or
could not work in their colleges and universities. This interesting discussion was
consistent with those often generated from other HR groups about why their
organizations feel uncomfortable moving forward on programs like paying for
performance—even when the business case is compelling and powerful.
Here is an overview of the informal survey outcomes. Responses to the types of pay for
performance were as follows:
 Operational program:
25 percent
 Bits and pieces of a program:
32 percent
 Have interest in a program:
34 percent
 No interest:
9 percent
There were not significant differences between public and private institutions. However
public institutions had more bits and pieces of a program and private institutions had an
operational program or had interest in finding out more. Responses to the second
question were about equal between employee satisfaction and productivity focus as the
reason for implementing a pay-for-performance program.
The concern was that while some colleges and universities have the written materials and
performance-management tools of pay for performance, a difference exists between what
they say they do and what they actually do. Having policies, procedures and written
programs is not the same as actually paying for performance, skill and competence. The
reasons given for the gap between knowing that paying for performance is the right thing
to do and actually doing it were as follows:
1. Lack of sustained commitment:
All agree that getting strong and honest sponsorship from leadership levels is
essential to making pay for performance a success. Changing pay is a “noisy”
process and tests leaders’ commitment to provide role models and support to the
program. Colleges and universities commonly have numerous HR initiatives—some
are successful, some are not. Employees sometimes question commitment and say
“this too will pass.” Because changing pay gets everyone’s attention quickly, many
leaders feel more comfortable with “soft” changes that do not strongly impact the
workforce. But are these “soft” changes real and meaningful positive changes?
2. Not the way it is done here:
While HR professionals are encouraged about the opportunity to work with new
entrants to change to a performance culture, they acknowledge a deeply ingrained
entitlement mentality exists in many cases. The culture too often is not to address
performance problems and not to align pay growth with skill and competency growth.
Rather, the focus is on pay growth based on ever-inflating job description prose. You
may hear, “to get a raise, you write a new job description,” which does not support a
performance culture. The question is: can a better culture exist so that rewarding
performance becomes the way that it is done?
3. Not enough resources:
While the consistent message is, “we don’t have enough money to pay for
performance” or “how we spend our pay dollars is governed by others and not by
performance,” those who are committed say they find a way to pay for results, skill
and competence. Although some acknowledge that the lack of resources is an excuse
for not changing how pay is delivered, the belief is that there are not enough funds to
do anything but distribute pay evenly without concern for individual differences. But,
even if only $2 is available, should it not be granted to the best performers?
4. Aversion to risk:
While most feel there is more risk to getting and retaining high performers if they
don’t pay for performance, skill and competence, all acknowledge college and
university leaders may be averse to taking the risk of paying for performance. The
universal belief is that the HR professional’s role in the arena of paying for
performance is to educate leadership on how paying for results as well as critical
skills and competence is the lifeblood of successful talent management. The
challenge is for leadership commitment to be sustained when “noise” from an entitled
workforce suggests that this change is not consistent with the original “deal” the
employee received when he or she was hired.
5. Studying it to death:
Creating a task force/study group is viewed as a way difficult decisions like paying
for performance are addressed in some instances. All agree the solutions should be a
product of high involvement, but the case for paying for performance is so strong that
any study should focus on how to implement it, not whether or not to do it (which is
a leadership decision at the most senior policy levels.) One approach is to hold the
study group accountable for design, implementation, communications and continuous
improvement of the solution and have group members serve as advisors to leadership
to monitor and maintain the process. The question is: where is the line between
studying it to death and getting participation so employees and the institution get
timely benefit from paying for performance?
The bottom line from the session was that paying for performance represents the
future for colleges and universities. Although the road may be full of ruts, HR
professionals in this session believe that they share accountability with the leadership
team for making such programs part of their organization’s future.
The Discussion
The CUPA-HR session on pay in colleges and universities focused on an interactive
discussion where paying for performance, skill and competence was actually done in
these institutions. And what, if anything, HR professionals should do about it. Some
of the reasons that paying for performance has such a powerful business case are the
following realities that are supported by solid research and best practices in not-forprofit and for-profit businesses outside colleges and universities:
 Compensation is commonly the largest or second largest opportunity cost of any
organization. The business case for paying for performance suggests that aligning
this major cost with measures of performance is the best way to manage pay for
all stakeholders—employees, leaders, students and outside stakeholders, as well.
 Organizations that pay for performance are more likely to achieve their goals than
those that don’t. Paying for performance attracts and retains a larger share of the
top performing 20 percent of the talent pool in terms of skill, competence and
results—the best people and managers want to work where performance is
rewarded.
 Pay communicates organizational priorities and suggests to everyone “what is
important here.” Not paying for performance results in paying for tenure, and pay
becomes an entitlement. Paying for other than performance characterizes lessthan-excellent-performing organizations.
 Research and best practices suggest there is no valid reason not to pay for
performance, regardless of the barriers to doing so. Paying for performance
characterizes the best high-performing places to work and is the only way to
create a performance culture where everyone can strive to be excellent and add
value to the organization. The challenge to not just colleges and universities is
that a huge knowing/doing gap exists in the arena of paying for performance.
Nearly every organization has a pay-for-performance policy, but many admit they
don’t really pay for performance, skill or competence.
Reprinted from Workspan, 07/07 with permission from World at Work, Total Rewards
Association