In a performance-based merit pay program, salary increases are differentiated based on performance rather than distributed equally as an across-the-board increase. An employee’s performance is evaluated over a period of time (typically twelve months) and then a merit award is determined based on the employee’s performance contributions during that period.
In July 2015, President Napolitano announced that all UC campuses and locations will be required to implement a merit-based pay for performance model for non-represented employees beginning in fiscal year 2016-2017. Rewarding high performers improves organizational performance, increases employee engagement, and lays the foundation for effective workforce planning and talent management. In addition, performance-based pay is the most widely used base pay program in organizations today. According to a study conducted by WorldatWork in June 2015, 92% of the 1,421 organizations that participated in the study use performance-based pay increases (merit increases).
No, UC Berkeley does not use the method of forced distribution to determine performance levels or merit rewards. With forced distribution, managers would be required to force a certain percentage of employees into each of the three merit levels rather than determining based on performance contributions. Managers are required only to use the performance-based Achievement Criteria and adhere to their allocated budgets when determining employee performance levels and merit rewards.
In years when a merit fund is available, the information discussed and documented in the check-ins, as well as the Achievement Criteria, will be used to determine performance levels and merit awards. Continual dialogue about performance will result in merit decisions that are more closely aligned with performance contributions.
Performance is no longer numerically rated. Instead, performance levels are developed through ongoing check-in conversations and by using the Achievement Criteria. The performance level helps managers determine where within the range of allowable merit increases an employee should be rewarded based on performance contributions. For example, did the employee consistently meet the high standards associated with the “Well Done” performance level, or did they meet the rigorous standards associated with the “Stand Out” performance level? Those who met the “Stand Out” criteria receive a larger merit reward to recognize their exceptional performance contributions. Those who do not meet the standards associated with “Well Done” receive no merit increase. These individuals will have a "Needs Attention" performance level and will begin a Performance Improvement Plan (PIP) for 30, 60, or 90 days.
To ensure consistent and fair application of the Achievement Criteria, calibration meetings are recommended. Calibration meetings are one way to ensure an equitable, unbiased, and factual process for merit recommendations. Unit leaders or their designees will meet with their respective management teams to calibrate employee performance levels and merit rewards within their respective organizations. Calibration meetings will ensure consistency in the distribution of merit increases, and ensure leadership support. Berkeley People & Culture Compensation team will also review the distribution spreadsheets to ensure compliance with merit guidelines.
After managers and supervisors determine employee performance levels, merit awards will be determined.
- Those with an overall "Needs Attention" will receive no merit increase, and generally begin a performance improvement plan to support getting things on track quickly.
- Staff who reach the "Well Done" level generally receive increases between 2.0-4.0%
- "Stand Out" performers will generally receive 3%+ merit increase
These are recommended percentage increases based on the 3% salary program.
The amount of the merit award will vary according to the employee’s performance contributions and the available budget. The merit program is dependent on available funding. Our program is supported by a limited budget provided by the campus/medical center and individual schools and departments. The fixed budget means that the actual merit increases will also be limited.
These dates are dependent on merit program guidance from UCOP. Generally, increases will be effective in July and entered into the payroll system in August.
After the Berkeley People & Culture Compensation team has reviewed the proposed increases and executive leadership has approved them, managers and supervisors will meet with direct reports individually to discuss performance-based merit increases. Generally, when merit funds are available, this will occur in July/August.
No, there is no appeal process for merit increases. Determining merit increase amounts is a management responsibility. In addition, the merit increase fund is a limited resource.
What is the exception approval process if an employee receives a “Needs Attention” rating in a single category, therefore is not eligible to receive a merit increase?
There are no exceptions to overall Performance Levels. If an employee has an overall Performance Level of "Needs Attention," following review of indicators in the Achievement Criteria and documentation from the three conversations that fall within a merit cycle, they are not eligible for a merit increase.
If an employee with a salary at or near pay range maximum receives a merit increase, their salary will be increased to no higher than the pay range maximum.
No, merit increase guidelines will be based on performance only as opposed to performance and/or position in range, seniority, time in classification, etc. The entire fund will be used to reward employee performance rather than attempt to address equity, compression or market lags.