Pay for Performance

Well-defined goals, established through open communication, set the stage for celebration!


President Napolitano has announced the 2016 merit program with a 3 percent budget for non-represented employees covered by Personnel Policies for Staff Members (PPSM).  This merit-based program determines salary increases based on the individual's performance and contribution. Recognizing and rewarding outstanding performance and differentiated pay based on employees’ accomplishments will help motivate people to achieve superior results. The merit-based approach is also consistent with feedback received from staff in the most recent Engagement Survey. Employee feedback urged us to make pay for performance a more prominent feature in our salary programs.


Employees eligible for the 2016 Merit Program include those individuals appointed to career or partial-year positions covered by PPSM before January 4, 2016, at any UC location, and who are still on career or partial-year status at UCSC on July 4, 2016; who have as applicable, passed probation as of July 4, 2016; and who are still on the payroll as a career or partial-year employee as of the payout date. Individuals with contract appointments are eligible if so stipulated in the terms of the contract and other eligibility criteria are met.

Merit Increase Structure

The pay for performance merit program seeks to proportionally recognize and reward individuals with salary increases based on performance.  Given the control figure of 3 percent, the overall increase range for satisfactory (Fully achieved expectations) or better performance is 0 percent to 4.5 percent. The following salary increase ranges are guidelines to help to determine individual increases for eligible employees based on the overall performance appraisal ratings on the 2015-16 performance appraisals. Divisions must balance the allocation of merit increases within the overall 3 percent budgetary control figure. These are recommended guidelines and individual increases may vary. If feasible, it is recommended to allocate a minimum of 2 percent for performance ratings of satisfactory or higher.


Performance Rating:


Improvement needed

(Fully Achieved Expectations)

More than Satisfactory (Exceeded Expectations)





up to 2.5%

up to 3.5%

up to 4.5%

Timing and Procedures

At UCSC, performance appraisals cover the fiscal year July 1 through June 30. This cycle does not provide time for completion of performance appraisals and assignment of individual merit increases to meet the July 1, 2016, effective date of the current merit program (June 19, 2016, for bi-weekly paid employees). Therefore, payout of the merits will be delayed approximately 3 months.

Merit control budgets are based on 3 percent of PPSM salaries for eligible employees as of a date determined by P&B.  Budgets will be provided to divisions by Planning & Budget soon afterwards. Divisions may delegate the requirement to balance the control figure to subordinate departments and units as appropriate to manage the divisional merits.  Compensation will provide merit rosters with information needed to determine merit increases. This information will include calculations for actual dollar increases associated with proposed percentage increases to ensure that good performers receive sufficient bottom-line increases to effectively recognize and reward performance. The rosters will also include divisional equity increase data for 2015-16, in case managers wish to consider equity increases in merit decisions.  

The merit rosters must be completed and returned to Compensation by late summer, 2016 (exact date TBD). Divisional approval processes will be completed prior to notifying employees of merit increases.  Merit letter email templates will be available for managers to notify employees.

The effective date of pay increases will be July 1, 2016, for monthly employees and June 19, 2016, for bi-weekly paid employees. The payout date will be determined as soon as possible.  There will be a lump sum payment for the retroactive portion of the increase.

Salary Increase Determination Process

The recommended increase ranges provide guidelines for individual increases.  Divisions must however, allocate the increases within the 3 percent control figure and within the budget, so increases may vary from the recommended ranges.

The divisions will each establish a plan for delegating, reconciling and approving divisional merit increases within the allotted time frame and communicating increases to employees. After receiving the merit call, typically merit spreadsheets will be disseminated to the supervisor, or manager, who will propose increase percentages to the unit head, or the division (depending on the preference of the division).  

The recommendations will be reviewed to ensure that they are based on the employees’ performance appraisal rating and are a fair allocation of percentages by performance to employees under their management. These recommendations will take into account the actual dollar amount of the proposed increase and any equity increases that were related to performance, rather than e.g. additional duties. The unit head will reconcile recommendations from subordinate managers/supervisors, balance to the 3 percent budgetary control figure, if delegated to do so, and submit the merit rosters to the division for approval/reconciliation.

The division will ensure that the proposed increases for the entire division are within the 3 percent budgetary control figure, within the allocated merit budget and distributed fairly to individuals in the division. The merit rosters will be completed and delivered to Compensation. Upon confirmation of increases by the division, final increase percentages can be provided to supervisors/managers for communication to employees using the available merit increase email templates.  Each supervisor will discuss the merit increase with each employee to recognize their contributions and to motivate future efforts.   


See Also