Prepared by the Committee on the Economic Status of the Faculty - March 1998
Endorsed by SACUA on March 9, 1998


This document proposes compensation policies to be adopted by the Schools, Colleges, and Divisions of the University of Michigan. Compensation policies embodying agreed-upon principles offer a number of specific benefits to the University and its members. Consistency in the establishment, communication, and application of compensation criteria as well as procedures, promotes fair treatment of individual faculty, supports academic freedom by reducing the scope for arbitrary decisions, advances the recruitment and retention of faculty, improves morale and enhances faculty productivity. An ancillary benefit is that the elimination of arbitrary or capricious compensation decisions will generate a legitimate basis for defense of the institution.

By tradition, the University of Michigan is administered in a decentralized manner. The purpose of establishing university-wide compensation guidelines is to provide basic standards of fairness and consistency rather than to infringe on the autonomy of the various Colleges, Schools, and Divisions (herein, referred to as Units) or to impose uniformity in salary levels among faculty across Units or fields. Unit decision makers should retain discretion and flexibility to set salaries that recognize the diversity and subtlety of faculty contributions to scholarship and the institution. The substantive details of compensation policy could thus vary across Units in accordance with the circumstances and customs of the Units and academic disciplines. Nevertheless, compensation policies should be consonant with the following basic principles:


The purposes of compensation in the University are to attract and retain outstanding faculty and to reward faculty for their teaching, research, and other relevant contributions such as service. Above all, it is essential to the integrity of the institution and the preservation of academic freedom that compensation decisions be free of bias and of discrimination. Compensation should not be used in any way that would subvert the autonomy of the faculty in those matters directly assigned as their sole responsibilities by Regents Bylaws. To foster confidence in the integrity of the decision-making process, compensation policies should conform to the following guidelines.

  1. Non-discrimination. Salary policy is governed by the non-discrimination policies of the University, which prohibit discrimination by race, religion, age, gender, marital status, national origin, and sexual preference.
  2. Openness. The compensation policy of each Unit should be written, public, and accessible, enabling faculty to know how compensation within that Unit is determined. In particular, each Unit should distribute to its faculty, updated as appropriate, descriptions of the factors (such as scholarship, teaching, and service) considered as components of merit and the process through which merit assessments are made. The statement should also identify those officially responsible for final decisions as well as other parties who contribute to the decisions.
  3. Consistency of compensation. Compensation for faculty within a Unit, sub-Unit, or field, in similar disciplines with comparable rank, accomplishments, and contributions should be similar among individuals. The salary structure within a Unit should therefore be consistent among faculty with respect to intellectual productivity (teaching and research) and service contributions.
  4. Peer review. Academic peer review is based on the principle that a single individual can possess neither the expertise nor all of the information necessary to evaluate reliably and accurately the many contributions of a diverse faculty. Accordingly, the Executive Committee of each Division or Department (or that committee charged with the recruitment and promotion of faculty members in the Division or Department) should review all compensation decisions for accuracy, consistency, and fairness prior to their communication to individual faculty.
  5. Communication. Decision makers responsible for determining compensation should provide, at appropriate intervals or at the request of the individual, an evaluation of the individual's performance as it relates to the merit criteria employed by the Units (and his or her respective Division or Departmental Executive or appropriately charged committees) and the faculty member's compensation. In particular, each faculty member is entitled to a meaningful explanation for disparities between his or her compensation and the overall salary structure of the Unit.
  6. Accountability and disagreements. Although unit administrators must have discretion to set salaries that recognize the subtlety of faculty contributions and the flexibility to respond to exigencies and opportunities, deans and other decision makers must be scrupulously fair and consistent in the application of their discretion. Faculty members who, after requesting of the appropriate decision maker a review of their compensation and performance, disagree with the outcome or are dissatisfied with the response have the right to request that the review be put in writing and kept on file with the evaluation. In cases of irreconcilable differences a faculty member may request a review through the Grievance Procedure.


The following recommendations pertain to budgeting and reporting of faculty compensation. The first recommendation is to clarify a concern that faculty salary is determined late in the budgetary process both at the University and unit levels.

  1. Budget priority of faculty salaries. Faculty salaries should be treated as equal in priority to other needs of the University and academic unit. Specifically, the need to allocate sufficient resources to maintain the quality of the faculty should be taken into account early in the budget process.
  2. Components of compensation. To reflect the changing nature of compensation and provide a more accurate picture of actual compensation, all compensation from university sources, rather than base year salary, should be reported and published annually. Other sources and types of compensation include research support, administrative supplements, bonuses and "at risk' compensation, and other compensation for services. The purpose of publication is to open for review, by the University and the public, how public money is spent. The publication should report all salary compensation from University sources, including base salary, at-risk salary, bonuses, and any other categories of compensation. Since some of these components are not known until the end of the fiscal year the annual report should include the total compensation for the current year, as known at the time of publication of the salary document, and the previous year's total compensation.