Like
the
Water on a Stone
,
SHARE Union Chips Away at Merit Pay
L oranne M agoun
E
veryone said it was impossible, but in 1997, employees at UMass Medical School
(UMMS) in Worcester, Massachusetts, voted in a union, SHARE (State
Healthcare and Research Employees),
part of the New England Organizing
Project (NEOP) of AFSCME, creating a
five-hundred-member unit of clerical and
technical public employees. UMass Medical School had diverged from the policies of other state agencies in key ways,
including implementation of a pay-forperformance wage system. Watching the
success of HUCTW (Harvard Union of
Clerical and Technical Workers), workers at UMMS were eager to establish
this new model of unionism. Employees
elected SHARE to reduce the unpredictable nature of merit raises, but also to
change the workplace culture that had
developed under this compensation philosophy. While the outcomes of the style
practiced by HUCTW and SHARE are
multi-dimensional, this article describes
the evolution of the pay systems throughout collective bargaining at UMMS and
its effects on the workplace.
Box of Cornflakes
The average annual pay within SHARE
in 1998 was $25,800. Every member
had heard SHARE Organizer Elisabeth
­Szanto compare the compensation phi-
losophy at UMMS to a box of cornflakes. The tall shape of the box offers the illusion that it contains a good
amount of cereal, but upon opening it,
one would see most of the flakes heaped
at the bottom. The height of the box represented the pay grade from minimum to
maximum. Workers were the cornflakes,
experiencing extreme salary compression
as new employees were hired in at similar
rates to what longer-termed employees
were making.
When UMMS overhauled their pay
system, the midpoint of each pay grade
was set to the job’s market-average wage,
but in 1998, 40 percent of the membership fell in the bottom quartile of their
pay grades with only eight of five hundred
paid at the maximum. The “merit” component was added to end the state’s old
“step” system, which rewarded longevity over performance. At a time of rapid
growth and diversification of its business
model, keeping wages near the market
average allowed UMMS to contain labor
costs. Because the annual merit raise was
so small across wider pay grades, it diminished one’s ability to progress to the
maximum. As the area’s largest employer,
this would erode the standard of living in
Central Massachusetts. As morale fell, the
social contract between worker and employer faded. Rebuilding this relationship
became SHARE’s focus.
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The Tournament
It is advantageous to sell such a box of
cornflakes and hope employees will buy
it. Merit pay is cost-effective. It offers supervisors a great deal of control, allowing
them to balance budgets, fix inequities,
and reward at their discretion. It deemphasizes the need for skillful management techniques, as messages regarding
sub-performance are delivered via the financial route rather than through a more
human exchange. It was sold as a selfcorrecting way to increase productivity.
Merit pay is a “tournament” model
of compensation, offering rewards to
the highest-ranking players for measurable differences in productivity.1 Hourly
workers at UMMS experienced its social
side effects. For employees in the tournament, it fostered intense competition
for small rewards, yet it is difficult to
accurately measure productivity in this
setting. Lack of metrics meant that winners often felt guilty, as if they had stolen
someone else’s raise, while overlooked
high-achievers were spiteful. Invariably,
data showed that certain workers, certain job titles, and salaried, rather than
hourly staff, received the highest rankings. Some managers underspent the
pool of money, while others, wanting to
be fair, gave everyone the same ranking.
Workers sensed little connection between
achievement and payoff. In a carrot-andstick system, the majority experienced a
punishment rather than reward.
The tournament poisoned workplace
culture. People needed a union to focus
on building community and partner-
52
ships. To counter the atmosphere of
distrust, SHARE adopted four guiding
tenets: “our work comes first, every person matters, we practice kindness and
respect, and we listen to each other.”
In HUCTW’s style, SHARE negotiated
a less formal, less adversarial grievance
process, called Problem-Solving, and
created Joint Working Groups involving
all layers of stakeholders working together. This requires deep relationships,
with members, management, and HR
functioning as equal thinking partners.
It is a labor-intensive model; for NEOP
it means having high staff-to-member
ratios. Everyone is invited to participate
in improving the workplace. Still, it
took a long time to feel the culture shifting at UMMS and even longer to build
the trust that would eventually change
the pay system.
Bargaining in the Early Years
The structure of the pay system was the
final obstacle to settling eighteen months
of negotiating SHARE’s first agreement
with UMMS. The mediator suggested a
compromise, providing each party some
of what they wanted. This created a
fixed-raise zone for those employees below the midpoint of their grades (the
market-average) and a merit-based zone
for those above the midpoint. Lowerpaid employees had a more predictable
path to the midpoint. UMass Medical
School won on its desire to pay a premium on work performed above the market-average only for exceptional quality,
and SHARE won additional money to
break up the salary compression for
longer-termed employees. Following ratification, the parties began the real work
of addressing a backlog of problems and
building foundations that would take
them into the future.
In the second contract, SHARE showcased ‘merit’ as arbitrary and unfair.
At large events, workers could spin the
“Wheel of Merit” to win a ranking in
the tournament, or sign an anti-merit pay
poster. Though the parties undertook
joint training in Interest-Based Bargaining, it took months to negotiate simple
ground rules. Clearly, settling the agreement would be problematic. Talks again
ended in mediation; merit pay remained
the issue.
The mediator repurposed the “pool”
of reward money into a “platform” system, which guaranteed raise amounts for
each ranking. This eliminated the practice of skimming people’s raise percentages to hit a financial target. For some
of SHARE’s members, there was a bitter
pill: one very low raise year in exchange
for a major change in the pay philosophy.
After fifty-nine weeks of contentious negotiations, the membership ratified it. As
with the labor-management relationship,
the agreement, while an improvement,
was still fraught with problems.
The Tipping Point
More change came during the third round
of bargaining. Through the experience of
jointly solving problems together during
the intervening years, relationships were
repaired and deepened. When the Chief
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This allowed lower-paid workers, who
Negotiator for UMMS explained that
consistently lost out on merit raises, to
there would be no contract without meritreceive more money. Those rated Outbased pay, the union believed it. SHARE
standing received a flat-dollar portion
knew that the only way to prove that
of a merit pool. Management would
“merit” did not work was for UMMS to
again have a known raise cost, and the
exhaust its options for making it fair. The
union could target money to lower-paid
union’s patience has worked for them in
members. It was another major shift in
many areas. As one Senior HR Manager
compensation philosophy.
explained, “SHARE is like water on a
stone. They just never give up.”
The Non-Merit State
The union brought data to show the
ill effects merit pay had within its memIn SHARE’s fifth contract, minimum raisbership. SHARE proposed that parames were targeted to the lower-paid, and
eters be set on these trends in order to
mechanisms were established to ensure
settle. Though the agreement expanded
progression through the pay grades for
merit pay to all members, a guaranteed,
longer-termed employees. At five, ten,
substantial minimum raise was provided
and fifteen years of service, the pay of emfor everyone rated Performing. An adployees who have fallen below the rates
ditional raise was given to those rated
at 25 percent, 50 percent, or 75 percent
Outstanding. In exchange
of their range are adjusted.
for accepting merit pay, the
This scoops up any outliers
.
.
.
recent
union
union would gain additional
and creates a more linear
sweeteners: everyone in the
trajectory financially. There
surveys . . . show
unit would be re-slotted in
is currently no merit pay
that a caring work
their pay grades according
component.
community
has
to their years of service, thus
Concurrent with changeliminating past harms, and
risen in place of the es in pay structures, a rea joint Performance Review
spectful, problem-solving
tournament.
Committee was created to
atmosphere has dissemistudy performance rating
nated throughout the unitrends, case-manage those rated Non-Perversity. Through evaluations and joint
formers, and overturn erroneous decisions
mechanisms, people with performance
to withhold raises. This was the culminaissues are now guided or transitioned,
tion of many years of rebuilding trust.
maintaining the dignity of the work The union-management problemer in the process. Performance
solving approach was influencing perforfeedback is no longer tainted
mance and pay. Although all members
by budgetary outcomes. Thus,
were in the merit system, this agreement
a manager can highlight areas
and the experience of working collaboraneeding attention, and a worker
tively with SHARE created a foundation
can appreciate the advice. The
for eliminating merit entirely. This would
employer can focus on growing
not have occurred had the union dug in
talent. Workers sense the new
its heels in an adversarial manner.
mentorship climate developing
In 2009 the Chief Negotiators delivat UMMS and are engaged in
ered a one-year deal that would repreachieving the mission of the unisent a further step toward standardizing
versity.
predictable and progressive raises. Guar In recent union surveys, staanteed minimum raises were awarded;
tistics show that a caring work
people received either a percentage or flat
community has risen in place of the
dollar amount, whichever was higher.
tournament. More than 80 percent re-
ported in 2010 that people are treated
respectfully in the workplace. Collegial
relationships and pride taken in the
work done together consistently generate the most positive responses. To date,
SHARE has not had to file a single arbitration. The average pay has increased
45 percent, and many individuals’ pay by
substantially more. The social contract
is re-emerging as members predictably
progress through their pay grades, and
the medical school is achieving national
distinction in many areas. The tournament model would not have supported
such success. As Kris Rondeau, Director
of NEOP says, “It’s a ten-year problem”
but was worth fixing.
Note
1. E. P. Lazear and S. Rosen, “RankOrder Tournaments as Optimum Labor Contracts,” Journal of Political
Economy 89, no. 5 (1981), 841–64.
Loranne Magoun
Loranne Magoun was a Research Lab Technician and
served for ten years as the first President of SHARE at
UMass Medical School. She received her Master’s in
Labor Studies through the Union Leadership Administration Program at UMass Amherst and currently works
as a Lab Manager to build community in basic research
labs at Tufts University School of Medicine.
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