To develop a methodology for faculty salary adjustment through market adjustment based on market demand for business PhDs and merit adjustment based on faculty members' performance levels in the areas of teaching, research and service.
The methodology is composed of two models: one for market adjustment and the other for merit adjustment. The market adjustment is handled through goal programming and the merit adjustment through data envelopment analysis (DEA).
The approach when applied to a sample of faculty salaries shows that the adjusted salary of each faculty member is higher than his/her current actual salary, and each faculty member in the particular discipline deserves a salary increase that reflects market demand and merit factors.
The DEA model used in this research does not impose restrictions on the weights. Realistically, one may impose bounds on the weights and exclude unreasonable solutions from DEA analysis and also set multiple goals instead of the single goal used in the goal programming model.
Based on a goal programming model that addresses the market demand and a DEA model that addresses the merit‐based performances, this methodology may be implemented as a solution procedure for restructuring faculty salaries.
The novelty in this approach is that DEA is being used as a benchmarking technique for merit adjustment of faculty salaries. In that sense, this research work may be the first, where benchmarking has been used in “faculty salary equity adjustment.”
