Rewarding Excellence: The Merit Bonus Program

National Chiao Tung University (NCTU) vice president Jason Yi-Bing Lin, who recently won a National Chair Award, is a world-famous expert in the fields of mobile communications and information networks. He was also the first person from Taiwan to be named as a fellow of the Association for Computing Machinery, the world’s largest educational and scientific computing society, on the strength of research conducted in Taiwan, and in the year of his induction was the only person from Taiwan among 17 ethnic Chinese inductees.

Lin is almost single-handedly responsible for every major breakthrough in Taiwan in policy and technical matters regarding research on dual-band networks, prepaid card services, mobile base stations, phone-number portability, and other areas of mobile telecommunications. As the head of Taiwan’s first 4G Testbed, he will also be playing a key role in the push to launch 4G mobile communications in Taiwan.

Universities cultivate the leading talent of the future, and the question of how to retrain top talent is an important issue in the effort to take Taiwan’s academic world to a higher level. Shown here is the campus of National Chiao Tung University.

Lin has received offers for employment in Hong Kong, Singapore, mainland China, and South Korea. Pretty much all nations in Asia capable of offering a competitive salary have sought his services. Even Saudi Arabia has approached him, despite the huge linguistic and cultural differences between that nation and Taiwan.

“To be honest, I was quite tempted,” admits Lin. The Saudis were offering a salary several times higher than he was making in Taiwan, and some of the fringe benefits were quite stunning, such as no income tax, and free gasoline for his car.

Lin eventually decided to stay put, partly because Taiwan offered him a pay raise, and partly due to other “understandable” reasons. His wife, for example, didn’t want him going to a country where the law allows a man to take four wives. The laws in Singapore, in the meantime, are too severe, and Lin didn’t want to go to mainland China because the name “Taiwan, China” would appear in all sorts of official documents, which he couldn’t accept.

“The gap between salaries in Taiwan and other countries is just too great, and there are all sorts of regulations against taking outside employment,” says Lin, who adds that it would be very difficult to pay the tuition of his daughter studying in the United States if he had to rely solely on his base salary. Even with the bonus he got this year from the NSC, plus research funding from other foundations, his income has only gone up by 20–30%, so it’s still hard to make ends meet.

Lin laughs: “The Merit Bonus Program came along just in time.”

Those running the Merit Bonus Program need to figure out a way to correct its heavy emphasis on polytech at the expense of the liberal arts. Shown left is an old scholar buried in his research on ancient texts. (Taiwan Panorama file photo) Shown right is National Taiwan University’s Center for Condensed Matter Sciences.

Throughout the world, there have long been two basic salary systems in academia—merit pay and seniority-based pay.

With merit pay, bonuses are introduced into a hierarchical pay system. On a regular basis, professors and researchers are assessed for performance in the areas of teaching, research, and service, and their salaries are adjusted on the basis of the evaluation results. This system has been in place for a number of years in the West, where the basic idea is that initial hires, promotions, and tenure go to those who perform the best.

The academic community in Asia, where societies stress the importance of seniority and harmony within organizations, has generally adopted civil-service-type seniority-based pay, which is not very flexible. In recent years, however, intense international competition for talent has spurred deregulatory action. In Hong Kong, for example, the Legislative Council’s Finance Committee eliminated restrictions on the pay scale for institutions of higher education in July 2003. And members of the teaching faculty at Japan’s national universities sloughed their civil servant status after their employers reorganized as independent legal entities in April 2004. Since that time, the universities have set salaries themselves.

In South Korea, Seoul National University will reorganize as a corporate entity from March 2012, after which the teaching faculty there will be completely free of hierarchical restrictions.

And mainland China, which has been a formidable headhunter in recent years, introduced the concept of merit pay in 1998 with its Changjiang Scholars Program. A specially hired professor can receive a bonus of RMB100,000 per year, and a chair professor­ can take home an extra RMB10,000 per month. Moreover, a scholar who achieves a major research breakthrough is eligible for a Changjiang Scholar Award of up to RMB 1 million.

Compared with the rest of Asia, Taiwan has not been very aggressive. President Wong Chi-huey of Academia Sinica is extremely concerned about human resource issues, and has joined more than once with Cyrus Chu, a minister without portfolio and an Academia Sinica academician, in urging President Ma Ying-jeou to take action. They finally won support for their ideas in late 2009. In late July 2010, the Executive Yuan adopted the Merit Bonus Program, thus institutionalizing the introduction of a merit pay concept.

National Chiao Tung University (NCTU) vice president Jason Yi-Bing Lin is a giant in the field of telecommunications in Taiwan, and a beneficiary of the Merit Bonus Program.

The Merit Bonus Program basically retains the existing seniority-based pay while incorporating a merit pay concept to provide for pay adjustments to help schools recruit and retain talented individuals.

The Merit Bonus Program is funded by subsidies from the Ministry of Education (MOE) and the National Science Council (NSC). The MOE funds come from a 10% retention of the budget for its Aim for Top University Project (informally called the Five-Year NT$50 Billion Project) and its Project of Pedagogic Excellence. Schools not included in either of these two programs can apply with the MOE for support under a separate NT$100 million subsidy program.

The amount of NSC funding available to any individual university or research institution under the Merit Bonus Program is equal to 6.5% of the total research project funding awarded to that entity by the NSC during that year. In all, the NSC disburses about NT$1 billion each year in this manner. The more research funding a school is awarded by the NSC, the more money is available for the retention of top research talent.

NSC deputy minister Chang Ching-fong points out that in the year-plus since the launch of the Merit Bonus Program, bonuses have been provided to 3,700 professors and research personnel at 120 different schools, with each person receiving between NT$10,000 and NT$200,000 per month. This has helped significantly to retain top talent.

Wong Chi-huey also notes that the NT$60,000 to NT$70,000 starting base salary of a newly hired assistant researcher falls too far short of the NT$100,000 to NT$200,000 paid monthly to someone in a similar position overseas, but the Merit Bonus Program has enabled the earmarking of 30% of research funding for improved compensation. As a result, those who turn in outstanding performance can get up to an extra NT$50,000 per month, which has proved an extremely effective means of recruiting and retaining top talent.

But while the intent of this reform is good, any man-made set of rules is naturally prone to the possibility of unfairness.

One economics professor grouses off the record that discussing the distribution of merit bonuses within a university department feels like “dividing the spoils” from a heist. Senior professors with authority over the use of resources allot the lion’s share to themselves while junior professors, who actually do the bulk of the research work but have less political clout, can only “pick at the leftovers.”

President Wu Se-hwa of National Chengchi University (NCCU) is also critical. He notes that most of the funding for merit bonuses currently comes from the MOE’s Aim for Top University Project, and from the NSC. In other words, schools that receive less funding from these two organizations will naturally get less funding for merit bonuses. National Taiwan University (NTU), for example, gets NT$3 billion under the Aim for Top University Project, of which NT$300 million is available for merit bonuses, and National Tsing Hua University (NTHU) gets NT$1.2 billion (NT$120 million for merit bonuses). But NCCU only gets NT$200 million, and thus has only NT$20 million available for merit bonuses.

Also, it is inappropriate to take the number of projects awarded by the NSC as the standard, because the NSC has always directed more funding toward science and technology, and less toward the liberal arts.

Wu Se-hwa is indignant: “Are the teachers at NCCU any less accomplished than those at NTU, NTHU, or NCTU? Why should our merit bonuses be any less? Furthermore, teachers in the liberal arts aren’t tied down to a particular laboratory or research team, so they’re actually much more easily headhunted.”

On that score, Cyrus Chu acknowledges that the merit bonus scheme does indeed stress polytech at the expense of the liberal arts, so in addition to the NSC, it might be a good idea to give due consideration to research funding from the MOE, the Ministry of Economic Affairs, the Council of Agriculture, and other agencies when making merit bonus assessments, so that universities with a special strength in the liberal arts or social sciences can award higher merit bonuses.

So how is a university to ensure fair distribution of such bonuses? Chu emphasizes that the government cannot get too involved in this question because universities have their autonomy, but suggests that perhaps the competent authorities could apply a bit of moral suasion by urging schools to shoot for certain percentages to be awarded to up-and-coming talent.

Limited resources must be put to use where they are most needed. The Merit Bonus Program provides academia with greater firepower to retain talent, which is to be commended. In the global search for talent, the race is on, and Taiwan cannot allow itself to be left behind at the starting blocks.