The purpose of this explanatory sequential mixed methods study is to explore faculty and administrator perspectives of faculty merit pay compensation systems in private, higher education institutions. The study focuses on 10 small, private, four-year institutions which are religiously affiliated. All institutions are located in Nebraska, Iowa, and South Dakota. The first phase of the study was comprised of a 19 question survey administered to 813 faculty and administrators employed by the 10 institutions. 131 participants completed the online survey. The analysis of the data found that there is statistical significance between faculty and administrator perspectives of merit pay compensation systems for faculty. Of the 131 participants of the online survey, 53 indicated they would be willing to participate in follow-up interviews. The researcher believed the follow-up interviews would further enhance the information found in the first phase of the study. 15 interviews were conducted and 8 themes emerged from those meetings: (1) The views of merit pay are not definitive; (2) Merit pay is a complex phenomenon; (3) Transparency must exist and bias/favoritism needs to be eliminated; (4) Diminished collegiality may occur under a merit pay system; (5) Buy-in is essential; (6) Motivation and demotivation exists; (7) Faculty performance should be rewarded; and (8) Higher education is becoming commercialized. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://www.proquest.com/en-US/products/dissertations/individuals.shtml.]