The types of merit pay increments and arguments for and against merit increments are reviewed, along with important variables a college should address when considering merit increments. The least common system at colleges and universities today is that of determining the entire faculty salary on the basis of merit. Most common at the university level is the merit increase that is combined with cost-of-living increments (COLA). In this system all faculty members receive a salary increase and those recognized as meritorious receive an additional increase. The greatest difficulty with this system is in determining the percentages of the increases of the COLA and merit raises. Another merit system complements salary increases by yearly percentage of bonus increases. Arguments in favor of merit increments suggest that merit is both a reward and incentive for excellence. Arguments against merit increases make the case that measuring instruments do not evaluate quality, merit evaluators are too subjective, and fair merit systems are difficult to develop. Additional considerations that are important to the success of such a system are: the amount of the faculty's base salary in comparison to similar colleges, the relationship of the faculty to the college's administration, and the profitability of spending the necessary time and energy to conduct an evaluation. A 23-item reference list is appended. (SW)