Universities – take back control of your vice-chancellors\' spiralling salaries

High vice-chancellor pay has captured the public imagination this year. This isn’t a new issue: there’s been an escalator effect for years, linking senior pay to rising tuition fees, while pay for the rest of staff remains static. Suddenly, subject to public scrutiny, universities have been forced to take action with a new voluntary code asking them to justify senior pay over 8.5 times the institution’s average salary. But first, remuneration committees will have to take a long, hard look at themselves and tackle the processes that have led to swelling salaries.

How did we get to this point? As the executive head of the university, vice-chancellors are answerable to their governors, who are normally a mix of internal and external members. A subset of those governors form a remuneration committee and this is where the problems with pay-setting start.

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In most institutions, these committees, which monitor the performance of senior leaders against targets and set rewards accordingly, include the vice-chancellor and exclude staff and students. The vice-chancellor leaves the room whenever their pay is discussed, but they’re still far too close to the process. The problems with this setup have been noted by the guidance for the new code, which says the vice-chancellor can’t be a member anymore.

This problem is compounded by the use of benchmarking data from the sector by remuneration committees. These show what other leaders are getting, together with performance targets that have been set for those leaders. The process inevitably leads to inflation in senior pay.

This creates a positive feedback loop: if most universities wants to link pay to the top quartile, and other universities increase their pay, then they’re bound to increase theirs, raising the overall level for the top quartile, and causing other universities to increase their pay in turn.

And universities, operating in a competitive marketplace and difficult policy environment, want to pay those high salaries because they’re terrified of the consequences if the vice-chancellor – who is capably steering them – leaves. In the eyes of the remuneration committee, the vice-chancellor is cast in an heroic role: raising student satisfaction, improving research grant income, cutting staffing costs or delivering a successful overseas campus.

Since recruiting an untested vice-chancellor is a risk, a transfer market has developed. This inflates wages in two ways. Firstly, to entice someone who’s already a VC to your university, governors feel they need to pay more. Secondly, it means that VCs, who might be tempted to move, can make the case for higher pay. There are also serious problems with the talent “pipeline”, with a limited number of women and BAME candidates appointed to the top jobs.

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But the main reason why remuneration policies in universities are so problematic is because they’re hidden, and until now has been largely free from public scrutiny. The new guidance is clear on this point: from now on, there must be full, transparent reporting explaining remuneration committee decisions, and justifying why there vice-chancellor is paid more than 8.5 times the median wage for the institution.

Governors need also to be honest about failure. We’ve seen recent examples of retiring vice-chancellors who’ve received large sums as “compensation for loss of office”. Vice-chancellors’ contracts often include far too generous provisions for when they fail to meet the expectations of governors. The same applies to tacking on rewards: some Canadian universities have been adding an administrative leave year at the end of the contract – we can’t have spurious sabbaticals or non-existent “ambassadorial” roles.

The draft code is an excellent step forward. It respects the autonomy of universities, while building a framework that universities must either conform to, or justify why they differ. The crucial part will be for remuneration committees to take a very hard look at the way that salaries have inflated – and whether they can honestly be defended.

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本文來源:https://www.theguardian.com/higher-education-network/2018/jan/11/universities-take-back-control-of-your-vice-chancellors-spiralling-salaries

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