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Beyond getting bums off seats – moving forward on executive pay

Heads of institution attending remuneration committees damages the sectors' reputation. But for Debbie McVitty there are larger questions to be answered on executive pay in HE
This article is more than 4 years old

Debbie is Editor of Wonkhe

UCU has recently been having a lot of fun tweeting pictures of redacted remuneration committee minutes, garnered from its recent freedom of information request to universities on the attendance and membership of vice chancellors on said committees.

Once again, when it comes to senior pay, the sector seems to have learned little from the summer of discontent in 2017. Anyone watching the debate from outside the rarefied circles of university management and governance will no doubt be scratching their heads as to why vice chancellors in some universities continue to attend remuneration committees – in some cases as full members – in spite of the committee of University Chairs (CUC) code of practice on senior remuneration.

We don’t know what’s going on inside universities that is prompting so many heads of institutions apparently to ignore sector-level efforts to address one of UK higher education’s most challenging public relations issues. There’s good reason to give vice chancellors at least some benefit of the doubt – but by continuing to downplay or explain away the issues the sector is only letting the sore fester.

Bad impressions

On Twitter there was some evidence of defenders of the principle of vice chancellor attendance at remuneration committees for the purpose of taking part in decisions about the pay of senior staff. This is on the (actually, pretty reasonable) assumption that vice chancellors are decorously standing outside the door for the part of the meeting that considers their own pay and reward. But arguably it’s not really defensible for vice chancellors to be in the room for any hard pay discussions. Performance, yes, if that’s part of the picture (more on this below). But in setting the pay of their subordinates vice chancellors de facto put a minimum threshold on their own.

That said, it’s especially tough on the institutions that have read the CUC code, and carefully considered and developed policies on accountability and transparency on senior pay. A quick internet search throws up multiple examples of senior remuneration policies and frameworks, and annual reports of remuneration committees.

It’s also notable that UCU asked for minutes of committee meetings, rather than evidence of a public pay and reward policy or report, which would arguably be more informative and meaningful, as is recommended by the CUC code. The overall impression given by UCU’s report – and impressions are what matter in this debate – is of a continued secretive and cabalistic approach to setting senior pay, which the sector needs like a hole in the head.

So, given that the CUC code was supposed to be the sector’s demonstration of its ability to get its house in order, what should happen now?

The psychology of executive remuneration

I’d argue that focusing on which bums are on which seats when senior pay is discussed is missing the bigger picture on senior pay in higher education. There’s work to be done about understanding the role of pay and reward in shaping higher education leaders’ roles and self-conceptions and the impact of senior pay on shaping public, student and university staff perceptions on the effectiveness and credibility of leadership. After all, if the assumptions and expectations brought to senior pay discussions are out of step with the prevailing winds of public opinion, vice chancellors can stand outside the door all they like; the issue won’t go away.

We know that, for example, beyond a threshold of personal financial comfort, many people are not especially motivated by financial reward, gaining more from seeing the impact of their actions on improving their environment. We also know that perceived equivalence in reward to peers, and out-earning subordinates, can be important to sustain motivation for some people. And we know that judging “performance” especially at the level of university senior management, is hugely complex (and therefore, perhaps, not something that should have multiple thousands of pounds riding on it).

For example, vice chancellors who claim to have presided over a good TEF result, an increase in research funding, a significant international partnership, or a boost for student numbers are at best failing to acknowledge the work of others in their institution. Of course leaders play a vital role, but for fairness to rule, there needs to be a strong and visible link between the leader’s actions and the outcome.

Come together, right now

No organisation is immune from disputes about fairness in pay, especially where the disparity between the worst- and best-paid triggers people’s gut sense of outrage – itself a line that moves according to wider social and institutional circumstances. It’s not helped that discussions about pay are socially awkward and in many cases, written into contracts that were signed and sealed long before the sector was forced to wake up to the issues over senior pay. It’s clearly tough for any single institution to be the first mover on this issue.

So, somebody – maybe Universities UK, maybe Advance HE, maybe UCEA, maybe CUC, maybe the Office for Students, or maybe all of them at once – needs to commission some independent research exploring on one hand, the views of students and staff on senior pay, and the views of senior managers on the other. I’d put money on the headline finding being that students and staff understand that leaders get paid more, but want to know what the justification is, and that pay across the institution is set fairly and proportionately, while many senior leaders would happily take a pay cut if they could be confident their colleagues could be persuaded to do the same (and if they wouldn’t, then that would tell its own story).

The detailed findings could be used to inform a national one-off get-together of remuneration committee chairs to set out a shared view of a more activist role they could take in setting out policies and frameworks for senior pay that visibly align to the institution’s mission and values, and producing communications that inform and explain. Ideally, they’d also agree right now that bonuses for senior staff are stupid. If there’s going to be pecuniary reward in the mix, it should be shared across the institution or spent on celebrating collective endeavour.

Universities are by no means alone in dealing with these issues, with heads of academy trusts, private sector CEOs and leaders of charities equally vulnerable. But universities have the capacity to take steps collectively to address it in a way that other sectors could struggle with. The CUC code was a good first step, but it could be time for stronger measures.

One response to “Beyond getting bums off seats – moving forward on executive pay

  1. I’m probably one of the few that believes that this pay ‘issue’ is one that the sector should actually push back against as something that somehow needs to be resolved. The key line in the (very good) article for me is that “I’d put money on the headline finding being that students and staff understand that leaders get paid more, but want to know what the justification is, and that pay across the institution is set fairly and proportionately…” and I draw attention to this because of what I see as being a left-wing bashing of people who simply earn good money for doing a very high-level responsible job… and I’m saying this as someone who does not earn anywhere near that sort of money and is a professional services member of staff.

    Society seems to be OK with people like TV presenters earning over £1million a year (I won’t name names) when all they do is read from autocues, and indeed, sports people earning unimaginable amounts for just kicking a ball about etc etc but people who are core to the development and maintenance of society such as those in health and education, are somehow closely scrutinised. Is this not simply because unions make a lot of noise to protect university staff who are lower down in the food chain, by pointing the finger at those who are senior and well paid i.e. you cut your salary and perhaps you could save 3 jobs?

    I quite like the notion as presented in the article, about a review being conducted across the sector to form a collective view, but my concern is that if such a review just reflects a left-wing ideology, then the result might just be more ammunition for unions to pursue a socialist agenda that serves nobody: the main problem being that the idea of what is ‘fair’ varies, depending on ones political standing.

    Let’s instead have a discussion about why school teachers, and Head Teachers, are not paid anywhere near as much as they should be considering the impact that they have on all our lives and how they seem to be held responsible by the Government for fixing all of the rest of society’s failings, and perhaps then have a think about readjusting our moral compass.

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