So that’s that then. After over six months of research, drafting, discussion and redrafting (lots of times) – the CUC HE Senior Staff Remuneration Code finally arrives.
When we were asked by our members to provide advice on how to tackle the issue of vice chancellor pay, we knew it would be a challenge that would require compromise and negotiation. Adding to the challenge, we had a new regulator coming over the horizon, a strong ministerial interest, and a public discourse on the topic that was in some parts toxic.
To end up with a Code that has the overwhelming support of the sector is very encouraging and we are confident that institutions up and down the country will comply with the principles of fairness and transparency enshrined within it.
A principles-based code
Our approach has been clear right from the start.
We began with the guiding principles that the success of the sector is based on a set of highly diverse, autonomous institutions that are well governed. When the debate (if we can call it that) on vice chancellor pay was raging, the success and enormous contribution that UK HE institutions continue to make, was something that was continually overlooked (alongside the complexity of the task and the global competition for talent). So, we were always clear that this would be a principles-based code, which would draw on best practice, and that it would be for institutions to work out how best to apply these ideas.
Drawing on best practice – and in particular the government-sponsored “Hutton Review of Fair Pay in the Public Sector” report – allowed us to quote what is in effect government advice, during discussions with regulators and others that might have wanted to be more draconian. I refer particularly to Hutton’s view that both fixed caps on salaries and the use of the Prime Minister’s salary as a benchmark were not appropriate.
We also set out to listen to other people’s views. Throughout this process, we have been lucky to have active support from registrars, the HR community, as well as individual CUC members (who themselves brought an extraordinary range of experience, knowledge and wisdom to the process). With that help, as well as the constructive response we received from an open consultation process, the version of the Code that is published today will be broadly welcomed across the sector.
A collaborative approach
At its core is the challenge to be more transparent and better at explaining what institutions are about, what they deliver and what this means in practice.
The Code addresses three principles for vice chancellor pay: fairness, independence and transparency.
- Fairness: The Code sets out the issues that university remuneration committees should consider when deciding the pay of vice chancellors. Factors include external comparisons, levels of experience, and the complexity of the position.
- Transparency: The Code also stipulates that every institution must publish an annual report in which it sets out clearly the salary of its vice chancellor and the pay multiple showing how their remuneration compares with the median earnings of the institution’s whole workforce. If the multiple is significantly above average – which will be published every year – it must explain why.
- Independence: The Code states unequivocally that no vice chancellor should be permitted to be a member of the university’s remuneration committee. While they may be invited to attend meetings, they cannot be present during discussions about their own pay.
Some may argue that we should have been more prescriptive. I believe strongly that the collaborative approach used in developing the Code means that universities will comply with the principles of the guidance and take action to be more transparent about pay. If we had produced a prescriptive Code, institutions may have ignored it or applied their considerable talents to thinking of ways to get around it.
I am confident that the new Code will encourage institutions to explain more about why they make the decisions that they do and use it as an opportunity to demonstrate the value that they bring to students and other stakeholders.
Governance never rests
Many institutions have already adopted, or are in the process of, adopting the ideas within the Code. It’s clear that in England, OfS will consider carefully the sector response. They have always been clear that they believe and support autonomy and co-regulation, but they have been equally clear that if there is excessive pay then they will act. This is perhaps the very first test for OfS to see how it can balance its desire to regulate in a way that supports autonomy, but at the same time protects the principles of public governance – which includes a notion of reward that is not excessive.
The CUC still has more work to do. We will undertake and publish an annual, independent review of how the Code has worked in practice, alongside the annual salary of a VC and what the average and top quintile pay multiple is – all of which will take place next year, and within the public domain.
Of course, governance never rests. Now that this Code has been agreed, I can turn my attention to the even more exciting topics of updating the guidance on the work of Audit Committees as well as initiating a review of the HE Governance Code itself.
Truly life in the fast lane.