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Too Golden a Parachute

Too Golden a Parachute
March 12, 2010

Dear Survival Guide:

I could use some help thinking about how to handle retirement agreements for faculty members. Like many places these days, we must reduce our payroll. In their infinite wisdom, the policy makers here are offering a retirement incentive program, which I think is terrible public policy. To make matters worse, we have a faculty member who wants the sun, the moon and most of the stars written into a retirement contract under this new program. This includes big raises over the next two years, promises of summer employment, a catered dinner/roast at the time of his retirement and, of course, promises to hire him back to teach for five years after retirement at a number that could most charitably be called insanely inflated. What we would get out of this is that he would resign and relinquish his tenure and salary line and we would (maybe) get some eventual relief from having to deal with him. But what message does this send to others? Don’t get me wrong: I really want to see him go, yet I sincerely believe it is time to stop offering retirement packages, especially in light of the financial problems our institution is experiencing. Any insights you can provide would be appreciated.

--Biting My Tongue

Dear Biting:

It isn’t clear to me what your position is, except that you didn’t set the policy that troubles you and that you have a decision-making role in the implementation. Let’s start by acknowledging that these incentive programs can be problematic, for all the reasons you cite, and more. So after pausing to regret what others and the larger situation have wrought, let’s think through your alternatives. There are four distinct issues here: budget, how to negotiate if you decide to go forward, the precedent it will set and reconciling your personal views and actions.

Your challenge is to look at all the factors and come to a decision that strikes the best balance among the four issues. If you believe strongly enough this is the wrong policy and you do not want to participate, you should consider whether you can stay in your position, since your institution is firmly on that path. If you do find a way to hold your nose and go forward, then be honest with yourself; don’t let your ambivalence about the program undercut your subsequent actions.

Here are some aspects to consider. You are under pressure to reduce your budget. Before you do anything else, make sure that any deal offered does that. As you know, if too much is paid to encourage a retirement, it is entirely possible that you will not achieve a reduction, and you might actually increase your costs. Be careful. There are surely tools for doing the calculations, and they should provide your starting place along with the parameters set by your powers-that-be.

Then there are the other considerations to factor in: How will you staff your classes? (Note that the question assumes he teaches regularly now.) Will you get a replacement line eventually? What will that do to your overall balance? Do the incentive payments come out of your budget, a central pool, or….? Will they be amortized over this budget year, or longer? You need a sharp pencil or a good numbers person to work the scenarios with you. An additional important factor is whether this path might help you avoid having to lay off others, sooner or later.

There is also the human dimension to consider: What will the retirement of this person do to the dynamic in your department? Sometimes, the up-front cost is worth what you gain in the overall atmosphere of the unit. This may be especially true here, if the outsize demands are any indication of the person’s standard operating style in daily life. While one question to consider is whether this potential retiree is getting what feels like an undeserved bonanza, another is whether your program could benefit immediately from a new mix that doesn’t include him. This is a complicated calculus, because you do not want to be seen to be rewarding bad behavior: even people with Ph.D.'s can figure out that you’ll pay off the bad actors and move in that direction. At the same time, making it a better place to work for everyone is a worthy goal.

This might be an unfair characterization of your faculty member and I might be reading more into your paragraph than intended. If this is a person who has served your institution for many years -- and contributed over that time -- do try to imagine how it feels to be him at this juncture in his life. The end of a long-term institutional affiliation, a change of status and a major life transition can be frightening and unsettling. At the same time, if your institution is putting out incentives, he may feel he is just playing by the rules of the game that have been set forth, and trying to do his best by himself and his family. Making demands may be all that he can control right now. Try to figure out if there are things you can explain that might ease the transition: Will his college email account continue? Will he have a continuing office, whether it’s where he is now, or some other arrangement? Will he have access to voice mail or people to take messages? Forward his mail? We sometimes assume that people know more than they do about how the retirement rules and protocols apply, so it is possible that listening carefully and providing good and supportive information about transitions may reduce his anxiety levels. Or, this could be all about money and power, which is a different situation. It’s worth considering the full picture and trying to imagine what it’s like to be him right now, and factoring that into how you move forward.

After all of your number crunching, think about your negotiating strategy. Remember that, especially if you are getting something that matters to you -- his departure -- leaving him room to save face and feel good about the interaction is not a loss for you; it’s a win. Decide whether you are willing to spend time negotiating, and if so, how much attention the process will likely command, given what might be a demand for attention. Reset your thinking to make it less painful by focusing on your objectives.

Think also about your environment and its dynamics. As you contemplate responding to the demands, try to get help from those above you implementing the program. Then, with their assistance or approval (or both), put together a response that is suitable under the circumstances. Think carefully about how you frame the offer. If you are going to make a take-it-or-leave-it offer, what is the end game? Will he appeal to others? Are they likely to respond? Will he be so persistent that you eventually wear down and give in, just to bring it all to an end? If so, do not start by saying “this is the final offer.” If you use upper administration as leverage saying “the provost won’t let us go higher,” or whatever, develop as much certainty as you can about what the response is going to be if (when?) he appeals over your head. If possible, get that in writing to help make it stick.

If those with the final authority will stand firm, offering the package with whatever personal regret you can summon while referencing the limiting rules can soften the interaction enough that there’s a face-saving element in it for the requester. Allowing for him to save face might not be your first instinct or highest priority, but your job is to keep your eye firmly on the ball, and align your actions with your final goal.

Your concern about the messages sent to the rest of your community by what is spent on this retirement is well-placed. Your next few years can be complicated beyond words by giving something that is far out of line with what will be offered to others. Do plan on the news spreading; don’t kid yourself that it can or will be kept private. In public environments, salary information is likely to be accessible upon request by news outlets, or published as a matter of course. Even in the environments that are most secretive about pay, information about special arrangements will go viral. Know for certain that whatever is offered here will serve as a precedent for some time to come.

At the very least, you should be able to articulate all the reasons the institution will enter into a special agreement. It would be ideal if those who are setting the incentive program do so, but if they do not, consider developing a policy statement within your unit about the principles used in developing packages. If there are not institution-wide rules that are public, do you have an executive or advisory committee with whom you could consult, so at least some people know explicitly that there are guidelines and you are not just being cavalier or careless?

If you want him to go but your budget is bad enough that the package is smaller than you think he might accept, how much can you offer in the way of the dinner that might be a smaller cost, but would salve his ego? Is his self-regard so high that an event with enough speakers would help him take the package? If it is not meaningful to him, don’t offer it and do not get sucked in. If the event seems to be a big factor, think of options that provide as much personal glory as possible at the lowest cost. What about a reception instead of a dinner? Again, keep your eye on the ball.

You do not get to choose whether the program exists: that decision has already been made. Now, you need to focus on the best interests of the institution and try to balance a whole series of factors to shape your unit going forward. If it will be better without him, and the program is there for the taking, focus on the good of the whole. That means do not offer more than makes sense in the big picture and do not offer less. And good luck.

--Survival Guide

Have a question for Survival Guide? E-mail her.

Bio

C.K. Gunsalus is professor in the Colleges of Business and Medicine and a research professor in the College of Engineering at the University of Illinois at Urbana-Champaign.

 

 

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