Betting on Performance

Employees at Australia's University of Canberra will vote this week on an agreement that will link pay raises to the financial performance of the institution.

In what is thought to be an Australian first, the plan also will include a bonus arrangement for all staff members if the university exceeds its projected operational surplus by $1 million, with the bonus pool capped at $2.5 million.

Writing in The Australian newspaper, Canberra Vice Chancellor Stephen Parker says staff members could expect to receive bonuses of about $2,400 each, with the plan giving the greatest proportional benefits to lower paid staff. Annual pay increases also are linked to federal grants and indexation, rather than a set predetermined increase.

"The motivations for this are various. If staff accept uncertainty in future salary rises they should benefit from the university's success," he writes.

"Because the pay rises are linked to commonwealth grant increases, if we can do better than budget by exceptional years in international student recruitment, in consultancy income or campus development, we can responsibly pay more."

Stephen Darwin, an official of the National Tertiary Education Union, said he was skeptical about the scheme but that "on balance we decided to support it."

"It's a workable package, but it depends on a 5 per cent surplus. But I think it's highly speculative. The whole university is taking a risk, but the risks are being passed on to staff in terms of lower pay increases," Darwin said.

"It's the vice chancellor's job to manage the university and not pass on the risks he takes to staff. For example, staff don't make decisions about sponsoring football teams or spending $5 million on training facilities for them," he said, referring to Canberra's sponsorship of the Brumbies rugby union team.

Parker argues that the plan potentially could mean that UC staff could be among the best paid in Australia.

"I think the proposed agreement is a good deal for staff, who stand to receive higher pay rises than at other universities, while also developing a sense that they have a stake in the enterprise."