Getting Compensation Under Control

The University of California Board Regents recently created a compensation committee to increase their oversight of university compensation practices and will introduce a yearly review of the system president’s performance.  The regents also added an independent compliance officer to assure their compensation policies are followed and will add several new positions in the president’s office to address management shortcomings.  These changes are designed to end excessive and secretive compensation practices recently revealed by the press.

Will these efforts bring administrative compensation more in line with the university’s compensation of top professors as suggested by the Academic Senate? Or will they simply provide a method for administrators to convince California legislators that higher administrative compensations are justified so that UC “can compete for the best people?”

The Regents’ compensation committee should, first and foremost, appreciate that top UC administrators already receive generous compensation packages. While some UC professors receive handsome offers from other universities, no UC campus chancellor has ever left for a comparable job at another university. Indeed, UC’s administrative generosity distorts salaries elsewhere.

When in 2004 Marye Anne Foxe received a $92,000 raise to induce her to leave the chancellorship of North Carolina State University to take the same position at the University of California at San Diego, North Carolina newspapers editors ridiculed “California dreamin" for provoking an “ugly” trend toward unjustified administrative salary increases in North Carolina.  Editors noted that prior to Foxe moving to San Diego, salaries at San Diego and North Carolina State were comparable, with San Diego paying its chancellor $280,700, only $32,700 a year more than Fox was making in North Carolina. They also noted “all the interest generated when one of the [North Carolina] chancellors’ jobs comes open,”  asserting that North Carolina chancellors’ salaries and generous perks already were the envy of most state and private sector employees.

North Carolina editors also denounced UC for paying MRC Greenwood, second-in-command of the 10-campus UC system, $100,000 more a year than her immediate predecessor. And all this was before the press’ revelation that UC administrators paid Foxe an additional $248,000 -- without informing the regents -- to forego her North Carolina sabbatical, making Foxe one of the highest-paid chancellors in the nation.

Trustees of the 16-campus North Carolina system reacted, somewhat predictably, with raises “to get our chancellors up to market.” North Carolina editors lamented that politically connected legislators "seem so eager to help higher-paid (and politically connected) state employees [i.e., university administrators] while they go on the cheap when it comes to the rank and file.” Mindful of a political backlash, in October 2005, North Carolina trustees capped the salary of incoming president Erskine Bowles at $425,000.  When this failed to quell the political pressure, Bowles promised to return $125,000 as a donation to student aid programs.

Elsewhere in the country, concerns over administrators’ compensation permeate higher education. In testimony before the California Senate Education Committee hearing on UC compensation, David Longanecker, a national expert on university compensation, opined that "American higher education by and large has lost its way. We are spending an awful lot on executive compensation compared with what we used to spend."

Both at UC and across the nation, top education administrators are being paid increasingly high salaries without any evidence of higher-quality services. At UC this results, first, from questionable practices that paid certain top administrators more than the market price for the job. The second reason applies across the nation as well as to UC and stems from trustee’s condoning of executive searches that artificially restrict the supply of eligible top education administrators.

Since 1981, UC Regents have delegated the authority to select the campus chancellors to the university president.  The president presents one name to the board for an up-or-down vote. The same is true for the salary of each proposed chancellor. For starters, the regents should revoke these delegations and assume responsibility for selecting the chancellors and setting their salaries. At a minimum, the regents should demand that the president offer at least three viable candidates for each vacancy and then negotiate the salary of the one chosen with the help of independent advisors rather than the president’s office. The president’s staff has a self-interest in high compensation, since typically yearly incomes are tied to the top administrators.

Going forward, the compensation committee should recognize that it is in the president’s interest to seek high administrative salaries and to bring aboard people disposed to support excessively high administrative salaries and compensation packages. In nominating chancellors and other executives, the president is selecting his team. Higher salaries buy the president the loyalty of these administrators as well as justification for keeping his own salary and total compensation package high. But do they buy anything for the taxpayers and students?

At the same time, there are existing practices that artificially inflate administrative salaries and deserve reform.  While many university presidents leave the room when administrators’ salaries are considered, no UC President since 1995 has done so. As a result, trustees and auditors are less willing to discuss executive fiscal responsibility freely. And the UC president, besides advocating salary hikes for himself and his colleagues, could identify his detractors in the open-ballot regents’ meetings and punish them, for example, by not appointing them to various advisory committees.

Although the University of California is a public institution, meetings of special committees to advise the  president regarding the selection of campus chancellors and other top administrators are held in secret, facilitating artificial restrictions on the number and types of candidates under consideration. Furthermore, for each administrative search, the president retains a search firm whose consultants’ fee is tied to the size of the nominees’ total compensation package, an arrangement that undermines efforts to rein in compensation.

Also, regents are typically asked to vote to accept or reject the president’s top personnel proposal in a telephone conference, in my experience a difficult context in which to organize resistance to a nomination or salary proposal.

Furthermore, UC administrators continually engage Mercer Human Resource Consulting to benchmark UC compensations with those of comparable universities. Mercer regularly finds that average salaries of  administrators, while understandably somewhat higher than those at other public universities, are substantially below those of private universities. Although Mercer notes that UC pay is comparable when retirement and other benefits are factored in, the impression left with their readers is that UC administrators are underpaid. This suggestion ignores the possibility that private university administrators generally face more stringent oversight and therefore job pressures than those in public universities -- not to mention the fact that private funds, not taxpayer funds, are being used.

Indeed, Mercer’s results consistently ignore and discount the fact that UC administrators are public employees.  The university's Academic Council found Mercer’s methodology flawed and in need of revision:  In particular, “it is biased too heavily toward the private sector,” said Stanton Glantz, chairman of the faculty senate’s committee on planning and budget, adding that “there are plenty of people in California government who are running agencies that are larger and more complex than the University of California who are not getting ridiculously astronomical salaries."

The Academic Council also observes that the salaries of top administrators in Mercer’s report are not performance-based. “At least at the highest levels, [senior management group] salaries are based primarily on membership in administrative categories.” The council recommends that periodic performance reviews be introduced to the salary-setting process for top UC administrators.

Mercer’s procedure is flawed in other ways. Mercer does not report dollar values of the various non-monetary perquisites provided administrators. Nor does Mercer account for administrators’ gifts back to their universities, thus frequently overstating the net salary paid the administrator. Top-ranked University of Michigan President Mary Sue Coleman, for example, on paper makes $724,604, but in fact nets far less since she periodically donates her performance bonuses included in that sum to university programs, in 2003 pledging $500,000.

Year after year, the biggest flaw regarding the Mercer executive compensation report is that UC administrators regularly hire Mercer to create it. In continuing to hire Mercer, administrators are buying results that they like.  In sharp contrast, regents periodically change their outside financial auditors to ensure a fresh, critical look at the university’s overall finances.

UC President Robert Dynes has publicly acknowledged that his executives promoted high administrative compensations by applying existing policy inconsistently, favoring top administrators, and failing to disclose fully compensation information to the Regents. Rules put in place after a similar 1992 scandal required that the regents approve executive compensation packages. To address these nevertheless recurrent management failures, the regents recently established an independent compliance officer -- reporting solely to the board -- to assure that compensation practices are consonant with board policies and an ombudsman to speed the University’s response to information requests. They also will restructure the president’s office and are considering adding a chief operating officer and a chief financial officer.  Addressing the president’s deficiencies by adding still another layer of employees to that bureaucracy hardly seems a serious attempt to ensure it will follow correct employment practices.

Even if the new Compensation Committee comes to acknowledge and correct the high-administrative-salary bias in the pre-existing UC salary-setting process, the problem of excessive high-level administrative salaries is largely a reflection of a different, probably greater, national problem resulting from trustees’ acceptance of artificial restrictions on the supply of eligible top education administrators.

For top administrators to have placated the regents and similar boards of trustees across the country, the supply of ostensibly qualified candidates for their universities’ top administrative positions must have been somehow artificially restricted. Otherwise, the above-described, high-salary regime could not have persisted because the excess supply of qualified candidates at the higher salaries would have put downward pressure on salaries.

Ever-spiraling salaries have in part resulted from trustees’ irresponsible acceptance of a convenient belief -- perpetuated by top administrators and their hired consultants -- that the only people qualified to head universities are those who have "gone through the chairs," that is, people who have previously served in similar positions elsewhere or come from the higher education establishment. It is hardly surprising that among U.S. doctoral universities, presidential salaries rose an average 81 percent while faculty salaries rose only 47 percent between 1993 and 2003. Moreover, as top administrators from the post-World War II baby boom era retire, selection of new presidents from the existing and limited pool of itinerant college presidents and other top administrators will potentially provoke even more intense bidding wars.

Nevertheless, an enormous supply of willing and able, administratively-oriented, professors -- such as existing deans, vice chancellors, vice provosts and chairs of professional schools and large departments -- as well as term-limited politicians and similarly suitable outsiders, would provide essentially the same services at much lower salaries.

The growing salary gap between university administrators and faculty (and staff) will likely become more divisive. Selecting from a small, virtually revolving pool of candidates who have previously led similar academic institutions demoralizes deans and other academic middle managers who have no realistic expectation of rising through the ranks of their institutions. An exemplary social science dean I know is returning to full-time teaching after having participated in innumerable administrative searches as “the token white male.” Narrow selection criteria also risk promoting leaders who will not mesh with their campus cultures. Universities are being disserved when the selection process disadvantages the large and growing number of middle-level university administrators, term-limited politicians, and others who would be excellent higher education executives and willing to serve at much lower salaries than are currently paid.

Berkeley provides a market check.  Berkeley recently became the first UC campus to designate a chief administrative and financial officer to oversee its nonacademic functions.  The former banker’s base salary is $260,000, with no relocation or housing support, and a standard 5 percent severance ($13,000). Berkeley’s Chancellor Robert Birgineau (whose compensation package is somehow more than twice as generous) opined that the three suitable candidates who came forward at the advertised $250,000 salary did so because “they love Berkeley.” Sorry, chancellor, that’s the market rate -- when the search process is open, not larded up with unnecessary requirements. The other two qualified candidates would be more than suitable to perform similar tasks in the nearby UC president’s office at much lower than current rates there.
UC’s current compensation debacle is largely a replay of UC’s early-1990s, “golden handshakes” problems.   Subsequent policies to fix these problems were either waived, ignored or circumvented by administrators. Had the regents used independent advisors they likely would have questioned the market-justification for the large proposed salary increases for administrators and certainly would have discovered the discrepancies between regent compensation policies and their implementation.

Nevertheless, the regents’ addition of an independent compliance officer will at best solve only what is probably a relatively small part of the compensation problem. Even if this officer corrects the internal problem of improper executive overpayments within UC, the larger problem of continually escalating salaries and perks would remain. A more important change would add independent advisors to inform the regents about available alternative administrative personnel and other compensation issues. While the regents and the president can be presumed knowledgeable about suitable outsiders, a couple of experienced, full-time, taxpayer-sensitive, UC professors who are painfully aware of qualified, underemployed administrative talent within the university would suffice.
Recognition of the above problems at UC may not inspire boards of trustees everywhere to reclaim their authority over the hiring of top administrators. It should, however, inspire trustees to broaden significantly their board’s qualifying criteria for top administrators, as well as to insist that recommended compensation packages be demonstrably in line with the candidates’ options in the marketplace. To eliminate the current excessive salaries of top administrators and executives will require that boards of trustees and directors both hire advisors to expose overpayment fraud and recruit independent, full-time advisors from the ordinary, experienced, non-administrative employees of the organization to inform them about available alternative administrative personnel.

Velma Montoya
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Velma Montoya, a Ph.D. economist, is a consultant and writer about higher education. She was a member of the University of California Board of Regents from 1994 to 2005 and represented the board on the California Postsecondary Education Commission.

Motivation and Its Discontents

Lately I have been following the discussion of “motivation” taking place at Southern Illinois University at Carbondale. Word of the matter came my way via salty blogger Margaret Soltan, a professor of English at George Washington University. The debate is a purely local matter. It probably won’t reach the wires services, though it has certainly livened up The Daily Egyptian, SIUC’s student-run paper. But the whole matter is quite interesting as a standoff in the other culture war -- not the conflict between left and right, but the clash of values between old-school academe and corporate American.

According to the Egyptian, a recent marketing report described SIUC’s faculty and staff as “prideless.” Even though pride is one of the seven deadly sins, this finding was not cause for celebration. Administrators decided to make an investment in morale by spending $20,000 on a series of programs of an uplifting nature.

A speaker named Steve Beck -- the president of Beck and Associates Corporate Training Solutions -- came to the campus last week to give a series of presentations on the theme “Making a Difference: It Begins With You.” The chancellor, John Dunn, announced the series to faculty and staff in an advertisement that included the line, “Please plan to attend.” (A sentence it is hard not to read as having a polite yet firm tone.)  

Audio and video clips at Beck’s Web site convey his fundamental message: a positive attitude is vital for improving customer satisfaction. At SIUC, he offered a “series of activities and anecdotes” covering “the importance of taking time when answering the phone and thinking about the way people greet one another,” according to a report in the Egyptian. “He also said listening and giving things full attention could help improve relations.”

The attitude that education is, when you get right down to it, one more service industry.... this does not warm the academic heart, somehow. About 10 percent of faculty and staff actually showed up.

Now, a friend who is wise in the ways of administration/faculty relations tells me that getting 10 percent of the professoriate at a given university actually to show up for anything is about par for the course. But that figure bitterly disappointed someone at the Egyptian. It was the perfect opportunity to worry aloud about the moral example set by SIUC's educators.

“The faculty had a lecture to go to,” an editorialist opined last Wednesday. “It wasn't mandatory, but it was recommended. And valuable information -- ways to improve the quality of the university's product -- was discussed. Most of the faculty and staff decided not to attend.... Our careers as students would falter if we didn't attend long, boring lectures. The same argument applies to the employees of this university.... As students, we give the faculty and staff an F.”

That must have been fun to write. Discharging aggression against people with power over you (in this case, professors) usually is. But the editorial is also interesting for how it mimics management-speak. A motivational speaker provides “valuable information ... to improve the quality of the university’s product.” Not a hint of skepticism about the corporate rhetoric. No questioning at all of the idea that Iearning to answer the telephone in a pleasing manner will contribute to the manufacture of skilled and well-informed students.

Then again, the editorialist also seems to imply that “the university’s product” is actually “long, boring lectures.” Wouldn’t a motivational speaker increase productivity in ways that students might not appreciate -- inspiring professors to give longer, even more boring lectures?

For his part, at least, Steve Beck is anything but dull. The samples of his talks available online are ebullient, emphatic, full of gumption. The reports that he spoke “flamboyantly” at SUIC. He gave, in short, a rhetorical performance in keeping with the standards of what has now become a well-developed cultural industry -- one that now has ambitions to professionalize itself.

The closest thing to an accrediting agency for motivators is an organization called the National Speakers Association, of which Beck is a member. Its rolls now includes some 5,000 people who work full-time at it, making between $3,500 and $50,000 per speech while making the circuit of workshops, corporate retreats, and weekend seminars -- not counting the additional revenue available from creating branded lines of books, videos, and inspirational audio recordings for drivers stuck in traffic.

Still larger fees go to superstars such as Tony Robbins, whose infomercials have made his dazzlingly expansive smile and ability to walk on fire known to millions. (The fee Steve Beck accepted for 10 performances suggests that he is, as yet, an up-and-comer. Either that or $20k counts as pro bono.)

And for every motivational speaker working full-time, there may be a dozen aspirants looking for their big break. The subculture has now become enough of a fact of life to have passed into pop culture satire.  Last year’s comedy “Little Miss Sunshine,” which just won the Oscar for best screenplay, includes a character who is certain his nine-step “Refuse to Lose” program will be the next big thing in the motivational field, even though it hasn’t actually helped him all that much.

It sounds like fertile territory for ethnographers and cultural historians to explore. There is already a considerable scholarly literature on the topic of self-help – not to mention the established field of Oprah studies. The world of motivational speaking might be the next frontier.

But for now, we have a recent book called Yes You Can! Behind the Hype and Hustle of the Motivational Biz (Bloomsbury, 2006) by the former Playboy editor Jonathan Black -- an entertaining and well-researched survey of the workings of the industry by a participant observer. Cobbling together bits of inspirational boilerplate and some anecdotes from his own experience, he even achieves some modest success at the bush-league level of motivationalism.  

Apart from his descriptions of the process of salesmanship-of-self on display at a meeting of the National Speakers Association, Black’s account offers a look at the implicit cultural politics of the inspiration biz. It often sounds as if motivational speakers always have the same message. They are, in effect, ministers of the secular gospel of positive thinking, preaching that the one true sin is failing to believe in yourself. But the market for that message changes from time to time, and so does the message itself.

“For much of the eighties and nineties,” writes Black, “the motivation business was all about making it, self-propulsion, getting rich quick. Athletic coaches ruled, because winning wasn’t everything – it was the only thing. The lecture circuit starred corporate titans like Malcolm Forbes, Lee Iacocca, and Ted Turner.” The ethos of this period was summed up by a pace-setting speaker named Zig Ziglar (something like the Stanley Fish of the motivation world) when he titled one of his books See You at the Top.

Around the turn of the century, though, something happened -- several things, in fact. The tech bubble burst. Dubious business practices eroded corporate prestige. Murderous fanatics showed that globalization would not be all about getting and spending in peace and comfort. The old motivational messages started sounding hollow, and the market took a hit.

But not for long. “The speaker business is a hydra-headed monster,” says Black. “Lop off one topic and six new ones appear.”  

The new message was more serious. “It was time to get real,” as Black puts it, “to think about values. The good boss was the sensitive boss. Ziglar’s new book, The View from the Top, was all about being ethical and praying to God. Suffering wasn’t a blight on success, it was a badge of honor, a common experience to bind humanity.”

That phase has passed, too, it seems. The perennial theme of cheering up and taking control of your life – of making friends and influencing people – is back in full effect, as exemplified by a t-shirt Black spots while making the rounds among professional and amateur motivators: Get Your ‘But’ Out of the Way.

Words to live by, surely. And yet the question remains whether there is any significant return on the investment when a company (or university, for that matter) pays to bring in a motivational speaker. Some people in an audience may feel a little uplift -- whether from the message itself, or the vaguely standup-comedy demeanor common throughout the industry, or simply from doing something diverting during work hours. But proof that speakers actually make any difference over the long term is just not there. It seems you cannot actually buy inspiration. The most you can do is rent it.

In fact, Black cites the work of a prominent business speaker named Jason Jennings, author of a book called Less is More, who finds no relationship at all between morale and “hired” motivation.

"He and his research team have come up with an interesting fact,” notes Black. “After studying four thousand companies and rating the ten most ‘productive’ -- based on various criteria from revenue per employee to cash flow -- they found that none spent much money motivating their workers..... What works to motivate workers, he believes, is ‘an authentic cause that becomes the culture of the company.' " One example Jennings offers is IKEA, with its proclaimed devotion to "furniture for the many – not for the few, not for the rich, not for design magazines." The company’s president takes just two weeks of vacation a year, and stays at Motel 6 when he travels.

I don’t have statistics at hand about how many chancellors or provosts stay at Motel 6. It would hardly be surprising to learn that most do not. That sort of change might not be the solution to "pridelessness" or academic anomie. But there’s certainly no evidence that motivational bromides are, either.

A forceful letter appearing in the Daily Egyptian last week suggests an alternative. Responding to the news that one session by Steve Beck drew an audience of about 50, Justin Bell, a doctoral student in the philosophy department, wrote:
“Spending $20,000 on motivational speakers is absurd in the face of so many laid-off graduate assistants and deferred facilities maintenance. Let's look at what $20,000 could do that would make a difference in the actual education of students. On my estimation, it could hire two half-time graduate assistants, purchase 31 new Dell computers (assuming no discount) or pay for any number of books. I suspect we could even make a big bonfire with money that would draw more than 50 people..... All this occurs in the face of raising fees and tuition on incoming freshmen and graduate students.”

Bell goes on to write, “I am someone who feels that being a student at a university is a type of citizenship, not a type of business relationship.”

His language here is not the same as that of Jason Jennings, a corporate consultant, when the latter calls high morale the product of “an authentic cause" animating "the culture of the company.” But the sentiment is similar enough: Treat people like citizens, not like hired help -- and motivation will take care of itself. The lesson is simple, inspiring even.

Scott McLemee
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Healthier Raises Than Last Year

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The median salary for mid-level administrators increased 3.0 percent this year, compared to 2.1 percent last year, according to a new report.

Going Hungry at Georgetown

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Students' weeklong protest over fair wages for janitors heads threatens to escalate Tuesday.

Compromise Ends Hunger Strike

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New Georgetown policy on pay for contract workers ends 9-day student protest.

A Strike in Ann Arbor

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Graduate instructors at Michigan take a day off to force concessions at the bargaining table. University officials are unfazed.

How LSU Will Save $1 Million This Year

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Buck up, Les Miles -- you have to start somewhere.

Miles, Louisiana State University's new football coach, will earn at least $1.25 million a year under the seven-year deal that the university has offered him, LSU announced Wednesday. The university's Board of Supervisors is expected to approve the deal January 20.

Faculty Salaries Up 3.2%

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Study of salaries at four-year colleges finds raises in 2004-5 much better than last year's average of 2.1%.

Postdoc (Partial) Satisfaction

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Most like their positions, but many have tight budgets and question whether they are actually being trained.

'Living Wages' and Hunger Strikes

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Student protest season is in full swing.

Two weeks after students at Georgetown University ended a hunger strike aimed at winning a "living wage" for janitors and other contract workers there, students at Washington University in St. Louis have started their own such protest -- and the university is turning up the heat on them.


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