Across three continents we have seen questions being raised about the compensation paid to the heads of academic institutions. This has mostly played out in the USA and the UK where the impact of the financial crisis and the downturn in the economy has impacted but the ability of students and governments to pay for education and scholarship but also put a dent in the ability of these institutions had been hit further by a downturn in the return on investment from their endowments. In Australia this has, until recently, been less of an issue as the resources boom and the influx of overseas students kept the system afloat. However, even in the “lucky country” there have been financial concerns raised most recently because of the Labor government’s reduction of university funding via an “efficiency dividend”.
This pressure for efficiency and austerity has prompted many people to question the level of pay received by university presidents and vice chancellors. But is this fair? From one perspective these individuals are heading billion dollar organizations whose complexity rivals many large corporations. From another perspective they are quasi public servants with few opportunities to really change the institutions they run. While each perspective guides us to a different market for talent, it is clear that there is an active market for these positions. It is this aspect of the debate we investigate.
What you are linked to here summary of an analysis of the compensation of three groups of university leaders in 2010-2011: (a) the 100 most highly compensated US university and university system presidents, (b) the 100 most highly compensated UK vice chancellors, and (c) all 37 Australian public university vice chancellors. It reveals that while UK and US university heads are most likely paid according to a similar model those in Australia are distinctly different. I leave it to the readers to decide!
Larry Zicklin believes professors should focus far more on teaching and less on being published … and my commentary:
It is interesting how over my 20 years as an academic I have heard this sort of logic again and again and again. Invariably it is from adjunct faculty with a more ‘professional’ background complaining that they do not understand what it is that academics do and why they do not ‘teach’ more or that their promotions should be based more on teaching. Unfortunately such arguments, while valid to the individuals who make them, are based mainly on faulty logic and a basic misunderstanding of what is going on. For example, whenever I go and work with a company I am amazed at how much time managers waste actually doing nothing but monitoring and interacting with other managers? Why are they not working with customers more? Why are they not out in the field rounding up more business? Isn’t it inefficient to have them in meetings so often invariably doing little more than playing power games against other managers? Of course, this is a naive viewpoint and it is based on my failure to understand what these managers do. Ditto Mr. Zicklin’s view of academics in business schools. Here are some points that matter.
His view of teaching is dominantly one of information dissemination. Having been at the top and bottom of the academic food chain (being both at U. Chicago and now in Australia at what is dominantly a teaching factory) I have seen the differences. The students at Chicago get knowledge at the coal face by people who understand what is both leading edge and sophisticated. Students here get commoditized information delivered by individuals who only know what they read because they are not leading edge scholars. Indeed, where the MOOC Tsunami will hit is on this commoditized end of the business.
Second, his viewpoint is based on the ‘leach on society’ view of academics. I argue that good scholars are some of the most entrepreneurial people in the world. Imagine Mr. Zicklin working in a business in which the failure rate is > 90% (which is the rejection rate of most leading journals). Also, it does not matter where you reside or which university you are at since the rejection is based on blind review. Imagine your typical corporate manager working in an environment in which their work was evaluated blindly and in 9 cases out of 10 rejected as being inadequate. Imagine also those individuals attempting to run projects on little more than scraps of funding (for an average academic on what is known as a 40:40:20 contract the actual cost of the research per professor amounts to only about $50,000 per year). Most companies spend more on business class airfare for managers than this. Most universities spend 20 times this on the basketball coach.
Third, most good academics could easily make more money outside academics than inside academics. When I received my PhD I had an offer from one of the major consultancies. It was three times my academic salary. But I remained an academic because I believed in what I wanted to do. I argue that the difference between managers and academics is that managers give up what they love for money while academics give up money for what they love. If you take away the scholarship aspect of this then the equation skews toward money. So if I am going to sing for my supper then I want to be paid for singing. Unfortunately as soon as that occurs I end up choosing not to be an academic. In reality, we have serious problems getting good brains to commit to getting phds and hence the pool of potential future faculty is actually drying up. If anything the premium needs to be bigger not smaller.
Fourth, Mr. Zicklin’s argument that promotion is all about research and not teaching is just wrong. You cannot get promoted anywhere as a basket case in the classroom. Indeed, nearly every academic I know is quite good to very exceptional in the classroom. It is also the case that where we looked at exactly this we found that our best scholars were our best teachers. So this idea that there are ‘teachers’ and there are ‘researchers’ is just nonsense. The best scholars are on average exceptional at communicating. Mr. Zicklin’s problem is that he is basing his viewpoint on myth and exceptions and not evidence. However, in the end, if your best scholars are you best teachers the institution must make a decision as to the allocation of their time. Unfortunately, good scholars are rare and institutions cannot replace them as easily as they could one trick teaching ponies.
Finally, the fact that academic journals are not read by managers is absolutely meaningless. These journals are not meant for managers. That is why you have HBR, Sloan Mgt Review, McKinsey Quarterly and other outlets. Any good journalist or writer will tell you that you write to the audience. If you want to communicate with managers you do it differently than when you speak to other scientists. As soon as you attempt to write to everyone you actually communicate with no one. I personally am the sort of academic that communicates to broad audiences (like my colleague Pankaj) but I do not expect managers to read my academic articles. Also, in a response to Freek Vermeulen on this same topic (also in the FT), I argued that we as academics influence practice one student at a time by how we do what we do and what we pick to have in our classes and how we communicate in public forums. Many of the examples given above are good examples of others. And there are many many more we can show.
So while Mr. Zicklin’s arguments appear to be logical and reasonable I would argue that you need to be careful about what you wish for. There is more than one tsunami approaching and my view is that the more dangerous one is that there are fewer and fewer potential scholars choosing to be academics because the personal benefits of such a career are being eroded while the financial compensation is not sufficient to offset this. If I had to make the decision today that I made 20+ years ago I would not go into academics. I would chase the money, cash out and then become an adjunct faculty member writing opinion pieces for the FT while living the life of the casual academic.
Potentially too much emphasis put on social reputation? Workplace reputation? Corporate reputation?
Last week Yahoo banned working from home . Overnight another major US company ordered its tele-commuters back to the office. That’s sparked a new debate on the costs and benefits of working from home.
Last week the business and society twitterverse, and its older equivalent – the press – went into overdrive when Marissa Mayer’s announcement that Yahoo! was doing away with telecommuting and insisting that employees come into the office and work cheek to cheek, or cubicle to cubicle, with their co-workers.
The reactions to the announcement have been fairly typical in their extremes. But what few of these articles discuss is whether there is any real value for a company in having fully employed managers and staff operating in isolation for the majority of their working time. Of course, there are situations where working away from the office is necessary and efficient. However, the whole point of having individuals working together implies that there are compensating benefits to co-location. So what is the evidence?
“I assume people act like jerks because they think they have something to gain, and maybe they are right…. Cleverness is a form of currency in academia; or ‘cultural capital’ if you like. If other academics think you are clever they will listen to you more; you will be invited to speak at other institutions, to sit on panels and join important committees and boards. Appearing clever is a route to power and promotion. If performing like an asshole in a public forum creates the perverse impression that you are more clever than others who do not, there is a clear incentive to behave this way.”
Corporate consultants tell us that a key driver of success is having a clear vision for the corporation and being able to execute this at all levels. However, how many employees really know or understand the overarching strategy of their company? How many know why they are there (other than to make money)? How many know what the priorities are so that they can make the important trade-offs when dealing with their subordinates, customers or other stakeholders? This issue is made all the more important when we consider the need for companies to have multiple strategies – e.g., a corporate strategy for the business and an environmental/social responsibility strategy for society.
If these strategies are important to performance, then it is necessary that the final and performance vectors relating them to individual actions by employees are critical. Yet one hears anecdotal evidence that few employees really understand their firm’s strategy. My colleagues Grahame Dowling and Pat Auger decided to investigate this more formally. In particular, we were not only concerned about whether or not individuals recognized their own companies strategy when placed in comparison with competitors but whether there was a difference between the corporate strategy and the firm’s environmental sustainability strategy. We were also interested in seeing if there were any systematic differences in which employees knew the strategy better.
How a High-Speed Rail Disaster Exposed China’s Corruption : The New Yorker
Podcast of an interview with 2SER in Sydney. Discusses the politics of the Euro and Merkel’s visit to Greece.