Dr Deborah Allcock, Professor Jill Johnes and Dr Swati Virmani have been investigating the drivers behind the increases in university vice-chancellors’ pay. Here Dr Allcock explains the research, its outcomes and the possible consequences for the future.
“Vice-Chancellors’ pay is now the new hot topic in both government and the media. In pure money terms, the average vice-chancellor’s pay for 2015-16 was £246,000, which is eight and a half times higher than the average wage in the UK, which stands at £28, 296.
Researchers at the Huddersfield Business School have been investigating vice-chancellors’ pay over the period from 2009/10 to 2014/15, which is what might be seen as the ‘marketization period’ for higher education, and whether this marketization has been the driver of the increasing salaries of university leaders.
Firstly, we looked at asked whether vice-chancellors’ pay could be explored using the performance models common in the corporate world. Corporates are accountable to shareholders who expect performance. We examined relationships between university performance and pay. Performance targets have been increasing within higher education, but are primarily focussed on the university research outputs and the new Teaching Excellence Framework. We found that performance items such as degree completions and graduate prospects did indeed positively increase VC pay levels. When combined with research outputs, this significantly supported a drive towards higher vice-chancellor pay. However, when returning to the question around universities using their money efficiently, this contradicted the arguments above.
Secondly, we considered the credentials of a vice-chancellor to be the leader. Again using marketization aspects, we found that vice-chancellors are able to command higher pay due to a number of factors, including the number of people in the recruitment pool, talent management and retention.
Finally, it’s widely accepted that universities provide extensive economic wealth to the nation. The Higher Education Statistics Agency data for 2015-16 showed that the sector reported a surplus of approximately £1.5 billion with many universities having income figures that corporate establishments would be proud of. With such income, direction and management become a complex role and thus structurally, institutional characteristics might also be a metric that affects the pay levels of vice-chancellors. Items such as student numbers, university rankings, being a member of the Russell Group were also considered and these too supported higher pay levels. Similarly, we found that higher pay in the organisation hierarchy also promoted higher levels of pay for vice-chancellors.
Speaking on the Today programme (Radio 4 on 7 September) Universities Minister Jo Johnson is now encouraging vice-chancellors to show pay restraint. But is this a contradiction? In essence, should vice-chancellors’ pay be set centrally or a free market prevails.
Our research suggests pay performance, human capital and institutional aspect dynamically combine to contribute to vice-chancellors pay, but more work is required to question the foundations and drivers of VC pay.
A final lingering thought is that the VC pay debate yet further mirrors the growing unease about senior salaries in the corporate world. VCs may have benefited from the marketization aspects, however, they may now be required to be accountable in the same way as their corporate counterparts.”
If you would like further information on this dynamic research, contact Professor Jill Johnes, Dr Deborah Allcock or Dr Swati Virmani.
You can read more on stories on vice-chancellors’ pay in this article by the Times Higher Education magazine