Chief Executive’s pay: a provocation

Lord Adonis has provoked a discussion on Vice-Chancellors’ pay.  Follow his tweets and you’ll see that he moves from the issue of tuition fees to the twin issues of the length of degree courses (which unwisely he linked to long summer holidays for academic staff) and VC’s pay.  There have been comprehensive rebuttals of the holidays issue – (see the Plashing Vole here) but not so obviously on VC’s pay.

This is not a defence of Vice-Chancellor’s pay.  This is not even an attempt to explain all the different facets that make up the reason why Vice-Chancellors pay has increased (one issue – the transfer market for ‘successful’ VCs  – I’ve touched on before).  I just want to touch on an aspect of the change:  that universities are now in a complex ‘market’ situation, and you can start to understand why remuneration committees are getting excitable about recruiting or retaining good Vice-Chancellors.

Universities have always competed for students, staff and resources.  Oxford and Cambridge Colleges built new accommodation blocks in the 18th Century to attract the sons of nobility.  Our central clearing house for admissions is a testament to the competition for the best applicants, even when demand severely outstripped supply.  The rhetoric around these markets has increased however.   Universities have struggled in the past, and the history of mergers hints at those past difficulties.  Starting with the talk of avalanches, we now see market forces at play – the VC at Huddersfield has launched a voluntary severance scheme citing:

“Once again the higher education sector faces many challenges – private providers are being encouraged to enter the marketplace, there is uncertainty about fees and our competitors are being increasingly aggressive in their student recruitment tactics. All this must influence how we shape our strategy for the next few years.

“To ensure that we maintain and develop our place within the market we have begun a process of closely analysing the provision we offer and this will continue into the future.

Different generations will no doubt understand aggressive student recruitment tactics differently; the first prospectus was probably seen as being a bit pushy, certainly De Montfort’s first TV ad was.  The point is that universities’ position as a safe public sector organisation is now under threat, even to the point of ‘market exit’.

One core argument why private sector pay is higher than in the public sector is risk.  In the private sector staff are hired and fired more easily, companies close or are taken over.  As a company can be more volatile, senior managers take greater risks, and should be rewarded.   Universities are not businesses, and comparisons are invidious, but, just for fun, here’s a quick comparison.

RM Plc

Let’s look at RM plc; a ‘major provider of resources, software and services to the education sector’.  RM has had some difficult years as they’ve transitioned out of providing hardware for schools into other services.  RM is heavily dependent on education spending, the bulk of which comes from public sources.  It employs 1800 people of whom 600 are based in India.    Its revenue for the year to November 2016 was £167.6m.

RM

RM’s remuneration policy is set out in its annual report.

The Policy is designed to attract, retain and motivate Directors and senior employees, both to achieve the Group’s business objectives and to deliver outstanding shareholder returns. To achieve this, RM’s Remuneration Policy aims to provide ‘median’ reward compared to comparator groups when acceptable levels of performance have been delivered. For the achievement of outstanding performance, it aims to deliver ‘upper quartile’ remuneration compared to comparator groups.

Helpfully the policy also says it avoids excessive risk taking by executives just to try and maximise their own personal returns.  The chief executive received total remuneration of £655k in the year to Nov 2016 (this includes shares – which accounts for why the sum is significantly down on the total of £1246k in 2015 when he got £749k worth of shares).

University of Bath

The University of Bath employed 2800 staff in the year ending July 2016, and had an income of £263 million.  Clearly it is also dependent on direct and indirect public funding for education and research, but its income has been going up each year, and it is exceeding its targets for surplus generation.

bath

We’ve all seen that the Vice-Chancellor got paid £451k in the year to July 2016, and Lord Adonis pointed out that benefits in kind and external income probably carried that to over £500k.  Although Bath is a successful university, no doubt the attention the news got is because it is not one of ‘leading’ universities (©Russell Group).

The University of Bath isn’t a company, and there’s no suggestion that you could interchange its chief executive with that of RM Plc.  But the chap at RM got paid £200k more in 2016 for running a company with 1000 fewer staff and £100m less revenue/income than Bath.

Greed

Lord Adonis rounded on the University of Bath in the House of Lords.  He noted that Bath was a ‘mid-ranking university’ and as the bulk of its funds came directly or indirectly from Government, they should have a say in the pay levels.

… the highly paid should set an example, particularly at a time of pay restraint. The only example the vice-chancellor of the University of Bath is setting to her staff is one of greed.

If the VC at Bath getting £451k is ‘greed’, then why isn’t the same tag applied to the CEO at RM?  Maybe Lord Adonis would think it is, but I think that’s unlikely.  Lord Adonis is a board member at RM and sits on the remuneration committee.  You’d have to assume that he’s signed up to their remuneration policy, and doesn’t think that the CEO getting £655k – a large part coming from school budgets – is setting a bad example.

CEO pay is a general problem.  It cannot be justifiable that their work is valued so much more highly than the work of others in their organisations.  That’s not to say that  there shouldn’t be something of a differential as greater responsibilities are taken on, but not at so steep a gradient.  Universities should push back against the corporate model, no doubt advocated by governors with experience of company boards, against the inflated wages for the CEO/VC.

 

 

 

 

 

 

 

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Disrupting Academic Dress: The Girls’ Own Paper

For most universities graduation brings the only occasion that academic dress is worn.  In the main this is an occasion that requires a hire company as graduands aren’t going to need it again.  Universities tend to hire it for their staff, so most don’t own a set.  This has meant a fairly stable economy for the academic dress hire companies; growth in the sector has seen a rise in the number of institutions and ceremonies.

This looks like a stable business, after all Ede & Ravenscroft have been in business since 1689.  One new company, Marston Robing, have branched out into offering extra services such as children’s graduation gowns.  In his affectionate  summary of the fun of graduation, Paul Greatrix notes that there’s now a disruptive company Graduation Attire, offering a service direct to the graduate.

gard

No doubt this will challenge some university ceremony organisers – the ties that a university has with its gown provider are often very long, and as Paul notes, there are challenges in getting the colours or patterns just right.  Dig out the academic dress regulations for your university and you’ll find a set of exacting requirements (helpfully collated by the wonderful Burgon Society here).  Although the description of gowns and hood may look similar in principle, look carefully and you’ll soon see that the claret and blue combinations for PhDs at Nottingham and Southampton are as distinctive as the claret and blue combinations for Aston Villa and West Ham.   There’s a disclaimer offered by Graduation Attire:

Whilst our hoods are normally very suitable for use at Graduations, we are always slightly cautious about recommending this where we are not the Official Robe maker. Usually a University will have a contract with an official supplier and you may not be allowed to cross the stage if you are not wearing full and correct academic dress. Our hoods will conform to the regulations involved but may differ in shade from those provided by the Official Robe Maker and this may make you look different from your colleagues as you cross the stage. Since it is your responsibility to ensure you wear the correct academic dress at your Graduation and it is such an important day for you and your guests, we strongly recommend you explore all options with the Official Robe Maker first.

Although having an ‘Official Robe Maker’ makes sense, it’s not obligatory.  In Oxford, where academic dress features much more in the daily life of the university, there is no monopoly provider.

University Hoods and How to Make Them

But what if there was another way of disrupting the monopoly?

The Girls’ Own Paper launched after women had won the right to enter examinations at English universities, and its advice column carried useful details on how to be admitted etc.  More fabulously, they had a stupendous article which noted that women had ‘an equal right to disport themselves in the distinctive hood of their degree whensoever and wheresoever they may deem fit’ (Vol1 no36).  But, they noted, there was the problem of the costliness of these articles.  The answer was that the ‘cost may be greatly reduced by making at home’ and that the paper would ‘place within reach of our girls an additional means of bestowing a most useful and acceptable gift upon father, brother or cousin’.

The article gives a history of academic dress, and sets out the various different colours of the hoods, each denoting the different degree.  The reader is advised to see an example of a hood before ordering their silk as the colours are unique: ‘Palatinate purple [Durham] is a pale tint, more nearly approaching the mauve or lilac of a milliner, yet not quite like either of these’.  The texture is also described: ‘the glossy black silk used as alining to the Divinity hoods is the bright glacé silk, in popular use for ladies dresses before the rage for dull, heavy cords set in.

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The Cambridge MA Hood

Then comes the instructions on how to actually make them.    Having laid out your black silk, a white silk lining then laid on it, with a further black binding (details available on request).

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The Oxford hood

The Oxford version is much less complicated (one of those rare occasions when Oxford is less complicated than anything).  The BA hood being lined with fur and the MA hood with crimson silk.  The BMus and BCL hoods are made of an ‘ordinary blue corded silk, such as is used for ladies dresses, of not too pale a shade’.

Equipped with these instructions, and hopefully an existing hood to cut an accurate pattern from, the author hopes and believes that ‘by a careful study of these directions a very successful hood may be made’.

The admission of women to British universities was the most extraordinarily disruptive act.  It’s dangerous to assume the motives of the editors of the Girls Own Paper, but I like to think this article is being both practical and also wonderfully subversive.  Yes; women could make hoods for their fathers and brothers, but also they could now ‘don those bright distinctive badges of their well won honours’ for themselves.  Good luck if you want to make your own hood – but just reflect on how marvellous it is that so many people can now ‘disport themselves in the distinctive hood of their degree whensoever and wheresoever they may deem fit’.