Remunerating University Presidents

Remunerating University Presidents

Ed Walsh

Competition in the knowledge age has become a race for
talent: universities have moved to the apex of the competitive system in developed
countries. World-class universities give a special competitive edge: they strongly
influence foreign direct investment and wealth creation. As a result
governments globally are pressing to ensure that their universities are vibrant
and competitive.

Most European governments are agitated by the fact that
their universities fare so badly in new international rankings. Prior to World
War II the world’s best universities were in Europe.  Now the US wins most of the Nobel Prizes in
science and European universities make poor showings.  Eight of the world’s top ten universities are
in the United States
and of these seven, such as Harvard, Yale, Stanford, MIT and Columbia, are run as private corporations
with the associated no-nonsense policies that nurture excellence and ostracise the

In contrast many European states have in effect nationalised
the universities, turned academics into public servants, locked them on salary
scales and created bureaucratic formulas that often tolerate mediocrity and
fail to reward excellence. Talent has drifted away and many ofEurope’s once-great universities have been humbled.

Poor rankings in the international polls have highlighted
this reality and many European governments are now moving to revitalise their lack-lustre
universities. Germany
is attempting to create nine elite universities and Britain has given university
leadership considerable discretion in fostering and recruiting vital talent.

Recently, under the National Development Plan, Irelandhas
moved in a most determined and creative way to boost the low research standing
of its universities and compensate for 80 years of neglect. Research funding
has been dramatically increased from miserly millions to generous billions in a
way that has caught the imagination of the multinationals and the international
research community.  Science Foundation Ireland has
been established with panache and is proving a remarkable success. Flexibility
has been demonstrated in offering the kind of remuneration packages essential
to compete internationally in attracting some of the world’s great researches to
Ireland.  The strategy is already paying off: major
multinationals have commenced to make research investments unprecedented in Ireland. Enterprise that invests
in research and intellectual talent puts down deep roots that make flitting eastwards
before the next minimum wage increase much less likely.

But our universities are still under the maw of the state,
governance structures are inappropriate and cumbersome, the executive is
constrained and leadership lacks the financial discretion necessary to weave
and duck while pursuing and capturing world talent.

The best of the US, UKand Australiauniversities have the
kind of discretion that permits them to ‘go for broke’ in the pursuit of a
person who is vital…an academic who is a potential Nobel Laureate or a
president or vice president with the necessary exceptional abilities. Ireland’s
development agencies are becoming increasingly aware that Irish universities
need similar flexibility and unless a number of our universities make good
progress towards the top-100 international rankings Ireland’s long-term wealth and job-creation
prospects are at some risk.

Moving a university into the top-100 category calls for
remarkable commitment at all levels: especially from the president and vice-presidential
team.  Courage and management skill is
called for in terminating jaded programmes and transferring resources to more
relevant ones, facing down entrenched university groups committed to the status
quo and then selectively allocating resources and reward to those who are
committed to change, relevance and the pursuit of excellence.  Unless the Irish universities are encouraged
to do this, and can compete internationally in attracting and retaining the
necessary leadership talent, Ireland
will fail to sustain the building of the great universities it needs.

The quality of the university executive leadership team is a
key determining factor in building a great university.  Despite the public image created by gown-clad
presidents mumbling Latin at conferring ceremonies the leadership and executive
challenge at presidential and vice-presidential level are immense.  With annual budgets now measured in fractions
of a billion, several thousand staff, overseas programmes, international
fund-raising and a diverse list of campus companies, few are fit to undertake
the multidimensional role of university president.  Given the nature of the people involved and
the complexity of the structures the challenge in driving forward a university
is far more demanding than doing likewise with a business of comparable scale.

Universities intent on achieving excellence compete globally
and use international head-hunters to track down talent.  When a presidential or vice-presidential
vacancy is due to arise a major global talent hunt is launched. In leading US universities
salary is seldom the constraint: but finding the right person willing to take
the job is.

The situation in Irelandis otherwise. University
governing authorities are finding that, while they have the discretion to
head-hunt, salary constraints dominate the recruitment of senior talent.

The annual salary paid to Irish university presidents ranges
from €186,000 to €205,000 and in some cases the president is obliged to live on
campus in the president’s residence (often considered more of an imposition
that a benefit). It might seem that remuneration is high enough already and the
proposal to move into the €300,000 range is unjustified.  But the reality is vividly evident, to those
attempting to recruit leadership at both presidential and vice-presidential
levels, that existing remuneration packages are uncompetitive. For example, recently
a potential candidate for a vice-presidential position at an Irish university was
approached.  He was working in a senior
position in Ireland
and willing to accept the university challenge, but when it emerged that his
existing earnings were over €300,000 discussions came to a grinding halt: the
university could not compete and the appointment was not made.

With experiences like this it is not surprising that those
who recognise the importance of moving our universities towards the top-100
league realise that, if world-class leadership is to be attracted and retained,
must abandon the old constraints that hamper senior executive recruitment. Ireland has
made great strides recently in putting flexible remuneration packages in place
to attract academic research talent; it must do likewise for university

Remuneration for university presidents has escalated rapidly
elsewhere, as an increasing number of developed countries competes intensely for
scarce talent. Ireland
is now at a serious competitive disadvantage. In the UK the earnings of many
university vice-chancellors breached the €300,000 mark several years ago, while
in the US fifty university presidents are paid over $500,000 and five over $l
million a year.

In this competitive international context the proposed
annual salary for Irish university presidents, in the €300,000 range does not
appear outlandish. Smart organisations committed to excellence don’t skimp on
their senior executive team.

7 January 2007

Irish Times

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