Vice-chancellors' pay has soared over recent decades (although most accepted pay cuts this year [] 19 0 obj Gschwandtner and McManus (Citation2018) also utilised this data, reporting that, between 2007 and 2015, VC remuneration rose by 20.6% in real terms. By 2020, Australia had 39 self-governing and self-owning publicly funded universities. The authors gratefully acknowledge the assistance to access published historical documents provided by a number of Australian universities and access to archival records provided by the National Tertiary Education Union of Australia. It hasnt always been like this. But this is a huge shock and [politically] there is a sense that universities just needed reforming anyway and this would fix them up.. DETUROPE - The Central European Journal of Regional Development and Tourism 2021, 13(3):130-141, doi: 10.32725/det.2021.023 Million-dollar salaries for Australias vice-chancellors are becoming the norm even as drastic cost-cutting measures have resulted in the loss of tens of thousands of jobs and dozens of courses. Toward a stewardship theory of management, Compensation benchmarking, leapfrogs, and the surge in executive pay, CEO governance and shareholder returns: Agency theory or stewardship theory, Governing the twenty-first century university: A view from the bridge, Silent escalation: Salaries of senior university administrators in Ontario, 19962006, Changing patterns of governance for Australian universities, Reporting on vice-chancellor salaries in Australias and the United Kingdoms media in the wake of strikes, cuts and falling performance, Theory of the firm: Managerial behavior, agency costs and ownership structure, Chief executive pay in UK higher education: The role of university performance, An assessment of agency theory as a framework for the governmentuniversity relationship, Australian universities top world rankingsfor VC pay, The political economy of the rent-seeking society, Rank order tournaments as optimum labor contracts, Changing cultures in UK higher education: The state as corporate market bureaucracy and the emergent academic enterprises, Executive compensation as a corporate governance problem, Agency theory: Review of theory and evidence on problems and perspectives, The economic theory of agency: The principal's problem, Pay developments in Britain and Germany: Collective bargaining, benchmarking, and mimetic wages, University governance in flux. University of Melbourne vice-chancellor Duncan Maskell is due to become Australias highest-paid vice-chancellor from next month.Credit: Justin McManus. This includes South Australias three universities, none of which is in the world top 100. One of the reasons why the business people on Australian universities' senior pay committees 'have a very unrealistic sense of what salaries should be in the higher education sector' is because Australian business bosses' pay has also increased disproportionately to that of their workers and that of their international counterparts. He says winning the Nobel Prize has not changed him, although it is a wonderful door opener. C`fTmZK M(VePt5PT@9\AUVmk}K PeC?PR0m+Lw8^+NQL%KwU)7XRfBFe I%>~n+&:Sf2osq4 )u`iTnc^j1ZUhO5myv$ZkK3gHz{anw/i+KsY94[f M|6wjl-i@_^UV#}Uwh s;mIp'N}|fi;eT The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment. "Chief executives are paid for their business acumen. Governors do not want to go through the hassle of appointing a new vice-chancellor, so they make sure they give [the existing one] a little more each year. So there is a lot of mythology around the notion that academics in Australia are underpaid. Reporting on vice-chancellor salaries in Australia . Then COVID-19 hit. /Resources << As these universities became increasingly corporatised and marketised, they adopted the rhetorics and logics of market-based agency governance. Governance regimes determine remuneration forms and their allocation between potentially competing groups, reflecting organisational power dynamics (Neokleous, Citation2015). But $1 billion is an astronomical amount of money; it is more than the entire revenue of most universities, said Andrew Norton from the Centre for Social Research and Methods at the Australian National University. >> We now examine the dynamic governance regimes of Australia and the UK with regard to VC remuneration. In private firms such disclosures are designed to discipline agents towards not exploiting information asymmetries by highlighting their share of finite organisational resources. Million-dollar-plus salaries are a PR problem with the government and the general public. Fifth, stewardship tends to be collectivist whilst agency is individualistic (Davis et al., Citation1997, pp. She chose the Centre for International Economics. https://creativecommons.org/licenses/by/4.0/ Governments could, for instance, set fixed ratios between VCs remuneration and mean academic salaries. We discovered the accelerating universe to our satisfaction on January 8, 1998, seven days later, Schmidt says. "But university vice-chancellors don't do that. /ProcSet [/PDF /Text] >> Its a process that can take six hours or two, depending on the abundance of the harvest. Richard Adams Education editor. The government pushes freedom of speech and foreign interference agendas, but shows little interest in the role of universities in producing the next generation of doctors, nurses, lawyers, diplomats, architects, engineers, teachers and social workers. "Dr Spence is going to get half of what he does now, in a far more prestigious university," says Tom Smith. vice-chancellor salaries Last year, he donated his $14,000 long-service leave payment to a staff welfare fund. Alex Usher, Canadian-based higher education strategist, Help using this website - Accessibility statement, no evidence that vice-chancellors pay reflects the performance. That is, university councils are not sufficiently empowered or self-interested in the financial affairs of the university to act as effective principals none of their actions have the potential to maximise their own financial positionFootnote3 at the expense of vice-chancellors as agents and hence they are unable to exercise effective control as governors with respect to levels of VC remuneration. Reporting on vice-chancellor salaries in Australia's and the United Kingdom's media in the wake of strikes, . /Contents 43 0 R But unfortunately as weve seen in this crisis, the vice-chancellors have really come up with nothing. First, principals may institute costly governance systems that delimit, control and monitor agents actions. His predecessor, Michael Spence, earned more than $1.6 million in 2019, which included rent-free accommodation in a Victorian mansion in Sydneys Woollahra that has since been sold for $9 million. /Rotate 0 Similar trends are evident elsewhere, including Denmark (Boden & Wright, Citation2010) and Canada (Essaji & Horton, Citation2009). /Font 29 0 R In only 11 Australian universities were VCs formally excluded from such deliberations. Ive got enough, Professor Schmidt told AFR Weekend during his Lunch with the AFR. Financial exigencies considerably strengthened VCs and university governing bodies powers (Marginson & Considine, Citation2000). The Morning Edition newsletter is our guide to the days most important and interesting stories, analysis and insights. Permission is granted subject to the terms of the License under which the work was published. There is no evidence of a system of performance-based bonuses. In agency governance, executive remuneration will always exceed the true economic wage because it is designed to be at the optimal point to maximise return to the shareholder in a trade-off between surveillance/control costs and rewarding managers, such that they promote shareholder interests above their own (Jensen & Meckling, Citation1976). Johnes and Virmani (Citation2020) also note this rise, which accelerated when full student fees were introduced in 2011 as part of the further marketisation of universities. Its a poke bowl hole-in-the-wall and, despite the wintry chill in the air, we sit outside on a metal bench at a tiny table that accommodates our food (two poke party bowls) and drinks (a mineral water and a kombucha) and not much else. Julie Hare is the Education editor. >> 14 0 obj Has it made the self-confessed extrovert more guarded? Professors Tom Smith and James Guthrie from Macquarie University Business School said the average pay of Australia's 39 vice-chancellors - the university equivalent of a chief executive - is $985,000, compared to just $670,000 in the US and $635,000 in the UK. Isaac Newton had to leave town for several months or years. 2022-02-20T17:38:29+01:00 >> Exogenously, university governance in England (Scotland, Wales and Northern Ireland have somewhat different systems) now consists of loose state regulation of the emerging competitive higher education market through the Office for Students. >> 2729). /CreationDate (D:20220220173829+01'00') 10.32725/det.2021.023 People also read lists articles that other readers of this article have read. endobj /Type /Page In the US, Cheng (Citation2014) found that between 2004 and 2009 institutional performance played a very limited role in determining public university VCs remuneration. Resources foracademics and university staff, Everything you need for each stepof your study abroad journey. 3 Approximately half of the chancellors of Australian university councils are remunerated (as are some council members) but in general the levels of remuneration are modest and do not compare with the fees paid to company directors. Professor Schmidt, who negotiated a salary package of just two-thirds of his predecessor, Ian Young, said the university council had been concerned about what such a low salary would flag about the institution. Profits accrue to those who own the means of production as a reward for risking capital. Professor Gardner was among seven vice-chancellors whose remuneration declined, often because of altered performance pay arrangements, while some vice-chancellors rejected bonuses. In real market businesses, CEOs hold a lot of power, including the power to enrich themselves at the cost of the dividends paid to shareholders. Australian vice-chancellors also outearn their public university counterparts in the US, where full-year pay packages averaged about $560,000 (436,000) in 2016-17, according to the latest survey conducted byThe Chronicle of Higher Education. We find a high degree of theoretically predictable and empirically verifiable correlation between rising VC remuneration levels and shifts towards more market-based governance regimes in Australian and UK universities. The only thing on its research agenda is commercialisation, which, if we are honest, is never going to fill the coffers that have been emptied by absent international students. Annual condemnations of remuneration levels (Langford, Citation2018) are countered with mantras that VCs lead large and complex businesses within which they work hard for objectively set pay (Blanchflower, Citation2017). He was fourth on the list, but fortunately for Schmidt, the three other contenders received offers elsewhere. I think a lot about how to get my meaning out without becoming a headline.. /ExtGState 21 0 R /Type /Page [2] He is currently the President and Provost of University College London. But at Bartlett High School, a local public school with 2000 students, he found a posse of like-minded souls and teachers. DETUROPE - The Central European Journal of Regional Development and Tourism 2021, 13(3):130-141, doi: 10.32725/det.2021.023. /ProcSet [/PDF /ImageC /Text] DETUROPE - The Central European Journal of Tourism and Regional Development By 2020, Australia had 39 self-governing and self-owning publicly funded universities. NTEU president Jeannie Rea said that vice-chancellors rising pay packets contrasted with a constant decline in ongoing decent jobs at universities. If you are experiencing technical difficulties with your application, please email the Recruitment team or phone 03 5327 9756. 2. /Creator (SolenSoftware Actavia 3.4 \(Journal system\)) In January, a NSW parliamentary inquiry urged the Auditor-General to review salaries paid to vice chancellors, arguing there was a failure of leadership when university bosses could earn 25 or 30 times more than staff, many of whom were in insecure work. /Type /Page You might also be interested in the following pages: As Table 2 starkly reveals, this ratio has increased very considerably since then. It will be hard for an incoming Labor government not to put the screws on those universities that made money while laying off staff.. In sum, rapidly rising VC remuneration is not strongly correlated with performance. His family moved around as his father, Dana, pursued an education in fisheries and aquatic biology. By closing this message, you are consenting to our use of cookies. << Mark Scott, who picked up the reins at Sydney University last July and delivered Australias largest-ever university surplus, earns a base salary of $982,800 a year, with a potential 20 per cent bonus increasing it to $1.15 million. academic workforce casualization Vice-Chancellor agrees to unlock salary increases to ease COVID-19 financial impact on staff. Its easy to be flippant about it, he says. These are the worst of times. The salary gap between Australia's university bosses and their staff has widened after solid pay rises launched more vice-chancellors into the million-dollar club. These reforms have since deepened and accelerated, especially in England where deregulation and student fees have heralded significant competition and marketisation. This has weakened collegiality and strengthened hierarchical managerial control by VCs and, to a lesser extent, university councils (governing bodies) (Trakman, Citation2008). There is a long-running cyclical public debate in the UK and Australia about the level of vice-chancellors remuneration in publicly funded universities. I keep reminding people that a university is not a corporation, says Schmidt. Relations between universities and the Coalition government are frosty, as the JobKeeper scenario spells out. . People forget that the private school phenomenon is very much an Australian thing. Rent-seeking points to a significant breakdown in university governance. Of course, these are demanding roles, but econometric research demonstrates little, if any, relationship between vice-chancellors pay and their actual performance. This system persisted until the late 1990s, when it was replaced by decentralised local enterprise bargaining, consistent with more managerialist employment practices (Anderson et al., Citation2002), under which academic salaries were determined by each university. One of Victorian's lowest paid Vice-Chancellors, Professor Iain Martin at Deakin University, voluntarily took a substantial pay cut when he took the job, bringing his salary to $819,000 for 2020 . 6 0 obj Its just not that important to me. 3435). /Type /Page Econometricians also looked at what might be driving these pay hikes. Deturope. SolenSoftware Actavia 3.4 (Journal system) (Bachan & Reilly, Citation2015, p. 69). Another $100 million came from the sale of land to the NSW government, while philanthropists responded to the pandemic with open chequebooks. << /MediaBox [0 0 595 842] He said when Sydney University vice-chancellor Michael Spence leaves Australia next month for UCL university in London, he will be taking a salary cut of more than 50 per cent. That was pretty bad. Not directly comparable: 2017 and 2016 figures not directly comparable because of vice-chancellors starting or ending their terms mid-year. /ProcSet [/PDF /ImageC /Text] /Type /Page Turning to the highest paid vice-chancellor in Australia, The University of Melbourne's Professor Duncan Maskell's salary is $1,469,999, a pay cut of $44,000 from 2020. /Font 26 0 R /ProcSet [/PDF /Text] By the 1990s, self-serving managerial behaviour was widespread, leading shareholders and governments to demand a shift towards greater formal, endogenous and exogenous surveillance and control measures such as non-executive directors, remuneration and audit committees, and the strengthening of shareholders legal rights (Cadbury, Citation1992). 12 0 obj >> Apart from a small number of newer for-profit institutions (beyond the scope of this article), universities remain private, charitable and self-governing. /ExtGState 40 0 R For example, York, where an interim Vice Chancellor in the previous year and relocation costs for the new Vice Chancellor pushed the total pay for 2019-20 up by 64,771 on the year before. We argue that this area requires urgent governance reform. $100 million a year, still wouldnt do it. /MediaBox [0 0 595 842] Dr Spence has since taken up the role of of vice-chancellor at University College London where his earnings are about half the previous figure. I ask Schmidt why relations are so strained. Gordon, in the meantime, applied for six jobs and was offered all of them. Purpose and Objectives. He is also the Director of the Grattan Institute, Melbourne Business School and the Melbourne Theatre Company, a board member of the Group of Eight and Universities Australia, a non-executive director of CSL Limited, and an ex-officio member of the universitys companies and controlled entities. Professor Tom Smith, who heads the department of applied finance at Macquarie University, said vice-chancellors salaries had been inappropriately benchmarked against government department and corporate chief executives since the 1980s. Most Likely Range. Vice-chancellors take a pay cut but three remain in $1m club. However, 12 universities had a change in leadership during the year and six had not publicly reported their financial data at the time of writing. /ProcSet [/PDF /Text] These posts are also variously named president, principal or rector. The second root cause of the over-compensation of VCs in both Australia and the UK, as we have highlighted, is that many officially sit on their own universities remuneration committees. 8 0 obj The extent to which these have been effective remains moot. Our analysis has found that 60 per cent of uni . Note 3: * represent years in which the VC may have not served for the full calendar year. Were working to restore it. /MediaBox [0 0 595 842] >> /ExtGState 48 0 R On the basis of the data presented in this article, we argue that it may also explain, at least in part, the escalation of VC remuneration in Australia and the UK. In salary tournaments, pay levels reflect the hierarchy of organisational roles. Did you know that with a free Taylor & Francis Online account you can gain access to the following benefits? In the Group of Eights [sandstone, research-intensive universities] you dont, because the power is in the professoriate. Sydney University has recorded an unprecedented $1 billion surplus. In 1994, it required universities, as with private firms, to declare senior staff remuneration in their annual financial accounts (Baimbridge & Simpson, Citation1996) (a requirement mirrored in Australia). In both Australia and the UK, VCs remuneration is determined by a remuneration committee of the council for each university. "Dr Spence is going to get half of what he does now, in a far more prestigious university, and the UCL salary is actually worldwide competitive," he said. Using this, Bachan and Reilly (Citation2015) found that VCs enjoyed remuneration growth of 59% in real terms from 1997 to 2009. Schmidts motivation was that by keeping ANU small and elite, a high-quality education and experience could be guaranteed for all students, international and domestic. But the big difference is, if the CEOs of big companies are doing a good job strategically and bringing in billions of dollars, then shareholders are happy if they get a couple of million, Professor Smith said. /Type /Page NR: not ranked. First, agency favours measurable, extrinsic motivations such as remuneration, whereas stewardship focuses on less measurable intrinsic factors such as personal growth and achievement (Davis et al., Citation1997, pp. THE, The Chronicle of Higher Education. 15 0 R 16 0 R] Alex Ellinghausen. Agency theory casts owners as principals and managers as their agents, with both seeking to maximise their own financial position at the expense of the other (Ross, Citation1973). It was not debated before the state election and will be reintroduced by Greens MP Robert Simms, who has argued it is inappropriate for vice-chancellors to be paid like multinational corporate CEOs. Third, the institutionalised and sometimes coercive structural power of agency relationships can be distinguished from the personal expert and referent power of stewardship (Davis et al., Citation1997, pp. Schmidt and Gordon have a pretty bush block near the small town of Sutton, a 30-minute drive from Canberra. Consequently, the federal government established the Australian Universities Commission, which centrally determined [p]retty much everything on funding (Forsyth, Citation2014, p. 129). Just a few months earlier he had met her mother, Daphne who was at Harvard visiting her daughter when she came across Schmidt making strudel on a bedsheet in the residential halls kitchen. The balance of internal power shifted away from academic senates to university councils which became smaller and focused on strategic and financial matters (Rowlands, Citation2017). University councils, which appoint remuneration committees, may therefore be insufficiently powerful or insufficiently self-interested as principals to control the process adequately. I raised my hand before all of this and lowered my intake, right? Professionals were seen as unaccountable and self-serving, making the self-governing universities with significant public funding an obvious target (McNay, Citation1999). A spokesperson for the University of Melbourne said the gross remuneration figure published in the universitys annual report did not take into account the pay cut he and other senior executives took for six months.
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