Category: compensation

College Presidents and Bonuses

A never posted draft dusted off and posted now.

While doing some research on a completely unrelated topics I came across a few articles on the question of whether college presidents should get performance bonuses.  One is from Insider Higher Ed and asks whether there should be bonuses for improved US News ratings (basically no, but with some dissenting voices) and another in Trusteeship, published by the Association for Governing Boards (also, mostly no). 

This is actually relevant to assessment since in the most general terms, assessment is about institutional accomplishment of stated mission goals.

So, let’s look at how obviously corrupt it is to give college presidents performance bonuses.

Why does one give performance bonuses?  To motivate behavior that rewards the institution.  But that is just the president’s job.  To counteract self-interest?  The most basic values governing a position like college president already rule this out.  Anyone who needs their self-interest balanced is corrupt to start with (in fact, the opposite is the problem for governing boards: they must be vigilant in ensuring that administrators do not use their position to feather their own career nest at the expense of furthering the institution’s mission).

Or maybe a governing board would want to show its appreciation for a job well done.  But who is actually doing the job?  Any president worth her/his stuff, knows the success of an institution of higher education depends on hundreds of individuals toiling away in vocational dedication to a task.  A president who accepted a financial bonus based on increased enrollments, higher selectivity, student learning outcomes or student success would be cynical in the extreme.

This model, ported uncritically and uncreatively from the private sector, assumes far less ambiguous goals and measurements of outcomes than exist in higher education. And it assume far more command, control, and executive power than exists in the private sector. And most of all, it probably inflates the influence of presidents on important outcomes.

Supporters likely only want to go half-way. It is unlikely that they would be willing to propose cuts when performance lags or when bad decisions reduce the performance of subordinates.

There could be a satisfying, if tragic, irony when such bonuses are offered: if it becomes widely known, the resulting demoralization of faculty and staff might undo the results that won the bonus.  But alas, the lag time in such things (and the fact that boards that give performance bonuses rarely administer failure penalties) would probably mean the chief executive could take the money and run (which would, perhaps, fulfill the goal of making higher education more like business).

The only ethical and rational thing for a board motivated to give performance bonuses to actually do is to reward the entire institution (and probably in a creatively progressive manner, not with an across the board percentage of salary).

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