Build Compensation Packages to Protect Your Institution and Attract Top-Notch Leaders

Opinions expressed in AGB blogs are those of the authors and not necessarily those of the institutions that employ them or of AGB.

When institutions conduct searches for presidents or other senior leaders, building the right compensation package should be a primary concern. Compensation must be fair, defensible, and competitive to attract excellent candidates and stand up to scrutiny. Boards and hiring officers have the option to engage with an independent third party to conduct a thorough qualitative and quantitative analysis of peer and aspirant institutions. This analysis affords a deep dive into how the institution can be attractive to candidates without inviting concern.

Presidential Compensation Packages

The 2017 American Council on Education’s American College President Study found that 54 percent of presidents or chancellors said they planned to leave their current positions within the next five years. In addition, the average tenure of college presidents in their current positions was 6.5 years in 2016, a downward trend over the previous decade. Right now, there is significant movement at the presidential level, so institutions must be prepared to offer attractive compensation packages at a time when enrollment may be declining. This is a critical time to evaluate presidential compensation levels against both peer and aspirant groups not only to gauge competitiveness, but also to determine what a new president could command.

Cabinet Compensation Assessment

This is also an opportune time for presidents to assess the compensation of their Cabinet. Recruiting and retaining talented team members should be priority as institutions navigate exceptional challenges now and likely for the foreseeable future. It is recommended that institutions conduct compensation evaluations approximately every four to five years, allowing for a smoother, more efficient hiring process by having current data in hand.

Compensation’s Role in Increasing Equity

Compensation plays an important role in the pursuit of equity in higher education. In the past six months, many institutions have made public statements condemning racism and pledging to eliminate the barriers that prevent communities of color and other underrepresented groups from accessing higher education; this pledge can and should extend to higher education administration, including fair and equitable compensation. Studies show that women in higher education administration earn on average 80 cents on the dollar compared to men, and the gap only increases for people of color. Further research also shows women and communities of color in higher education are disproportionately underpaid in leadership while overrepresented in lower-level leadership roles.

Importance of Defensible Compensation

It is crucial that the development of compensation packages is handled carefully and thoughtfully by the Board or hiring committee. AGB Search’s partnership with CUPA-HR ensures that well-researched data inform the development of a fair, competitive compensation package that also serves to eliminate income inequality.

Compensation decisions by both public and private institutions are of increasing interest to parents, students, staff, donors, legislators, and the general public. State sunshine laws and the now legally-mandated posting of IRS Form 990s ensure disclosure of compensation, and news of the packages approved is usually reported – and sometimes widely discussed – in the media.

How Compensation Evaluation Works

AGB Search’s Compensation Evaluation Service (CES) is affordable and timely, with reports returned to Boards within three to four weeks of a signed letter of engagement. In addition to assisting with peer and aspirant group selection and compensation statistics, the CES report provides guidance on the process Boards and other decision makers should follow in setting compensation to be compliant with law, regulation, and standards of good governance. Multi-position CES reports (analyzing salaries and benefits for entire Cabinets, for example) are also available for an additional fee.

Related Resources:

• UPCOMING EVENT – AGB Ask The Experts Session (October 21^st,2020  12:00 pm -1:00 pm EST)
  AGB Search: Executive Search Process for Client Partners
• Conducting Virtual Searches
• A Complete Guide to Presidential Search for Universities and Colleges
• Presidential Compensation: A Comprehensive Guide for Higher Education Governing Boards and Chief Executives

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