The most comprehensive study into university vice-chancellors’ pay has demolished their claims that their huge rises are based on performance.
Economists have shown that instead it is the vice-chancellor equivalent of “keeping up with the Jones's’” as the lower-paid race to close the gap with the best-paid university bosses.
“A better performance of the VCs is not what causes a higher pay,” say the researchers who analysed the performance of 154 universities’ vice-chancellors over a decade on everything from the quality of their university’s research to increasing student participation.
“It is much rather a benchmarking behaviour where those universities with below average pay increase their VC pay quicker than those with average pay.
“’Keeping up with the VC Jones’s is what seems to explain the recent inflation of VC pay, rather than their good performance.”
No previous study has analysed the relationship between pay and performance as comprehensively, according to the researchers, and the findings are likely to be studied closely by the government and new Office for Students which is seeking to crackdown on vice-chancellors’ soaring pay packets.
The economists Dr Adelina Gschwandtner, from Kent University, and Dr Richard McManus, from Canterbury University’s Christchurch business school, used complex economic models to test the vice-chancellors’ claims that their average pay rises of 41% in 10 years were due to improvements in the performance of their universities.
The pair say the ratio between vice chancellor and staff pay is increasing with those at some universities earning 12 times more than the average of academic staff and 35 times more than the average workers in the local area. While vice-chancellors pay rose by 41% in a decade, academic staff’s increased by just 3%.
However, the researchers found no evidence for a causal link between vice-chancellors’ pay rises and the performance of their universities, based on analysing six criteria including expanding student numbers, the popularity of their institution, their league table positions and research excellence.
“There is not a statistically significant link between a change in pay being associated with a change in performance,” they say.
“That is, high performing institutions pay higher salaries to their chief executive [vice chancellor] but changes in either pay or performance is not associated with changes in the other.”
The researchers instead turned their attention to the benchmarking theory where, using sophisticated economic and mathematical models, they found that 71% of the variance in vice-chancellors’ pay could be explained by the “keeping up with the Jones's” thesis.
The pay of vice-chancellors in the lower or middle brackets rose by up to 6 points greater than those at the top end – even those who were highest paid continued to enjoy decent increases in their salaries.
The researchers cite Bath University and Bath Spa University, which claimed they got value for money as the performance of their vice chancellors was outstanding during a turbulent time in higher education and their universities had flourished under their leadership.
Bath University vice chancellor Glynis Breakwell left with a final annual salary of £471,000 after a series of bumper pay rises. Her pay pushed the ratio between the university’s lowest and highest paid to 30:1.
Bath Spa University paid its vice-chancellor Christina Slade more than £800,000 in her last year in office, including a £429,000 compensation for loss of office.
Dr Gschwandtner said the benchmark that universities used was often the pay of the Russell group of leading research-intensive universities to which others aspired.
However, she added: “The relationship between pay and performance needs to be strengthened. We need to have a structure like you have with shareholders in business to hold them to account.
“Normally, vice-chancellors’ tenures are relatively short. They stay for five years on average. To improve a university takes years. If they are paying them more based on what others are paid, they should be more frank about it. They should not come out with this good performance argument when it is not the case.”