Keeping up with academic Jones’: benchmarking and university Vice Chancellors’ pay in the UK

Gmeiner, Michael W. ORCID: 0000-0002-9604-4061, Gschwandtner, Adelina and Mcmanus, Richard (2023) Keeping up with academic Jones’: benchmarking and university Vice Chancellors’ pay in the UK. Higher Education Policy. ISSN 0952-8733

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Abstract

We study the pay of chief executives of higher education institutions in the UK, known as Vice Chancellors (VCs), over a ten-year period. As different institutions might have different missions and follow different performance objectives, we use the LASSO method in a novel way to choose which performance parameters are most strongly associated with VC pay for each institution. Moreover, we use the same method in order to decide if and how institutions benchmark against other institutions in terms of VC pay by constructing a set of benchmarks for each one of them. We find that while institutions at the lower and medium end of the pay distribution benchmark primarily against institutions with larger VC pay than themselves, the institutions at the higher end of the pay distribution benchmark are primarily towards performance parameters. This type of behaviour can explain the recent inflation in pay observed in the sector. Empirical evidence as well as results from simulations motivate a policy recommendation that symmetric benchmarking by all institutions would prevent upward ratcheting of average VC pay. While we are looking at data stemming from the academic sector in the UK, the method and the recommendations can equally apply to other salaries that are benchmarked such as the ones of professional athletes or CEOs worldwide and therefore, bear generality.

Item Type:	Article
Official URL:	https://www.palgrave.com/gp/journal/41307
Additional Information:	© 2023 International Association of Universities
Divisions:	Economics
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management H Social Sciences > HC Economic History and Conditions
JEL classification:	Z - Other Special Topics > Z1 - Cultural Economics; Economic Sociology; Economic Anthropology > Z13 - Social Norms and Social Capital; Social Networks G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J33 - Compensation Packages; Payment Methods
Date Deposited:	24 Nov 2023 14:12
Last Modified:	18 Nov 2024 20:03
URI:	http://eprints.lse.ac.uk/id/eprint/120863

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