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Academics have traditionally been seen as somewhat dusty, risk-averse people, not usually associated with rapid change or job hopping for higher salaries.
However, UK business schools have seen important changes in recent years. Significant numbers of senior academics are now moving between universities, and loyalty is becoming a thing of the past. The main driver of this relatively new behaviour is the offer of much higher salaries.
This year, the data will be collected for the UK’s 2014 Research Excellence Framework (REF). This assessment considers and rates the quality of research undertaken by teaching staff over the past six years at each university faculty and school. The results are published and feed into many of the published league tables over the coming six years. The assessment is also used by the UK government to allocate research grants to universities.
Research performance and publications in quality journals are effectively the property of the researcher. Thus if a researcher moves university then their research record transfers with them. With REF looming large for universities, a high-level research performance can be purchased by offering generous salaries and other inducements to targeted staff.
The mobility of teaching staff is usually restricted by family factors and a reluctance to sever local ties. In the academic world, however, in an attempt to attract top researchers it is now commonplace to shoehorn teaching and any other duties into two days a week. In this way the job can be undertaken from a distance without relocating the family, thus lifting the main impediment to employment mobility.
The terms of employment at universities usually contain little in the way of retention elements because the usual deferred benefits, such as bonus schemes and long-term share incentives, are not offered. Universities have a pooled final salary pension scheme arrangement so the funding costs of higher pensions are shared among all member universities. Moreover, academics frequently work independently, or with researchers from other universities who have a shared research interest and so there may be few ties for these individuals at their workplace.
This behaviour began in 2008 with the Research Assessment Exercise (RAE), the forerunner of REF. BY 2011-12 the number of academics moving between universities had multiplied. As these staff are “courted” and leave, their universities have little choice but to move into the transfer market to fill the vacancies. The outcome is higher salaries for the better researchers, with less work in terms of teaching and management duties.
Many universities have made significant bricks-and-mortar investment in their business facilities in recent years. To ensure ranking success they are now attempting to secure a top research rating. Business schools generate significant financial surpluses for universities that can be used to cross-fund less commercially viable faculties. The new undergraduate fee structure in the UK will only augment the surplus – as long as the school has an appropriate reputation.
Clearly academics, like footballers, are now in a position to appropriate some of this financial surplus and are doing just that. The nature of research ownership and the lack of retention elements in contracts permit this.
Contracts could be structured to improve retention. Industry has learnt to be flexible in retaining top talent, by investing heavily in management development, career planning for high performers, giving individuals greater responsibility and more involvement in the running of the business, as well as increased autonomy. This is usually accompanied by an increasing share in business ownership. A talented manager has to be given something to lose by taking the risk of moving to another business.
Many universities have plenty to learn from industry; perhaps business schools should similarly adopt more complex and deferred remuneration strategies?
Some football clubs have invested heavily in their stadiums and in players’ wages to attract the best performers, including managerial talent. Clearly such a significant investment in stadiums and wages needs the best management to achieve real performance.
This has not so far occurred in business schools where there has been a notable shortage of qualified and experienced people willing to manage schools. Salaries do not reflect the growing importance of this role, and as a consequence able managers remain in better remunerated industries, or in the case of academic researchers they stick to the bigger meal ticket.
Interestingly universities retain the traditional view of teaching as a commodity that does not command a premium in the market. It may be that the increasing importance of teaching experience in rankings methodologies will start to change this mentality, and as a result there may be a greater focus on and recognition of teaching importance.
For too long successful universities have relied principally on the reputation of their research records. They are now finding that without a clear retention policy, success can leave with little notice.
Dr John Colley is director of MBA and executive programmes at Nottingham University Business School.
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