Professorial Pay Banding
John Gathergood
Large organizations need equitable, transparent and flexible pay setting arrangements for senior staff. Universities are no exception, and with professorial university staff attracting high salaries (when compared to median salaries in the population), we have a responsibility to create appropriate structures for senior pay.
As part of a research project for the Royal Economic Society, together with co-authors I have analysed professorial pay in UK universities. This project uses data on professorial pay for the universe of UK professors provided by the Higher Education Statistics Authority. This analysis shows that professorial pay varies across disciplines and is mainly determined by two factors. First, external demand for the skills and experience of professorial staff, which is particularly high in medicine, many areas of engineering, business and economics, and law. If universities are to retain top talent in these fields, they need to pay competitive salaries relative to external offers in the sector. Second, internal demand and value creation within the university environment. Professors who attract very significant research funding, or teach executive education and high-fee finance degrees, or work in internationally mobile areas, are in particularly high demand. To retain top talent within our university, we need to pay competitive salaries in the face of external offers from competitor institutions. In recent years we have faced challenges when seeking to retain staff in the most competitive disciplines.
At the University of Nottingham, our current professorial pay structure is based upon a traditional ‘civil service’ model of a de facto automatic progression to a standard maximum, followed by limited opportunity to progress to a small number of discretionary points, with no clear descriptors of performance commensurate with pay at different levels. Under this structure, pay is strongly determined by job tenure, and exceptional performance is rewarded by one-off movements to a new, fixed pay point, with very limited scope to achieve pay above the super maximum.
This traditional structure has two particular shortcomings. First, it offers little reward for exceptional performance or to adjust pay with in line with performance, due to the lack of progression opportunities and a high degree of rigidity in pay setting. Second, pay progression relies too heavily on job tenure. This has many drawbacks, but the most prominent and severe of these is that it exacerbates gender pay inequality. With female staff having on average shorter tenures in professorial roles (due to on average being promoted to professorial positions at older ages), age-based salary setting overly favours male professors.
In response to the need to engage in responsive, competitive pay setting, the majority of universities (and nearly all Russell Group universities) have adopted banded professorial pay structures. Banded pay structures allow significant scope for pay progression, with clear pathways to higher bands, and hence higher pay, in line with transparent band criteria. They also allow progression to be accelerated, removing the reliance on job tenure that contributes to gender pay inequality. A move to a banded professorial pay structure is therefore a move to an equitable, transparent and flexible pay structure fit for a modern organization, which will help the university achieve its goals of improved performance and staff retention while also contributing to reducing the gender pay gap.
John Gathergood is Professor of Economics and Associate Pro-Vice Chancellor for Research and Knowledge Exchange in the Faculty of Social Sciences