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    UVa and Teresa Sullivan: Managing Faculty without Money

    The debacle at the University of Virginia, whose Board of Visitors hastily fired President Teresa Sullivan, has been a lesson in how business-oriented trustees can urge bad business practices. My earlier post listed some of the imprudent ideas that Sullivan was resisting: a big bet on online learning with no business plan or revenue stream; a desire to chase expensive star faculty from outside UVa instead of building in-house; and a drive to reallocate funds from profitable but unglamorous fields to sexier, less profitable enterprises that the Board of visitors preferred. What took me totally by surprise is that Sullivan's antagonists wanted big raises for faculty during a budget crisis, and were dissatisfied that Sullivan only found money for 2% raises. That's flabbergasting.

    What that illustrates is that Sullivan's opponents aren't driven by business sense but by business culture.

    They're not demanding fiscal prudence (which university trustees have always done, and which many trustees from finance and business have done very well). Instead they're expressing a set of habits and values common in parts of the business world. The key Board members have bought into an especially shallow and naive version of that business culture, but they're extreme illustrations of a wider problem. It's all too easy to apply popular management ideas to a complex enterprise whose economic model you don't understand. And that can lead to trustees like Helen Dragas and Mark Kington demanding moves that, viewed simply as business, are risky and unsound.

    There have been hints about the faculty-salary argument before now: in the fairly incoherent op-ed by putsch-supporter Paul Jones (in which Jones cites the $140,000 average salary for full professors at Virginia as "alarming") and in Sullivan's defense of herself to the Board, in which she makes a point of having found money for a small raise this year. Now, Board Rector Helen Dragas's latest statement confirms that faculty salaries were a contentious issue, and a small raise did not suffice.

    This disagreement reflects a misunderstanding about how to manage university faculty, who are much less motivated by money than employees in finance are. Every employee is motivated my money to some degree, and certainly professors will never turn down a raise, but it's only part of the mix.

    University faculty "consume their wages in happiness," as economists like to say, sacrificing some of their earning potential for other kinds of job satisfaction. I've blogged about this as the LeBron James effect: a willingness to leave some money on the table in exchange for something else the employee values. (In James's case, he was willing to make $3 million less a year in order to have a shot at a championship and, you know, get past the Celtics in the playoffs. It's worked out for him.) In LeBron's case, the man would rather be paid a ridiculous amount of money to be the best at what he does than an even more ridiculous amount of money to come up a little short. That makes sense.

    College professors are also motivated by a lot of other things, both selfish and altruistic: the quality of their students, opportunities to do their research, their sense of how much prestige the school they're at confers, the number and quality of colleagues they can talk about their work with: the list goes on and on. They'll all take more money if it's offered. But money alone won't keep them happy if other things are missing. If they have no research collaborators, or feel that they'll never finish their book, or feel that they can't actually teach the way they want to teach because of the way their school is run, they will want another job. (One friend who was frustrated about teaching conditions once told me, "I love our mission, but I can never get enough of my unit back to the chopper.") Giving them a 5% raise might soothe them temporarily, but it won't stop the problem. Fundamentally, those people would rather be somewhere else. They don't want to be at the same place for 5 or 10% more money, so paying them more doesn't buy you any real loyalty.

    On the other hand, a professor who makes a comfortable salary, but might get a better one elsewhere, might not go looking around for a raise if other things are going well. If she has the pleasure of being able to watch her students succeed, stimulating intellectual relationships with colleagues in or near her field, and the satisfaction of getting her own research done, the fact that she feels underpaid might be just one of those things. A rival college might be able to lure her away by flashing some cash, but they'll have to come looking for her, and they'll probably have to convince her that they can match those other sources of happiness. People are unlikely to move to a school where students aren't as well prepared, or where the rest of the department is always fighting, even for a raise. They almost never move to a place where they think it will be harder to get their research done, no matter the price. Most professors would rather be paid an okay salary to write their books and teach students who really seem to get something from classes than be paid a better salary to not write their books or to teach students who aren't interested.

    A lot of UVa's faculty could make better money at some rival school. But then, virtually all of those faculty could have made more money, at some point, by not becoming professors in the first place. They could have leveraged their earlier educations, their ability to manipulate information, and their relative class privilege to earn more in some other, less interesting field. But, at least initially, they traded a measure of their earning power for other satisfactions. The trick to keeping them at the University of Virginia isn't to throw money at them, but to emphasize the other things that make them happy about Virginia. A few will still be lured away by schools with deeper pockets, but Virginia can't win heavy bidding wars on salary anyway, and over time the quality-of-academic life approach will retain more people than other strategies would. Of course, the last two weeks have infuriated most of the faculty and convinced them that the university is in chaos and upheaval, which is much worse for faculty retention than salary stagnation could ever be.

    Dragas and company did not, at least, make one of the mistakes that people from the business world occasionally make when dealing with academics, which is to decide that since professor's salaries are so shockingly low, by business-world standards, that professors will be grateful for any extra amount of money. The thinking here is that faculty have simply failed to make a better living, and since their salaries are comparatively low, the price of their loyalty is low. Needless to say, the assumption that faculty members will go along with anything if you give them a $500 raise often leads to trouble.

    Dragas makes the opposite, and more generous error; since UVa's faculty salaries are so far out of line with what she and her colleagues in business earn, she assumes that they must be in desperate need of pretty large pay raises. This is a more subtle mistake, and leads to a more subtle problem. While faculty are relatively unmotivated by salary, they can be very aware of relative salary. They might be less attuned to how much they make than to how much they make compared to the usual salaries for their department and university. The salary isn't just money, but a psychological marker of respect and success. Changing the pay scale too much, too quickly, especially if done piece-meal, can upset faculty who were previously content.

    Let's say a leading full professor at UVa, where the average full professor's salary is around $140,000, is actually making $175,000. (Let's imagine, for the sake of this example that our professor works in a department which is dead-average in salary, so that the extra $35,000 is not simply about her being in a better-paid field.) Although she might be aware that she could theoretically attract a higher salary if she moved elsewhere, she likely feels pretty good about the money she does make, because she's being paid well by institutional standards. If, however, her department suddenly lured in two new star faculty from outside (which Dragas seems to think would be the way to go), and those new hires start at $215,000, she's going to suddenly wonder why she isn't valued as much as the outsiders are. That's not rational, but it is human. Similarly, if you a university suddenly has a pool of money for unusally large raises, and chooses to distribute more of those raises to some faculty than others, that new money will foster discontent. People who might have been okay with Colleague X making more than they do are not going to be okay with Colleague X suddenly making that much more than they do. And suddenly, all that the administration's money has bought it is trouble.

    But the biggest mistake, born out of the assumption that salary alone governs employee loyalty, is that Dragas wanted to find money for raises at the expense of the other things that make faculty happy. Cutting academic programs in order to fund raises for the faculty who don't get cut would mean a net loss in faculty happiness and loyalty. Raiding financial aid funds to increase salaries would mean a net loss of faculty loyalty: that would inevitably mean a weaker student body, and undercut the faculty's sense of purpose. (You can only ask people to sacrifice so much for a teaching mission they believe in, but you can't ask them to sacrifice anything for a cause they don't believe in.) And a top-down, business-style form of university governance, where one executive makes all the decisions with little or no faculty input, will simply enrage faculty. You might find room to pay them an extra ten or twenty percent that way, but not nearly enough to make them happy under the new system. If they wanted to work in a top-down, business-style organization, they would, for a lot more money. There are some things you almost literally cannot pay then enough to do.


    Okay, but money's not nothing. UVA profs in Arts & Sciences haven't received even cost of living increases in five years, and that translates into a ten percent decrease in real income. We're not starving; we're making choices more like quitting the gym than like switching from chicken to cat food. But there's a lot of discontent: the A&S faculty petitioned the Board of Visitors for relief just a few weeks before this bigger controversy broke out. The little money available for raises is going to a few stars; richer universities are raiding the faculty, and there's a definite sense that things can't go on this way much longer.

    Sure, anonymous. I grant that. And I'm not claiming that faculty aren't motivated by money at all, or that there's an excuse to keep underpaying them. But the person who seems most fixated on getting faculty larger raises to keep them happy has obviously made the faculty very, very unhappy.

    Dragas's solution, which is apparently to "reallocate" money that could give raises (at least to stars) by cutting from other places that would also hurt faculty retention. Cutting whole departments in "bold" moves is not going to make the faculty who aren't fired more loyal. Cutting back on financial aid, and therefore by definition taking a more limited and inevitably less talented student body, is not going to help faculty retention.

    Underpaying faculty hurts retention and morale. Of course. But there are other ways to hurt retention and morale. The point isn't that money doesn't matter; it's that this is not a single-variable problem, where salary is the only factor in faculty satisfaction.

    I've tried to make this clearer by updating my original post with a new final paragraph. Thanks for your comments.

    I'm a little concerned about faculty compensation already.  I thought that the whole point of public funding of academia was to let folks pursue their hearts' delight so that all of society could benefit from it.  We provide academic freedom so that useful ideas can be developed without immediate pressure.  We subsidize graduate education because it's useful to have academics out there.  We provide all sorts of non-market-based support so that these great benefits can accrue.

    For faculty super-stars to then turn around and say, "Gee, the market will pay me a whole lot more to teach elsewhere," seems like a betrayal of this model.

    If folks want to be rewarded based on the market, then perhaps they ought to dive in with both feet and work out a way to fund their graduate education themselves.  Under the current model, faculty seem to want to have the best of both worlds -- public risk  in funding of their education, and private reward when they succeed.  This is as ugly as the current situation on Wall Street.  Until we resolve this, I think we're going to see many more problems.

    (I understand how hard academics work, and I understand first hand how mean graduate stipends can be, but I also understand how delightful it can be to have complete control over your research and your teaching.  As you point out, that's worth money, and folks need to realize that, or take a different path in life.)

    Which is it? Is taking a lower salary a favor the employee pays the employer, or that the employer pays the employee? If someone accepts less money than they might have made elsewhere for five or ten or twenty years, and then goes elsewhere, is that a sign of ingratitude or "betrayal?" Someone who's made wage concessions for years isn't obligated to keep making them in the future.

    Your position seems to be that professors should be grateful for being employed at all, and they should show their gratitude by staying forever at any wage offered. You also seem to assume that their wages are not market wages, but some kind of generous gift. But all wages are market wages; professors aren't opting out of the employment market. They're just participating in a less lucrative sector of that market. Labor markets that pay poorly are every bit as real as the overpaid ones.

    A college offering a professor a low wage isn't giving them a generous gift for labor that has no actual market value. There's no budget for gifts like that. They're simply paying that professor as little as they think the employment market will allow them. to. (If they're wrong, they get turned down for another job at another school.) Some faculty's value increases, through the fruits of their own labor, and they can demand more pay. That's the American way.

    Least of all do faculty owe economic loyalty to the public, since the public doesn't actually fund their salaries, or much of anything else at public universities. Virginia taxpayers provide between 8 and 9 percent of the University of Virginia's budget. (And of course, many faculty got their PhDs at private institutions, at private expense. The Virginia taxpayers didn't pay anything to educate the faculty at UVa.) Acting holier-than-thou about how "the public's money" is being spent when it's not the public's money is simply dishonest.

    If you're going to talk like you're being a hard-headed realist, deal with reality.

    Large sums of public money flow into non-profit institutions of higher education (both public and private) to pay for research (NSF, DoD, DoE, etc.) and as loan guarantees or outright grants.  That is definitely public support.  Note that non-profit status is also a kind of public support.

    My complaint is not with starting salaries for professors (which seem ridiculously low) or pay for adjuncts (which is criminally low), but with the salary for so-called 'stars'.  I realize that the "American way," as currently practiced in a variety of fields, is to take whatever you can get with both hands, including generous handouts, then turn around and lecture the world about how hard you worked to get it.  I'm just disappointed to find that this practice has spread to academia.

    If academia was totally privately supported, and academics paid for their education from the start, then stars would have every right to claim "market wages."  In the current model, this just looks like more winner-take-all silliness.

    Kevin, you appear not to understand how graduate student's stipends, research and education are funded.  For areas where there is external funding to be had, professors function as small business men, going out and winning contracts (and grants) through competitive proposals, sometimes in areas of their own choosing (NSF) and sometimes in areas of specific interest to the agencies and companies (DOD, DOE).

    While the grants are made to the university, and the university takes money for costs such as electricity, accounting, etc (aka facility and administrative costs), the professor as principal investigator (PI) directs how the money will be spent to support graduate students, staff, research expenses, etc.

    Among the other things that most do not know is that university professors are only paid for nine months work for the most part.  That means that they can, if they can find funding, get three months salary from their grants and contracts, going off elsewhere to do research (summer faculty fellowships) or teaching summer school.  It is not clear to Eli whether those numbers for UVa include summer employment.  Probably not from the amounts.  Medical schools have another model driven by NIH funding and private practice compensation which varies from place to place.

    At the better schools STEM faculty are required to find funding to buy out some of their teaching load during the academic year which is a whole other ball of string to unravel, and they are almost always required to do so in medical schools.

    The other model for funding grad students is through teaching assistantships where they work under faculty supervision to teach undergrads in recitation sections.  This, of course, is the most common way for first year students in STEM areas and the way for humanities departments, where they also often pay their own costs.  You can argue that the faculty should do this but then the faculty would have no time for research and you would have to hire a lot more expensive faculty.  Such students are attracted by the skill and reputation of the faculty.

    So, in the same sense that partners in a law or consulting firm are required to bring in business, so are a considerable portion of the faculty.


    I am actually more familiar with funding models than I'd like to be (which makes it all the more embarrassing that I left TAs out of my discussion -- sorry).

    Describing professors as small businesspeople similarly glosses over some details.  The funding I've seen up close and personal (DHS and DoD) requires results, but failure or slow progress didn't seem to put a real crimp in things.  My impression (unsullied by linkable facts, alas) is that the NSF is even less fussy about results.

    It's a little bit less about producing salable product and a lot more about the government (and industry, too) giving grants for ideas that might work out.  I'm aware of how hard folks work to get those grants, and the rate at which grants are turned down, but it's not like the money in is strictly linked to the results.  "We learned what not to do, and educated a bunch of grad students," seems to be an acceptable result.  This is not how a small business works, or at least the startups with which I've been associated.

    (Not that I think that businesses are this amazing fount of competency that should be always emulated, but I think that's a post for a different day.)

    Well, Kevin, let's say that your understanding of how higher education is funded is very hazy. Your combination of righteous certainty with lack of actual knowledge isn't persuasive. But it is boring, and I'm not interested in debating someone who's not really arguing in good faith.

    Counting non-profit tax status as government support is a clear sign of not arguing in good faith. By that logic, the public should get a say in the finances of every priest, minister, and rabbi, since they "support" those non-profit enterprises. Nobody's BS should be this weak.

    Moreover, the fact that academic employment is part of a marketplace is not new. (And yes, that's a University of Virginia link. The book was written in the 1950s.) Your jeremiad about how professors today have become corrupt, blah blah blah, is just nonsense.

    But the real give-away that you're not on the level is that these are your responses to a post about how faculty do willingly forgo their full market salary.

    I just wrote 1500 words about how faculty choose to make less money than they might, and you come in pontificating about how faculty should never have the choice to make more money. What on earth do you want? Actually, don't tell me. I'm not interested.


    Sorry to hijack your post (which made some great points, especially about how wage disparities can divide the faculty).  After reading about how professors don't expect high salaries, my mind leapt immediately to the star professors who do get high salaries, and why this is a problem.

    Since you're bored, I won't bother to respond to the rest of the post.

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