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Considering Compensation

Considering Compensation

This question is taken from AGB Search's monthly newsletter, "Securing Leadership," which features two questions—one frequently asked by search committee members and another often posed by candidates. You can subscribe to the newsletter here.

An institution asks: We are considering a new compensation package for our president. What do we need to know?

Your question is one more institutions should ask. Most want to pay their leaders fairly, to retain and motivate top talent.  At the same time, compensation decisions these days are scrutinized by legitimate stakeholders including legislators, government agencies, faculty, students, parents, and donors. Thanks to sunshine laws and the media, these decisions are subject to public disclosure and debate as never before. A growing number of institutions have spent unwelcome time in the headlines due to (at a minimum) some tone-deafness and neglect on this issue.

Boards and others who set salary and benefits need to find a balance among competing goals, one that ensures compensation that is at once fair, defensible, and competitive.

Ideally your board has a dedicated compensation committee properly constituted to ensure expertise and avoid conflict of interest and charged to recommend a package to the full board. Its core duty will be to look at “comparables.”  That is, it should select an appropriate institutional peer group, then secure reliable and current data on the compensation paid to these presidents.

Third-party analysis is now the gold standard. Services like the Compensation Evaluation Service provided by AGB Search and CUPA-HR can create and/or validate defensible peer groups (including an aspirant group, if desired) based on independent (and, thus, more credible) analysis as well as consultation with the campus. They can also supply the best available data on salary and benefits from peer institutions.

Once you have your objective benchmarks – median salaries and benefits – you will want to adapt them to meet the institution’s specific needs.

There will be things about your institution, your president, the position – even the local philosophy of compensation and compensation strategy – that will argue for setting compensation at a different level and mixing elements in different ways within the larger guidelines provided by the external analysis.

For more information about compensation and how AGB Search can assist in those conversations, visit AGB Search's website.  Also, for more information, consider The Compensation Committee.
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