Saturday, March 29, 2008

Relative Wages and How to Get There

If anyone has any doubt that, above a certain level, it is all about relative wages as opposed to absolute wages, visit a law faculty in the days after someone has acquired the salary list and distributed it. I have been around law faculties on 4 occasions when this has happened and it can get emotional and often for good reason. So what are the reasons faculty salaries rankings can be so unrelated to the value of a person to the School? Before starting this non exhaustive list, keep in mind that these irrationalities are the result of years and years of unforeseen events and wacko decision-making and, thus, pretty much out of the control of any current dean.

1. Playing favorites. Don’t tell me it does not happen. Deans “see” some people as more valuable to the School when they may just be more valuable to the Dean. Years later someone may come along and ask why X’s salary is so high. In many instances it is because X was the darling of a past or current dean.

2. Unpredictable allocations. Suppose the lowest paid person on your salary makes $100K. In September, your dean offers an entry level person $102K assuming that for the next year there will be a 3% increase and the current people will be elevated above the newcomer. The legislature actually says no raises and now the entry person is ahead of more seasoned and more valuable people.

3. Maybe only my School has this one. Every 7 years you can go up for a 9% pay increase. Not everyone gets one and that depends on funding, not on merit. Yes, you are worth 9% or 0%. This makes for some instant leap-frogging on the salary list without regard for relative productivity.

4. Tunnel vision matching offers. Deans get really focused on keeping particular people and lose sight of the market more generally. Suppose a hot shot gets a better offer elsewhere and your school matches or beats the offer. Equally productive people like where they teach and could but do not go out and get an offer. It’s an instant problem. Plus, the matching offers are often way too much. Does a college town school really have to match the offer of a high cost of living school? Of course not. Finally, and this is where tunnel vision hurts the most. As the bidding goes up and up I have yet to hear of a Dean say “Wait! For that salary I could go into the market and get someone even better.”

5. Sloppy administrative work. Some deans are really lousy at reading yearly reports. Professor X may list 10 coauthored articles most of which are 15 pages long. Professor Y may list 4 fully developed original articles. These numbers probably also correlate with the number of times they visit the dean to say how valuable they are or the level of whining about how underpaid they are. Deans are sometimes just awful at seeing through the smoke.

6. Halo effects. Professor X was productive back in the day and had a big name. Now he wants to double dip and your school pays big money to get him. Actually Professor X regards your school as semi-retirement. The halo can also apply to incumbents who already are working from such a high base that even average salary increases are huge.

7. Prodigal writers. These are the folks who retire after tenure and their salaries sink relative to others. Then several years later and out pops an article. Sometimes, although actually still 9 years in debt to the school, deans bring them back into the salary fold.

8. Narrow Chair descriptions. Suppose a donor endows a Chair for the study of Law Use Regulation in Sub Sahara Africa. You search and search. The best person in that area is actually not so good but you’ve got to spend the money. Right? So you hire “not so good” at way more than some “quite good” people who contribute to the core needs of the School.

9. Laterals. You bring a mid level lateral in from a high cost of living school and pay him more than comparable people on your faculty. Why? I don't know maybe your dean just wanted there to be some excitement. The reasoning actually will be that the faculty voted yes and the candidate would not take a pay cut.

There must be more.


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