Saturday, June 30, 2007

Sally! Sally! Sally! - What's Anyone Worth?

June 30, 2007, 6:00, 9:00 a.m.

"Sally! Sally! Sally!"

On June 28, I wrote:

there were two stories yesterday that I really wish we'd had -- either from Search Committee II or the media, and not just for President Mason but for all the candidates -- during Interview Week.

Erin Jordan, "New UI leader's goal is 'helping;' She knows how college students with tight finances feel. As an undergraduate, the new U of I president had to struggle to pay for school," Des Moines Register, June 27, 2007

Diane Heldt, "New UI leader raring to go; Mason doing her homework by calling key people, listening," The Gazette, June 27, 2007, p. A1.
Nicholas Johnson, "Sally, We Hardly Knew Ye," June 28, 2007.

The cheerleading from the media for President Mason reminds me of the old basketball chant, "Lute! Lute! Lute!" (Hence, "Sally! Sally! Sally!) But I guess a "welcome to Iowa City" feature story/public relations gift is not totally inappropriate for our new UI president.

So if Wednesday was the day the Register and Gazettte simultaneously chose to do their feature pieces about wonder woman, today (Saturday) is the day the Gazette and Press-Citizen simultaneously decide is the day to explain why $1 million in benefits for a university president is really quite reasonable -- and the day for the Press-Citizen to play catch-up with its own wonder woman story.

If you're curious why I would use a figure like $1 million a year, instead of Mason's $450,000 "salary," the analysis is laid out, along with additional commentary on this subject, in Nicholas Johnson, "Executive Compensation" in "Prez Mason & Now What? - Life Goes On," June 23, 2007.

Editorial, "Judging a University President's Worth," The Gazette, June 30, 2007, p. 4A.

Editorial, "Mason Deserves Salary She Will Earn as President," Iowa City Press-Citizen, June 30, 2007.

Brian Morelli, "Mason Preps for Iowa; Purdue Provost Ready for Transition to UI President," Iowa City Press-Citizen, June 30, 2007; Brian Morelli, "Purdue, UI Offer Many Similarities and Differences," Iowa City Press-Citizen, June 30, 2007.
I'll return with some thoughts regarding "just how much is anybody worth?"

# # #

I'm back, with some random thoughts.

Just How Much is Anybody Worth?

At the outset, let me make a couple of points very clear. (1) I think President Sally Mason shows a great many signs of someone with the intellect, social skills, experiences, energy, drive and desire to make her mark as the UI's 20th President. I look forward to watching what she does and how she does it. I welcome her to Iowa City and wish her all the best. While I will continue to blog it as I see it with regard to the University in general and its Regents and administrators in particular, I really do want her to succeed. (2) It is not my position that her $500,000 to $1 million a year in family pay, cost avoidance, and benefits is out of line, or that she is "overpaid" or "not worth it."

OK? Now . . .

Relevance of the Corporate Sector

The Gazette's editorial acknowledges that it's "not obvious" how to measure a university president's performance. But it finds some support for her compensation in the average $15 million paid S&P 500 CEOs, and the $2.24 million paid by Rockwell.

The Press-Citizen's editorial finds justification in similar fashion: the fact that anyone qualified to be a major university president could "succeed in the more lucrative corporate world." In a kind of Lake Wobegon (where "all the children are above average") twist it adds that "it was long past time to increase the UI president's salary to the 'above average' level among peer institutions."

Then, in a burst of realization regarding what had just been written -- after all, not all our university presidents can be paid "above average" -- the editorial reverts to a "I've got mine, Jack; pull up the ladders" with regard to Iowa's other two major Regents universities. Why? Well, because you see "there's a significant difference between the responsibilities faced by the UI president and the presidents of its sister schools."

Can the Differentials Be Justified?

So can we all concede at the outset that "nobody ever said it was rational; nobody ever said it was fair"? The fact is that we don't have an agreed-upon metric for explaining why some people are paid 400-500 times what others are paid when all are working in the same business.

We may have wage scales of sorts, with differences in pay between assistant professors and associate professors, or GS-12s and GS-16s. But that doesn't explain the differentials between departments and colleges for those holding similar titles, or the length of time between their promotions. Nor does it explain the differences in jobs and pay for those working in government jobs.

When I was running for Congress what was said to be the world's largest tractor factory, John Deere in Waterloo, was in the district. Talking one day with some UAW 838 members who worked in the foundry regarding differentials in pay, I put it to them as follows. "Ask the company president what's the least he'd be willing to take to work your job: heavy work, in 120-degree surroundings, with the constant threat of serious injury or death from molten metal. Then ask yourselves, what's the least you'd be willing to work for to sit at his desk, carpet up to your ankles, in air conditioned comfort, and play golf every Wednesday afternoon."

What Do Administrators Do?

Oh, I hear you say, but you're ignoring the responsibility of administrators, the constant stress in their jobs. No, I'm not. But based on what I've read (and personally experienced) the greatest stress falls, not to them, but to those to whom they can delegate tasks, those who can't "write their own job description" or set their own schedules (let alone those of others dependent upon them), those who must meet rather than set the deadlines, those who can't hand off jobs to others. (As a business executive once told me with leering pride, "I don't get ulcers, I give ulcers.")

Morelli quotes Mason as saying, "The president needs a lot of information, but doesn't need to be doing a lot of jobs. Hopefully, the team that is in place will be doing their jobs well and frees the president up to be the face of the university."

She's right. Or at least that has always been my approach to management as well. I told the office chiefs at the Maritime Administration, "I'm trusting you to do your job. If you want to consult with me before making a decision, and I'm in my office, just walk in and we'll talk about it. If I'm not, don't wait for me. You decide. If you screw up, I'll take the heat at the White House and in Congress -- twice. After that we'll need to talk about it." And the "lot of information" I needed came to me with a management information reporting system I designed for some 90 programs and projects that we called the "Monthly MARAD Review."

I don't mean to belittle the responsibilities -- and potential for great contributions -- of administrators. I'm just trying to put their jobs in context -- and make the point that it doesn't necessarily follow as logical, just and inevitable that the person who
(a) writes their own job description, sets their own schedule (and thereby the schedules of others), can hand off tasks to others, gets the emotional rewards of adulation and being the center of attention, is able to meeting "important" and interesting people and engage in rewarding conversations, can constantly be learning fascinating, cutting edge stuff, and needn't worry about money, should be paid multiples more than the person who

(b) takes orders from others (who are sometimes disrespectful or even abusive), has little flexibility in scheduling for family and personal needs, has no one to whom they can delegate tasks, may work in dirty or otherwise uncomfortable (and possibly unhealthy or unsafe) conditions, doesn't find colleagues especially intellectually or emotionally rewarding, does the same boring stuff day after day, and is constantly worrying about bills.
As someone once observed about the dogs in the 1151-mile Iditarod Trail Sled Dog Race, "If you're not the lead dog the view never changes."

Recall "For Want of a Nail"?
For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.
Who is to say, in that case, that the guy responsible for supplying nails was less important, less worthy of a living wage, or otherwise inferior to the blacksmith, rider, general or king?

The Marketplace

The marketplace? Yes, the marketplace provides 400-500 times the compensation for CEOs as for those who make the products the CEO's company sells. Can't argue with that. Just look at the pay stubs. Our law school graduates, on average, earn more than those with masters degrees in English -- who've put as much time into their education, and may well be able to write better.

There's something a little troublesome about The Gazette's reference to the pay packages for S&P 500 CEOs, and the Press-Citizen's to the "lucrative corporate world."

That's like saying the reason law professors should be paid more than foreign language professors is because if we were working in large corporate law firms (as some of us, like myself, once were) we'd be paid five times as much (or more) as we are as professors. The fact is, we aren't working in those law firms -- and for a reason: we prefer our lives as law professors. (That's not to say there wouldn't come a point at which the differential was such as to send some law professors back to law firms -- or medical school professors back to practice.)

For those who've come up with a new idea (whether intellectual property or an entrepreneur's imaginative filling of a niche for goods or services), and then managed the business into prosperity, while not violating the antitrust laws and otherwise "playing by the rules," I have little problem with their taking a substantial share of the profits. They've played a major role in creating new wealth, and they are (in my view) entitled to share in it.

I am less enthusiastic about the compensation paid "hired hands" as CEOs, individuals who had nothing to do with the founding of the company and its subsequent success, and not much more impact on its success following their arrival than that provided by the many others working there. It is especially upsetting when the salaries, stock options, bonuses and golden parachutes continue to escalate notwithstanding a downturn in sales. It's not much better when the increase in profits is more a function of the economy, or results for the industry in general, than of anything done by the company in question, not to mention its CEO.

When Compensation Comes from Taxpayers

But there are other considerations at play when setting the compensation for a university president -- or a school board superintendent, city manager, or other public employee. Of course, there are similarities of task: budgeting and financial management, human relations, community and public relations, law suits, and so forth. But a university is not -- yet -- a for-profit corporation. It's a different environment, with a different set of missions -- and satisfactions and rewards for its presidents that many of them obviously prefer to those provided by business.

(As The Gazette's editorial points out, rather than profit, "For Mason’s first year, she will be judged on:
* Progress in implementing the university’s mission, vision and strategic plan objectives.
* Cooperation and coordination with other regent institutions and the Board of Regents.
* Responsiveness to the regents’ strategic plan, policies and directives.
* Assisting the state’s economic and work-force development."
I must say, these raise a whole other bunch of questions; but my point for now is that none of them sound like "an increase in sales over last year.")

And, not incidentally, the president's compensation comes, not from the school's "profits" (since there are none), but from the taxpayers -- most of whom, as David Skorton pointed out, are earning less than one-tenth what the president will be paid.

Note in this context that, if recent reports can be believed, the UI's coaches with responsibility for the Hawkeye men's football and basketball programs are now responsible for, in effect, raising the money to pay their own salaries. That is, those programs are to be self-sustaining rather than the recipients of University dollars. The UI president has not -- yet -- been given any variant of a similar challenge.

And so in conclusion, . . .

My points:
- Few nations have sustained for long, without a violent revolution, the disparity between rich and poor that we have -- and are escalating -- in the U.S today
- At some point that disparity becomes a moral issue
- As NASA discovers from time to time, when you're trying to get astronauts to the Space Station and back alive, no one person's job is less important than anyone else's
- There is virtually nothing of "inherent worth," and little in measurable productivity and outputs, to justify taxpayer-funded, public sector executive compensation that reflects what's paid in the for-profit sector
- We should just admit that when it comes to university presidents' compensation we pay what we do for reasons similar to those offered in the children's book about Ping, on the Yanksee River in China, with regard to ducks' behavior: "that's just the way ducks do"

So I'll close by repeating what I said as I began: "(1) I think President Sally Mason shows a great many signs of someone with the intellect, social skills, experiences, energy, drive and desire to make her mark as the UI's 20th President. I look forward to watching what she does and how she does it. I welcome her to Iowa City and wish her all the best. While I will continue to blog it as I see it with regard to the University in general and its Regents and administrators in particular, I really do want her to succeed. (2) It is not my position that her $500,000 to $1 million a year in family pay, cost avoidance, and benefits is out of line, or that she is 'overpaid' or 'not worth it.'"

I just believe we need to do a lot more thinking about compensation in our society than we do, and display more candor and analysis when we talk and write about it. In the process we should acknowledge that there is little of inherent worth to justify the disparities in pay dictated by, as the ad has it "you get what you negotiate," and the supply and demand for labor in a "marketplace" that seemingly knows no bounds.

# # #

[Note: If you're new to this blog, and interested in the whole UI President Search story . . .

This blog began in June 2006 and has addressed, and continues to addresses, a number of public policy, political, media, education, economic development, and other issues -- not just the UI presidential search. But that is the subject to which most attention has been focused in blog entries between November 2006 and June 2007.

The presidential search blog entries begin with Nicholas Johnson, "UI President Search I," November 18, 2006. They end with Nicholas Johnson, "UI Held Hostage Day 505 - Next (Now This) Week," June 10, 2007 (100-plus pages printed; a single blog entry for the events of June 10-21 ("Day 516"), plus over 150 attached comments from readers), and Nicholas Johnson, "UI Hostages Free At Last -- Habemas Mamam!," June 22, 2007.

Wondering where the "UI Held Hostage" came from? Click here. (As of January 25 the count has run from January 21, 2006, rather than last November.)

For any given entry, links to the prior 10 will be found in the left-most column. Going directly to will take you to the latest. Each entry related to the UI presidential search contains links to the full text of virtually all known, non-repetitive media stories and commentary, including mine, since the last blog entry. Together they represent what The Chronicle of Higher Education has called "one of the most comprehensive analyses of the controversy." The last time there was an entry containing the summary of prior entries' commentary (with the heading "This Blog's Focus on Regents' Presidential Search") is Nicholas Johnson, "UI President Search XIII -- Last Week," December 11, 2006.

My early proposed solution to the conflict is provided in Nicholas Johnson, "UI President Search VII: The Answer," November 26, 2006.

Searching: the fullest collection of basic documents related to the search is contained in Nicholas Johnson, "UI President Search - Dec. 21-25," December 21, 2006 (and updated thereafter), at the bottom of that blog entry under "References." A Blog Index of entries on all subjects since June 2006 is also available. And note that if you know (or can guess at) a word to search on, the "Blogger" bar near the top of your browser has a blank, followed by "SEARCH THIS BLOG," that enables you to search all entries in this Blog since June 2006.]

# # #


Anonymous said...

Many years ago there was a NYT article "Just What Does a University President Do Anyhow?". I wish I had kept it.

My recollections are
1) Keep the money coming. About $300 million/year in grants and $100 million/year in gifts. With all due respect to interim presidents they do not have the suction of a president for getting large gifts.
2) Hire central administrators and deans. If they screw that up the consequences can be dire.
3) Make policy. When promotion standards were made uniform across the university it was a very painful process but the UI is better off because it was done.
4) Represent the University to Iowa in general, the legislature in particular and to the nation.

It is an important job and if they are good at it the university will thrive.

Anonymous said...

Morality? Hee hee

I suggest you walk in to.... say.... the next annual GE shareholder meeting and suggest they cut the CEO pay by say 50% because it is the moral thing to do. Maybe you can join those nuns that went after Welch all those years.

Lessons in Moral Courage said...

That's ridiculous. The GE Ceo salary should be cut by at least 90%. At least. Some of us are waking up to the fact that being filthy rich is, well, filthy. And the world can't afford it anymore.