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The legitimacy of pay and performance comparisons: an analysis of UK university vice chancellors pay awards

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journal contribution
posted on 09.06.2014, 13:44 by Heather Tarbert, Kai-Hong TeeKai-Hong Tee, R. Watson
This article examines UK University Vice Chancellors (VC) pay awards. The empirical analysis, covering the period 1997–2002, evaluates the impact upon VC pay awards of university performance measures, internal pay comparisons and two external pay comparisons, that is, the pay of other VCs and the pay of chief executive officers (CEOs) leading comparable-sized UK firms. For the total sample, we find no evidence that VC pay awards are related to any of the performance measures, although for the pre- and post-1992 subsamples there is some evidence that pay awards are related to some ‘mission-relevant’ performance measures. All the analyses show a positive relationship between changes in the proportion of other highly paid employees and VC pay awards, which suggests that internal pay comparisons play an important role in remuneration committee decision making. As anticipated, the two external pay benchmarks have very different effects upon VC pay awards; the pay received by other VCs produces a marked ‘mean reversion’ in pay levels while the pay of CEOs running comparable-sized UK firms had a highly significant positive impact upon VC pay awards. Following the insights of institutional theory, we interpret this conservatism by university remuneration committees as stemming primarily from legitimation concerns rather than financial constraints.

History

School

  • Business and Economics

Department

  • Business

Citation

TARBERT, H., TEE, K.-H., WATSON, R., 2008. The legitimacy of pay and performance comparisons: an analysis of UK university vice chancellors pay awards. British Journal of Industrial Relations, 46 (4), pp. 673 - 707

Publisher

© Blackwell Publishing Ltd/London School of Economics

Version

SMUR (Submitted Manuscript Under Review)

Publication date

2008

Notes

This article was published in the serial, British Journal of Industrial Relations [© Blackwell Publishing Ltd/London School of Economics]. The definitive version is available at: http://dx.doi.org/10.1111/j.1467-8543.2008.00689.x

ISSN

0007-1080

Language

en

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Keywords

Exports