The report, commissioned by CUC and compiled by Advance HE, provides a review of the CUC HE Senior Staff Remuneration Code, developed in 2018 in response to requests by members for support on the increasingly scrutinised and controversial issue of vice-chancellor (VC) and senior staff pay. Designed as ‘principles-based’ and building on best practice, the Code’s adoption is at the discretion of governing bodies in the institutional context. The Advance HE review draws on desk-based research, an e-survey with 109 respondents and 11 semi-structured interviews with representatives from governments across the four nations, funding councils, unions and HE organisations. The review establishes the reach and use of the code since launch and where it sits alongside other codes and reporting requirements across the four nations. It explores whether the code and its underlying principles remain fit for purpose in the current context and makes a number of recommendations.
- 93% of survey respondents agreed that the code fulfils its aims to ensure the awarding of senior staff pay is fair, independent and transparent, and 95% agreed the code is fit for purpose. In broad terms, the code provides a widely-used framework and assists in decision-making. However, the review concludes it could be strengthened further, especially in light of developments in the sector which have exposed some gaps and raised some questions (p5, p36)
- The Code should give greater clarity and explicit emphasis to the concept of “fair pay for all”. Stakeholders felt that strengthening the code on this matter would give further public confidence that pay is “fair, appropriate and justifiable” (p6)
- The updated HE Code of Governance, which set out the values on which HE governance should be founded and the objectives it needs to deliver to meet the “challenges of sustainability, growth and change”, should be referenced more explicitly in the Remuneration Code to support a values-driven approach. There is currently no explanation or guidance around how the Remuneration Code sits in the context of these values, which is a “missed opportunity” (p6)
- Stakeholders felt strongly that greater alignment between the Office for Students (OfS) reporting requirements and those in this Code should be pursued. At present, inconsistent definitions are used, creating confusion and additional burden for the governance and HR staff supporting the remuneration committee and its work (there was particular confusion about which method to use to calculate pay ratios for the head of institution). It also contributes to inconsistency across the four nations (p6, p32)
- Institutions adopting the Remuneration Code must ensure (or explain why not) that they have a “readily accessible published annual statement” that covers the elements set out in the Code. Desk-based research found significant variability in the content and accessibility of the statements. CUC may wish to consider if it should be even more prescriptive about its form and location to improve visibility and accessibility (p6, p29)
- To promote transparency and public confidence, most stakeholders would welcome greater consideration in the Code to staff and student voice on remuneration. Lessons might be drawn from governance requirements in Scotland which mean institutions there have more experience of this (p6, p31)
- Some stakeholders noted that inconsistent public staff data collection (which is no longer mandatory) would pose a challenge for institutions to undertake comparative analysis, as advocated by the Code. It is recommended that CUC work with the Universities and Colleges Employers Association (UCEA), Universities Human Resources (UHR), Jisc, and national funders and regulators, to push for improved data collection to minimise this risk (p7)
- Given the high turnover of governors and Chairs in the sector each year, more could be done to ensure that Chairs of Remuneration Committees are informed about the Code and have the opportunity to share practice and develop their thinking on remuneration (p7)
- 98% of respondents agreed that “individuals are not involved in deciding their own remuneration”, while 92% confirmed their head of institution (HoI) was not a member of the Remuneration Committee. Institutions adopting the Code should ensure it is the case, and obvious, that the HoI is not a member of the Remuneration Committee nor do they attend/contribute to discussions regarding their own pay and reward. Providers should be clear about who are members and who attends remuneration committees. CUC may wish to strengthen its requirements and advice on this and clarify instances where an HoI can legitimately provide input to Remuneration Committees, for instance when they are determining the remuneration of other senior staff (p9, p27)
- CUC should develop opportunities and examples for Chairs of Remuneration committees – and the staff which support them – to share practice and engage in dialogue around ‘how’ to govern remuneration well. Stakeholders would also welcome greater clarity on making assessments of the ‘value’ contributed by senior postholders, as set out in the Code’s explanatory note two (p11)
- Institutions adopting the Code should conduct a self-assessment against the Code in the near future and do so regularly within the wider institutional cycle of assessing governance effectiveness (p8)
Implications for Governance
The ministerial, regulatory and media interest in the topic of vice-chancellor and senior staff is intense, and the impact of the pandemic and Brexit on university finances, staffing and the student experience are likely to heighten it even further. The financial climate has underlined more sharply pay differentials between staff and those at the top of institutions, fuelling an ongoing debate between those who suggest senior pay is disproportionate and those who argue that the complexities and market position of senior roles in higher education justify the current levels of remuneration. Governors on Remuneration Committees and governing bodies generally, will be acutely aware of these levels of interest, and the associated reputational issues for their institutions and the HE sector generally.
CUC’s review commission is timely and Advance HE’s report suggests practical operational measures (recommendations 4, 5 and 11 are particularly directed towards institutions) that can help Remuneration Committees to feel confident that their work is as fair, independent and transparent as it can be.
On the issue of membership of the Remuneration Committee, governors might want to ask whether it is perfectly clear that the VC or other senior staff are not members of the Committee that determines their own pay, nor attend discussions regarding it. The review points out that some institutions have split the work of the Remuneration Committee into two committees, one of which the HoI may well be a member of as its terms of reference exclude matters of their own pay.
Issues of transparency and accessibility of information were also raised. Governors may wish to consider whether their institution’s published statement about pay contains all of the elements recommended in the Code and whether this is it truly ‘readily accessible’. The review’s research revealed a range of inconsistencies in content across the sector and difficulties in locating the information in one place and lack of signposting to others.
The review provides an opportunity for governors on Remuneration Committees to consider what support they might need to determine senior staff remuneration in line with the Code. Perhaps more can be done, particularly given the high turnover of governors and chairs, to introduce/reintroduce governors to the Code. Are there opportunities for governors and the governance and HR staff which support them, to share practice and advance their thinking, particularly around articulating the ‘value’ contributed by senior postholders? Is there a need to consider a co-opted member or formalise HR support arrangements/attendance? The review also recommends that the effectiveness of the Remuneration Committee is evaluated, including against the Code, on a regular basis.
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