The Infinite Monkey Theorem and VC Pay

.

There is an idea that people should be paid to perform and that if you perform better you should be paid better, particularly if you are in a high level executive position. In academia, at least in the UK, for the most part executive pay looks random.

What do I mean? If you take the table of Vice Chancellor pay data from the THE and make a histogram, you get something that roughly resembles a normal distribution. The histogram can be approximated by a Gaussian distribution in which the average pay for a VC is £244,000 ($370,000) and the standard deviation is £64,000. No it is not perfect, but it is close enough to be remarkable.

There is some tendency for top executive pay to follow university ranking within the UK, but, like the US, it is not as strong as one might like. For example, only 3 of the top 10 paid VCs (2011/12)  lead universities appearing in the top 10 of the 2013 Guardian University Guide. They are: Oxford, Bath, and Exeter. There are also 2 that are unranked. Of the top 10 universities, 2 have VCs paid in the bottom half of the distribution (Durham and Lancaster). While these data indicate some tendency for the VCs of highly ranked universities to be paid better, the stronger trend is randomness.

The other point is that the highest paid university VC in the UK is getting about 4.5 times LESS than the highest publicly funded University President in the US. This too is remarkable.

Conclusions: 

1)  While there is some weak tendency for highly ranked universities to have well paid executives, the stronger tendency is for randomly distributed salaries about an average. Further, I suspect at every university there are pay review committees who have all kinds of tick boxes, incentive schemes, and salary reviews and I am sure they take their roles quite seriously. However, for the most part they could be replaced with a monkey and a Gaussian random number generator. This is a little like the proverbial monkey with a typewriter writing Shakespeare.

2)  Like many of us, VCs do not seem to be paid to perform, they are paid.

3)  Publicly funded University executive pay in the US at the high end is a bit outlandish. 

General comments on the data set: 

Please see the THE document for details on the data and its limitations. This data will be limited by cases of missing data. For the purposes of this exercise where there was an indication of “not stated”,  I have entered a 0. This is similar for what THE has done for the total excluding pension. For the overall I have summed salary, other benefits, and pension.

Selection of the Guardian league table was arbitrary. I have my issues with league tables, but they can provide an index for trends which may be better than nothing.

Pay for performance? It is a myth.

With discussions in the news about CEO pay and its rise relative to average worker pay, I thought it might be interesting to look at Universities in a similar way. There is useful data on HE executive salaries here (for the UK) and here (for the US). The US data is for public universities.

In a reasonable world you might expect a VC at a top 100 university to earn more than one in the same city that is not ranked at all. You might be wrong. League tables are fraught but they are an index and hence useful. Much as I hate seeing long discussions about whether Cal Tech or Cambridge is better and by how much, I accept that there is a difference between an unranked university and a global top 100. 

So, I spent some time trying to align some of this data with data from league table rankings (QS and THE). I haven’t had a lot of time yet so only got through the first page or so of the US data. There is some relationship between base pay and ranking it is weak (explains about 24% of the variance). However, there is a really no relationship between total pay (including incentives) and ranking.

Note: unranked universities appear as 1000. 

There are 5 US universities in the top 20 for highest paid executives which are not ranked in either league table. I do not see how this makes sense. The graph is puzzling.

Where is the time sink? There is a big one in the office near the e-mail button.

Once upon a time, as e-mail was becoming more prevalent in education, I was a whole hearted supporter. At that time, I still encountered students who had never used a computer before. This has not happened in a long time. I even wrote about how computers save time using words like “quietly turbo-charged”. I was really impressed by the productivity enhancements of e-mail. At the time I was also an early adopter of e-submission, first via email and later via something called WebCT. I loved both. I also had the opportunity to be trained to submit grades directly into a programme called banner. This was about 8 years ago. It was also in the developing world.

Now that e-submission and e-mail are no longer at the leading edge – having been widely adopted and now the status quo – I have come full circle. I think we have lost our way. Both have become ends in their own right rather than means to an end. With that comes stagnation, decline and lost productivity. Why the change of heart?

My inbox and outbox are what done it. My inbox brings in nearly 11,000 items a year. At the same time, I have been sending about 4,000. This does not take into account that many of these items might go to multiple recipients. An e-mail sent to a class (module for UK readers) of 135 students counts as one. I do not know exactly how long it takes me to consider each of the 11,000, but let’s take a conservative estimate of 15 seconds. This single activity consumes 45.5 hours. Writing emails takes longer. Depending on what I have been asked to do, a response may take an hour (or longer). Others such as routine student questions might take 30 seconds. When I recently returned from 2 days away from the university, I noticed that it took me the better part of a day to clear my inbox and during one two hour period it took me 2 hours to complete 12 emails. It is hard to say I wasn’t asked questions outside of the virtual world during those 2 hours, but that would be about one e-mail every 10 minutes. For the sake of illustrating my point use a round number of 5 minutes each. Answering emails then involves 333 hours of my time.

Together,  these two activities amount to about 378 hours. The UK work week is typically 37 hours/wk (not 40 like the US and a variety of other countries). This means we are looking at around 10 weeks of time devoted to screening and responding to e-mails. That is a lot of time. I will be honest, in the nearly two years of my current inbox there are over 500 items I have not even had the time to click on and at best I will have just scanned the title.

What is worrisome about that number (378 hours)? The academic contracts I have seen from the UK (excluding professor) are for 1575 hours of work a year.  The 378 is about 0.25 of the contracted amount. If the flood of e-mails continues to rise (it has increased on the order of 500 to 1000 items a year) I will drown. I do not think I am alone in feeling on the ragged edge of being overwhelmed by this. While I am sure there are people who receive less e-mail and perhaps manage it “better”, I am equally sure there are those that receive more and do not manage it as well.

Are these estimates extreme? Perhaps, but I think 25% of time devoted to maintaining e-resources of various types (including e-mail) is not extreme.

Given the choice, what would students and staff (and academic managers) choose? Would they all say that devoting 25% of academic staff resources to e-mail is the best use of time? I think not. Extra academic tutorials would go a long way to helping students. More fully marked assessments (rather than portfolios) would go a long way to helping students. More time available to work in lab and write grants and papers would go along way to helping the reputation and competitiveness of a University.

I genuinely believe that institutions that crack this problem will be at a very substantial competitive edge. In the meantime, I genuinely believe a vicious cycle is at work. The maintenance of e-resources and keeping up with e-mail is a drain on time which is driving institutions to implement more e-learning and e-mail based communication while lowering assessments. The more they do this the less time is available for face to face interaction and tutorials.  

A Plea for Help and Anecdotal Evidence about US University Teaching Costs

A reader was curious where the money in US universities is going. The perception is that they have huge budgets that increase faster than inflation. The problem with providing insight into this is that I am not an accountant. So this post is part plea for help part anecdotal evidence contradicting the impression. 

Plea for help: I like to consider myself a reasonably intelligent person with a reasonable head for numbers, but I really find the financial statements of many US universities too difficult to understand. There are exceptions. For example, the Massachusetts  Institute of Technology  does a pretty good job, as does the University of Washington, but many State supported Universities, I simply can’t get my head around.

So help please. The 2011/12 annual report for UCLA  is here (useful part starts on page 24). The 2010/11 equivalent for UC Berkeley is here (useful part starts on page 18). If anyone can provide the following for US State supported Universities including any substantiating links, it would be appreciated: 

      1)      Total income and expenditure

a.       Broken down by: teaching, research, and other.

b.      Broken down by State funds and other.

      2)      The total number of full time equivalent students.

Anecdotal evidence that university education costs are not increasing in excess of inflation: The first page of the University of Washington report is great. Using this as an example:

      1)      State appropriations supporting the University have declined over the period 2000/1 to 2010/11 both in terms of absolute dollars and even more precipitously in terms of dollars per student. In 2000/2001, net appropriations for operating expenses were $341.5 Million ($8,699/student). In 2010/11, the equivalent figures were $296.8 Million ($6,051/student).  

  

      2)      Overall per student cost (assuming the cost to students is the state appropriations plus tuition and fees) increased from $15,482 (2000/1) to $18,181 (2010/11). This corresponds to a yearly increase of 1.6%/year over the decade. According to the data here, the average rate of inflation over the period was in the range of 2.4%/year to 2.5%/year. 

 

       3)      The perception of increase cost relative to inflation is due to the state providing less support to education and shifting the cost onto parents and students. For example, between 2005/6 ($8,255/student) and 2010/11($12,130/student) there was an 8%/yr increase in tuition and fees (the part students and families see). However, overall the University lost substantial ground to inflation. 

This particular case is anecdotal (only one university in a very large number of state run universities). Looking at broad numbers can mask many trends and this does not take into account any changes in the distribution of out of state students. However, it illustrates a general problem of perception. The teaching mission of universities is being squeezed at the same time that cost to students and families is increasing. (Note: the UK situation is more nuanced – some subject areas are seeing an increase per student).

Any assistance with the more complex balance sheets would be appreciated.

If I have misinterpreted the UW figures or made any computation errors, please correct me.