The Texas kerfuffle has raised many questions, some of which have already been discussed at length on other law blogs. But for me, the news brings up a larger question that I’ve been thinking about for a while now: should law school compensation be transparent, at least to other faculty members? …
[T]here appears to be a great deal of variation, even among schools operating under some sort of transparency mandate. For example, I have seen schools that interpret the requirement to make salaries publicly available to mean that they are in a file in the central library, such that one has to make an affirmative effort to discover them. I have seen others distribute salary information in a yearly memo to faculty, such that everyone is confronted with everyone else’s salary, whether you want that information or not. And I have seen some schools following what appears to be the Texas model, under which the reported salary numbers give little useful information about total compensation, because so much compensation comes in the form of benefits that are not required to be reported – children’s tuition, housing, loans, foundation grants and fellowships, etc.
But what I want to address is a different question: assuming flexibility in the matter of whether faculty compensation is transparent to other faculty members, should it be? I’m going to answer that question with a tentative “no” despite the admitted costs of secrecy in compensation information. …
Let me begin with some assumptions about the ideal academic salary system. First, it should be meritocratic, meaning that faculty members are rewarded for excellence in the pursuit of shared institutional goals – for example, scholarship and teaching. Second, it should be fair, in the sense that faculty are neither rewarded nor penalized for traits, behaviors, and the like, unrelated to those goals. For example, the system should show no race or gender bias, “squeaky wheels” should not be able to increase their compensation beyond their due through constant complaints to the dean’s office, nor should more unassuming faculty be passed over for deserved compensation. Third, it should be transparent, in that each faculty member is aware of the total compensation of other faculty members. This transparency enables verification of features one and two – i.e. that the system is meritocratic and fair. …
Now, before someone extols the virtues of lock-step systems (long the norm at many law firms, but increasingly under pressure), I agree that there are some arguments in its favor: the reduction of internal conflict and competition and the fostering of a collective sense of purpose. But law schools are not law firms. The lesser mobility of academics, the reduced ability to fire non-performers, and the lack of the big “carrot” of partnership profits at the end of the day render the two environments too different to map one compensation system onto the other.
Professor Krawiec‘s interest in structural transparency has much more to do with a law school faculty’s culture than whether schools are using their money effectively. Still, her thoughts offer an interesting take on how varying levels of transparency affect the object of transparency. With any regime, whether regarding employment data or compensation, it’s critical to consider the consequences, positive and negative.
I also wanted to highlight an interesting comment responding to Professor Krawiec’s Faculty Lounge post:
In an ideal world, we would trust the deans to do their job right, and we would keep compensation info private. But remember what the theory of second best tells us. So long as the world is not ideal, and we cannot trust the deans, opacity of compensation is not necessarily a good idea. As the Texas blowout shows, some deans simply cannot be trusted. Larry Sager gave himself a $500K bonus without informing his own boss! He also set up a vast system of payouts to his friends, most of whom had no outside offers from higher-ranked schools and were not at any risk of leaving. Can you make sure this massive self-dealing is not happening elsewhere? If not, periodic sunlight might well be the best disinfectant.
Whether or not this allegation proves to be true, these are the concerns law schools now face. Insofar that self-dealing occurs to the detriment of students and taxpayers, inquiries into faculty compensation will be sure to make headlines in 2012.
- Texas Tribune: UT President Asks Law School Dean to Resign Immediately (December 8, 2011)