Trends in Faculty Engagement and Compensation

• Faculty have at least some input in the decision making at more than half of AACSB-member schools surveyed, but deans, provosts, and department heads still wield the greatest influence.
• While business schools still offer new hires guaranteed research funds and teaching load reductions, the use of both of those benefits has declined in the past five years.
• Compensation for full-time faculty has remained stable, although institutional control, regional differences, and school size lead to variations among institutions.

 
AACSB recently launched its 2021–22 Business School Questionnaire (BSQ) Finances Module overview reports, which are available through DataDirect. Below we highlight several of the findings, which offer glimpses into two important areas of business school administration: school governance and faculty compensation.

Faculty Input in Governance Varies Widely

The BSQ Finances Module asks business schools to rate the level of their stakeholder involvement in their governance processes, which includes decisions regarding annual operating budgets and related resource allocation. Unsurprisingly, respondents indicated that three groups of stakeholders are the most influential, having “significant participation/input” or “sole responsibility” in governance. These groups include business school deans (for 90 percent of respondents), university provosts (59 percent), and business school department heads (41 percent).

Business schools are split when it comes to their faculty’s level of involvement in governance. Slightly more than half indicated that faculty have “minimal or no participation/input” in business school governance, and slightly less than half indicated that faculty have “moderate or significant participation/input.” Faculty unions have the least amount of overall involvement (see Table 1 below).

Faculty Have Some Input in Decision Making

In addition to rating stakeholders’ general involvement in governance, business schools rated the level of influence various stakeholders have in governance decision making. Here, the findings mirrored those above, in which 90 percent of schools indicated that the most influential stakeholder is the business school dean, whose “input is likely to impact or essentially determine decision outcomes.” The university provosts come in a close second.

Here, however, more schools indicated that faculty have a say in their decisions. In fact, 60 percent of responding schools reported that business school faculty have input that “may impact or likely impact decisions in business school governance.”

In this area of business school governance, department heads are the most influential faculty segment, with 41 percent of respondents reporting that the input of these stakeholders “likely impacts or essentially determines outcomes” in the school’s governance. While faculty unions still wield little influence, their ability to provide input that “may impact decisions” or that is “likely to impact decisions” is marginally greater than their participation in overall governance (see Table 2 below).

Schools Get ‘Moving’ to Attract New Hires

Responses to the 2021–22 BSQ Finances Module also revealed various compensation practices that business schools leverage to attract top talent (see Table 3 below). For example, 66 percent of respondents reported that they pay for moving expenses, making this the top form of nonsalary compensation for new hires. On the other end of the spectrum, signing bonuses are the least common form of nonsalary compensation, offered by only 4 percent of respondents.

Forty-six percent of large schools offer new hires guaranteed research funds for three years, while only 14 percent of medium-sized schools and 10 percent of small schools offer this benefit. Small and medium-sized schools are more likely to guarantee research funds for one or two years, rather than for three years.

Regardless of institutional characteristics, roughly a quarter of respondent schools offer their new hires teaching load reduction for one year.

When we compare the results of AACSB’s 2017–18 and 2021–22 BSQ Finances Modules, we find that fewer schools are offering several types of compensation to new hires. For example, over the past five years:

• The number of institutions compensating for moving expenses declined across all institution categories. The largest drop occurred among private institutions, where the percentage offering this form of compensation fell from 77 percent in 2017–18 to 64 percent in 2021–22. This number fell from 80 percent to 76 percent for large institutions; from 76 percent to 66 percent for medium-sized institutions; and from 68 percent to 63 percent for small institutions.
• The percentage of schools offering guaranteed research funds for three years as part of their compensation packages fell from 36 percent to 31 percent.
• The percentage of schools offering a guaranteed teaching load reduction to new hires also declined, from 37 percent to 28 percent.

Overload Pay Common for Full-Time Faculty

According to this year’s survey, the following three compensation practices are the ones AACSB-member schools most commonly offer to full-time faculty:

• Summer teaching compensation (69 percent).
• Overload/stipends for teaching credit courses (73 percent).
• Additional pay for administrative duties (72 percent).

However, we discover several differences when we consider these practices across different institutional characteristics. For example:

• Small schools are more likely to offer summer teaching compensation and overload/stipends than their medium-sized and large school counterparts, with 83 percent offering summer teaching compensation, and 79 percent offering overload/stipends for teaching credit courses.
• Among schools in the Americas, the most common full-time faculty compensation practice is overload/stipends for teaching credit courses, offered by 84 percent of respondents.
• Among schools in both the Europe, Middle East, and Africa (EMEA) region and the Asia-Pacific (AP) region, the most common full-time faculty compensation is to offer additional pay for administrative duties, for 56 percent and 46 percent of respondents in these respective regions. 
• Public and private institutions have similar full-time faculty compensation practices, with the exception of summer teaching compensation, offered by 75 percent of public institutions compared to only 58 percent of private institutions. 
• Forty-four percent of responding schools offer additional funds for research, with relatively little variation across institutional characteristics. However, there are significant global differences, with 26 percent of schools in the EMEA region, 39 percent of schools in the AP region, and 47 percent of schools in the Americas offering this benefit.

A controlled five-year comparison of responding schools shows little to no change in full-time faculty compensation practices. But given the disruption higher education experienced over that time frame, caused primarily by the COVID-19 pandemic, we believe this result could be a positive indicator.

Despite the overall stability in the numbers, a few variations stood out to us:

• The category of stipends for teaching noncredit courses was one of the few to show significant change, with the number of respondents offering this form of compensation dropping from 32 percent in 2017–18 to only 26 percent in 2021–22. 
• The number of small and medium-sized institutions offering summer teaching compensation held steady, coming in at 88 percent and 80 percent, respectively, for both surveys. But the number of large institutions offering this form of compensation decreased by 3 percent.
• The number of schools offering additional compensation for administrative duties held stable among schools in the Americas at around 80 percent. But the number of schools in the AP region offering this benefit declined from 72 percent in 2017–18 to 67 percent in 2021–22, and the number of schools in EMEA declined from 56 percent to 50 percent.

More Insights to Come

An examination of the BSQ Finances Module data offers the opportunity to find more data-informed answers to questions about the financial strategies of AACSB-member schools. For that reason, we encourage schools not only to participate in future AACSB surveys, but also to leverage the benchmarking tools and other features of DataDirect to discover more insights to support their decision-making processes.

We soon will post a follow-up article that will delve into other characteristics and trends within business school financial models. We will specifically explore changes in areas such as operating budgets, net flow, and fund allocation, all of which have significant impact on business school operations.