An Introduction to Staff Compensation Strategy in Higher Education

Key Insights

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• The gap between what colleges and universities pay and what today’s employees expect―not to mention what they can receive from other out-of-sector employers―is a growing liability. In fact, 86% of higher ed staff cite low pay as a top reason to seek employment elsewhere. And unfortunately, high inflation, a rising cost of living, and a tight labor market have only continued to widen the gap between current staff pay and competitive market rates.
• Increased legislation and pressures around pay transparency mean that campus leaders can no longer ignore or downplay poor pay. Salary information is more readily available than ever before, and many candidates are choosing employers based on the availability of salary information.
• Moreover, colleges and universities cannot rely on superior non-monetary benefits to compensate for weak salaries. Higher education’s competitive position on benefits has weakened as other employers have bolstered their own offerings, with some even adding flashy new benefits like student loan repayment assistance that appeal to younger demographics.
• The talent crisis following COVID-19 spurred a wave of compensation investments that helped “stop the bleed” at most institutions, but these one-time investments are not enough to prevent future talent loss. While most institutions will never be able to compete on salary alone, campus leaders must turn their attention to developing a long-term strategy to strengthen the market credibility of their staff compensation so they do not immediately lose top talent due to poor pay.
• Given growing budgetary pressures and financial challenges at colleges and universities, strengthening the market-credibility of staff compensation is no easy task. Cabinets, divisional and department heads, and managers must make tough decisions about where and how to invest limited resources. To maximize ROI, they must move away from across-the-board salary increases and instead make more targeted adjustments that address specific recruitment, retention, and engagement issues.
• To that end, we have designed this briefing to get campus leaders up to speed on out-of-sector compensation principles and spark honest dialogue about staff compensation strategy in higher ed, including these issues:
  • How can we design a compensation strategy that will enable us to live up to our broader pay philosophy?
  • What is the right balance to strike between direct and indirect compensation given heightened employee expectations and market competition?
  • How can we increase the market competitiveness of our staff salaries even amid tight budgets?
  • What compensation tactics can we use to boost staff productivity and engagement while still appropriately managing personnel costs?
  • How can we balance the need for equity with more targeted investments that support staff recruitment, engagement, and retention?
  • What do our staff need to know and understand about our institution’s compensation strategy?
• Institutions that care as much about attracting and retaining staff as they do students must invest in developing a compelling employee value proposition (EVP) that goes beyond just compensation. Salary is not the only―or even most important―component of an institution’s EVP. Colleges and universities must also identify and strengthen other key elements of their distinct value proposition, including the intangible benefits of working at the organization.