Tuesday, July 14, 2009

 

Counteroffers

I don’t do counteroffers.

That’s not just a quirk of mine; my college doesn’t do them. It’s a policy I’m happy to follow.

The question comes up whenever somebody respected on campus gets an offer elsewhere. People always seem a little surprised when the answer to “so-and-so got another offer – what are you going to do?” is something like “wish hir the best.” But it is, and that seems right to me.

Admittedly, a position like this is easier to sustain at a community college than it would be at a Harvard. At the tippity-top of the prestige hierarchy, there may be good reasons to give Superstar Professor whatever she wants. Superstar Professor brings name value for recruitment, donor interest, and/or metric tons of grant money; a certain amount of groveling may make sense. But at this level, that’s not how the world works. While some professors here are more respected internally and in the local community than others, nobody really comes here to study under so-and-so. Our faculty don’t bring in the mega-grants, and for the most part, we wouldn’t have the infrastructure to support them if they did. That’s not our mission.

(To be fair, the policy isn’t limited to faculty. We don’t do counteroffers for administrators or staff, either.)

Good arguments exist for counteroffers. The one I find almost persuasive is the one that notes, correctly, that salary raises here are incremental and pretty much across-the-board. (The exception is promotion bumps -- going from Assistant to Associate Professor, say.) That means that if the salary you accepted when you took the job wasn’t much, then it may never be. Some people prove to be worth far more than the usual salary scale pays them, and they know it, but all else being equal, they’d rather not leave. In a system without counteroffers, their only option for a meaningful pay increase is to leave.

That’s a problem, but it’s a problem with across-the-board salary increments. Introducing counteroffers trades a small problem for a much bigger problem. At a really basic level, you’re encouraging people to try to leave. Incentives matter. When you reward ‘disloyalty’ over ‘performance,’ it isn’t hard to figure out which way people’s energies will move. If you want to keep the best performers, pay for performance. That’s not the same thing.

I’ve read that the average length of stay after accepting a counteroffer is 18 months. I don’t know if it’s true, but it sounds right. In my own experience, job searches (other than coming out of grad school) haven’t been entirely about money. People will tolerate relatively low pay if they like the job. (If that weren’t true, the entire adjunct workforce would have quit years ago.) If somebody is looking, it’s because s/he wants out. I’m okay with that – sometimes ‘out’ is the best option all around. Although the academic blogosphere is quick to sniff sinister motives whenever somebody trots out the ‘f’ word, there really is such a thing as a bad fit. If someone wants to find a better fit for hirself, I say, go right ahead. Someone who never quite clicks at college A can succeed wildly at college B. Context matters.

In my single days, I learned early on that there’s no point in trying to argue your way out of getting dumped. To me, that’s what a counteroffer amounts to. It’s an attempt to postpone the inevitable through a palliative that doesn’t address the real issues. At most, it’s a mutually-unsatisfying stall. But unlike the dating analogy, counteroffers affect more than the parties directly involved. When there’s a contractual pay scale, counteroffers can sabotage it. Other employees quickly get the message, and system-gaming becomes a full-time job. Loyalty is punished, performance ignored, and internal equity simply forgotten in the stampede. Not worth it.

Is there an argument for counteroffers at the cc level that’s actually persuasive? Am I missing it?

Comments:
I think you have the incentive part backwards. The problem with so much that we do in higher education is that it is incredibly difficult to evaluate productivity and quality. It is a bit easier when dealing with research since there is an existing, if incredibly flawed, set of standards (prestige hierarchies of journals, publishing houses, etc.) plus a bottom line measure when it comes to grants. But teaching is notoriously difficult to evaluate for quality.

The question then becomes how do we place a monetary value on the quality of work that a given faculty member does? The CC solution, much like the K-12 public school solution, is to pay a flat rate based on easily observable external markers, i.e. years of experience and education.

The point of counteroffers, much like the proposals to add performance pay to K-12, is that it allows the market to set the price for a faculty member's wage. As you note, this is not a perfect system, especially because it can engender substantial bitterness at certain schools (not to mention the losses incurred by search committees and candidates in performing a search solely for getting a $ offer). But I think you are slightly mistaken to conclude that going from one to the other is replacing a small problem for a larger one. There are merits and problems to either system and I do not necessarily see that "proper incentives" is an argument against counter offers.

- Cal
 
I agree with DD. If counteroffers are the best way of getting a raise, then logically it makes sense for faculty to put effort into getting offers, which will take away time and energy from their teaching. You are rewarding people who are good at job-hunting and interviewing, rather than people who are good at teaching.(Or, if you prefer, you are rewarding people who spend their time job-hunting and interviewing, rather than teaching.)
 
Well, that's not *quite* right. If counteroffers are the only way to get a raise then it creates an incentive for people to engage in the types of activities necessary for getting an offer from another school. That will include some deadweight loss due to job searching, but it will also include having to put more effort into one's job in order to be an attractive job candidate.

The entire idea behind using counter offers is that they are only going to go to those individuals who are able to secure outside offers.

A flat raise system encourages people to do as little as possible since, regardless of performance, they are guaranteed the same raise.
 
The single biggest shock to my system when I entered this business was the fact that nobody was willing to do counteroffers, and nobody was willing to adjust salaries after the hire. Nobody says this going in. NOBODY. Although I made a good decision for myself in terms of fit, I made an absolutely horrible decision for myself in terms of compensation. I had the leverage to bargain for a better deal, and in the interest of being a good citizen, I left that leverage on the table and expected that somebody would notice my good citizenship later. That decision will probably cost me several tens of thousands of dollars over the remainder of my career, if I stay put.

While I understand all the rationale for not doing counteroffers, and I understand the rationale for pursuing fairness in salary raises over the course of careers (it's money, after all, and what looks to one person like "merit pay" looks to another like biased treatment), the system you leave behind is a system that penalizes the good citizens in favor of the cynical and aggressive. (Most of the "good citizens" are female, too.) It's no shock at all that you get people embittered after a season.

How do you fix a broken system like that?
 
The main argument for counteroffers is that you don't have any other system for merit pay. If all raises are incremental, and you have relatively few ranks into which people can be promoted, then employees pretty much have no mechanism for receiving increased pay in exchange for superior performance.

By producing another job offer, the employee is demonstrating that the market thinks they're worth more than you're paying. If you'd prefer to lose them rather than pay them more, that's fine as long as there's nobody you really care about hanging on to. Is your entire faculty basically interchangeable? If so, fair enough, but I doubt I'd stick around with an employer that viewed me as a commodity.
 
I do not work in higher ed -- I'm a social services administrator -- but I'm of a similar mind about counteroffers.

From time to time, I have employees approach me saying that they have an offer (or, if not an actual offer, then the opportunity to go elsewhere) and that a pay raise might induce them to stay. I find this annoying.

My agency determines starting compensation using a formula that takes into account degree, licensure (i.e. LICSW), years of experience in the field, years of supervisory experience, etc. Then everyone gets a small raise every year (exactly how small is tied to work performance). Individual managers have no leeway to negotiate salary with new hires. It's not perfect, but it's reasonable.

My department also offers opportunities to earn overtime, and I strive to accommodate employees who wish to modify their work schedules to accommodate graduate studies. (Earning a graduate degree equals an automatic salary bump.) We also frequently have openings for new managers, and do a better job than most of training and supporting new managers. In short, we offer plenty of opportunities for our employees to earn more -- we just expect them to work for it.

Oddly, the people who approach me seeking a counteroffer tend to be the ones who can't be bothered to sign up for overtime, go back to school, or apply for a promotion. I always wish them the best, while secretly hoping they will call my bluff and go elsewhere. They never do.
 
Further to the specifics of your closing question, DD, I work at an R1 research university in the Southwest, not a CC. However, with that disclaimer, I'd say that there is another, valid reason for counter-offers to be sought or offered:

I am quite happy at my current gig but the nature of my particular niche is such that I have been head-hunted several times, in addition to those couple of other times when a post came up whose description fit me so well I felt I needed to at least apply, for the sake of visibility in the market.

Thankfully, my relationship with my (much admired) current boss is that I don't need the whipsaw of an external offer in order to make the case that I might deserve/need/be due for a merit raise. However, HE may need that whipsaw, in order to make the case to administration above him. I trust my current boss to recognize the value of my contribution and to do all he can to recompense appropriately.

However, in the normal state of affairs--even more in the current climate--"all he can" is limited, in the absence of additional ammunition.

Twice, now, I have been able to say to my immediate boss, "look, there's an offer on the table from External University X. I don't want to leave, but can you possibly use that offer to flog the suits into finding me more money?" And he has been successful.

He probably would have been successful anyway, but the external offer put teeth in his appeal to Upper Admin that it might have lacked otherwise.

YMMV.
 
Counter-offers are a non-issue at my CC. Pay is set like Anonymous@6:11AM describes for a different operation: salary is set by qualifications and experience, raises are applied by formula, and the only "merit" increase comes from changing qualifications (earning a PhD). Is it fair to all? No. Are other systems fair to all? Rarely.

As you point out, if "merit" raises are only doled out for counter-offers, then your best performer will not get compensated if ze is happy at your college. In fact, ze won't get compensated until ze is so upset that people making less significant contributions are getting raises that ze decides to leave.

One unfortunate aspect of our college's system is that the only way to get a pay increase is to teach extra classes. That is easier for someone whose only challenge is to find a suitable way to distribute N versions of a multiple choice exam over M sections than someone who is expected to read papers or grade problems. However, that system does respect the basic economic principle that you need more bodies paying tuition if you are going to earn more money.

I think there is a scheme to do merit raises in a teaching environment, but I don't think that anyone has implemented it anywhere. That scheme would evaluate instructional quality by external measures, such as the performance of your students in a later class (including after transfer). It can't use student evaluations or passing rates, since those can be manipulated to the detriment of the institution as a whole.
 
I'm curious: what is your CC's strategy for dealing with salary compression? You sort of gesture toward it when you discuss the fact that raises are incremental at your institution, but I'd be interested to hear more. It strikes me that if an institution isn't going to accept counteroffers, then that institution needs to have a meaningful commitment to addressing salary inequities that occur as a result of compression, in which new hires are hired in at rates equal to or greater than their colleagues with more experience, more service to the institution, etc. If an institution is actively addressing the issue of compression, it seems to me that the "no counter-offers" policy may be justifiable. If the institution isn't doing so, however, then I wonder whether the message that the institution sends is that it ultimately doesn't value loyalty, performance, or internal equity.
 

While I understand all the rationale for not doing counteroffers, and I understand the rationale for pursuing fairness in salary raises over the course of careers (it's money, after all, and what looks to one person like "merit pay" looks to another like biased treatment), the system you leave behind is a system that penalizes the good citizens in favor of the cynical and aggressive. (Most of the "good citizens" are female, too.) It's no shock at all that you get people embittered after a season.

How do you fix a broken system like that?


Simple solution: formally bargain a salary schedule and implement it consistently for the entire employee group.
 
When I left Anon CC, I was tentatively approached about a possible counteroffer. Something of the "anything we can do to make you stay?" variety, nothing specific. I didn't take it, because nothing they could have offered would have made up for what I was getting at the new gig.

I knew through the grapevine of others who had stayed for counteroffers, although never for very long.

The salary compression issue is particularly problematic in non-union environments and/or positions. Milo's suggestion seems like just the thing...but only works in a unionized setting.

In this area at least, there's a distinct difference between the pay scale for faculty & (unionized) staff vs. the non-unionized staff. As in: non-unionized staff don't have a scale, just a vague sense of what the market will bear at the time the individual is hired. A recipe for attrition!
 
As Anon 5:42 said, I also made a good decision for myself in terms of fit but horrible in terms of compensation. I also had the leverage to bargain for a better deal. I didn't because of time constraints not because I am a particularly "good citizen" in that respect. It was July and they needed an answer. They were desparate and that was my leverage. However, I had no second job offer so they didn't want to bargain. Sadly, I had a second job offer one day after accepting the first. It turns out I should have let the phone ring for one more day and let them sweat a little more. The decision to give them an answer too quickly will cost me nearly $40,000 dollars (I did the math) over the remainder of my career if I stay.

There are no options for a merit raise or position increase as we are tied to an increment step raise system and we are all equal level "instructors". The worst burn in my mind... I would be making more with a masters because the five extra years I spent getting a PhD are worth less than five years experience. That's not even considering the "lost income" of not working those five years.

I love my job but sometimes I hate that I choose to teach. It was and is the biggest financial blunder I have made or conceive of making in my lifetime.
 
I agree with other posters that the solution is not to initiate counter-offers, but to work on developing some sort of merit pay system. Of course that is much easier said than done, mostly because of the potential for abuse and at least allegations of favoritism. Of course, making counter-offers amounts to a sort-of merit pay system, using 'external evaluators'.

I started out my teaching career as an R1 University lecturer, but was eventually lured away by a job offer at a CC. When I told my Department Chair that I was leaving, he wouldn't believe me, assuming that I was fishing for a counter-offer. I got three ever-more-tempting counter-offers before I was able to convince everyone that I was really leaving. Clearly, this is way the game is played at that level, but I'm not sure we want to go that way, do we?
 
The point of counteroffers, much like the proposals to add performance pay to K-12, is that it allows the market to set the price for a faculty member's wage.

This is silly. The only way that counteroffers could better align the teaching with what it is worth on average is if the external offers had better information about the quality of the teaching than the institution at which the teaching was occurring -- and this is wildly unlikely.

Instead, you get an auction system of the sort where the `winner' is by definition the person who was willing to overpay.
 
This is silly. The only way that counteroffers could better align the teaching with what it is worth on average is if the external offers had better information about the quality of the teaching than the institution at which the teaching was occurring -- and this is wildly unlikely.

First, this statement assumes that current pay reflects the person's comparative worth as a teacher. For example, it ignores salary compression.

Second, much of this debate might conflate positions where distinctiveness is the key metric and where it is not. In R1 schools, it is all about leadership and influence in the research field, or professional stature. In hot fields, market salaries are rising so fast that administrators tend to rely on outside offers as the main way to validate differences in market value. There is little expectation in these schools that surface similarities in job descriptions or academic credentials should translate to equal pay.

Yes, it is an extremely competitive environment and that has some incentive benefits (and costs) for the system as a whole.

You can argue all day that this is both wrong and problematic -- and it is certainly the latter -- but with all due respect that only means you don't know what research universities value, and how hard it is to measure that value.

On the other hand, CCs, like many government offices, may rightly simplify the pay scheme by assuming credentials tell all, or at least enough to avoid the problems DD and others mention.
 
Sadly, I've seen the opposite at my R1. When my colleagues have had offers from other places, the chair and dean have knee-jerk reacted to match the offer. Often without thinking, and in circumstances where a counteroffer wasn't even necessary (in one case, my colleague who received the counter-offer was surprised).

Just goes to prove that not all academic leaders have strategic management skills.
 
I didn't say it was done right, and it often is not. Salary compression and inversion continue to be the main compensation issues at my R1 as some fields have much more active markets than others (e.g., history, economics), and then the offers have to be from peer programs, which in some cases may only be a handful. And then you need sensible administrators who don't completely outsource faculty evaluations to other universities.

But my point was that at research universities, the debate should be about how to manage counteroffers, not whether they are appropriate or not.
 
Dr. Crazy -
At our institution, we don't hire people at a salary higher than that of a person with comparable experience. Raising the starting salary requires raising the salary of existing faculty in our (non-union) salary schedule.
 
I think it's a mistake to focus on "counteroffers" in isolation and try to determine whether they're a good or bad thing. I think you have to look at the whole compensation system. How well does the system reward merit? How does it handle salary compression? Do employees get paid at market rates, without needing to play the external offer/counteroffer game? If the compensation system gets those things right, then the criticisms of counteroffers seem spot-on.

But many institutions have run out of money, and rather than compensating employees based upon merit, have just decided to skimp on merit raises, on decompression, on market rates, because they have to save money. They cynically figure that only a fraction of their employees will bother to get an external offer, and it will be cheaper to retain a subset of them with counteroffers than to pay everyone at a market rate. In that kind of environment, I think the criticisms of counteroffers are misplaced.
 
To Eli the important issue is to be sure that the person who leaves will not be angry at the old place. If they say good things about your place at their new place it is actually a good thing that they left.
 
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