If Kent State Beats Goals, Professors Will Profit

By KATHRYN MASTERSON

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Kent State University is trying a new and unusual tactic to improve its status, retention rate, and fund raising—paying cash bonuses to faculty members if the university exceeds its goals in those areas.

The bonuses are built into a contract, approved last month, that covers 864 full-time, tenure-track faculty members who teach and do research on the university's eight campuses. Proposed by Lester A. Lefton, Kent State's president, the "success bonus pool" will be divided among faculty members if the Ohio institution improves retention rates for first-year students and increases the research dollars it generates and the private money raised through its foundation.

The message behind the institutional-performance bonuses, which are much more common in private industry and for university presidents than for professors, is that faculty members should benefit from the work they do that influences those measures of a university's success, Mr. Lefton said. Be a good partner, and Kent State will be good to you.

"We're not asking for extra work, but if operating results are better, I want to share this with the faculty," the president said in an interview with The Chronicle. "We think this is an innovative approach that benefits both faculty and administration, and ultimately benefits our students."

Paying faculty bonuses tied to institutional performance is highly unusual, said Gary Rhoades, director of the Center for the Study of Higher Education at the University of Arizona and the next general secretary of the American Association of University Professors. Bonus clauses tied to institutional performance are more common in contracts of presidents, provosts, and other senior administrators.

"I think it's a creative idea," said Mr. Rhoades. Providing incentives for activities that go beyond an individual faculty member's duties and that benefit the institution is a smart move by the university, he said: "If the boat rises, we all rise with it."

Offering a financial incentive for these activities also has risks, Mr. Rhoades said. In general terms, he argued, an overemphasis on money could result in decisions that may not be in the best interest of the university. On the other hand, making faculty members feel that they are partners in a college's fund raising could lead to discussions between them and the business side about how, in a time of tightening budgets, that money could be best used.

"If they had this contract at my place, I'd be really happy," Mr. Rhoades said.

'It's an Experiment'

The bonuses don't replace raises and merit pay, a step that would probably have been unacceptable to the Kent State faculty members involved with the union. The three-year contract includes a 3-percent annual raise, additional merit raises, and domestic-partner benefits.

The bonuses could pay a little—a few hundred dollars per professor after the pool is split equally among the faculty—or a lot, if Kent State sees some massive gifts and big gains in the other areas. Mr. Lefton, who says retention is one of his major goals at Kent State, is hoping for a lot.

"I would be thrilled if faculty blew the top off on this and retention went up 10 percent and we doubled our fund raising," he said. "I would love to give huge bonuses to each member of the faculty."

Faculty members are key to retaining students and fostering ties with alumni who could become donors, said Mr. Lefton, who envisions the financial bonus as an incentive for them to invite students home for dinner or to make room in a busy schedule to have lunch with a graduate who may become a donor to Kent State. He points to the recent example of Roe Green, an alumna who gave $6.5-million to the theater-and-dance school. Her involvement, and subsequent philanthropy, was nurtured by the faculty members there.

Lee Fox, an associate professor of psychology who is president of the Kent State chapter of the AAUP, says that she is not sure how the bonus program will work and whether faculty members will have much of an effect on direct fund raising, but that the union was willing to try it.

"It's an experiment, and we'll see what happens," Ms. Fox said. "If there is some success, maybe we'll get some credit—and in this case, the credit will be monetary."

Ms. Fox is leery of calling the bonuses a form of profit-sharing, since colleges are nonprofit organizations, but she says the system does look a little like that. Personally she has mixed feelings. "This clearly is a stretch into the business world, and I'm not sure if it's good or bad," she said. "As a faculty member, it makes me a little bit uneasy. As president of the union, I think it's a creative approach" to reward faculty members for their contributions.

Cheryl A. Casper, a professor emeritus of economics and chief negotiator for the AAUP chapter at Kent State, says she is unsure how much tenure-track faculty members can pitch in if they don't teach first-year students or are not directly involved in fund raising. But as an economist, she knows that people respond to incentives.

"Lester Lefton was very keen on the idea of trying out an incentive pool," she said. "We were willing to experiment, too."

Alumni Connections

Involving faculty members in fund raising is common in higher education. John Lippincott, president of the Council for Advancement and Support of Education, says he hears more often about development offices working with faculty members, whose research and teaching can get donors excited about the college.

"With the pressure of meeting campaign goals, institutions are having to get all hands on deck to be successful, and faculty play a key role in that," said Mr. Lippincott, who praised Kent State's bonus idea. "It does reinforce the notion that everybody has a stake in the fund-raising effort."

Faculty members often have the best ties to alumni and can have a major impact on fund raising, said Gene Finn, Kent State's vice president for institutional advancement. "For them to be rewarded for opening doors for us is terrific."

Mr. Finn already had incentives in place for his fund raisers, who are eligible for bonuses of up to 10 percent of their salary on the basis of donor visits, solicitations, gift closures, and calls to new prospects.

Most colleges do not offer financial bonuses for fund raisers. But in a tight marketplace, they are being used more as a recruiting and retention tool. According to a recent survey by CASE, 13.9 percent of respondents said they were eligible for them, up from 9 percent in 2002.

Mr. Finn says the fund raisers he hires from private industry expect to be financially rewarded when they do well. "I feel very strongly that in fund raising, you've got to be creative in attracting and retaining the very best," Mr. Finn said. "People who are the very best expect bonuses and rewards."

Mr. Finn thinks an entrepreneurial approach to compensation is needed. "We're in an era where we have to be able to compete with private industry and private institutions," he said. "In order to compete, particularly in Ohio, we're going to have to be entrepreneurial and do things we haven't done before."

Yank Heisler, as special assistant to the president, helped Mr. Lefton formulate the success-bonus concept. Mr. Heisler, who retired last summer as chairman of KeyBank, spent 30 years in the banking industry and brought a business perspective to the contract process.

"Those of us who come from that side are used to situations where you are rewarded for being successful," he said.

The money for the bonuses will come out of the university's operating budget, said Mr. Heisler, who is now interim vice president for administration and finance.

Here's how the system works: Faculty members share a bonus of 10 percent of the growth in research dollars over the year before, as long as the increase is at least $2-million. For the 2008 fiscal year, Kent State brought in $32-million. So if research grants reach, say, $35-million next year, the faculty would split 10 percent of the total increase of $3-million, or about $350 for each of the 864 faculty members.

For fund raising, the faculty would receive 2 percent of the increase above the year before, as long as that increase was at least $2.8-million. Last year Kent State's foundation raised $28.5-million. For the bonuses to kick in, the university must raise at least $31.3-million next year. If Kent State hit that minimum, faculty members would then split 2 percent of the increase, which would be $56,000, or about $65 a person. If a big gift showed up, of course, the bonuses would increase accordingly.

For student retention, faculty members would receive 40 percent of the additional revenue when retention goes up at least 0.5 percent on the main campus.