Introducing the Remuneration Code
In Higher Education – much like elsewhere – Remuneration Committees are tasked with forming judgements about value and fairness.
They weigh up performance and retention, in the context of a public narrative that has tended to weaponise salaries in an increasingly unequal society. Outcomes are scrutinised, affecting the institution, and the sector as a whole.
In 2018, the Committee of University Chairs (CUC) introduced the Higher Education Senior Staff Remuneration Code to give:
- Better guidance to the institutions which adopt the Code
- Comfort to policymakers (and the public) that the governance and assurance of Vice-Chancellor and other senior staff pay is conducted appropriately.
It was a welcome development. An act of leadership by the sector.
Two years later…
What has changed? Is the Code making a difference?
Reviewing the Remuneration Code
Our review found that, overall, the Code is widely used by its intended audience. Governance professionals within our universities have been instrumental in achieving this usage.
Remuneration Chairs felt well supported. There was general agreement that the Code usefully provides a framework that covers the right elements for good governance: fairness, transparency, and independence.
People were confident that this enables better decision-making, but it is still too early to understand its influence on actual levels of pay.
Most recommendations are addressed to CUC to action, working with partners as appropriate.
We support a strengthening of the Code in the spirit of continuous improvement rather than radical overhaul. We are aware that, although it has been in place for a relatively short time, there have already been some shifts in attitude since its development.
There are three recommendations that AHUA members will want to note:
1. Focussing on fairness
Setting senior pay explicitly in the context of ‘fair pay for all’ has come to the fore in the wake of greater public focus on inequalities, heightened not least by COVID-19. The Code is relatively silent on this, aside from noting that ratios should be calculated and published.
Institutions in Wales are required to produce Pay Policy Statements responding to the Fair Work Commission outcomes. There is practice to learn from, and a desire for greater focus from most stakeholders.
We suggest that CUC considers how the Code might be strengthened further on this issue. This presents a real opportunity to show further sector leadership. However, a balance between prescription, and setting a framework that can be contextualised, will always need to be struck.
2. An appetite for sharing and learning
Making decisions about pay is complex, particularly determining the ‘value’ of senior post-holders’ contributions.
There is not enough opportunity to share learning and experience about how to do this well. We picked up real appetite for this among AHUA members, the HR community, and Remuneration Committee Chairs themselves. We will collaborate with CUC, UCEA, AHUA, and UHR to enable this to happen.
Another area that will benefit from sharing experience is how student and staff voice is considered in relation to senior staff remuneration. Institutions in Scotland will have reflections on this given the requirements of the Scottish Code.
AHUA members may wish to collate and consider these, working with CUC. It is certainly an area that accords with a general trend to include stakeholders in key governance matters across sectors.
3. Making transparency work
The area that requires more immediate focus is consistency in how information about remuneration can be understood by stakeholders. This really speaks to the heart of the Code and one of its key aims: to improve confidence.
We appreciate that our work was not a full audit of institutions’ compliance with what is a ‘apply and explain’ Code. However, for those still relatively new to the governance cycle, we offer the following as practical reflective questions:
- Is the effectiveness of your Remuneration Committee evaluated, including against the Code, on a regular basis? It would be timely to pay particular attention to this Committee in light of any changes CUC makes to the Code, later this year.
- Where adopted, does your ‘readily accessible published statement’ contain all of the elements recommended in the Code, or is it stated why not? And is it truly ‘readily accessible’? Our findings surfaced a range of inconsistencies in content, but also difficulties in locating the information in one place, and lack of signposting to others.
- Is it perfectly clear that your Vice-Chancellor, or other senior staff, are not members of the Committee that determines their own pay, nor do they attend discussions regarding it? We know that this is a bone of contention for many. It is worth taking another look at how this information is conveyed. Be satisfied that it is not open to misinterpretation or misrepresentation by external readers.
- What further support might your Committee and its members need to determine senior staff remuneration in line with the Code? Perhaps there is a need to consider a co-opted member or formalise HR support arrangements and attendance. Perhaps members would benefit from (re)induction specific to the Committee and its role.
The future of the Remuneration Code
We know that focus on fair senior staff pay is unlikely to ease.
The Code has a real role to play in helping institutions to demonstrate their commitment to effective remuneration governance. It is part of the overall assurance landscape which helps us tell the story about Higher Education’s success, building trust and confidence.
The review recommendations therefore provide an opportunity for us to reflect on our role. We look forward to working further with AHUA, CUC, and others.
Finally, we would like to offer our sincere thanks to:
- Jim McGeorge, University of Dundee – AHUA nominated member of the review reference group
- Teresa Kelly, Middlesex University, and Alison Jones, University of Huddersfield – AHUA nominated interviewees.
- All AHUA members and their Remuneration Committee Chairs who completed our online survey.
For further information or support about this review, or governance effectiveness more broadly, please do contact Victoria Holbrook.
Victoria Holbrook is the Assistant Director, Governance, at Advance HE. View her profile.