Question and Answer on Compensation
Q. What is the difference between salary (or base pay) and non-base pay?
A. Base salary is permanent. Non-base pay, such as administrative differentials or salary supplements come and go with the individual and individual circumstances. In some cases, pay is provided when defined performance objectives are met. In other cases, added pay is used when faculty or staff temporarily take on added duties outside their normal work. This is a fairly typical way to pay people for taking on added duties. This practice works to hold down “salary inflation.”
Q. Who receives non-base pay in the institution?
A. Faculty, staff and administrators can receive non-base pay, though overwhelmingly, non-base pay goes to faculty.
Ninety percent of non-base pay goes to faculty. Ten percent of non-base pay is paid to staff, which also includes administrators.
Q. What are the additional pay totals by employee group for FY13?
EOs: $376,000 total for executive officers.
Deans: $481,000 for all 19 deans.
Faculty: $152.7 million (including clinical pay for medical school faculty).
Staff: $15.6 million.
Q. What are the types of non-base pay?
A. Here are some examples:
Faculty members earn additional pay for added duties, such as when they become department chairs. Faculty members are not department chairs for life. The additional pay associated with those positions is time limited. Faculty also received added pay for teaching courses, conducting research or engaging in other scholarly activities during the summer.
Nearly all Medical School faculty members earn additional compensation for the clinical procedures they perform.
We also have high performing employees who are achieving performance goals to earn their additional pay. Those who are not able to hit these goals do not typically stay at U-M very long.
Q. Why isn’t all pay simply salary?
A. Using non-base pay to reward exceptional performance and additional duties rather than permanently adding to a person’s base salary allows the university to maintain flexibility in how we spend since it’s not a permanent increase. This is smart business, especially during difficult economic times.
Q. Which salaries are increasing more rapidly – those of staff or faculty?
A. Faculty merit increases have been greater than staff increases for most of the past 30+ years. Only eight times have staff salaries increased at a faster rate.
Q. Are salaries benchmarked with other institutions? How do we compare?
A. Yes, university processes include routine benchmarking of competitive salaries. Our top faculty and staff are paid consistent with the market.
Compared with public peers, U-M faculty are generally in the second or third spot in terms of salary. That’s also true with the salary of the majority of executive officers as well as the dean positions. The president’s salary is lower than peers, ranking fifth. (2012 data).
Q. Are our salaries competitive with private peers?
A.There is a chasm between faculty salaries in private vs. public institutions, and it’s something we need to continue to address to remain competitive. More than half of our top competitor institutions are private.
Q. What are the steps the university takes to maintain our ability to recruit and retain faculty?
A. During the worst economic downturn in recent history, one of highest priorities was maintaining competitiveness for faculty so we are able to recruit and retain the best. When other institutions were laying off faculty, and implementing hiring and salary freezes and furloughs, we:
- Hired 150 new faculty.
- Had a merit program for faculty every year (a major goal).
- Had no faculty layoffs or furloughs.
We were able to achieve a merit program and no furloughs or large-scale layoffs for staff as well.
Q. Why don’t you benchmark total compensation instead of salaries?
A. Salary information is usually the only information publicly available across institutions. It’s not a perfect measure, but it is a consistent one we can use to gauge competitiveness.
Q. Is compensation information for U-M faculty and staff publicly available?
A. Yes. Salary information has been posted online for decades and can be compared, year-to-year, institution-to-institution. All compensation information is publicly available and routinely requested and distributed to media as well as others.
Q. Why are some administrators paid more than peers?
A. U-M is significantly larger than peers in terms of total expenditures, and that larger scope comes with greater complexity and responsibility.
For example, UC-Berkeley has $2.1 billion in total expenditures vs. U-M at $6.7 billion. In addition, statewide systems, like the UC one, often have multiple people in top spots (at the system level and then again at the campus level) versus U-M having one for the whole.
Given that, our top administrators are paid to remain competitive among our private and public peers, and commensurate with that larger, more complex scope.
Q. What has U-M done to contain administrative costs?
A. Despite growth in all areas of our mission, our administrative costs have remained in check, and a recent Goldwater Institute study called U-M a “model for how to stem (administrative) bloat.”
Between 1993 and 2007, U-M was one of the few leading universities that actually the number of administrators. U-M decreased the number of administrators by 5.5 percent during that time. During that same period, the number of full-time instructional, research and service employees significantly.
And, administrative spending per student (adjusted for inflation) increased by only 7.5 percent during that time – the 23rd lowest-increase in administrative spending. At the same time, instructional spending went up by more than 29 percent.
Q. Why is it important to benchmark salaries with private institutions as well?
A. The University of Michigan is considered one of the world’s great institutions of higher education. While we are very proud to be a public institution, we compete with both public and private universities for top talent on the faculty and among staff. We need that top talent across all areas to remain a university that offers students a world-class education.
Last Updated: May 2014
