What is a CEO worth?

Are salaries paid to the heads of some multi-academy trusts too high, as Sir Michael Wilshaw might to think  from the tone of his letter to the Secretary of State or perhaps actually too low for the level of responsibility that they have to undertake. What is clear is that executive heads and chief executives of MATS do seem to think they deserve to earn more than those they manage. This seems like a sound business principle, but is it really?

There is another principle that relates pay to the nature of the work. Is taking the strategic lead in an organisation more important than running an operating unit such as a school? This is a moot point. Perhaps, the justification is that you need good talent and such individuals won’t be prepared to step up from headship without a pay rise. I would have some sympathy if the job had been offered at a lower salary first, but all too often it isn’t: in some cases it isn’t even put out to open competition just decided internally within the MAT. Can that ever be the right thing to do with public money?

With head teachers often subject to dismissal if a school fails an Ofsted inspection, does the same happen to executive heads and CEOs of MATs? If not, why not? We shall no doubt see what happens in response to this Ofsted Report.

Now the alternative view is that in London, at least, middle managers in businesses not much larger than the average primary school in staffing terms can earn six figure salaries and their CEOs even higher amounts and both groups can have bonus payments and share options on top that will pay out handsomely if the company does well. Should schools be competing with these salary levels?

I note that in response to Sir Michaels’ letter to the Secretary of State he pulls no punches. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/506718/HMCI__advice__note_MAT_inspections____10_March_2016.pdf The letter to Mrs Morgan says:

“This poor use of public money is compounded by some trusts holding very large cash reserves that are not being spent on raising standards.

“For example, at the end of August 2015, these seven trusts had total cash in the bank of £111m.

“Furthermore, some of these trusts are spending money on expensive consultants or advisers to compensate for deficits in leadership. Put together, these seven trusts spent at least £8.5m on education consultancy in 2014-15 alone.”

Now, this blog has complained in the past about schools holding large cash reserves that should be spent on teaching and learning. One might also ask, what the Regional School Commissioners have been doing in holding academies to account.

Finally, there are currently 151 local authorities in England with a Director responsible for education. In most cases they have other responsibilities as well. If each were paid £200,000 – more than they actually are – the bill would be just over £30 million before overheads. If 18,000 schools were formed into MATs of 20 schools that would be 900 CEOs. If they were paid only £100,000 each the bill would be £90 million. You can do the maths if there are more MATs and higher salaries.

Personally, I thought we were in an age of austerity and I set up TeachVac to offer a low cost option for recruitment to allow more money to be spent on teaching and learning. Frankly, this Report is disappointing news and I hope that there is an urgent review of salaries in education outside of those set by the STRB for teachers and school leaders. We need some clarity of purpose in the use of public funds.

 

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3 thoughts on “What is a CEO worth?

  1. Spotted this TES article from March 2010 in which you were quoted saying the gap between the pay of education leaders and their staff was widening. https://www.tes.com/article.aspx?storycode=6039350 The situation today is worse. The way academies and MATs are governed allows CEOs, executive principals etc to set their own pay. This has led to the situation that Sir Michael is complaining about.

    • Janet,

      Perhaps the Public Accounts Committee should look at the use of public money on the governance and management of schooling. With the advert for 9 deputy regional commissioners the costs of the academy programme are mounting up. following on from the defeat of the government on Sunday trading could a coalition of SNP, Irish MPs and Labour wreck any drive to further converting schools to academies?

      John

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