Here we are at that time of year when due to publication of academy trust accounts, chief executive pay is examined and becomes a news story. In this year’s coverage I haven’t spotted any mention of the decision makers, or certainly not in a positive light: the board of trustees. Once again governance is invisible. As the experts in multi academy trust (MAT) governance, NGA has been writing on this tricky topic for years: “Onwards and upwards? The rise of executive pay” was the title of an NGA blog in 2016, and a year ago we produced detailed and well received guidance on the subject. So over the past week there’s been understandable noise in the press about the outliers, but actually our take is that overall there’s been a gradual change of attitude in the MAT sector, with more attention and more exploration of this issue, undoubtedly in large part because of greater scrutiny from the DfE and ministers, but I like to think that the focus provided by our comprehensive guidance and the Framework for Ethical Leadership in Education has helped too!
For the last couple of years ESFA’s Academies Financial Handbook had advised that “the board of trustees must ensure its decisions about levels of executive pay follow a robust evidence-based process and are reflective of the individual’s roles and responsibilities”. It emphasises that the board’s approach to pay and benefits must be independent, objective, transparent, proportionate and justifiable. So given I am claiming there is more consideration of pay in this way, why hasn’t there been much movement in executive pay over this time?
One very significant reason is of course contracts of employment: once someone is in post, you can’t unilaterally amend their terms and conditions. Occasionally employees will refuse pay rises or even take a reduction, usually when the organisation is in funding difficulties, but this can’t be imposed by the employer, the trust, unless it’s contained in the contract. Therefore any recalibration which needs to be done is most likely going to happen once the postholder is leaving and a new lead executive recruited.
Second, while benchmarking has a role, there is a risk that it prompts a race to the top. Most discussions around reward for MAT executives start from headteacher pay, and some seem to make an assumption there needs to be of some sort of multiplier - a racheting up - as the trust takes on more schools. Being a chief executive of a MAT is a very different role from being a headteacher. So why not look which to public sector and charity for chief executive benchmarks. As we set out in our guidance, the remuneration packages for the chief executives of the NSPCC (income £118.3m) and Barnardo’s (income £312.8m) are circa £190,000. These are complex, sizeable charitable organisations in the children’s sector with multiple income streams. Alternatively the median pay of chief executives of small (up to £200m turnover) NHS trusts was £167,500 and in trusts with £200-400m turnover £182,500 with the upper quartile £202,500. The salary range of Director of Children’s Services with responsibility for the leadership, strategy and effectiveness of a local authority children’s services was between £90,000 and £166,000.
We all want to reward our leaders properly, while remembering that this is public money and consequently, leadership positions do not attract the same premiums as those in the corporate sector. Those who choose to work in public services do so because they have exactly that: a sense of service to the public. They have a wish to make a difference or and are motivated by duty, the organisation’s mission. Compared with four years ago there is much more open consideration of mission, values, ethos, helped in part by the Framework for Ethical Leadership in Education, which had it its first birthday summit at the end of last month.
Many MAT leaders enthusiastically promoting ethical leadership are embarrassed by the pay of some others in the sector. It is in fact only a small fraction of MATs involved in astronomical pay; yet the coverage tarnishes all who lead MATs. It is not helping academies in the PR battles, playing into the ‘privitisation’ critique. NGA has for years pointed out that academy trusts are part of the third sector, the charitable sector. However offering and taking remuneration which is reminiscent of the private sector suggests otherwise. The Department for Education knows this, hence the ministerial correspondence which NGA has supported. Yet the DfE is currently unable to insist on remuneration restraint by trust boards: our publication Moving MATs forward: the power of governance explains further. If they begin to be frustrated by their lack of influence, perhaps ministers will begin to look to other levers, such as more prescriptive funding agreements or a framework for executive pay as exists in the NHS. However that wouldn’t fit well with the rhetoric of autonomy for trusts and their boards. As always, our message to trusts is use your power wisely and fairly.
Chief Executive, National Governance Association