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To improve the graduation rates in four-year courses in his university is the sole aim of University of Texas, Austin President William Powers. A proposal to establish an incentive-pay system has been initiated for all the system heads including 11 system administrators, six health centers and nine universities.

Individual administrators who have the eligibility for the plan will be personally met by the chancellor under this plan. The official’s performance evaluation will be based on certain areas that will be outlined to them. The time horizon will be between one and three years and officials must aim towards certain specific outcomes. As a final step, the board must approve of the goals sent to them by the chancellor.

According to the sample plan in the proposal, performance will be measured in four areas including cost savings made from initiatives that shared services, sponsored research program growth as compare to previous year, the percentage of institutional expenditure that is funded by philanthropy and previous four year graduation rate aspects that have gained significant attention.

Though incentive based pay has always been tried out before, all such initiatives have been optional rather than a rule, especially at public universities and colleges. University of Texas is one of the largest and most prominent in our country. The very fact that this university is proposing such a system is definitely noteworthy. This approach could spur more such initiatives across the country.

One downside we can see to this positive angle is the series of inevitable confrontations between the political policy driven system and university campuses. This is because, of late, university policies have been increasingly micromanaged by politicians and governing boards. This policy too will be dictated by them.

To improve outcomes through efficiency and accountability in the system, a plan proposed by Francisco Cigarroa, the system Chancellor was accepted a year back. This plan called the “Framework for Advancing Excellence” proposed a performance pay model and this framework will now be used to audit and measure progress.

Previously a consulting firm for the private-sector organizations, Towers Watson helped the UT system develop the proposal that according to experts resembles a corporate sector plan. There is however widespread concerns that this type of performance-based compensation plan could attract a lot of interference in day-to-day activities by the board members.

They feel that the board’s function should be to set the right direction for the university and its President and leave them to handle the rest as such plans are general and not perspective. In order to work optimally, they must work in consultation with the campus leaders.

Nationwide, there is a feeling that performance pay systems such as what is proposed by this university could lead to a situation where governing boards are more involved with major decisions and policy making. Most of the policies then will be brought into place at the exclusion of campus leaders.

This is one of the major reasons for controversies at leading universities in our country. They must find a way to work around this issue and bring about a via-media solution for the proposal to work well.