Any board that hires a new head, or is renegotiating an HOS agreement mid-contract or renewing a contract that is coming to an end must keep the following in mind:
Littleford & Associates has benchmarked the total compensation of more independent and international schools than almost any Firm in the world over the past 30 years. Our database is built on confidential conversations with heads and board chairs worldwide as well as on independent research.
And yet the process is just as important as the ultimate product. That means that both the board members and the head need to feel that the process was not a negotiation, was not adversarial, and was not a mediation. It should be a healthy facilitation in which the board can appreciate formally the work done by the head and give the head a voice to articulate comfortably his or her own aspirations for the outcome of the compensation review process. This should be a “marriage renewal ceremony” and not an awkward or tense back and forth.
Boards need to keep in mind that they have one CEO, the head. They need to take the time as well as spend the money to ensure a fair and competitive agreement which meets the needs of the head’s family and which the board deems reasonable in terms of the school’s financial health
While performance-based compensation may have been awkward or even verboten in the past, that is no longer the case. Many heads have found that much larger compensation increases can occur if they are tied in some measured way to overall school financial health and other measures of progress. This is more of a bonus concept which, in the US and some other places, is taking the form of “golden handcuffs” using deferred compensation vehicles.
Most heads of well-established schools in the United States are more likely to retire on a strong asset base drawn from deferred compensation assets than from national, regional, local or other formal retirement and pension funds. This topic is well worth discussing among the parties to see if both sides are comfortable with this retirement concept.
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