February 2022 edition: The Benefits of Executive Salary Benchmarking

The Benefits of Executive Salary Benchmarking

The summer of 2021 heralded the start of a new partnership between the CST and HR intelligence specialists XpertHR, who came together to launch a salary survey, collecting and reporting on market pay data, to promote understanding of the remuneration of different levels of senior executive roles within School Trusts. This enabled those within the sector to effectively and accurately benchmark the pay of their senior leaders.

Trusts were invited to take part over the summer months, providing, in strict confidence, detailed information on the remuneration of their senior teams – from CEO’s, Executive Heads to Directors and Heads of function. The response was amazing – over 200 Trusts expressed interest within a week of the initiative being launched, with 120 Trusts completing the questionnaire.

A summary report, providing a snapshot of certain key results provided, free of charge, a broad overview of pay across the sector. Those that wished to delve deeper were offered the opportunity to access data on market pay in much more detail, using the XpertHR Cendex reporting platform.

So why is this work important? What benefit is there to Trusts in being able to benchmark salaries? Benchmarking the pay of employees within your Trust has certain key benefits. Firstly, it ensures that you are able to make the best use of your reward spend, from the budget available to you. This supports staff recruitment and retention activities, ensuring that salaries offered are both competitive without being disproportionate, but also fair. It means that decisions around pay are justifiable and based on robust evidence.

While the snapshot information published in the summary report was very interesting, it does not provide the full picture, and pay is far more nuanced than a single snapshot view might suggest. It is not always enough to know what the average or mid-point salary is for a CEO or a particular Director, there are instances where a more detailed view is necessary. For example, if a Trust wishes to review the pay of its CEO as they are expanding and possibly acquiring additional schools, then a view of the market data which encompasses the size of the Trust would be very helpful. The data suggests that indeed, the more schools within a Trust, the higher the CEO pay is likely to be. The Median (mid-point) salary of a CEO in a Trust with 21 schools or more is £180,000 across the UK, compared to £117,197 for a Trust with 1-5 schools.

There is still more to consider, and not all CEOs in large Trusts automatically earn more than those in the smaller Trusts as evidenced by the other metrics available – the lower decile and lower quartile rates for CEO pay in larger Trusts are lower than in some of the smaller Trusts. It is helpful, in this example, to then consider the size of the schools within the Trust and examine other factors which influence pay. If we look at pupil numbers, we see that CEO salaries in larger schools are more consistently higher than if we use number of schools alone as our criteria. Region of the UK can also play a part – typically we see staff in London and the South East earning higher rates of pay than across the rest of the UK.

This supports staff recruitment and retention activities, ensuring that salaries offered are both competitive without being disproportionate, but also fair. It means that decisions around pay are justifiable and based on robust evidence.

Jennie Jakubowski

It is also worth considering that the role of the CEO is a unique role, and we cannot always apply the findings discussed above, to all senior leadership roles across the sector. If we look at Director level posts, we see that the link between size and typical pay (both number of schools and number of pupils) is still there, but it is not always as marked as is the case for CEO pay. While at CEO level the incumbent from a smaller Trust might only earn two thirds of the rate of a CEO in the largest Trusts (comparing Median or mid-point salaries) at Director level it is more like 87% - so a significantly smaller differential (Median salary for a Director in a Trust with 1-5 schools is £67,364 compared to £77,000 in a Trust with over 21 schools).

This research also enables us to look beyond basic salary, and a second supplementary report to the main findings was published on 31 January 2022, looking at bonus payments, other allowances, pension contributions and healthcare benefits.

Looking forwards the 2021 survey is the first in a series of annual reports which, over time, will build up a bigger and better picture of senior leadership pay across the sector. From the second year we will also be able to accurately identify and report on pay trends. We would encourage as many Trusts as possible to support this important work by taking part in the 2022 survey. The summary findings of the 2021 survey can be downloaded from the CST website: Executive Salary Benchmarking. To express interest in the 2022 survey or for any queries about this work and the results please email cendex@xperthr.co.uk or email me directly jennie.jakubowski@xperthr.co.uk.