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What presidents should know about contract negotiations

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Editor's note: This is an excerpt from an article in the June/July edition of the Community College Journal, the bimonthly magazine of the American Association of Community Colleges (AACC).

This is a great time for individuals aspiring to the community college presidency. We have entered a period of significant transition in executive leadership.

According to the 2012 American College President Study by the American Council on Education, in 2006, 47 percent of community college presidents were 51 to 60 years old and only 37 percent were between the ages of 61 and 70. More than five years later, 51 percent are 61 to 70 years old. This means more than half of all current community college presidents are either ready or will be ready within a couple of years to exit the presidency and retire or transition into another career.

How best should the rising tide of presidential candidates prepare for their first experience negotiating a presidential contract? This article is based on numerous years of experience working with aspiring presidents and representing the interests of college governing boards in the negotiation process. The intention is not to provide legal advice but to offer some general guidelines on how to prepare for the negotiation process. Contract laws differ from state to state, so always obtain appropriate legal advice.

You put your heart and soul into “killing the interview” and making the very best impression on all constituency groups during the initial campus visit. You finally receive the late-night call from the chair of the governing board informing you that you are, in fact, the candidate of choice.

But before you can assume your new role, you first have to negotiate a contract that works for you, your family, and the college. As a young executive, a million questions go through your head. How do you shift into preparing for negotiations? What do you need to know? What should you ask for? What is typically included in the president’s contract? Should you hire a lawyer to handle the negotiation? What to do first?

Know the environment

You are seeking your first presidency during a period when the old “do more with less” maxim is more than ever the mantra. Across the country, state governments face significant budget constraints and a plethora of competing demands for public investment. Funding of public community colleges has declined in all but a few states.

At the same time, the community college sector is actively engaged in local, state and national policy discussions centered on the critical role community colleges play in achieving student success and completion, on national workforce development needs and on access and equity in higher education. Future community college presidents will be hired with mandates to make significant progress toward these ends.

Do your homework

It is critical for new presidents to empower themselves with information and data prior to entering into contract negotiations. An effective negotiation can help launch a successful presidency.

College presidents must understand and acknowledge economic realities within the context of the region, community and college when considering contract negotiations, specifically when presidential compensation can be perceived as too high or lucrative.

The full article in the CC Journal includes tips for better negotiations and a Q&A with George Boggs, a former community college president and former AACC president.

In the past, and still today in some cases, there was an expectation that an incoming president would earn as much as if not more than the outgoing president. Economic hardships in many states have changed this expectation. If the faculty and staff have not received a raise, for instance, it’s sometimes difficult for a board to be overly generous with a new president. Public perception is important. As part of the announcement of your appointment, details or actual copies of your presidential contract will be released and closely scrutinized.

If the board is overly generous, it can leave itself open to criticism from internal constituencies and the communities it serves. It is important for a successful presidential candidate to understand the forces that influence the negotiation process and public perception. You don’t want the announcement of your appointment to be derailed by the terms of compensation.

Preparation and an analysis of the financial health of the college and the economic well-being of the community will help you understand what to expect. Here’s a short list of items to research:

  • Unemployment rate in the community
  • Stability of housing market
  • Presidential salary scale for the state and region for similar institutions
  • Specific information on state and local income taxes and property taxes
  • As much information on the contract of the outgoing president as possible. Most states will publish this information.

Most new presidents spend more time focused on salary and benefits and don’t spend enough time on other important aspects of the contract, such as:

  • Term of contract
  • Total compensation package
  • CEO performance review
  • Termination/separation clause

The negotiation

While you deserve a competitive and fair contract, keep in mind that you are starting a relationship with a new board. The last thing you want when building that relationship is contention.

Fiscal realities have brought renewed attention to executive pay, and that scrutiny has made governing boards increasingly sensitive. If you have done your homework, you will know what you want and what the college can afford.

A fair negotiation will result in a contract that is right for you, your family and the community. As a new president, you want to build a long-term relationship with the board. At the same time, in the event the relationship does not work out, you want a contract that protects both you and your college. Remember, in negotiations, you are your own champion.

Polonia is vice president for research, education and board leadership services at the Association of Community College Trustees (ACCT). Miller is a research and curriculum specialist for ACCT.