Reform Academic Employment Policies

Traditionally, colleges have hired faculty from the ranks of recent PhD graduates, using tenuretrack positions as bait to lure new hires who, upon completing a rigorous academic career crash course, are presumably enticed by the benefits package commensurate with the professorate. This package normally includes a respectable salary, health and life insurance, a retirement package, a highly flexible schedule, a generous amount of paid time off, a great deal of autonomy and the prospect of earning near permanent job security in the form of tenure.

The American Association of University Professors (AAUP) defined academic tenure in 1940 as:

“After the expiration of a probationary period, teachers or investigators should have permanent or continuous tenure, and their service should be terminated only for adequate cause, except in the case of retirement for age, or under extraordinary circumstances because of financial exigencies.”

Reform Academic Employment Policies
Reform Academic Employment Policies

The concept of tenure in the United States dates back at least to 1915 when the American Association of University Professors (AAUP) established a declaration of academic freedom and tenure in response to a growing number of cases involving alleged infringement of academic freedom, as a means to protect academic freedom and to render the professorate “more attractive to men of high ability and strong personality.“  Upon receiving tenure, an employee may only be terminated for “adequate cause”, unless an institution has “extraordinary circumstances because of financial exigencies” and thus, granting what one higher education researcher, Philo Hutcheson, defined as “a contractual relationship, emphasizing the lifetime arrangement between an institution and a professor.” 

Education is one of the few industries in the United States that provides job tenure, which has drawn a steady flow of criticism over the past few decades as colleges have increasingly moved away from this employment arrangement. Edward Morris describes several ironies of academic tenure, including the fact that it is a one-way contract in which tenured faculty receive a lifetime employment contract without having to offer a reciprocating commitment to the institution they work for, that a tenure system creates insecurity among non-tenured faculty, and that professors awarded tenure are those least motivated to spend time in the classroom.

This chapter will explore the economic impact and potential cost savings of continuing to move away from a tenure system of employment for college faculty to a more flexible policy.

The Erosion of Tenure

Colleges increasingly are moving away from the use of tenure in favor of what Ronald Ehrenberg and Liang Zhang dubbed contingent faculty, which includes full-time non-tenure track and part-time faculty. The use of contingent faculty provides colleges with a more flexible work force at a presumably lower cost. The following three figures will reveal the change in the composition of the 4-year college faculty work force. Figure 3.1 shows the change in the percent of full-time faculty that is not tenured and not on tenure track at 4-year colleges between 1989 and 2007. At public 4-year colleges, this ratio increased from 19 percent in 1989 to 32 percent in 2007, an increase of 3.6 percent per annum. At private not-for-profit colleges, it increased from 24 percent in 1989 to 36 percent in 2007, an average annual increase of 2.9 percent.

Figure 3.1: Percent of Full-Time Faculty Not Tenured & Not on Tenure-Track
Figure 3.1: Percent of Full-Time Faculty Not Tenured & Not on Tenure-Track

As evident in Figure 3.1, the percentage of full-time faculty not tenured and not on tenure-track has increased steadily over the past 18 years. The percentage of new full-time faculty hired without tenure or not on tenure-track has been volatile during this period, especially at public 4-year schools. Figure 3.2 shows the ratio of non-tenured and not on tenure track faculty new hires to total faculty new hires between 1989 and 2007. This ratio increased by 22.8 percent between 1989 and 1999 at public 4-year schools, but declined by 14.5 percent between 1999 and 2007. At private 4-year schools, the ratio increased by 19.9 percent between 1989 and 1999 and declined by 6.5 percent between 1999 and 2007.

Figure 3.2: Percent of New Hire Full-Time Faculty w/o Tenure & Not on Tenure-Track
Figure 3.2: Percent of New Hire Full-Time Faculty w/o Tenure & Not on Tenure-Track

The decline in the hiring of full-time non-tenure track faculty since 1999 is most likely due to the increasingly popular trend of hiring part-time faculty, most of which don’t have tenure status. Figure 3.3 displays the ratio of part-time to full-time faculty between 1989 and 2007. This ratio is much higher at private 4-year colleges than at public ones, although the gap has narrowed over time, as the ratio of part-time to full-time faculty has increased by 71.7 percent at public 4-year schools, as compared to an increase of 57.1 percent at private 4-year schools.

Figure 3.3: Ratio of Part-Time to Full-Time Faculty
Figure 3.3: Ratio of Part-Time to Full-Time Faculty


The Benefits of Academic Tenure

The 1940 AAUP Statement of Principles on Academic Freedom and Tenure described tenure as a “means to certain ends, specifically: (1) freedom of teaching and research and of extramural activities, and (2) a sufficient degree of economic security to make the profession attractive to men and women of ability.” In essence, the two prevailing arguments in support of academic tenure are to preserve academic freedom and to attract and retain quality faculty members.

Tenure as a Means to Preserve Academic Freedom

Richard T. De George explains that “the main purpose of academic tenure is to prevent the possibility of a faculty member’s being dismissed because what he or she teaches or writes about is considered by either administrators or some people outside the institution to be wrong or offensive.” In other words, tenure provides a lifetime employment contract that shields faculty from dismissal without just cause.

In its 1940 Statement of Principles on Academic Freedom and Tenure, the AAUP stated that academic freedom […] applies to both teaching and research. Freedom in research is fundamental to the advancement in truth. Academic freedom in its teaching aspect is fundamental for the protection of rights of the teacher in teaching and of the student to freedom in learning.

It is noteworthy, and seemingly forgotten by many today, that the 1940 AAUP Statement imposed several limitations to academic freedom:

“Research for pecuniary return should be based upon an understanding with the authorities of the institution.”

“[Teachers] should be careful not to introduce into their teaching controversial matter which has no relation to their subject.”

“[Teachers] should remember that the public may judge their profession and their institution by utterances. Hence, they should at all times be accurate, should exercise appropriate restraint, should show respect for the opinions of others, and should make every effort to indicate that they are not speaking for the institution.”

Thomas Sowell notes that the tenure system was originally developed to protect faculty from views expressed outside the university, but that it has evolved to protect professors from views expressed inside the classroom as well. Sowell suggests that tenure-protected professors take advantage of their job security to practice classroom indoctrination–teaching students what to think, rather than how to think.

Tenure as a Means to Attract Quality Faculty

Some proponents suggest that the lifetime job security provided by academic tenure is required to attract quality faculty members to the professorate. Those making this argument assume that the extensive training period necessary to obtain a Ph.D. qualification, in addition to the long probationary period, would deter many academically capable individuals from aspiring to become professors if lifetime job security was not available.

The Cost of Academic Tenure

Criticism of academic tenure has grown over the years, with economic arguments making a compelling case to eliminate the practice of tenure in favor of a more flexible policy that has the potential to help reduce the cost of college.

Tenure Is Not Cost-Effective

The case has been made that tenure is cost-effective based on the assumption that most scholars are risk averse and are willing to accept lower pay for job security, suggesting that academics forego higher salaries by working at a college and that the job security offered by tenure is compensation for a lower salary than they might otherwise receive. The evidence suggests the opposite is true–that tenure is not a cost-effective employment instrument. This analysis is two-fold. The median salaries of tenured and tenure-track college professors will first be compared to that of all doctorate-degree holding workers and then to full-time non-tenure track faculty.

The 2007 median 9-month equated full college professor salary is estimated to be nearly $89,000 at 4-year public colleges and nearly $80,000 at 4-year private not-for-profit colleges. In order to effectively compare these salaries to that of all doctorate degree-possessing workers, these figures need to be converted to 12-month salaries. By increasing each by one third, the 12-month salaries of full professors amount to over $118,000 at public and nearly $111,000 at private institutions. In contrast, the 2007 median 12 month salary for all doctorate degree-holding workers between the ages of 40 and 69 is estimated to be slightly more than $102,000. These figures do not include additional job benefits, such as insurance, retirement and time off, which are presumed to be more valuable in academe than in the private sector. This suggests that college professors, on average, receive better compensation than comparable employment options in addition to lifetime job security, bringing into question the notion that the job security offered by tenure compensates for a low salary.

Moreover, faculty positions are already being filled without tenure, and at a lower cost. The rising proportion of non-tenured full-time faculty, as described in Figure 3.1, suggests that college teaching and research positions are desirable jobs—even without elongated job security attached. We estimate that non-tenure track full-time faculty members earn between 77 and 80 percent of the salary of assistant professors at 4-year public colleges, and between 83 and 88 percent at 4-year private not-for-profit colleges. An increasing number of non-tenure fulltime faculty work for lower wages than their tenured and tenure-track counterparts, indicating that colleges can and do cost-effectively attract qualified faculty without the job security provided by tenure. It is important to note that this analysis excludes part-time adjunct instructors, for which colleges are often accused of exploiting for cheap labor, and instead focuses on faculty who are employed on a full-time basis.

The Reward Structure is Misaligned with Tenure

The current tenure process requires new hires on the tenure-track to serve a probationary period of up to seven years before they are eligible to receive tenure. At the conclusion of the probationary period, faculty members are evaluated based on their supposed merits in teaching, research, and service. The assumption is that faculty members who have proven their worth will continue to perform well for the remainder of their careers and this therefore merits a lifetime employment contract. Critics question the reward structure in place with a tenure system that emphasizes research over instruction. Quest University President David Helfand, who successful lobbied Columbia University in the 1980s to be granted fixed-term renewable contracts rather than receive tenure, noted that there is an implementation problem with tenure—that it rewards research and public stature, while it punishes teaching.

As reported in an essay by Robert W. McGee and Walter E. Block, it has been suggested that “receiving an award for good teaching is considered the kiss of death for an untenured professor,” implying that, “anyone who spends so much time preparing for class must somehow be deficient in research.” One critic was quoted in the McGee and Block piece as saying, “Academic culture is not merely indifferent to teaching, it is actively hostile to it. In the modern university, no act of good teaching goes unpunished.” Morris adds that “mediocre teaching performance will be overlooked if the professor is able to place an article in a refereed journal.”

In Going Broke by Degree, it is indicated that the emphasis on research for tenure has “…led to vast numbers trying to write the relatively few articles a year that are of interest to a general audience within their disciplines.” Because of the increasingly specialized nature of research, Vedder suggests that it has become counterproductive for faculty to interact with those in related disciplines, to serve on university committees and even to take teaching too seriously. This, he says, is “bad for students, bad for scholarship that has broad social meaning, and bad for developing a university community that has common meaning.” He continues that “once faculty get tenure, they are often set in their ways, so the situation does not improve.” 

The status quo suggests that tenure-track professors neglect their teaching and service duties in pursuit of publishing research, a questionable reward structure that appears to be misaligned with one of the primary missions of higher education–to educate the future workforce. Colleges increasingly hire additional employees to fill the void of providing instruction and offering service that was formerly a responsibility of the faculty, adding to the cost or providing an education.

Tenure Enables Deadwood and Prevents Flexibility

The theory of tenure suggests that only those professors who have proven their worth through excellence in teaching, research, and service during the probationary period will be awarded tenure. Such a policy prevents colleges the flexibility to remove professors who become incompetent or to reallocate labor resources to meet a change in demand for particular programs or disciplines. As described by Morris, “A distressing number of the senior professors lapses [sic] into a stultifying complacency and stays [sic] in their positions too long.” Daniel Weiss, President of Lafayette College, suggested that, “In some ways, higher education is more like a political environment than the management of a private corporation, except that thanks to tenure, it is difficult to vote anyone out of office.”

Under most private sector employment policies, when an employee has demonstrated that his/her work no longer meets a minimum standard of quality (and often after efforts to rehabilitate have failed), the employer initiates action to rid itself of the unproductive employee. Under a tenure policy, the employer (college) effectively loses this flexibility to eliminate tenured faculty whose quality of work fails to meet a minimally acceptable level or whose productivity has dwindled over the years. This has often been coined as the deadwood argument.

Deadwood faculty are by no means the norm in higher education, as the majority of faculty pulls its own weight; however, the mere inability to remove unproductive faculty is economically inefficient for colleges and unjust to the students paying tuition and forced to sit through class with professors who view them as a nuisance. Morris adds that “when a professor becomes ‘deadwood’ other faculty members usually have to fill in to remove the slack, or, in a much more expensive alternative, someone new has to be hired who can (and will) perform. In the latter case, the institution is saddled with two salaries to cover one job.” The deadwood problem was exacerbated in 1994 when a federal ban on mandatory faculty retirement went into effect. Charles Clotfelter described “the combination of tenure and the absence of a mandatory retirement age created at least the theoretical specter of aged, unproductive faculty clogging faculty slots that might otherwise have been filled by energetic and freshly trained young scholars.”

The dynamic nature of the global economy requires that organizations have the flexibility to adapt to changes in the world. The presence of tenure in higher education significantly reduces a college’s ability to efficiently reallocate resources in response to consumer demand–a hindrance that would be life-threatening to an organization in a healthy competitive market. The tenure policy increases the cost of college, as institutions are forced to hire additional faculty to teach courses in popular disciplines with high demand, rather than being able to reallocate faculty resources from subjects that are in low demand by students. For instance, courses in information technology or business may be very popular among students, while courses in medieval history may not. With a tenure system, colleges are not able to reduce the number of medieval history professors in order to increase the number of information technology and business professors, resulting in a misallocation of resources. “Whatever the manpower adaptations required in higher education, tenure makes them more difficult,” as Morris put it.

Alternative Approaches to Tenure

The previous sections analyzed the benefits and costs of academic tenure. The main argument in favor of tenure is that it protects academic freedom—a noble function that is vital to the advancement of knowledge and truth in society. The arguments against tenure suggest that it is an economically inefficient employment policy. Four alternative approaches to the current tenure policy that are currently in practice will be presented. The four alternative approaches are as follows: increasing the use of contingent faculty; implementation of a mandatory posttenure review policy; introducing a system of renewable long-term contracts; and offering job security as a trade-off to other forms of compensation.

Increase the Use of Contingent Faculty

This alternative involves a slow, yet steady phasing out of tenure by discontinuing the tenuretrack contract of all new faculty hires and waiting for the tenured faculty to leave of their own natural accord via resignation, retirement or death. Rather than recruit new tenure-track faculty, this approach would offer new hires shorter-term contracts, similar to the current trend of contingent faculty use. This approach appears to be gaining traction, as demonstrated in the analysis presented earlier. Although it is a less than ideal solution, it does provide colleges with much more flexibility and reduces the explicit cost associated with instruction; however, it may not be a sustainable long-term strategy as it increases the risk of high turnover among instructors. This will undoubtedly raise the costs associated with faculty recruitment, retention and other administrative burdens.

Case Study 3.1: This is the approach that the Kentucky Community and Technical College System’s Board of Regents recently decided to formally pursue. In March 2009, the Regents approved a revision that halted the tenure-track process for all new hires appointed on or after July 1, 2009. Employees appointed prior to this date will retain their tenure status; however, employees hired after this date will be subject to either short-term renewable contracts for full-time employment, with the length of the contract commensurate with years of service, or at-will employment for part-time faculty. The Regents cited flexibility in the employment of faculty and staff as the rationale for its policy change.


Implement Post-Tenure Review

One of the problems with tenure is that professors undergo a rigorous performance review prior to being granted tenure, but once tenure is granted, a professor could go 30 years without another performance review. This lack of accountability post-tenure is unhealthy. A posttenure review process would retain the tenure system, but implement a mandatory posttenure review of all faculty members. Implementing an effective post-tenure review policy, which protects academic freedom, would theoretically eliminate (or at least significantly reduce) the deadwood problem, as the entire faculty would be subject to a periodic performance review. Although post-tenure review processes vary widely across institutions, a generalized model might involve a substantial peer review every five years after tenure is awarded, with a probationary period of perhaps two years, imposed on those faculty deemed to be weak and inadequate, offering concrete suggestions for improvement. At the end of the probationary period, a subsequent review would be conducted to determine if the individual in question performed adequately. If not, then such an individual would most likely receive a oneyear termination notice.

In theory, the post-tenure review approach has already been widely adopted in academe, as more than two-thirds of states require it for public colleges and nearly 50 percent of private institutions have some sort of post-tenure review policy.  But in practice the reviews have little success at improving accountability because they are largely inconsequential and typically amount to little more than a rubber stamp. This toothlessness was deliberate, with higher education following the lead of the AAUP, which thought post-tenure review “ought to be aimed not at accountability, but at faculty development,” arguing that “post-tenure review policies could be consistent with academic freedom only if they had no power to impose consequences on underperforming faculty.”

Anne Neal described post-tenure review as “relatively ineffective as either an incentive system or a disciplinary tool,” citing perennial compliance and consistency issues with post-tenure review in Virginia, Colorado and Hawaii. Neal describes the current post-tenure review process as a “ritualistic exercise in rubberstamping,” suggesting that while widely implemented, it carries little value as an effective practice of increasing accountability among faculty.60 Victor Davis Hanson described post-tenure review in a similar fashion, calling it an “oxymoron, not a real audit.”

Renewable Long-Term Contracts

This alternative involves the elimination of tenure in favor of long-term renewable contracts for faculty. The contracts could be structured for an initial probationary period of three to five years, with the criteria for performance evaluation (a detailed outline of teaching, scholarly, and service expectations) specified in the contract, including a clause pertaining to academic freedom to avoid its diminishment. If after the probationary period, a faculty member passed his/her performance review and there was still a need for the position at the college, then the contract would be renewed, with a subsequent performance review similar to the initial one. This contract renewal process would continue, with perhaps an increase in the length of additional contracts, not to exceed ten years, as a reward for continued successful performance.

Renewable long-term contracts would address many of the issues pertaining to the faculty tenure process without suppressing academic freedom. First, academic freedom would be preserved in faculty contracts through a combination of an explicit clause addressing the right to academic freedom and a specification of evaluation criteria that would provide additional defense against the politicking that could take place during employment reviews. The contracts would give colleges more flexibility when it comes to adjusting staff levels in response to changes in consumer demand or the economy, as well as the ability to rid themselves of faculty that have become deadwood in a reasonable timeframe, as opposed to being stuck with unproductive faculty members until retirement or death. The specification of performance evaluation criteria in employment contracts would help clarify the reward structure for individual faculty. This sort of contractual arrangement would be more cost effective for colleges than the tenure system, as it would free up long-term resource obligations in favor of shorter-term obligations with comparable compensation packages.

Case Study 3.2: The Franklin W. Olin College is a private undergraduate engineering school in Massachusetts that opened its doors for its first class in 2002. Rather than offering tenure, Olin hires faculty with a system of five-year renewable contracts. When negotiating terms, faculty and the college agree on the criteria that will be used in a peer reviewed performance evaluation when the contract is up for renewal. Despite not offering tenure, the college was able to attract what it describes as a “dream team” staff by luring both tenured and tenure-track faculty from prestigious institutions such as MIT, Cornell and Vanderbilt.

One might suspect that Olin necessarily offer faculty a risk premium as a tradeoff for the absence of tenure, but this assertion is not supported by the faculty compensation data. Table 3.1 displays the average salary, benefits and total compensation package of all professors at fifteen of the top engineering colleges in the US in 2007. Olin professors received the 7th highest total compensation among the schools, but earned the 6th highest average salary. Olin’s faculty compensation package is competitive without a tenure policy, suggesting that the model of long-term renewable contracts has bona fide merit in the real world.

Case Study 3.3: Quest University is a private liberal arts and sciences school in British Columbia, Canada that welcomed its inaugural class in 2007. Quest does not offer tenure, instead opting for a system of renewable contracts for its faculty. Quest President David Helfand tells us that it hires new faculty on an initial one-year contract and assesses them at the end of the year in consideration for a new three-year contract in which the faculty member and Chief Academic Officer negotiate the terms of the contract, including the criteria (which is dependent on the particular strengths of the individual) to be used for evaluation at the end of the contract. At the end of the threeyear contract, a performance evaluation is conducted and if approved for an extension, a new three-year contract is negotiated in the same manner as the previous one. At the conclusion of the second three-year contract, a performance evaluation is again conducted in consideration for a new six-year renewable contract. The Quest case provides additional evidence that the renewable long-term contract model is plausible.

Table 3.1: Average Faculty Compensation at Select Engineering Schools (2007)
Table 3.1: Average Faculty Compensation at Select Engineering Schools (2007)

Case Study 3.4: Facing financial insolvency, Lindenwood University President Dennis Spellmann performed a makeover of the university in the late 1980s. One of Spellmann’s first policies was the abolishment of tenure in 1989. His critics at the time argued that if Lindenwood survived, the removal of tenure would condemn the university to the “academic backwaters, making it difficult to hire qualified faculty members to ensure that survival.” Lindenwood has not only survived, but it has prospered in the process. Morris suggests that one of the main reasons for it success is the “defying [of] academic convention and removing life-long tenure for its professors”, contending that Lindenwood has “avoided many endemic problems of higher education that have sprung directly or indirectly from the tenure system at other U.S. universities,” such as “the high cost of supporting a faculty whose senior members are largely unaccountable for the quality or quantity of its services.”

Offer Job Security as a Trade-Off to Other Forms of Compensation

This alternative approach entails re-designing the job security provided by tenure as an optional fringe benefit as opposed to an entitlement. Under such a policy, faculty members would be given a choice of compensation options, each assigned a monetary value. Depending on an individual’s risk tolerance and familial needs, he/she would select from a variety of benefits, including salary, retirement contributions, job security, health and life insurance, campus parking, office location, etc.

To our knowledge, such a policy has yet to be implemented, although Washington DC Schools (K-12) Chancellor Michelle Rhee proposed a differential pay scale in 2008 that would have allowed unionized public school teachers to voluntarily trade in their tenure and seniority for the opportunity to earn additional bonuses and pay raises for outstanding performance. Under the proposal, a two-tiered pay scale would have been established, in which teachers who remained in the traditional pay system would maintain tenure and receive modest pay raises, but those who opted to forego tenure for the performance-based system would have annual reviews to determine whether they remained employed and the amount of bonus or pay raise that they might receive. The policy would have permitted existing teachers the option to join the merit-based system or remain on the tenure system, but new hires would automatically be enrolled in the merit system. The Economist estimated that this would increase starting salaries from about $40,000 to $78,000, and wages for the best performing teachers would double to about $130,000.

In Going Broke by Degree, a similar policy for higher education is described. Faculty is presented with a menu of compensation benefits to choose from. In a hypothetical scenario, new faculty hires would be told that they will receive an annual salary of $65,000 and $15,000 in annual fringe benefits to choose from, with the ability to exceed this amount by opting for a salary reduction. The fringe benefits might include a choice of health and life insurance plans, retirement contributions, parking spots and tenure protection. For example, the new hire might choose from a $3,000 per year catastrophic health insurance plan, a $5,000 medium-quality health insurance plan and a $7,500 deluxe health insurance plan. Tenure protection would be valued at perhaps $5,000 per year.


Tenure is a policy that was adopted nearly a century ago to protect the academic freedom of the professorate against political and outside influence. As noted, academic freedom is vital to the advancement of knowledge and for the common good. However, it is not the case that tenure is the only method capable of achieving this goal. Morris notes that Lindenwood University’s experience suggests that “not only is tenure an exceedingly inefficient and unreliable means of securing academic freedom, it also may be unnecessary”, as tenure imposes economic inefficiencies such as misaligned incentives, resource misallocation, the enablement of deadwood, and reduced flexibility. The 1940 AAUP Statement describes tenure as “a means to certain ends”. Tenure has proved effective in protecting academic freedom, but it is not the only means to achieve it, and certainly not the most cost-effective.

Several alternative approaches were discussed that offer a potentially more efficient means, including the use of contingent faculty, post-tenure review, renewable long-term contracts, and offering a menu of fringe benefits–of which tenure is one. Each alternative has its own merits, if implemented appropriately. Post-tenure review has been relatively unsuccessful in improving efficiency to date, but this is largely an implementation problem. The use of contingent faculty has risen over time, which increases a college’s flexibility and reduces costs, but such faculty members are increasingly upset with the contractual arrangement and are threatening to unionize, which would undermine the efficiency of the approach. We are starting to see some colleges institute renewable long-term contracts with success, but this has occurred mainly at colleges starting from scratch and may prove to be more difficult to implement at institutions that currently have tenure in place and would most likely involve a phase-out period. The fringe benefit trade-off approach has not yet been attempted in practice, but has the potential to be a long-term solution to the inefficiencies of a tenure system.

There is not a one-size-fit all solution, but the alternatives mentioned offer some generalized approaches to reducing the cost inefficiencies imposed by tenure without resorting to a lowball pay structure or imperiling academic freedom. The optimal strategy for one institutional type may be very different from what is most effective at another. For instance, research intensive universities might benefit most from a hybrid of renewable long-term contracts and fringe benefit trade-offs, whereas it may be most efficient for teaching colleges to utilize a combination of contingent faculty and renewable contracts. There are a variety of approaches to reducing cost inefficiencies, but one approach is economically unsustainable in the long run—tenure.