Explanation of the performance awards policy at UCT

Dear colleagues and students

There have recently been some questions raised about the payment of bonuses to members of the senior leadership group (SLG) at UCT. In social media posts, comments are being made about the fairness of, and transparency and processes around, these payments.

I write to clarify these questions but also to assure you that these payments are aligned with the UCT remuneration policy, that they are considered and decided within an agreed process that is transparent and within accepted human resources (HR) practices. In the final instance, all these bonuses are overseen by a committee that reports to the UCT Council.

The remuneration structure (performance appraisal and bonus system) has been in place at UCT since 2002. It governs how performance is assessed and how bonuses are paid across UCT. It applies across all academic and professional, administrative support and service (PASS) staff and is agreed by the unions, management and Council.

The bonus payment to the SLG of R2.8 million

Some question the fact that the SLG (some 23 people) have collectively received a total of more than R2.8 million in the form of bonuses for work performed between July 2015 and June 2016. It must be noted that approximately R21 million was paid for the same performance period in exceeds and discretionary awards (performance bonuses) to PASS staff – not including the SLG. A further R5.4 million was paid in excellence awards to professors and merit awards to academic staff. This is in addition to the mechanism of rewarding academics through ad hominem promotion, which in 2016 cost the university a further R14.5 million. In effect, the total cost of bonuses and ad hominem promotions was R43 million.

It is important to note that in the case of PASS staff (and the SLG form part of this performance structure) the awards are all once-off payments based on performance in that year. The award does not become part of the base salary of the individual. This is a less expensive and better incentive system than that which exists in many companies and some universities that award performance increases each year, which become part of the base pay in the future.

Changing the remuneration system

It is important to note that SLG members perform executive functions on a par with other executive functions in business and government. The salary packages of executive staff are relatively low compared to industry and bonuses form an important component of the package. They are part of the conditions of employment as negotiated with the unions, are part of the legitimate expectations of staff as the conditions under which they were employed, and cannot be unilaterally discontinued or varied. If we are to propose a change of the policy to the unions, that change will take place going forward, not retrospectively.

Paying bonuses in times of austerity

During 2016, because of austerity measures, we did consider not paying bonuses to staff, but concluded (with the unions’ approval) that since people had worked from July 2015 to June 2016 on the understanding that exceptional work would be rewarded with bonuses, it would be in bad faith to cancel such bonuses in late 2016. We also believed that it would not be fair or reasonable to deny bonuses to one part of the university while paying bonuses to everyone else at UCT. As the SLG is only a small number of people, the impact on the total salary budget is less than 0.2%. You will recall that the austerity target for salary savings was 4–5%. However, we will raise the matter of bonuses this year in the consultations with the unions. The general sense is also that even in times of austerity one would want to continue to reward outstanding performances.

Smaller increases

The most senior members of the SLG wished to send a signal to the university regarding remuneration and austerity by voluntarily accepting lower salary increases than the rest of the university. From 2015 to 2016, I took a 0% increase, the deputy vice-chancellors (DVCs) took a 2.5% increase and the executive directors, registrar and deans took a 3.1% increase. Other PASS staff (in pay classes 5–12) received a 6.8% increase from 2015 to 2016; academic staff received a 5.8% increase; and clinical staff received a 7% increase. In addition, SLG members, like many staff at UCT, donate personally to the institution, many to student financial aid. By example, I donated the full amount of my bonus to UCT – mostly to support financial aid.

Comparative analysis

The setting of SLG salaries at UCT is based on benchmarking with comparative universities and the market. Particularly at this time when we are trying to recruit deputy vice-chancellors and deans, and in the next six months a vice-chancellor, the Remuneration Committee has been concerned that our salaries at this level should remain competitive and preferably be slightly above the market (the benchmark of the 60th percentile of the comparator group of universities). In fact, the UCT VC’s salary is currently 13% below the 60th percentile of the group and the DVCs are 9% behind the 60th percentile.

The process of making the awards

Each member of the SLG has a line manager who does a performance appraisal, as is done for all PASS staff annually. The performance appraisal is usually measured against key performance areas and, as for other PASS staff, a line manager can award a discretionary bonus, which is up to 5%; or an exceeds 1 or exceeds 2, which may be up to 10% and 15% respectively. These awards are paid as a once-off lump sum based on performance for the previous year, and for one year only. This is unlike for academic staff where merit awards (for lecturers to associate professors) are for two years and excellence awards (for professors) are valid for four years. The performance appraisal of the VC is done by the chair and deputy chair of Council and includes a survey of many of the people with whom the VC works, including students, Council members and members of the SLG.

In the case of deans, executive directors and the registrar, the recommendation of the line manager goes to a consistency check development forum meeting, comprising the VC and the DVCs, which assesses the performance. In the case of the DVCs and the VC, the annual remuneration package plus bonuses are all individually reviewed by the Remuneration Committee of Council, which is chaired by the chair of Council. The bonuses for pay class 13 staff are also reviewed by the Remuneration Committee.

See the composition and membership of the Remuneration Committee...

Transparency

We ensure transparency across the different divisions and faculties through the consistency check meetings and through the governance of the Council’s Remuneration Committee. The fact that all payments and bonuses are published in the financial statements also ensures transparency. We do not believe that the individual performance assessments, which include both the strengths and weaknesses of individuals, should be placed in the public domain, but they are reviewed by the Remuneration Committee.

Sincerely

Dr Max Price
Vice-Chancellor

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