Lest you think that the world of executive employment in academia is, in line with its non-profit educational mission, too high-minded to engage in hardball negotiation tactics, consider this gambit, which we have now seen more than once in the past year.
After a lengthy search process, the Board of Trustees of a university, college or independent school has settled on between two and four “finalists” for the presidency or head of school position. At this point, each of the finalists is presented with a term sheet, the salient feature of which is the amount of base annual salary for the job, plus a few other less important details.
All of the “finalist” candidates are then told that to be eligible to continue in the process, they must agree “up front” to the particulars of the term sheet.
The purpose of this exercise, of course, is to stifle any meaningful negotiations over key terms in an initial presidential or head contract by suggesting, not too subtly, that if one candidate does not want to accept the provisions of the term sheet, the Board will choose one of the others who will. A classic “double bind.”
This tactic also, unfairly, requires the candidates to decide whether they need to hire a knowledgeable executive employment attorney in order to advise them before they have even received the assurance that they are being offered the position.
This negotiation ploy may look smart from the Board’s point of view, but I respectfully suggest that, in addition to disadvantaging the candidates, it carries a meaningful downside for the institution as well.
Consider the following:
There are two finalists for the position. Both are presented with a term sheet and asked to agree in advance to its terms. The candidate more desperate for the job promptly agrees. The second candidate decides not to play this game, for a number of reasons: perhaps he or she finds it distasteful, or has other employment opportunities, or is advised by someone like us, employment attorneys who routinely negotiate executive contracts in academia, that they should be careful about agreeing to any terms before they are actually selected for the job.
In my example, the Board now offers the job to the first candidate, the fish who has taken the bait. In this scenario, it is distinctly possible that the school has wound up with the lesser candidate.
And for what?
Any experienced attorney working in the non-profit educational arena knows that with respect to an initial presidential or head contract, any negotiation over initial base salary will be necessarily constrained in any event. If the school is offering (for example) a starting base salary of $500,000 per annum, negotiation may push that figure up somewhat, but not to any dramatic extent.
More importantly, from our point of view (which is the point of view of the potential first-time president or head of school), base salary is only one item to be discussed, and often traded off against a number of other consequential items in the proposed presidential or head agreement.
This is why lawyers experienced in this practice area will tell the client: “Of course, it is totally your decision as to how to respond to this ‘take-it-or-leave-it before you have been selected offer,’ but our advice would be to politely decline to do so along the lines of the following: ‘Thank you for showing me the term sheet. I now understand some of the details of what is being offered by way of compensation for this job. You will understand that I do not want to incur the cost of an experienced attorney to review and respond to the terms before I am actually offered the job. Of course, if I am actually selected for the position, I will pass this term sheet along to my attorney with the understanding that this is what the Board is offering.’”
Such a measured response also sets an appropriate balance in the important relationship between the Board of Trustees and the school’s chief executive officer who must not only lead the institution forward as a visionary leader and consistent problem-solver, but also, unlike the Trustees, is required to attend innumerable rubber-chicken dinners on Saturday nights in order to raise money for the school.
At this point, if the Chairperson or other Board contact insists that they will not consider any candidate who has not made a firm commitment to the term sheet, the candidate must decide whether they will be the one to “blink first.” In our judgment, that decision affects more than simply reducing the candidate’s negotiation leverage. It telegraphs whether the candidate is likely to bow to pressure in a number of other situations, even ones which may disadvantage the institution. It certainly cannot be taken lightly. It shouldn’t have to be taken at all.
