Faculty Remuneration Policy under Entrepreneurial University Framework

Salary + Consultancy + IP Earning + Startup

Rahmat Ullah
Director Center for Innovation Studies
University of Sialkot
Director ORIC and Executive Director Institute of Research Promotion
Pakistan
rahmat(at)irp.edu.pk

Aroosa Khan
Research Officer
Center for Innovation Studies
University of Sialkot
Pakistan
aroosa.khan(at)uskt.edu.pk

Summary

The universities operating on the conventional model of teaching and basic research are missing numerous revenue streams developed by the entrepreneurial universities. The faculty earn much more from entrepreneurial activities as compared to university paid-salaries.

Conventional University Model

The salaries of faculty in Pakistan largely depend on public sector funding in government and on students’ fees in private universities. This leads to a high financial burden on the state and students. The faculty is assigned maximum course load that leads to no time for quality research, industry engagements, and other activities of socio-economic development. This is a conventional university model where teaching and basic research is focused.

Entrepreneurial University Model

The entrepreneurial universities developed other streams of revenue for institutions and faculty. The entrepreneurial faculty earnings include salary, research grants, industry funding, and licensing income from intellectual property. These non-salary streams of faculty remuneration generate a lot of other economic streams like new businesses, technology transfer, consulting, new products and services. These streams bring a lot of money back to the university, add in tax collection for the state, and generate a lot of employment, increase country export and add in national GDP. Most importantly this entrepreneurial approach develops skillful students and enables them to start their own ventures.

These remuneration streams are still missed in Pakistan. The university faculty needs legal permission, incentives, recruitment criteria, and promotional parameters, to develop non-salary revenue streams like:

Faculty earning from university salary
Faculty earning from research grants, entrepreneurial and industrial activity
Faculty earnings from IP licensing
Faculty earnings from own startups and companies.

The Economics of Entrepreneurial Universities

The Economic Output of Academia in EU, 2017

The Technology Transfer Offices (TTOs) in the USA and Knowledge Transfer Offices (KTOs) in the EU play the leading role for research commercialization and academic entrepreneurship. The TTOs and KTOs earn a lot of money from academic outputs and develop an enabling environment for faculty and students to engage in commercial activities. The two images given below show that an entrepreneurial university creates numerous economic activities, and add significantly to national GDP. In the EU, around 5000 new companies are created by universities with research contracts worth 3.81 billion.

The Economic Output of Academia in the USA for 25 Years

According to the AUTM report 2017, the USA TTOs lead the world in research commercialization as USA universities frequently make engagements in entrepreneurial activities. The universities have created huge wealth through the commercialization of academic works in the last twenty-five years. The universities made the industrial impact of USD1.3 trillion along with USD591 billion in USA GDP and 4.3 million new employment opportunities. The 11,000 new companies are created by university faculty and students. The 200 news drugs and vaccines are introduced in the market generating economies and improving the health quality of USA people. Around 0.38 million new inventions are disclosed and 80000 are protected through patent for commercialization and revenue generation. This huge economic contribution is largely based on faculty works and developed culture of faculty involvement in applied research and commercialization activities.
Source: AUTM report 2017.

Faculty Earning from Industry and University Salary

Figure 01 in the Appendix shows that faculty in Germany earns from industry yearly USD 200,000 followed by the USA, and China. The faculty in South Korea earns around USD 150,000 yearly from industry followed by Netherlands, Turkey. The faculty members in Taiwan earn from industry around USD100,000, and in India around USD50000. Figure 02 in the Appendix presents a list of twenty universities along with faculty earnings from industry and World University Ranking.

APPENDIX

Since the study was conducted, most countries have seen a returning surge as a second wave of contaminations is growing. Concern has been expressed at the lack of sufficient track and trace facilities in some countries, the long haul for finding a vaccine, the burst in infections caused by the social antics of students coming to the first year of university, and returning senior students, leading to a clampdown by the authorities; the tension between government policies to save the economy, avoiding wholesale redundancies with companies going to the wall, and an imminent threat of a financial depression, needing a fine balance between government subsidies, quantitative easing, and financial recovery.

Another worrisome trend in some countries is that parts of the general public, including the media, are turning against the experts (who want stricter measures), threatening even their lives (by way of example four experts are now under police protection in a western European country). Moreover, again in some countries, politicians, listening to the public and the media (state and private) are starting to adopt relaxing measures, even if objective evidence reflected in international observatories would point to the opposite direction (for example ECDC (the European CDC) www.ecdc.europa.eu/en/covid-19-pandemic).

So the Helix is torn down, with the businesses asking for more relaxation of measures and a return to ‘normality’, the experts going on the other side, and the government trying to ‘calm’ the population. It seems that a new phase of collective denial has started, where ‘living with the virus’, becomes not only the new normal, but a dangerous reality (from collective responsibility to individual one). The system thus is over-fragmented and calls for increased individual action in order to stay safe. This fragmentation dilutes social cohesion and creates negative conditions to fight the pandemic and prepare for the aftermath.

All the above factors are leading to an interesting set of dynamics between the three actors in the Triple Helix – Government, Industry and Academia, and offer a rich canvas for a follow-on study.

The table below shows that faculty earn much more from industry sources as compared to university salary. There are a few selected universities presented below and a detailed list is given in the appendix. The data shows that in USA Johns Hopkins University, the university salary is only 41% of faculty earnings from industry earnings, and 29% of total earnings. In the case of Germany LMU Munich, academic salary is 21% of industry earnings, and 17% of total earnings. In Netherland, the faculty earn from academic salary 40% of what they earn from industry, and 28% of their total income. In Sweden, the faculty earn 52% of industry income from university salary and 34% of their total earnings from all sources.

Faculty Industry-Earnings – The Examples from Countries

Source: Types of income generating activities implemented in public universities in Malaysia (Source: Adopted from Asia (2012) www.researchgate.net/publication/277881266_Income_Generation_Activities_among_Academic_Staffs_at_Malaysian_Public_Universities

India

Indian Institutes of Management (IIM) lag behind and yet to reach up to their global equivalents in terms of faculty earning policies, their corporate sector is gaining benefits from their expertise and making them richer. One of the prominent expertise and entrepreneurial activities of any faculty member could be the consulting activities. These consultancies help them earn more as compared to what they earn from their pre-defined salaries from institutes. The statistics show the earnings of IIM faculty on average as Rs.12 lakhs from consulting fees and share the 45% of their earning with their home institute. This net amount is comparatively greater as on average a faculty member earns Rs.8 lakhs as annual salary from the university.

Source:: https://economictimes.indiatimes.com/industry/services/consultancy-/-audit/iim-professors-earn-more-from consultancy/articleshow/5122071.cms?from=mdr

Malaysia

Malaysia is considered to be another exemplary country in the context of income generation activities other than the basic salary among the faculty members. The data generated from interviews with researchers and analyzed by the interactive model reported that the researchers in the higher education institutes of Malaysia acquire a significant amount of income from research, consultancy and commercialization activities that contribute to the financial sustainability and advancement of a university. The following image summarizes some of the income-generating activities carried out by academic staff at HEIs in Malaysia.

Jamaica

ORIC/TTO offices developed within the entrepreneurial university framework help generate sustainable income streams that ultimately benefit the institutes and helps in the national development along with the financial stability of the faculty members. A study reported by the School of Graduate Studies, Research and Entrepreneurship, and the Office of Development, University of Technology, Jamaica, exemplifies the identification of such independent expansion of revenue resources which included graduate programs, applied research and consultancy, endowments, and proficient training to industry.

Source: Oliver, G, Henry, M, Newman-Rose, C and Streete, T. (2013) Strategies for Income Generation at the University of Technology, Jamaica. Latin American and Caribbean Journal of Engineering Education, 2(1).

Conclusion

The entrepreneurial universities in the developed countries are promoting the collaborative approach of academia to connect with industry. They enable professors to serve for society along with teaching and research activity. This entrepreneurial role needs to be supported by promising policy making, profitable incentives, preemptive ORIC/TTO and industry demand under a technology transfer drive.

The faculty needs to be classified into admin faculty, research faculty, teaching faculty and entrepreneurial faculty. The entrepreneurial faculty having a keen interest to engage with society and industry to be further supported for commercialization activities. The faculty needs to be assessed and promoted based on their selected track as admin or teaching or basic research or entrepreneurial activities.

It is interesting to note that faculty in the advanced world hardly earns 30% of their income from academic salary, and rest (70%) they generate from funding and commercial activities.
The Center for Innovation Studies, USKT

This article is developed by CIS, USKT, and aims to study innovation systems and models of regions, countries, and areas for global competitiveness. The traditional factors of production are continuously being replaced by new factors. The regional resources of location and raw material are no more than important unless planned and exploited in a very innovative way. The new factors are knowledge, innovation and time to bring innovation in the market. CIS USKT envisions being a leading research center for innovation studies and policy advice.

Published by the Triple Helix Association – ISSN 2281-4515

Publications

Members area

RESOURCES