Despite a sagging economy and shrinking budgets, salaries in U.S. business schools are still posting gains; in addition, new hires are being added at a healthy clip. According to findings from the 35th annual AACSB International Salary Survey, solid growth appears to prevail across all business disciplines.
The AACSB survey, conducted between October and December of 2002, collected salary data on 25,089 business faculty members across all ranks in 28 business fields and on 4,253 administrators in 25 typical administrative positions. A total of 494 schools participated.
Survey response rates were particularly high among accredited schools. Of the accredited schools invited to participate, 95 percent chose to complete a survey.
While the complexities of conducting an international salary survey have not yet been resolved, collaboration with other organizations is expanding the data in some areas.
AACSB and the Canadian Federation of Business School Deans, based in Montreal, are now working together to conduct a Canadian Salary Survey. In a similar effort between the London-based Association of Business Schools and AACSB International, a survey of salaries in the U.K. has been launched.
Beyond pure salary data, the U.S. study highlights a number of trends that are likely to be of interest on several fronts. While the usual caveats about interpretation of data must be employed, several conclusions and directions seem clear.
New Hires. More than nine percent of full-time business faculty were classified as new hires who began work in Fall 2002. On average, U.S. business schools each welcomed 4.7 new faculty members. Certain fields—such as information systems, accounting, and marketing—continue to require the largest number of new faculty members as schools fill staffing needs.
New Doctorates. Particularly for new doctorates, times are good. Average salaries have increased by 34 percent between 1998 and 2002. In some fields, new doctorates may encounter special opportunities. For instance, IS faculty accounted for 11.1 percent of all new hires in 1996, and a much grander 18.8 percent in 2001. That figure dropped somewhat in 2002—to 16.7 percent— possibly due to factors such as the failure of dot-coms and massive layoffs in fields of technology and telecommunications. Still, it remained a popular field, behind only the broadly defined management category in percentage of new hires for 2002.
Accounting and Finance. Continuing a trend established in recent years, the survey showed that new doctorates in the fields of finance and accounting tend to earn significantly more than the average of $88,200 per year. To a large degree, this situation may reflect simple supply and demand: Virtually all schools offer finance and accounting programs, so the need for faculty in those disciplines is high; but because the production of new doctorates with emphases in these areas has not kept pace, their scarcity is driving up the salary base.
New Hire Differential. Not only are new hires in specific fields earning more than their peers, in some cases they’re also earning more than established faculty members in their own disciplines. Some new hires are paid more than both assistant and associate professors. Again, the discrepancies are particularly high in the most competitive fields. For instance, the average salary for a newly minted Ph.D. in finance is $102,400. For an assistant professor, the average salary is $97,400; for an associate professor, it’s $93,300.
While the raw numbers aren’t so striking in the field of accounting, it turns out that full professors in accounting aren’t really staying all that far ahead of the new assistant professors joining their ranks. As a comparison, the average salary for full professors in economics is 46.7 percent higher than the average for new doctorates. In accounting, that difference is only 9.3 percent.
This inversion of salary rates, where new hires make as much or significantly more than existing faculty, must inevitably contribute to rising salary costs across the board. It also may contribute to a certain fluidity in the job market, as assistant and associate professors realize they might have to jump ship to a new institution to get a significant pay boost.
The fallout from this phenomenon is likely to grow worse as the existing faculty population at business schools begins to age and retire, and replacing faculty members becomes more and more expensive. For some schools, a replacement commands one-and-a-half times the salary and benefits of the retiring faculty member—a number that doesn’t include search costs. For schools looking at a high volume of upcoming retirements, the costs are almost certain to be significant.
Gender Issues. Noticeable disparities exist between male and female faculty professors, with men earning more than women at every rank. The gap is greatest at the highest levels, where male full professors earn $108,200 on average, compared to female full professors, who average $97,600. The gap is much smaller at the entry level ranks. New female doctorates earn an average of $86,300 to the $89,200 earned by men. Without further study and evidence, it’s impossible to determine whether or not the gender gap may be closing.
Other Factors. Faculty salaries also are affected by other elements. For example, the survey gathered data about salary differences between schools accredited by AACSB and those that are not, as well as between public and private schools. For new doctorates across all fields, the average salary at an accredited school is $90,900. At a nonaccredited school, that number is $65,600. A new finance professor at an accredited school earns, on average, $105,500; at a nonaccredited school, the average salary falls to $72,700.
Salaries are also higher in accredited private schools than in public schools. Again using the new finance professor as an example, the average new doctorate makes $114,300 at an accredited private school. At a public accredited school, the new doctorate average salary is $102,200.
Caveats. The numbers compiled in this study should be viewed as aggregates drawn from widely differing institutions that may not have much more in common than the fact that they offer business degrees. Almost every school will deviate from these averages because of variances in geographic location, student body makeup, size of the institution, size of the program, mission, and all the other elements that make a school unique. A professor at a small nonaccredited college usually will not expect to earn the same salary as a professor at an internationally ranked school, and some of those schools are part of this database.
In addition, information presented here is based on nine-month academic year salaries and does not include various incentives that might enhance a professor’s total compensation, such as signing bonuses and research support. The survey also doesn’t reflect actual teaching loads, which may vary as teachers are offered lighter teaching loads to make certain positions more attractive.
While the salary survey data provide a general overview and describe trends, views of the world can be inconsistent. At the same time opportunity knocks for talented business faculty in certain fields, administrators and recruiters are squeezed by escalating salaries and shrinking budgets. Regardless of one’s perspective, staying informed is a key tool in planning, negotiating, and budgeting.
The AACSB International Salary Survey
AACSB member schools that provide data can acquire custom reports based on the salary survey. The reports, which include comparisons with schools selected by customers, can be created and purchased online; reports generally can be delivered within minutes via e-mail. The complete salary survey report can be purchased from AACSB at www.aacsb.edu/knowledgeservices.