Compensation: The Biggest Piece of the Pie

When changing the school's entire business model sounds like too much, consider tackling the school's biggest expense — compensation.

Feb 1, 2024  |  By Jeff Shields, FASAE, CAE

From the January-February 2024 Net Assets Magazine.

Jeffrey Shields, FASAE, CAE
NBOA President and CEO

Leaders in independent school business hear a lot about the traditional business model. You know some of the common refrains: The traditional business model is broken. A new business model offers great promise. We should be rethinking our business model. It’s true that independent schools charge less than it costs to educate their students. It’s also true that by and large tuition has increased more than most families can afford. The traditional model works for perhaps 20% of schools, with a big brand name, heavy enrollment demand, a strong fundraising culture and a large endowment. And yet reimagining the entire business model can seem intimidating or unapproachable, especially since that model has been in place at our schools for decades.

As I see it, that’s what makes NBOA’s Mission-Anchored Compensation Strategies research and deliverables so exciting and compelling. Our research team has explored one sizable, impactful component of the business model, in fact the largest expense at most schools — faculty and staff compensation and benefits — and studied how schools are making the most of their investment. Rather than suggesting you reconsider the entire business model all at once, we are offering different strategies aligned with your school’s largest expense line, which will fit different contexts, and with solutions both large and small in scale. Schools of any size, mission and location will find something to consider in this work.

It is hardly necessary to add that recruitment and retention of faculty and staff has also been challenged since at least 2020, making attractive compensation and benefits an indispensable key to the effective delivery of a school’s mission. Lead researcher of the NBOA initiative, Patrick Schuermann, Ed.D., who has studied teacher compensation for years, noted that clearly communicating the value of total compensation has never been more important. “It is paramount,” he said, particularly when base salaries appear lower relative to public schools or other industries. “In the vibrant mosaic of our independent schools, every tile — each faculty, staff and leadership team member — holds unique value,” he continued. “As the leaders in our study shared, the challenge and the opportunity is to find ways of combining compensation with other meaningful forms of recognition, and then communicating these in ways that speak to the diverse hopes and needs of those who comprise our communities.”

On that note, NBOA Senior Director, Research and Data Analysis Elizabeth Dabney, who was instrumental in the initiative, was struck by how some school leaders considered professional development to be a significant and differentiating benefit. It’s an example of how an attractive total compensation package will go beyond a paycheck and health insurance. “I was especially interested in the schools that were developing partnerships that benefit faculty and staff, such as partnerships with local universities for degrees or training, or partnerships with organizations that offer certifications in areas like Montessori education,” she said. “These efforts did not seem to break the bank, but they did speak to employees’ interest in growing in their careers. Robust professional development as a benefit seems to hit the chord of schools really investing in their employees, not just offering them a benefit like insurance.”

Moving away from a traditional faculty pay structure will not necessarily cost more, but it does represent an opportunity to bring greater mission alignment to the way schools allocate their largest budget line item.”
—Patrick Schuermann, Ed.D.

As Dabney implied, school leaders may worry that a new approach to the school’s compensation system will cost more. This is not necessarily the case. Allaying these concerns, Schuermann drew attention to this takeaway from the Research Findings report: “Moving away from a traditional faculty pay structure will not necessarily cost more, but it does represent an opportunity to bring greater mission alignment to the way schools allocate their largest budget line item.” This is not anecdote or opinion. This is a conclusion drawn from extensive quantitative research on practices at hundreds of independent schools around the U.S. and the world.

The kind of research NBOA conducted over 18 months has never before been done for independent schools. Analysis of existing data began in the summer of 2022 and efforts continued throughout the year, including developing and administering a quantitative survey, conducting focus groups with a wide range of schools, and then interviewing leaders at schools that developed especially promising approaches. All of this was synthesized into publications and tools with different purposes (see sidebar for more information).

It goes without saying that changing compensation practices at independent schools can pose a challenge, due to long-held ideas about how faculty should be paid. Independent schools have the advantage of independence from large-scale bureaucracy, but how often do we use it when it comes to faculty pay? The step-and-lane system, i.e., the traditional faculty salary scale based on years of experience and educational degrees, is entrenched; Our research shows more than half (56%) of independent schools use it. In focus group conversations, school leaders would begin by agreeing that changing a compensation system was well-nigh impossible due to entrenched ideas and culture, reported Dabney, but would conclude by describing ideal systems that were outside the traditional step-and-lane.

This is an opportunity for leaders of independent school business, be they in finance, human resources or elsewhere in school administration, to act as change agents for the good, if they implement changes with care. In his introduction to the Research Findings, Schuermann underscores that “Because compensation systems are nested at the intersection of so many forces, any alterations to them need to be mindful to not just the technical aspects of change, but also the deeper, cultural, adaptive elements that involve the hearts, minds, values, loyalties and relationships at the center of our mission-driven institutions.” Dabney was also struck by the importance of sound change management practices, on which success of a new system most often hinged. “Having a trustworthy sponsor of the change, communicating early and often and sometimes in a personalized way, taking the time needed to educate people about the change and implementing slowly and thoughtfully, regardless of the details of the compensation system itself,” were common practices among successful schools, she said.

Schools with a banded salary structure reported maintaining a mission-aligned workforce for both administrators and faculty at significantly higher rates than schools with a step-and-lane structure.

The good news is that schools that used a more innovative compensation system reported improved outcomes. One takeaway from the Research Findings: Schools with a banded salary structure reported maintaining a mission-aligned workforce for both administrators and faculty at significantly higher rates than schools with a step-and-lane structure.

I hope this puts wind in your sails to not only explore the Mission-Anchored Compensation Strategies resources, but beyond that seriously consider how your school can make the most of this critical component of the business model. You don’t need to change everything at once, but if your school’s leadership can change components appropriate to your school’s context — with the help of research-based resources — you may find your school moving confidently down the road of financial sustainability, which, as we know, enables a school to fulfill its mission in perpetuity.

Jeff Shields signature

Jeffrey Shields, FASAE, CAE
NBOA President and CEO



Jeff Shields

Jeffrey Shields, FASAE, CAE

President and CEO


Washington, DC

Jeff Shields, FASAE, CAE, has served as president and CEO of the NBOA since March 2010. NBOA is the premier national association serving the needs of business officers and business operations staff at independent schools. Shields, an active member of the American Society of Association Executives, has been recognized as an ASAE Fellow (FASAE) and earned the Certified Association Executive (CAE) professional designation. His current board service includes serving as a director for AMHIC, a healthcare consortium for educational associations in Washington, DC, as well as a trustee for the Enrollment Management Association. Previous board service includes serving as a director for the American Society of Association Executives, as a director for One Schoolhouse, an innovative online school offering supplemental education to independent schools, and as a trustee for Georgetown Day School in Washington, DC. Shields holds a BA from Shippensburg University and an MA from The Ohio State University.

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