Should academic tenure be abolished?

Academic tenure may have perverse results in removing the incentive for continued performance. On the other hand, it is surely no more perverse than the golden parachutes and munificent bonuses, weakly related to performance, which senior management arrange for themselves in other organizations.

Indeed it seems to me that tenure is closely analogous to the stock option packages received by executives in a corporation, or to the shares of a general partnership held by the partners. Tenure is effectively a way to give a profitable ownership share of a non-profit organization.

If universities were actually for-profit corporations, then they could compensate their employees with grants of shares or stock options. Like tenure, grants of stock options would (a) not be an immediate cash expense for the corporation; (b) have a true cost which was hard to measure; (c) be thought to encourage employee loyalty and align the employee's interest with the corporation's interest, although as we know, neither tenure nor stock options function perfectly in this regard.

However since universities are non-profit organizations, they are stuck with tenure as an ownership-stake-like form of compensation. Giving out shares of trusteeship of the university would be problematic, since the shares could not be sold and members of a non-profit corporation cannot financially benefit from their membership.

There is no liquid market for "tenure shares" as there is for publicly traded stocks, although it may be possible to sell tenure back to the university for a buy-out retirement package. The fact that tenure shares are illiquid, but guarantee continued employment, is itself interesting.

Why do capable individuals accept lower-paying jobs in academia in the first place? (a) Because of a sense of prestige. (PhDs, and perhaps JDs and MDs too, are often inculcated with the belief that the smartest will continue in academia, while the rest are washed out and do something else.) (b) Because of a belief that they will have more freedom and control of their own work than in a business organization. (c) Because of a desire to remain in the stimulating environment of a university campus.

These intangibles—prestige, freedom, environment—offer psychic compensation which partially substitutes for monetary income and persuades some to be professors when they could make more money doing something else.

Now, as a successful corporate executive enters the end-stage of his career, he naturally secures the most pleasant retirement that he can. Having been compensated primarily with money throughout his career, he arranges a golden parachute consisting of more money.

But what about an academic? His revealed preferences are less for monetary compensation and more for intangibles. His ideal retirement package would contain the prestige of continued association with a university, the freedom to continue to work on what interests him, an office on campus and the chance to continue to interact with all that the campus offers. In short, he still wants to be a professor when he retires. His preferred form of parachute is to stay on the plane.

So, the use of tenure as a job compensation for academics may be of a piece with the other forms of compensation that an academic is offered even in the earlier stages of his career.

Academic institutions should offer tenure or not as they choose, but there's at least some reason to think that tenure is a favored form of compensation for a reason and not just as a historical artifact.