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Designing Head of School Contracts

By Net Assets posted 06-16-2021 04:55 PM

  

Human Resources |

A well-crafted head of school contract can help pave the way for a successful headship.

Head of school turnover picked up speed during the pandemic, and the momentum of new head announcements will continue through 2021, according to attorneys in the Education Practice at Venable LLP.

“What we’ve noticed over the past three to five years is that the new heads coming in are very well versed in the terms and conditions of the head of school contract,” said Caryn Pass, chair of Venable’s Education Practice, in a recent NBOA webinar, Designing Heads’ Contracts That Hardwire Best Practices. “They’re consulting with colleagues about what they should be looking for in terms of compensation and actively looking for statistics [on executive compensation],” she explained.

With the increasingly competitive nature of the search for a head, it’s important that schools clearly outline the expectations of both the school and the incoming leader, and balance the school’s relationship with the head against the school’s obligations to families and the mission. Grace H. Lee, NBOA legal counsel and partner with Venable’s Education Practice, outlined preliminary issues that schools should consider to achieve this goal:

  • Meet with the school’s board regularly and “remind them to send a positive message that the school and board value the new head.”
  • Pay commensurate with similarly situated entities, taking into consideration base salary, other forms of compensation, retirement and bonuses.
  • Consider the head’s specific needs, such as requests for vacation time or campus housing.
  • Show concern for health and wellbeing by making sure your contract addresses items such as vacation, remote work in the summer and sabbatical.
  • Specify how each party may terminate the relationship before the end of the term of the agreement, as well as the legal consequences of early termination. “Hope for the best but plan for the worst,” said Lee.

Term of Contract

When determining the tenure that would best serve the school, it is prudent to review the school's strategic plan and assess the head’s role in context of your long-term goals. In general, the trend in creating employment agreements with a new head has been to establish an initial three-year term, though, as Pass noted, some boards may suggest a 10-year contract. Pass urged business officers to be cautious of very long-term contracts and, when appropriate, limit the contract to three to four years.

”We are seeing a trend in sitting heads not being willing to take more than a three-year contract because they don’t want to make the long time commitment,” explained Pass. A shorter contract gives the new leader a chance to come in that first year and make changes while providing sufficient time to see the benefits from those changes. In schools with an upcoming capital campaign, for instance, a short term contract can allow the school to use the campaign as a key data point in evaluating the head’s performance.

For schools that have a good relationship with their head and wish to renew the contract, Pass recommended introducing a five-year term “to try to send that message to the head that they're valued and that we want them to stay.”

For further insight into these topics and many others, include salary and bonus best practices, deferred compensation options and more, view the webinar and slide deck in the NBOA Library (NBOA members and webinar attendees only).

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