From the Editor

From the editor

SOM dean takes a pay cut.

The nation has been agog in recent months over Wall Street's galactic sense of entitlement—that notion among some CEOs that when you've brought the world down around your ears, it's time for a multimillion-dollar bonus. So it was restorative to learn in January that the new School of Management dean, Sharon Oster, has given herself a $100,000 salary cut this year in order to fund internships for students.

Oster took her post after the previous dean unexpectedly announced—in the midst of a curriculum overhaul, a $300 million capital campaign, and a recession—that he was leaving for another job. She might reasonably think she deserves her new salary. Why is she parting with so much of it? Because SOM students, she says, like business students everywhere, may have trouble finding jobs this year. Her salary cut will fund up to a dozen internships at Yale this summer in such areas as real estate, finance, and media.

I asked Oster four leading questions about her decision.

Does this mean your salary is huge? This is the most common speculation I have heard. Oster says even one of her grown children raised it, to her amusement. She would say only that her pay is reasonably consistent with SOM faculty salaries; "there's a premium to being a dean, but it's not unconscionably large." However, top administrators at some schools make in the low to mid-six figures—very comfortable territory, but not so comfortable that $100,000 is minor. Nor is Oster independently wealthy. (She specifies that her donation does not mean she thinks deans are overpaid.)

Is this a woman thing? Economist Linda Babcock once ran an experiment showing that women did better at bargaining up the price of an item they were selling if the proceeds went to another person. They sold at $44.10 on their own behalf, $50.31 on someone else's. (Men sold at $51.20 for themselves and $46.36 for someone else.) Does Oster's donation reflect a gender gap in self-interest? She says she's not sure how much traditional gender roles weigh. The male leaders she admires have some traits considered typically female, like acute listening skills. And vice versa for female leaders: "You need to be able to tell the people behind you, we've gotta take that hill and let's run like hell up it."

Is this a nonprofit thing? Oster is an applied microeconomist who studies how organizations work, including nonprofits. Has she absorbed the culture of giving? Possibly, she confesses. "All of us who work at Yale work at a great nonprofit. Leaders of nonprofits are people for whom there is a connection between what they do as leaders, and the mission of an organization, that is especially strong." And she likes that kind of leadership.

Are you trying to change the world? Oster emphasizes that she doesn't want to put pressure on SOM faculty or staff to follow her lead; not everyone is in a position to give money. But she sees her salary cut as part of a larger creative effort by the school and alumni to help students. (Some alumni, hearing of her gesture, have offered internships and jobs at their own firms.) Oster is known as a hard-nosed sort. When asked whether she's hoping to help adjust social norms, however, she sounds like a dedicated idealist. For instance: "SOM has a strong Yale heritage of personal commitment to values and service." And, very simply: "Society would be better off if people acted on their values." 

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