Trekking the Tenure Track

Schadenfreude. Sunday’s New York Times article on the process of “de-partnering” at Goldman Sachs inevitably has triggered gloating among its competitors and critics alike. As author Charles D. Ellis’s “The Partnership” revealed in 2008, at the peak of the financial crisis, Goldman Sachs like the rest of Wall Street is still run by a small group of “rainmakers” at the pinnacle of its organizational hierarchy: “the partners.” This process to “partner” is analogous to the process of receiving tenure in academia: both promotions seek to reward achievement and past performance.

Goldman Sachs and other firms with steps to removing partners deserve approval for maintaining such a strong sense of “revolving door” review because partnership, like tenure, presents many problems when unchecked. In most systems of review, there exists an inconsistency between the past actions for which partnership or tenure is bestowed and the future expectations for a partnered individual at the institution. Goldman understood that partnership should not be seen as a reward but rather as an investment opportunity to gain from an individual’s leadership in the institution or firm. The lessons Goldman learned might now be applied usefully to academia, where the “tenure” model of job promotion is riddled with the same issues that Goldman’s old partnership model was; it promotes good researchers and intellectuals who are not necessarily good professors or true leaders.

The partnership model depends far too wholly on past output. Its design is based on the moral-hazard problem in contract theory economics, which is solved by using output as a proxy for effort, which cannot be directly measured. In the corporate setting, this output is signaled through deal flow or revenue generation for the firm. In academia, reward is most measurably a function of research and publications. These assumptions rely on the fallacies that deal flow or published papers directly reflect an individual’s promise as partner or professor that they may not. The economic model from which this result is derived is far too trivial to be applied this generally.

Furthermore, it is not necessarily true that such observable outputs are the right proxies for effort. While convenient to base uncertain decisions about the future on past observation, incentives do usually change when tenure is granted. This point needs no belaboring, but tenure schemes should incorporate this fact, accounting for future promise rather than bookkeeping the past. While a professor is promised intellectual freedom once granted tenure, there is an overwhelming sense of security that accompanies this which may reflect negatively on a professor’s responsibilities to the University, namely advisory or teaching roles for graduate and undergraduate students, administrative roles in a lab or research program, and leadership positions on University-wide committees.

While those granted tenure or partner status are expected to be the ones with the institution’s long-term goals most in mind, the process in place today requires greater detail to short-term gains or wayward attention to the politics of the tenure system in order to receive tenure. On Wall Street, irresponsibility accompanies the desire to make short-term profits, and the individuals most in a position to become managing partners in the near-future are not, however, equipped to think much further ahead than their tenure decisions.

The challenges to measuring excellence in finance parallel those in academia, but instead of viewing tenure as a career capstone, it should be seen as only the start of an individual’s true contributions to an academic institution. Academics who are most fit to successfully fill all the roles that professors play should be given this opportunity sooner. This implies either the need to reevaluate the standards on which universities base tenure reviews, moving away from the model of rewards for past “output” or to eliminate it entirely and smooth the organizational hierarchy of academia institutions. Maybe, this time, Goldman had it right.

Ashin D. Shah ’12, a Crimson photo editor, is an applied mathematics concentrator in Pforzheimer House.