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On-campus incentives

To combat the lucrative lure of the private sector, some universities are changing the way they pay their technology transfer officers. In the meantime, these professional monetisers are often offered distinctly non-monetary incentives. By David Rapp

Technology transfer officers at universities are charged with converting university-created intellectual property into viable businesses, often partnering with private investment firms in the process. A successful tech transfer officer can bring in millions to a university coffers, but many are vastly underpaid.

The centrality of IP to the nation’s innovation economy is currently not adequately reflected in the compensation structures of tech transfer offices.

Tony Stanco, director, National Council of Entrepreneurial Tech Transfer

“The centrality of IP to the nation’s innovation economy is currently not adequately reflected in the compensation structures of tech transfer offices,” says Tony Stanco, the director of Washington DC-based National Council of Entrepreneurial Tech Transfer (NCET2). “These people are on the front lines and compensating them appropriately with the right incentives to move IP out the door and into products will have a direct impact on people’s health and the nation’s wealth. Unfortunately, their critical role is under-appreciated by university administrators and misunderstood by government policymakers.”

Some universities are starting to rethink the way they pay the people that help monetise IP. Among these new ideas are performance-based incentives, which are commonplace perks for similar jobs in the private sector.

According to AUTM’s most recent salary survey, 30 percent of university tech transfer directors received a bonus, up from about 10 percent when the survey started in 1998. Those bonuses now average $20,000 each year, depending on their performance the previous year. Some universities see the institution of bonuses as necessity to stop their best and brightest from jumping ship.

Retaining talent at tech transfer offices has always been difficult. Lesley Millar, director of the Office of Technology Management at the University of Illinois at Urbana-Champaign, says: “Probably the life of a tech transfer officer at a university in the late 1990s was about a year and a half. There was significant turnover.”

To slow this turnover, the University of Illinois is looking hard at how other universities incentivise their tech transfer teams. “The primary purpose of putting in an incentive pay scheme is to both to retain and attract good-quality staff,” Millar says. “We’re trying to work out how you do that in this highly competitive market.”

According to Wayne State University’s Fred Reinhart, vice president for finance at the Association of University Technology Managers (AUTM), incentive schemes are often viewed as too much of a headache. “It gets sort of messy,” Reinhart says. “It could be a long-range bookkeeping nightmare. Our philosophy here at Wayne State is that it should be straightforward and almost simple, to make sure that everybody understands it.”

MIT: $46m gross revenue in 2005

Then again, some of the most prestigious and well known technology transfer programmes do not employ incentive schemes. Lita Nelsen, the director of the Massachusetts Institute of Technology’s blockbuster Technology Licensing Office, says her group, in the 2005 fiscal year alone, raked in $46 million in gross revenue, with 512 inventions disclosed, 312 patents filed, and 20 companies launched using MIT technology. While the TLO is inarguably a heavy-hitter in tech transfer, it remains, like most of its colleagues in academia, decidedly old-school in how it compensates its tech transfer officers. 

“They get a straight salary and the most fun job they ever had—what I call my binary incentive system,” Nelsen says. “You do a good job, and you get to keep the most fun job you ever had.”

This and other topics will be discussed at the upcoming University Start-Ups Conference 2006, to be held in Washington DC on October 23 – 25 and sponsored by the NCET2. PrivateEquityOnline readers will enjoy a 10 percent discount by using discount code PEOCODE06. Learn more at http://www.ncet2.org/