VENTURESCOPE

Technology transfer officers shepherd innovations from initial disclosure by university researchers, through the vagaries of the patent process, to final licensing by outside investors. In so doing, they are on the frontline of making technology pay off – in some cases, to the tune of millions of dollars. As a result, some universities are starting to rethink the way they pay these prized people. Among the perks now on offer are performance-based incentives – commonplace in the private sector.

Just what type of incentive is appropriate in an otherwise academic institution, however, is a question that universities are wrestling with. Academia can't offer the lucrative stock options that might be granted by, say, a pharmaceutical corporation. Indeed, the very idea of offering a technology transfer officer a percentage on future earnings derived from his or her work is a tough one for universities to accept.

According to Wayne State University's Fred Reinhart, vice president for finance at the Association of University Technology Managers (AUTM), incentive schemes are 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 simple, to make sure that everybody understands it.”

The risk is that individuals who feel under-compensated tend to look for other jobs. Lesley Millar, director of the Office of Technology Management at the University of Illinois at Urbana-Champaign, is looking to fill a vacancy in her office, but she's aware that many prospects will want more money to stick around. “Probably the life of a tech transfer officer at a university in the late 1990s was about a year and a half,” she says. “There was significant turnover.”

One solution: annual bonuses. 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 a year, depending on performance the previous year. Some universities see bonuses as necessary to stop their best and brightest from jumping ship.

FOR THE FUN OF IT
Then again, some of the most prestigious and well known technology transfer programs 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.”

Nelsen says MIT can't compete with private sector salaries but, unlike the University of Illinois, she claims her office has no problem holding onto people despite the dearth of bonuses. “We have remarkably low turnover,” Nelsen says. “Not because these people don't have other opportunities, but because we try very hard to find people who, on the basis of their backgrounds and their personalities, would get a great deal of satisfaction out of this kind of work.”

Nelsen worries that incentives could compromise her office's core mission. “Our objective is to get as many technologies as possible out there working and invested in…rather than to try to pick a few big winners,” she says. Incentives based on profits could cause tech transfer officers to push the most potentially lucrative items – at the expense of other equally deserving technologies.

It helps to keep profits in perspective. After all, even MIT TLO's $46 million intake is a drop in the bucket compared to the university's $2 billion annual operating revenue. “We've done very well, but we see our income as a by-product, not a primary purpose,” she says. Millar agrees: “Certainly for us, and for many other universities, it's not just about the money.” The trick, it appears, is making sure tech transfer staff feel the same way.