by Dennis E. Powell
Following a steady upward trend that continued through 2009, the salaries of business incubator managers had fallen in 2013 to levels last seen in 2005, according to a new NBIA survey of compensation paid to full-time incubator CEOs.
The survey, similar to ones conducted by NBIA or its partners every few years for nearly a quarter century, was compiled by Linda Knopp, former NBIA director of policy analysis and research, who left the organization last year but who contracted to complete the project. The complete 2013 report will be available from the NBIA Bookstore this summer.
“Managers at most incubator types and most demographic groups reported lower average salaries in 2013 than they did in 2009, when NBIA last conducted its compensation survey,” writes Knopp. “While some of the decrease in salary levels is likely related to the current economic climate, it’s also possible that the 2013 data more accurately reflects industry compensation levels than did the 2009 data, when NBIA received fewer responses to the compensation survey.” The 2013 study is derived from 133 usable responses, while the 2009 survey was based on only 58. Since larger sample sizes have greater capacity to capture a population’s variation, the 2013 data may better represent the variation in the incubation industry population.
But even if the 2009 findings are less representative of the entire industry, the salaries of full-time incubator managers have increased little if any since the previous survey in 2005, which was also conducted by Knopp. The 2005 survey was based on 165 usable responses.
“The median salary of full-time incubator CEOs in 2013 was $71,750 ($76,492 average), compared with a median figure of $79,325 in 2009 ($86,699 average),” Knopp writes. “The 2013 figures are comparable to 2005 salary levels, when full-time incubator CEOs reported median salaries of $72,000 ($77,523 average). As in previous NBIA compensation surveys, full-time incubator executive salaries varied widely – from a low of $30,000 to a high of $178,905 – depending on a number of factors, including the type of incubator, its location, and the program sponsor.” The new study does illustrate some changes in the nature of the industry. For instance, for the first time the managers of technology and biotech incubators were not drawing the top salaries. Instead, that honor goes to those who characterize themselves as managing “other” incubators – neither tech nor mixed-use, but ones dealing with the arts and non-mainstream businesses.
There has been a gender disparity in incubator manager compensation for as long as NBIA has been tracking management salaries, which began with a Coopers & Lybrand study in 1990. That disparity remains.
“Female incubator managers continue to earn less than their male counterparts, with the gap again widening over the last four years,” Knopp notes. “Men earned an average of $86,117 in 2013, compared with $65,138 for women.
These figures represent a 7 percent decrease in pay for men and a 14 percent decrease for women over the 2009 figures, when average salaries were $92,167 and $75,764, respectively. Still, for every dollar earned by male incubator managers, females earned only 82 cents (up from 76 cents in 2005).
“The differences between average salaries for male and female incubator managers remain even when you control for other factors that may be influencing salaries, such as geographic location and incubator type. For example, female incubator managers earned less, on average, than their male counterparts in rural, suburban, and urban areas. In rural areas, female incubator managers earned 23 percent less than their male counterparts in 2013, while in urban areas women earned 25 percent less than men. In suburban areas, the difference was the greatest (with women earning 28 percent less than men, on average). The average salary for male incubator executives in rural areas in 2013 was $81,355, compared with $63,000 for females. In urban areas, men earned an average of $87,018, while women earned an average of $65,261, and in suburban areas, the average salary for male incubator managers was $91,784, while the average salary for females was $66,152.”
The study looks at manager compensation from numerous angles. Though the sample size in the 2013 study was sufficiently large to produce meaningful results, the sample size of some subgroups was deemed sufficiently small as to draw a caution from Knopp to those who might seek to impose greater granularity on the report than the numbers will reliably bear. Still, in all cases the data are useful.
The survey was distributed to NBIA member and nonmember incubator managers. While 87 percent of the respondents are NBIA members, the nonmember response is sufficient to strongly suggest that member programs offer better pay: “Incubator executives from NBIA member programs fared better in 2013 than their nonmember counterparts. Incubator managers from NBIA member programs reported average salaries of $78,399, compared with $64,400 at nonmember incubators. Although it’s impossible to determine from these data whether NBIA membership actually leads to higher salaries or whether NBIA members tend to work at better-funded incubation programs that can pay higher wages, it’s still interesting to note the difference.” The difference is greater than it was the last time a large sample was available, in 2005, when the member-nonmenber salaries were $77,667 and $75,500 respectively.
While for-profit incubation programs were common in the early days of the industry, nonprofits made up 94 percent of those responding to the 2013 survey (which is still 1 percent higher than the 2009 study). The narrowing compensation gap between the managers of for-profit and nonprofit companies always favored the for-profits – until now. “For the first time in 2013, for-profit incubator managers reported lower average salaries ($46,175) than did nonprofit managers ($78,116),” writes Knopp. “Because of the small number of for-profit programs that participated in the survey [n=2], it’s difficult to say whether this finding marks the start of a new trend or is a result of the small pool of respondents from for-profit incubators. Still, it’s a finding worth watching in future surveys.”
Looking at the range of salaries paid to full-time incubator executives one sees a considerable range – but it remains lower than in the 2009 study. About 19 percent of incubator managers report earnings of $100,000 or more, a more than 50 percent reduction from 2009’s figure and the same as 2005. “In contrast, more than one-quarter (28 percent) of incubator managers earned less than $60,000 in 2013 – less than the median salary for full-time managers in 2000. In 2009, 14 percent of incubator managers reported annual earnings of less than $60,000,” Knopp finds.
For the first time, though, executives who manage more than one incubation program are likely to be paid more. In 2013, managers of multiple programs report an average salary of $85,918, compared with an average of $70,836 for those managing single programs. (In 2009, managers of multiple programs reported being paid less than their single-program counterparts.)
Does incubator location figure in to the manager’s compensation package? Indeed it does. As in previous surveys, managers of rural incubation programs are paid less than their urban and suburban colleagues, though the gap is narrowing. Writes Knopp: “Rural incubator managers reported average annual earnings of $75,707 in 2013, 5 percent less than the average salaries of suburban incubator managers ($79,883) but only 1 percent less than urban incubator executives ($76,140). In 2009, rural incubator managers earned 7 percent less than suburban or urban incubator executives, and in 2005, they earned 30 percent less on average, than their counterparts in urban areas and 28 percent less than those in suburban areas.” The decrease in salaries since 2009 has taken place irrespective of location, with rural incubator executives on average taking an 8 percent pay hit, with suburban and urban salaries dropping by 9 and 14 percent respectively.
As noted above, managers of “other” incubation programs – arts, services – now earn more, according to survey respondents, than managers in any other category, and they are in the only category that has not experienced a salary decrease since 2009. Technology incubator executives came in second, followed by manufacturing incubator managers, biotech incubators, mixed-use and kitchen incubators. The change in salaries since 2009 hit biotech managers hardest, with a 38 percent reduction compared to technology (-10 percent) and mixed-use programs (-9 percent), while “other” managers report an 11 percent increase. (The number of manufacturing and kitchen incubator managers responding in 2009 was insufficient to produce a meaningful statistic.)
An incubator’s sponsor figures in to the compensation of the program’s executive, the survey shows. Managers whose incubators are a consortium of several sponsors typically were paid more in 2013 than those of other types, Knopp finds. “Still, managers at incubation programs sponsored by hybrid consortia experienced a 31 percent decrease in average salaries over the last four years, from $121,500 in 2009 to $83,333 in 2013,” she writes. “Incubator executives who managed programs sponsored by city, county, or state government agencies and those at programs sponsored by four-year colleges and universities earned the next highest average salaries in 2013 ($81,650 and $79,820, respectively). Both groups experienced decreases in average salaries over the past four years” though the decrease was not as draconian as that found at programs with multiple sponsors. “Between 2009 and 2013, average salaries of incubator managers at programs sponsored by government agencies decreased by 4 percent, while average salaries at programs sponsored by four-year colleges and universities decreased by 10 percent.
“During the period, average salaries also decreased among all other sponsor groups except those with no sponsoring organization. Between 2009 and 2013, managers at stand-alone incubators experienced a 20 percent increase in average salaries, from $57,600 to $69,089. Still, this group earned one of the lowest average salaries in 2013. Incubator executives who managed programs sponsored by “other” types of organizations, which includes for-profit entities, earned the lowest average salaries ($63,957), followed by managers at incubation programs sponsored by community, technical, and two-year colleges ($66,245).”
Nearly 60 percent of those responding to the survey are at incubators that have opened since 2004. Of those, one third have opened since the last compensation survey, in 2009. And 23 percent of the respondents are at incubators that opened before 1999.
“Those who directed incubation programs that opened between 1999 and 2003 earned the highest average salaries ($83,316), followed by those at incubators that began accepting clients between 2004 and 2008 ($81,643),” Knopp notes. “Incubator executives at programs that opened between 1989 and 1993 and those that managed incubators that opened between 2009 and 2013 earned the lowest average salaries ($66,788 and $72,455, respectively).”
Experience tends to matter, though. “As far as salary levels go, experience certainly seems to pay off, however. Full-time incubator executives who had been in their current jobs ten years or more earned an average of $93,216 annually, while those who had held their positions seven to ten years earned an average of $88,216 and those who had been in their jobs for five to seven years earned an average of $81,460,” she finds. But the trend is not linear. “While those who were new to their positions earned less than their counterparts who had held their positions for longer periods of time, those who had been on the job less than one year earned more, on average, than their counterparts who had worked in their jobs for one to three or three to five years.” The pattern matches that of the 2009 survey.
Experience matters, too, in compensation of executives who have not necessarily been in the same program their entire careers. “Although there was some variation, years in the field certainly results in higher average salaries in most instances. Incubator executives who had worked in the industry for 20 years or more reported the highest average salaries ($114,269), followed by those who had worked in business incubation between 10 and 15 years ($99,585) and those with 15 to 20 years of industry experience ($87,441). Managers who had been in the industry between three and five years reported the lowest average salaries ($60,693), followed by those who had worked in business incubation between one and three years ($68,481) and those had less than one year of industry experience ($68,789).”
And older incubator managers tend to be paid more, the survey finds. “Incubator executives who were 66 years or older earned higher average salaries ($87,208) than their younger counterparts, followed by those who fell into the 46 to 55 age group ($79,454) and those who were between 56 and 65 years old ($78,351),” Knopp writes. “The youngest incubator managers (35 years old and under) earned the lowest average salaries ($70,180), followed by those between 36 and 45 years old ($76,831).” Contrary to earlier studies, incubator managers as a group are becoming younger. One fourth of the respondents in the 2013 study were 35 or younger, 24 percent between 36 and 45, 27 percent between 46 and 55, and 28 percent 56 or older.
Education is rewarded. Among respondents, 56 percent hold postgraduate degrees. “Full-time incubator executives with doctorate or other professional degrees earned the highest average salaries ($85,110), followed by those with master’s degrees ($84,207),” Knopp writes. “Incubator managers who had completed some college but had no degree earned the lowest average salaries ($62,000).”
Compensation of incubator executives extends beyond salary in the overwhelming majority of cases, with 96 percent reporting fringe benefits. About nine in 10 receive paid vacations; nearly that many receive paid holidays and at least some health insurance as well. Dental plans are provided for about 70 percent of respondents, while half report life insurance and vision coverage. In all cases, the figures represent slight increases over 2009 levels. Retirement plan contributions, though, were down slightly since the last survey. A relatively small group report stock options, royalties or bonuses as part of their compensation packages.
Many incubator managers note that they could earn more in other jobs, but they point to an intangible – job satisfaction – as a benefit as well. “Many incubator managers say the opportunity to make a difference in the lives of entrepreneurs is one of the best parts of their jobs,” writes Knopp.
Keywords: compensation -- incubator staff, evaluation -- incubator performance, idea generation and creativity, regulatory compliance -- incubator, research -- incubation
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