The education world is different: There are no stock options; and salary levels obviously have limits. One needs to find other ways, therefore, to compensate those with whom one works.
A leader of a college or university (or any non-profit, for that matter) should do what one can for those who work at the institution. One thing one can do at no cost is simply to be appreciative of hard work and to thank people for their work. Doing so goes a long way, a very long way.
Should financial difficulties arise, they should be addressed through attrition whenever possible, not layoffs (I never laid anyone off during my 24 years as a college president, and we had significant budgetary challenges when I first arrived on the scene). Some individuals on my board questioned my policy, which I repeatedly stated publicly; to them, especially because they often had to lay people off themselves, my approach was not very “businesslike.” Perhaps it was not, but I felt it was the right policy for the institution, the people working there, and me.
Rather than make personnel cuts (again, I put attrition in a separate category), I gave smaller pay increases than I would have liked to do. I concluded that, in a small community, it was better to share whatever pain had to be endured, instead of having a few people bear all of it.
One reads regularly of presidents who draw high salaries and who, when the economy sours, lay off personnel at their institution. Before doing so, I believe it would be far more effective for those presidents to reduce their own salary first, rather than reduce the salaries of others or eliminating positions. If cuts still have to be made after salaries are reduced, they will probably be better received–if not by the affected individuals, then at least by the community as a whole.