As we have chronicled frequently, one aspect of the “Higher Education Bubble” is the lavish pay many  administrators (including school presidents) enjoy.

Surprisingly, some schools are now trying a free market tactic to alleviate the situation: Tying raises to results.

Like all leaders of American colleges and universities these days, Massachusetts Bay Community College President John O’Donnell is under pressure to increase graduation rates and turn out students ready for jobs.

And like a small but growing number of his counterparts around the country, O’Donnell has a new incentive to meet these goals: His salary partly depends on it.

“College presidents need to be accountable,” said O’Donnell, a self-professed advocate of the idea that presidential pay be used to reward good performance, and whose board of trustees has recommended that he get the relatively modest maximum allowable incentive bonus of $7,390 for this, on top of his $211,150 base pay.

Taking a page from the corporate playbook, public and private college boards are beginning to tie at least a portion of annual merit raises to how well presidents and their campuses meet performance targets.

“Corporate concepts are just starting to drift into academia, and they have to,” said Stephen Pollack, a partner in the San Francisco office of the human resources consulting firm Mercer, who specializes in nonprofit organizations, including in higher education. “Institutions can’t afford not to have competent people in these jobs.”

The trend exposes the reality that presidential evaluations historically have been almost a formality at many colleges, and raises often rubber-stamped, said Patrick Callan, president of the National Center for Public Policy and Higher Education. The process appears to be undertaken “just to justify extravagant salaries, or is way too focused on fundraising,” he said.

In other cases, “it’s like they put the presidents on trial,” and every constituency—faculty, donors, students—is invited to weigh in, said Callan. “That’s just a killer. It creates presidents who won’t take risks.”

Now salary raises and bonuses for college leaders are being linked to results, just as public funding for the institutions themselves has been.