A debate is needed over whether arrangements such as contracts that limit teaching hours, national bargaining and the single pay spine are hindering or helping the sector, funding chiefs say.
A report published today says the higher education workforce needs to be more flexible and agile to respond to financial and competitive pressures.
The Higher Education Workforce Framework 2010, published by the Higher Education Funding Council for England, also highlights differences between the priorities of staff and employers.
The former want more flexible working conditions - often because they have caring responsibilities - while the latter want staff to work at times that suit students, including evenings, weekends and traditional holiday periods, it says.
Views are divided over whether the sector-wide arrangements currently in place are "enablers or barriers" to progress.
For example, some managers see the post-1992 academic contract, which limits scheduled teaching to 550 hours per year, as outdated and inhibiting efforts to cut costs.
By contrast, the University and College Union maintains that the contract is "an important standard and safeguard", and that workloads would increase if it were changed.
In pre-1992 institutions, pressure is mounting for amendments to the "model statute" - a detailed provision covering employment issues.
"The model statutes were often cited as being out of pace with employment law and a significant barrier to the effective performance management of academic staff," Hefce says.
However, the UCU fears that the proposed changes could compromise academic freedom.
The University of Cambridge's attempts to change its employment provisions, contained in "Statute U", have taken two years and been strongly resisted by staff on the grounds that they would make it easier to sack academics.
Pay spines and the national framework agreement on pay and career structures also come under scrutiny in Hefce's report, with a suggestion that the framework is "creating inflexibility within institutional pay systems and interfering with their ability to control costs".
Even the lowest salaries often outstrip local labour market pay, leading universities to outsource services such as catering and cleaning on cost grounds. But the report notes elsewhere that these roles are the most problematic in terms of recruitment and retention.
When it comes to pay negotiations, some believe local bargaining is an "opportunity for individual institutions to renegotiate the entire employment relationship with their workforces and establish more sustainable" ones, the report says.
The counterview is that local bargaining is more expensive and risks undermining equity and transparency in pay across the sector.
"Nervousness was expressed about the prospect of a 'pay league table'," Hefce notes.
Alison Johns, head of leadership, governance and management at Hefce, said: "The report is intended to galvanise debate on what needs to happen next so that we can retain our reputation in a highly competitive global marketplace."