Have you read your Chronicle this week?

I’ve been working on it and saw this commentary which I thought interesting. For those who don’t like to click on links I’ve included the article here. For those who love links click here Chronicle article. As always the comments on the Chronicle site are interesting!

The Worrisome Ascendance of Business in Higher Education

By William W. Keep

Recently the Board of Visitors—not a particularly apt name given their actions—at the University of Virginia forced the ouster of President Teresa A. Sullivan after two years in office. Since then we have learned that the rector and vice rector of the board, Helen E. Dragas and Mark J. Kington, who has since resigned, have M.B.A.’s from UVa’s Darden School of Business. Peter D. Kiernan, a powerful alumnus who evidently weighed in on the decision, is also a Darden graduate and, before he resigned in the midst of the furor, was chairman of the Darden School Foundation Board.

The trio, having made their chops in real estate, construction, and investing, apparently saw an opportunity to transfer their knowledge to higher education. Though colleges can learn many things from the ways businesses operate, treating a college strictly like a business would be a mistake.

In an e-mail to Darden board members justifying Ms. Sullivan’s ouster, Mr. Kiernan uses the business term du jour “strategic dynamism” to describe the ever-reactive leadership style he prefers, which is opposed to the older, more static “strategic planning” style employed by Ms. Sullivan. (Apparently engaging in “strategic dynamism” means excluding faculty, students, and most alumni.) In truth, when challenges arise quickly, successful businesses have always responded accordingly­—i.e., dynamically. Strategic dynamism at UVa is nothing more than a euphemism for Thomas Paine’s adage, “Lead, follow, or get out of the way.”

To be sure, higher education faces unprecedented challenges: growing competition for new populations of students at home and abroad; the opportunities, costs, and uncertainties of new technology; declining state support for public institutions; rising tuition; increasing student debt. All demand a careful look at budgets. Stagnant or declining incomes and uncertain employment prospects sharpen pressure to demonstrate what a college degree offers.

In response, some critics have called for a more businesslike approach to higher education. Why? Because colleges face the same fundamental challenges of any business: securing steady revenue streams, covering expenses, using resources well, and planning for an uncertain future.

Over recent decades, we have heard about students as customers, learned to “manage” enrollments, shared and decentralized budgets with the goal of increasing accountability, identified per-student costs per major, and generally dissected the “service” of higher education. We have learned that programs in art and music are not cost effective. Engineering and equipment-intensive courses are expensive. Even as students and parents in the United States rail against the lack of low-cost public education, those in other countries that have such systems face unprecedented tuition increases.

So what have we learned? First, the student-as-customer model fits poorly. Certainly some educational experiences are better than others, and information about quality differences needs to be readily available. However, anyone who has listened to students and parents demand results not earned or special privileges at special prices knows the customer model has flaws. Of course that does not prevent some institutions from using customer satisfaction to determine the price of a dorm room. I remember the well-heeled student who told me that the university could gain revenue by “selling” preferred parking places to those willing to pay.

Second, discussions among faculty and administrators about multiple revenue streams, costs per student, program efficiency, budget accountability, and the like can be difficult. As an institution, academe has much more experience resisting change than embracing it.

Third, even as some people resist change, there is an increasing awareness that the future will be different. We will not go backward. Budgets present real constraints, public support will not return to previous levels, domestic and international competition to offer new educational options will continue, as will calls for increased accountability.

What we need is to learn the discipline of business without the short-term orientation. Markets are amoral. A competitive market will determine a fair price—whether for cocaine or cocoa—but not necessarily the enduring social value. A one-year increase of 25 percent in the price of a house does not reveal the underlying forces causing the price increase, or its real value. Markets do not know the worth of a mature forest three generations hence. Nor can a market accurately determine the lifetime value of thoughtful exposure to the classics or art or music. Enduring acts of civility are not bought and sold. The qualities that professional educators worry about often do not lend themselves to short-term market valuation.

We can learn from business to allocate resources responsibly, have transparent and disciplined budgets, and plan for a more secure financial future. At the same time, we need to avoid the hubris of business “success.” Too many successful business leaders espouse the benefits of a free-market system while accepting that some sellers can be too big to fail and must be protected from market forces. Too many successful business leaders hypocritically accept money from the government while at the same time decrying the intrusion of government in the economy. And what happens when money is at risk? Manhattan prosecutors recently opened an investigation into grades in M.B.A. courses at the City University of New York’s Baruch College, some of which were apparently falsified for the purpose of maintaining revenue.

If Rector Dragas, former Vice Rector Kington, and Mr. Kiernan know all of this, the evidence is lacking. Ms. Dragas and Mr. Kington also serve on the board of the parent firm of Dominion Power, a business whose code of ethics calls for “the highest level of ethical standards,” with board members expected “to behave with respect, honesty and decency toward everyone affected by our business.” We in academe need to choose carefully between those aspects of business that serve us well and those that do not.

William W. Keep is dean of the School of Business at the College of New Jersey.

6 thoughts on “Have you read your Chronicle this week?

  1. Awesome PhiloDave for this critical piece, is this not what we aim to do with our students when we “educate” them i.e help them think critically and holistically?.
    Perhaps we should not be called “educational institutions” but training factories.
    What comes to mind is an excellent re-enactment of the famous debate between W.E.B Dubois and Booker T W,ashington performed at HWC by Sid Daniels and the Speech department.It would be great to have this performance again followed by a discussion An invitation to the Mayor, Chancellor,ICCB,and the Board of Trustees and Sheila Simon would surely help “educate” them.
    Somehow it seems that there is a flavor of an Orwelianl’ social structure of 1984 in all of this.

  2. Nice post, speechfromtheblock.

    “First, the student-as-customer model fits poorly.”
    Yup.

    “Markets are amoral.”
    It conflicts with the moral responsibility of education, don’t it?

    “At the same time, we need to avoid the hubris of business “success.”
    Sure would be a good experiment to have administrators, presidents, and faculty across the district submit their definition of success. We could all learn from each other and perhaps be humbled by the exchange.

  3. I think the line “What we need is to learn the discipline of business without the short-term orientation. Markets are amoral. A competitive market will determine a fair price—whether for cocaine or cocoa—but not necessarily the enduring social value” is perhaps one of the most interesting here. Large corporations and the markets ARE amoral (and breeds a culture where amoral choices are acceptable and the ‘norm,’ which, of course, is an entire problem in itself and would lend me to a waaaaay long post but….). The business/corporate aesthetic is purely for economic values of resources (‘human capital’ — also credits in college of economic value in order to create proper human capital) and not at all social value. Education is in part to (and something that I whole-heartedly believe) develop/train/support people in order to obtain sturdy employment BUT it is also intended to develop a populace that can think, evaluate, and make strong decisions that hopefully are also socially valuable.

    This may seem as if I am anti-business – I’m not. I grew up in a small family business. I know how they work and how valuable they are – AND that they can have social value. My deep concern that has grown over the last few years is for the invasive corporate mentality and the idea that if one is a business person (esp. from a large entity) they have the ‘right’ ideas on how to manage education with business ideals and ignore educational ideals. Like the article says, some business ideas are helpful and really can help higher education compete in this new world but despite what too many of those coming (note: I did not say ‘all’ – just many) from corporate backgrounds far too often think, running a corporation/business is not all all the same thing as developing a strong, academic institution that fulfills both social and economic value to the world. The ideas of business and academics could (and should) work together with respect and recognition – not one mode superseding another. If that happens, true academics, that which teaches thinking, debating, questioning, and expanding ones world view AND has credits of economical value will disappear.

    • Avid_Reader is an avid thinker.
      Couldn’t agree with you more when you state “The ideas of business and academics could (and should) work together with respect and recognition…”
      I’d emphasize the “should”. Sounds like your small business experience has served you well.
      Not all business folks gots the right ideas, ‘specially if $$$ are their guiding lights.

  4. Dear Realist et al,
    I noticed today that they are installing metal detectors in the main entrance downstairs. Did I sleep through the crime wave that has enveloped the campus to such a degree that we now need metal detectors in our college? I looked in the board report but could find neither the manufacturer’s name nor cost of the detectors.
    Also, skimming the board report for June I found the tentative agreement between the board and the union. Does anyone here know what the “Classification Committee” is and what it means that, “CCC will give a decision in writing, including rationale, for eleven positions which have been recommended for review by the Classification Committee?”

    • I haven’t seen the security setup myself, but they’re part of the district wide campus security upgrades that have been in the works since last year. If they are metal detectors then I’m quite surprised at the level of security being installed, as I only expected some sort of turnstile that allowed passage with a valid ID.

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