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Risky Business?

Risky Business?
March 3, 2006

The 2006 Higher Education Business Summit, scheduled to begin April 30 in Scottsdale, Ariz., has been promoted by CraigMichaels, Inc. as an exclusive event for senior business officers from colleges and universities to interact, share knowledge and “form strategies to move … institutions forward in this aggressive marketplace.” For a fee of $595, attendees will get to learn about fiscal planning, leadership, and how to enhance efficiency, according to promotional materials. They’ll also stay for at least two nights at a “four diamond” resort and have ample opportunities to golf.

Also present at the meeting will be as many as 15 companies that want to do business with colleges. While conferences featuring colleges and vendors are hardly new, this one is raising eyebrows because the vendors are being promised one-on-one meetings with college leaders in return for sizable fees paid to CraigMichaels. When companies sponsor their own events, which is common practice, college administrators know what they are getting into, they say, and they go if they want direct exposure to a given entity.

But when they sign up for conferences on issues, while they may assume vendors will be present, they don’t expect their time to be promised to them. In addition, some of the college leaders asked to speak at the conference report that they are concerned that they were not made aware of the financial arrangements behind the event.

“This operation is clearly a commercial one and I want no part of it,” said David E. Shulenburger, executive vice chancellor and provost of the University of Kansas, who was invited to attend this year’s summit. “I simply don’t have time to go to a meeting designed primarily to expose me to commercial vendors. That is the way I read the descriptions to this meeting, so I chose not to attend it.”

His argument is supported by information the company provides to what it labels “solutions providers” -- in other words, vendors -- that are scheduled to attend the event side by side with about 100 financial officers from universities nationwide.

Vendors are told beforehand that each business attendee is “pre-screened.” “They may not attend the summit unless they pass our requirements for budget, signing authority, title, and have actual needs for the products and services of our solution provider companies, such as yours,” according to an e-mail sent to vendors by CraigMichaels and provided by one such vendor, who asked not to be identified, to Inside Higher Ed.

For prices ranging from $18,500 to $39,500, based on the number of meetings they want to pay for, vendors are promised up to 60 “one-on-one sales meetings.” CraigMichaels receives a “service fee” of $1,500 from every vendor that attends the event. The company indicates that this fee was introduced late last year to cover taxes, gratuities and administration costs levied by the resort where their summits are held.

When asked about these arrangements, Craig Lehmann, president and chief operating officer of the company, said that many higher education organizations, both nonprofit and for-profit, offer pricey deals to vendors to sponsor events, host galas with prospective clients, and to set up promotional booths to network and, ultimately, to make sales.  (Lehmann is correct that such events take place all the time -- Inside Higher Ed is among the entities that exhibit at some conferences -- although the norm at those sessions is not to promise attendees’ time to any organizations promoting their services.)

Lehmann also suggested that such arrangements are not uncommon in other business sectors, such as the cruise ship industry. The company hosts several conferences throughout the year in various sectors, including health care, retail, and sports and entertainment. According to Lehmann, the company has also operated several educational conferences for the past few years.

Business officials who agree to come to the event, Lehmann said, are told that they are “required” to attend at least eight vendor meetings during the summit, although the firm’s Web site indicates that attendees are given the “opportunity” to have up to 10 of these meetings. He noted that if there are not enough vendors at a summit to schedule eight one-one-one meetings, there could, hypothetically, be fewer required meetings for attendees.

Lehmann pointed to an article written by a “media partner” of one of the company’s previous events as proof that attendees know that vendors will be in attendance. In May 2004, School Construction News, a trade magazine, ran an article on a higher education facilities summit, hosted by CraigMichaels. The article said that 24 “solution provider products and service companies attended, for prescheduled private one-on-one meetings.” CraigMichaels posts that article in the news section of its Web site.

He added, too, that “all attendees sign a booking form that clearly explains in detail what the summit is all about and their obligations in terms of the summit format.” He said he couldn’t provide a copy of the form because he classified it as privileged information.

Mercy Valencia, assistant vice president of real estate administration at the University of Arizona, attended the company’s 2005 business event, and does not recall signing such an agreement. She said that she “did not know in advance that I had to attend eight one-on-one meetings when I went to the summit.” “They had given me a schedule with the meetings, but I was unaware they were mandatory and one on one until the second day when I was slapped on the wrist,” she said. “An assistant asked me, ‘Did you know that you didn’t keep your appointments yesterday?’ I told her I didn’t know that they were required.”

Valencia also said that she was unaware of vendors paying any type of fees for access to college administrators. She does not plan to attend the 2006 summit.

Michael B. Bliss, vice president for administrative services at Brigham Young University at Hawaii, who has attended three CraigMichaels higher education events, said that he, too, had been unaware of specific one-on-one meeting requirements before attending his first event. “We were asked to pick from a group and identify those with the application,” he explained. “I know of no contract. I, in fact, did two of [his required meetings with vendors] on the phone.

“I also know that a few people signed up and then skipped out on them,” he added. “The [CraigMichaels] people are pretty aggressive at the conference to get you to the one on ones. But if you agreed to do it, you should hold up your end of the bargain.”

Despite the administrators’ recollections, Lehmann maintained that CraigMichaels informed every 2005 attendee of the required vendor meetings before the event and has informed every 2006 attendee. He said that only speakers are not told about the one-on-one meetings. The speakers are generally senior administrators, many of them well respected in their areas of expertise. In 2005, according to promotional literature, top finance and business officials from institutions including the University of Texas System, the University of Pennsylvania, the University of Virginia and the Citadel spoke at the summit.  

According to Lehmann, vendors are supposed to discuss industry benchmarks and explain what services they offer. “It’s an informal, relaxed environment to explain what they do in the industry. If there’s a synergy, that’s fantastic,” he said. “You can lead a horse to water, but you cannot make it drink.”

Damon J. Manetta, a spokesman for the National Association of College and University Business Officers, said that Lehmann’s explanations ignore the “unusual” aspects of what CraigMichaels is facilitating. “For our annual meeting, we don’t do anything of that sort,” he said. “A provider might hold a session to talk about whatever they want to talk about.  But attendees have their own free will to choose whether they want to go or not.”

Manetta said that although his organization is a nonprofit association, he hasn’t heard of other for-profit higher education companies conducting business in the way CraigMichaels does.

“From my knowledge, this kind of summit does not sound like something that would be beneficial to our membership,” added Manetta. “It’s like being required to attend eight commercials.”

Several prominent business leaders at universities nationwide have said that they were invited to be speakers at the summit without being provided details on the monetary arrangements and vendor requirements. Several others -- who became aware of the vendor meeting requirements for attendees -- said that they weren’t comfortable with the system.

Still, because several prominent leaders have spoken in the past -- and CraigMichaels, through promotional literature, goes out of its way to highlight the quality of speakers presenting at the summit -- some speakers and attendees have said that they automatically assumed that the event would be a useful service.

“I really would have appreciated full disclosure,” said Michael Mandl, executive vice president of finance and administration at Emory University, who has decided that he will speak at the summit. He said that he didn’t know of the vendor meetings in advance.  But, he added, “People who attend probably conclude that having one-on-one meeting [with vendors] is valuable.”

Bliss, for instance, has found the summits to be useful. “[M]eeting with the vendors is both a minor annoyance for the inexpensiveness of the conference and a time to learn something new from the vendors who I think have something to offer,” he said. “For example, at NACUBO with everyone walking by, you do not feel too often that you have the vendors’ attention. If you want to discuss the vendors’ product you feel rushed or interrupted.

“At the [CraigMichaels] conferences, you have them alone for a period,” he added. “I have not been embarrassed or pressured by them. I was a little annoyed the first time, but when I realized what I got out of it and the low cost of the conference, I was alright.” 

Bliss said that when he first attended the summit, he was unaware that vendors paid fees. “I did not realize that at first, but it was pretty evident,” he said. “The cost of the conference was low, and we were at very nice accommodations. It had to be subsidized.… The fact that we had to see the vendors was the final key. Also, after I met the people from [CraigMichaels], they were pretty forthright about the fact the vendors helped pay for the conference.”

One prospective vendor said he didn’t want to be associated with the conference. “When you’re pitched about paying big fees for access to these folks, we find it morally wrong,” he said. “You get access because you have good ideas and services, not because you can lay down the most amount of money.”

It is not known what deals were made between vendors and attendees who were present at last year’s summit. CraigMichaels would not disclose these details or provide a list of people who attended. “If they result in having business, that’s fantastic,” Lehmann said of the vendors and attendees. “I have no idea if that’s the case.”

Wick Sloane, chief operating officer of Generon, a financial consulting firm, and former chief financial officer at the University of Hawaii, said that business officials who attend such a meeting would probably not want to disclose such details because he believes that vendors most likely have an upper hand in this scenario and attendees probably would not want to admit that.

He believes that vendors are likely to try to make up for the big fees they pay to CraigMichaels by charging colleges more, and that as a result, colleges are likely to be embarrassed by the deals they signed. “Vendors have to include their costs in what they then charge the colleges for their products," he said. “It’s no wonder higher education costs and tuitions are in bad shape.”

Lehmann said that the company does not request any data from vendors or attendees regarding contracts that may be pitched or signed as a result of the summit. “I’m not privy to any contracts that do happen,” he said.

“Every $100 a CFO saves is one new library book, shelved and catalogued,” said Sloane. “Every $25,000 is a year of financial aid. I can’t imagine this event bringing any new information to CFOs already doing their job. At the end of the day, business officers should prove that they are getting better deals because of this meeting.” 

Lehmann said he could not speak for any vendor company on whether they were giving the best prices to summit attendees.

When asked whether he was concerned that contracts made with vendors at the CraigMichaels event would be inflated to help cover their costs for paying to attend the event, Bliss responded, “Yes and no.”

“I like to think I would make anyone I hired or contracted with meet the guideline of being the best price or having a product that was worth the extra amount,” he explained. “I would not like to think that I was swayed so easily that I would go to a conference and pay any amount or even a higher amount. I usually am pretty careful about making sure the university is getting the best deal.”

CraigMichaels would not provide a list of confirmed attendees and vendors for the 2005 or 2006 summits. Lehmann indicated that this is privileged information.

 

 

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