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Searching for Strategy in Tough Times

May 12, 2008

The economic experts and college administrators gathered Friday to discuss how to manage higher education “in uncertain economic times” joked a few times about the debate over whether the United States is in a recession.

But even as economists and politicians continue that discussion, those gathered at the invitation-only conference at the TIAA-CREF Institute (the pension giant’s research arm) had moved past the question. Recession or not, they said, colleges are hitting a period of economic challenge they have not seen in some time -- and they predicted considerable questioning of long-held assumptions about how courses are delivered, what is taught, how institutions are run, and how money comes in to support them.

The general consensus was that the combination of conditions facing higher education right now -- flat or diminished government support, more scrutiny of tuition rates and endowment spending (see related article today), changing student demographics, an unpredictable stock market -- add up to making this period one that will be challenging colleges for some time. Many of the solutions discussed weren’t entirely new – outsourcing and merit pay, for example, are hardly revolutionary concepts in higher education. But officials said that colleges may need to push these ideas further than they have in the past -- and to extents that they may be controversial.

In the last 20 years, organization of jobs has changed dramatically in the private sector, but it is “little changed” in higher education, said James T. McGill, senior vice president for finance and administration at Johns Hopkins University. In certain cases -- food services and custodial services -- colleges have accepted the notion that outside companies may be better managers than they are. But what about the functions of colleges on a department by department basis, he asked?

On too many issues, such as payroll, purchasing, and collecting payments, colleges are so decentralized that they have departments (academic and otherwise) where people are constantly performing tasks for which they have no training. “We can’t afford to have people who aren’t really skilled doing these tasks in 10 percent of their time and not doing it well,” he said.

The solution may be either more outsourcing, McGill said, and/or the creation of new positions to handle these services in a more centralized way. What higher ed needs for most administrative functions, he said, is “fewer people, more skilled, and higher up.”

McGill acknowledged that these changes would upset many. He said that the problem is that many people do not yet see the urgency for change. “We have not yet found the answers at Hopkins,” he said.

Where do faculty members fit in to this vision of a more rationally managed higher ed enterprise? As at any gathering of administrators, there were of course some of the typical jokes about faculty members that one hears in these settings. (Question: How many professors does it take to change a light bulb? Answer: Change?)

But there were also repeated comments about the need to better inform professors about the economic choices facing their institutions – and to involve them in making the choices.

Kathy Hagedorn, who consults with colleges on management and human resources issues, said that when she was vice president for human resources at Saint Louis University, she found that professors were willing to make tough choices about, for example, health insurance, if given a set of options and information about the implications of choices. For example, faculty members backed choices that might have been marginally more expensive for them, but that provided for better coverage for the lowest paid employees at the university.

A big problem, she said, is that the department chairs and deans responsible for many management decisions don’t actually get much training in how to manage. Department chairs and deans are going to be making key decisions about raises and -- in tight times -- about which positions get eliminated, she noted. So if colleges want quality decisions, training is essential.

On salary decisions, Hagedorn said that the biggest mistake made by colleges is across-the-board raises, which she said “send the wrong message.”

She said that administrators and faculty members together must agree on “what represents excellence” in different positions and departments, and then be sure that there are differential rewards for different employees or groups of employees -- or no rewards -- depending on performance. If there is a “clear vision” of what is expected, this is a way “to hold people accountable,” she said. These same sorts of measurements, she said, should be used to identify targets for layoffs or eliminated positions.

Beyond routine raises, Hagedorn urged adoption of a program of identifying stars on the faculty and in the administrative ranks – and specifically focusing raises and other rewards on those people to prevent them from going elsewhere. “People are going to be the strategic advantage of institutions,” she said.

Risa Palm, provost and vice chancellor for academic affairs at the 64-campus State University of New York, said that one response to the economic downturn needs to be a more serious look at course design. If you are going to ask a key question she identified as “can colleges serve larger populations at lower costs?” it’s necessary to look at exactly what goes on in the classroom, she said.

In many cases, she said, “we have to go away from the Socratic model of one great professor working with one great student,” or even a less expensive model of a group of students and a professor around a seminar table. One challenge, Palm noted, is that many people believe on some deep level that such models, which are expensive, assure quality teaching. “There is a fact-resistant belief that more expenditure on education reflects higher quality,” she said.

What is known about student learning, she said, is that some of the key qualities (especially for introductory courses) are: continuous feedback, individualized and on-demand academic support, and interactive materials that appeal to the “millennial generation of multi-taskers” who prefer approaches that go beyond traditional lectures and textbooks.

Executing such an approach might involve outsourcing tutoring services while redesigning what goes on in the classroom, Palm said. The process of making such changes will of course cost money, she added, but it can yield significant savings as well. Too many courses are taken more than once, or are taken and failed, she said, and both of those events have serious costs associated with them -- financial and otherwise.

While course redesign “is not a panacea” and probably isn’t going to work in every class, she said it has significant potential for multi-section, lower division courses.

Clark Ross, an economist who is vice president for academic affairs and dean of the faculty at Davidson College, said that another issue on which colleges must shift discussion is growth. “Every year, we add things at Davidson,” he said. And while many of those things have great educational value -- he cited recent additions of language instruction in Chinese and Arabic -- Ross questioned the way many people think about such additions in academe.

Too often, he said, the prevailing view in academe is that “if you can justify a benefit, you can justify an expenditure.” So Arabic and Chinese are good things to study, hence you add them. But with such logic, Ross said, too many things get added. College leaders need to assert that having “a marginal benefit greater than zero” is “not sufficient” to justify additional programs. But that idea is “alien” to many, he said.

Another kind of growth may need more attention, Ross said. If colleges like Davidson (enrollment 1,700) were to grow by a few hundred students, the costs of offering course like Arabic and Chinese would get spread out, and the demand for them might make them more justifiable from a financial perspective. While a liberal arts college wouldn’t want to grow too much, Ross said that examining size may lead to strategies that produce economies of scale without altering the character of institutions.

Joseph Quinn, an economist at Boston College and a former dean of the College of Arts and Sciences there, said that without the kinds of questions Ross urged on institutions, they would continue to add programs – without subtraction.

Quinn said that his institution added four years of Arabic, seeing educational value that justified the reality that enrollments are on the small side. But the question, Quinn said, is where did the 100 students taking Arabic come from. “They are taking Arabic instead of taking something else,” because the additional courses didn’t have a corresponding overall enrollment increase. The problem, he said is that they didn’t all drop the same courses to take enrollment. So it is likely that there “is one less student in 100 other courses” as a result of the Arabic additions. Assuming none of those courses are then eliminated, this demonstrates the problems with growth, and especially growth that isn’t the result of rigorous analysis.

“The single biggest challenge for deans” in the years ahead, Quinn said, will be “how do you decide what to stop doing.”

 

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