The CEO Is the Difference

Colleges -- especially those facing major financial difficulties -- need leaders who can craft a vision as well as carry it out, write Yoram and Edith Neumann.

August 5, 2015

Many small and mid-sized tuition dependent institutions of higher learning are feeling increased pressure on their net tuition revenue and encountering sluggish enrollment. The push for higher education  affordability as well as enrollment challenges due to smaller entering classes have distinct negative effects on the bottom line of many less endowed non-profit colleges and universities. In extreme cases, institutions permanently close their doors. From 2004 to 2011, more than 50 nonprofit colleges and universities were closed.

The number of closures continues to generate active discussion among higher education policy makers, boards, administrators, students and parents. Various estimates have concluded  that as many as 1,000 colleges and universities are facing existential threats based on various risk factors.

Few colleges at risk have been successful in turnaround initiatives by redefining and refocusing their vision, mission, role, niches, delivery models, operations and business models while many others are continuing to struggle. For those who analyze the reason for this differential outcome, it always centers on the strategic skills of the chief executive officer (CEO) of the institution.

The overwhelming majority of studies on college CEOs and their leadership skills are single static studies. An exception is one we did that included two different periods spread over five years with the same sample of 158 presidents and colleges.

In our view, the CEO's strategic leadership includes three different skills: visioning, focusing and implementing.

Visioning refers to the ability of the CEO to concisely foresee the future of the college, identify the opportunities that will transform the fate of the college, and conceptualize the long term path for growth.

Focusing is the CEO's ability to move the college constituencies from the current stagnant or downward spiraling situation to accept and commit to the new vision. It includes the involvement of constituents in adopting a new vision for the institution through a consultative process, amending the initial vision following the process, leading the articulation of an action plan, and pivoting the institution to concentrate on the newly defined priorities.

The final skill is the ability of the CEO to implement and direct the operations needed to carry out the plans of the new vision and realize its goals.

Each CEO can be classified as either "high" or "low" for each of these three strategic leadership skills resulting in eight different strategic leadership profiles. The highest level of the strategic leadership profile is a leader who rates "high" on all three strategic leadership skills (visioning, focusing and implementing). This profile is defined as the Integrator. The lowest level of strategic leadership profile is a leader who is "low" on all three strategic leadership skills. This profile is called the Maintainer. Between these opposing profiles, various types of leaders are situated, high on some skills but low on others.

The study documented that the Integrator is the truly transformational leader who makes the difference between college growth and college decline. There is a continual decline in institutional performance as we move from the Integrator through other strategic profiles to the Maintainers. Colleges presidents/CEOs who are Integrators experienced the maximal resource growth, the maximal enrollment growth, and a major improvement in their perceived quality.  Integrators had the strongest odds in being associated with positive bottom line outcomes over time while Maintainers had the strongest odds in being associated with negative bottom line outcomes.

The conclusions concerning the crucial role of leaders' strategic skills on college performance and growth have since been also confirmed by other studies in higher education for private nonprofit as well as public institutions, including community colleges.  Furthermore, similar conclusions have been extended to other sectors outside higher education. Recent studies unequivocally documented that the CEO as a strategic leader can exert meaningful influence on its organizational performance and success.

The problem in selecting a new CEO is that, based on our study, only one of six functioning CEOs in colleges and universities are Integrators, and the selection of a new CEO is a complex process involving multiple levels of screening and several constituencies. In conducting a search for a new college CEO, the appointing board often relies on external search firms and internal search committees. Board members may not be aware of the crucial role of the multiplicity of strategic skills needed for a successful college turnaround. Search committees often represent various constituencies that seek consensus on a slate of candidates that can tilt the search from a focus on strategic leadership skills of the new CEO.

The dynamic interaction between the board, search committee, and executive search firm can also move the search away from an initial emphasis on selecting a pool of candidates who possess the strategic leadership skills needed to move the institution toward long term viability.

If we add in other search factors, such as preference for external or internal candidates or misinterpreting the candidates' track records, especially in the performance of their previous positions as well their fit to a particular new college environment, we can understand how some CEO candidates who are capable of transforming college may often be overlooked.  While other search factors may be important on their own merit, we believe that they, by themselves, should be considered only after potential candidates have met the strategic leadership skills' threshold.

Consequently, the leader's strategic skills should be the focal point of the initial search process, from defining the search objectives and goals through the screening of candidates capable of institutional turnaround for the CEO position. It is always better to select a CEO with strategic turnaround skills than to try to develop the CEO once the search is over.

Developing strategic leadership skills in a CEO executive development program is not an easy undertaking. Many executive development programs excel in one or two strategic leadership skills. Some programs develop the execution or implementation side, others develop the focusing, building teamwork, establishing coalitions and influence aspects, while few attempt to include all these skills.

Conspicuously, the visioning skill, although most dominant in determining college performance, is missing from most of these programs.  This skill is the most complex to develop as it is rooted in an individual cognitive style and the ability to identify complex patterns in the environment and their derived opportunities. Recently, the vision skill has attracted attention among executive leadership programs.  New ways to develop the vision skill have been recently proposed by articulating the various aspects involved in identifying the changing realities and the various approaches and activities to deal with those changes. However, it is too early to predict whether or not these emerging approaches will be successful in the development of this skill for CEOs in their current position.

Turning around colleges and universities from a path of decline or stagnation to growth and financial viability needs an Integrator as a CEO with a specific set of strategic skills.  College constituents who miss this point will do so at their own peril.


Yoram Neumann is chief executive officer and University Professor of Business Administration at Touro University Worldwide. Edith Neumann is provost and University Professor of Health Sciences at Touro University Worldwide.

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