Business issues

Consumer Financial Protection Bureau urges colleges to look more closely at bank deals

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Feds eye new guidance for colleges that want to enter into agreements with financial institutions to offer banking products on campus.

Public universities don't have to comply with California minimum wage laws, but some are and some aren't

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As voters and politicians in California's expensive Bay Area push higher minimum wages, at least two public universities aren't paying it.

Universities should stop being all things to all people (essay)

I always thought it was strange to walk into drugstores and see cigarette cartons piled high as mountains behind the cashier.  After all, I come from Ontario, Canada, where you can’t buy alcohol outside of special Liquor Control Board of Ontario stores.  (Beer, it should be noted, is also available throughout the province at “The Beer Store” -- a name that’s even clear enough for beer-addled Canadians like Bob and Doug MacKenzie.)

So when I heard that CVS, the large drugstore chain, had decided to stop selling cigarettes, it was as obvious to me as the eventuality that the successful ALS “Ice Bucket Challenge” campaign will one day be co-opted by our new enemy in the Middle East (the “ISIS Bucket Challenge”).

Drugstores and pharmacies are supposed to further health. Promoting smoking does not. One health care industry professional quoted in The New York Times said: “Think of it this way: Would you find cigarette machines or retail stores in the gift shops in a hospital selling cigarettes? Of course not. I think it does give them a leg up.”

CVS announced the move along with a new name: CVS Health. CVS has moved from selling health care products to delivering health care services. It currently operates 900 “minute clinics,” where health care professionals deliver simple services like administering flu shots and prescribing antibiotics for garden-variety ailments.

It’s nice when organizations decide what they want to be when they grow up and then execute that vision. Too many institutions try to be all things to all people. Like colleges and universities.


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Colleges and universities license their brands for many products that don’t have much to do with higher education.

There’s the BC hockey table (Go Eagles!):

The Emory rug (Go Eagles, again!):

 

UT duct tape (if you can’t hook ‘em, tape ‘em):

And UNC fragrances (smell like tar, or like a heel):

 

The news last week was that universities are licensing their brands to Kraft for Jell-O molds.  While Kraft launched the university Jell-O product last year (to massive demand, apparently), 16 more institutions have been added, including these:

It’s clear to me exactly how this happened.  All universities have trademark licensing offices.  Many of these schools already license their brands for shot glasses.  It’s a small step from shot glasses to Jell-O shot molds. Of course, this isn’t what the universities are saying. A spokesperson for University of Georgia said the molds are not specifically marketed for alcoholic shots:  “Our look at it was plain and simple. Jell-O is a reputable product that has been on retail shelves for years.  What we don’t control is the individual end user and what they use the product for. What the product was designed for is gelatin.”  Or this from UNC:  “The conclusion was that the Jell-O mold was a family- and fan-friendly product that shows school pride.  It was consistent with other recently approved products, including a school-branded line of Pop Tarts.”

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News coverage to date has focused on the mixed message the product sends to students who are subject to university policies and educational programs for alcohol and binge drinking. But how about the link between the Jell-O shot economy and the phenomenon of the six-year degree that is already too prevalent at the aforementioned institutions?  A new study from the New York Federal Reserve shows that the return on investment from a 6-year degree is 40 percent less than that on a 4-year degree.

Then there’s the question of the purpose of trademark licensing.  While universities undoubtedly have valuable brands, their mission isn’t to maximize revenue across multiple product lines. What is their mission? Based on a scan of Jell-O-brand universities, 60 percent fail to mention students AND learning in their mission statements (and forget about outcomes, tuition or return on investment, which are nowhere to be found). 

Higher education mission statements tend to be multifaceted, complex and vague. Most include knowledge dissemination and research. Many include statements about furthering the public good. Often, there are so many bottom lines there’s effectively no bottom line at all. This makes it difficult for trustees to ascertain whether officers (or trademark licensing offices) are doing a good job and to exercise appropriate governance.

Like CVS, universities need to stop trying to be all things to all people. If their mission involves students AND learning, they should look at their current over-broad roster of activities and begin to cull those that are unrelated. They should also consider eliminating those that may be related, but where they do a poor job. See last week’s New York Times feature on how specialized institutions like the Fashion Institute of Technology or Harvey Mudd College punch well above their weight (in terms of rankings) when admitted students choose between a specialist and a generalist.

Institutions counting on licensing revenue from Jell-O shots and other products may find it difficult to focus solely on student learning. And nearly all institutions find it difficult to specialize. 

CVS faced the same decision set. Cigarettes represented $2 billion in annual sales. It was hard to walk away from that. 

But CVS made the strategic decision that they were in the business of health, a decision that ought to have a financial payoff down the line, according to an industry expert quoted in the Times: “When you stop selling cigarettes as a retailer, it sends a very big signal to the rest of the health care community that you are in the health care business. I do think that it’s going to open up many possibilities in all of the partnerships that they’re trying to create across the country.”

Ryan Craig is a partner at University Ventures, a fund focused on innovation from within higher education.

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Chegg takes to social media after receiving cease and desist order from Southern Connecticut State U.

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Southern Connecticut State tells Chegg that university's contract with Barnes & Noble bans anyone else from marketing textbook rentals to students.

 

A North Dakota university looks to partner with and maybe buy a for-profit consulting firm

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A small private college gets very close to financial firm -- and hires its founder.

To lure research and avoid regulations, some universities turn away from tax-exempt bonds

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To avoid regulations and attract private research dollars, universities may be turning away from tax-exempt bonds.

Starbucks announces it will pay for employees to take junior and senior years at Arizona State online

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Coffee giant announces it will pay for junior and senior years of any of its employees admitted to Arizona State's online program.

Essay on the impact of applying corporate values to higher education

America's public research universities face a challenging economic environment characterized by rising operating costs and dwindling state resources. In response, institutions across the country have looked toward the corporate sector for cost-cutting models. The hope is that implementing these “real-world” strategies will centralize redundant tasks (allowing some to be eliminated), stimulate greater efficiency, and ensure long-term fiscal solvency.

Recent events at the University of Michigan (suggest that faculty should be proactive in the face of such “corporatization” schemes, which typically are packaged and presented as necessary and consistent with a commitment to continued excellence. The wholesale application of such strategies can upend core academic values of transparency, and shared governance, and strike at the heart of workplace equity.

Early this month our university administration rolled out the “Workforce Transition” phase of its “Administrative Services Transformation” (AST) plan. From far on high, with virtually no faculty leadership input, 50 to 100 staff members in the College of Literature, Science, and the Arts (LS&A) departments were informed that their positions in HR and finances (out of an anticipated total of 325) would be eliminated by early 2014. Outside consultants, none of whom actually visited individual departments for any serious length of time, reduced these positions to what they imagined as their “basic” functions: transactional accounting and personnel paperwork.

It became clear that many of those impacted constitute a specific demographic: women, generally over 40 years of age, many of whom have served for multiple decades in low- to mid-level jobs without moving up the ranks. A university previously committed to gender equity placed the burden of job cuts on the backs of loyal and proven female employees.

These laid-off employees found little comfort in learning that they would be free to apply for one of 275 new positions in HR or finance that will be contained at an off-campus “shared services” center disconnected from the intellectually vital campus life.

The resulting plan reveals no awareness of how departments function on an everyday basis. Such “shared services” models start with the presumption that every staff member is interchangeable and every department’s needs are the same. They frame departments as “customers” of centralized services, perpetuating the illusion that the university can and should function like a market. This premise devalues the local knowledge and organic interactions that make our units thrive. Indeed, it dismisses any attribute that cannot be quantitatively measured or “benchmarked.” Faculty members who reject these models quickly become characterized as “change resisters”: backward, tradition-bound, and incapable of comprehending budgetary complexities.

The absence of consultation with regard to the plan is particularly galling given that academic departments previously have worked well with the administration to keep the university in the black. Faculty members are keenly aware of our institution’s fiscal challenges and accordingly have put in place cost-cutting and consolidating measures at the micro level for the greater good.

Worries about departmental discontentment with AST and shared services resulted in increasing secrecy around the planned layoffs. In an unprecedented move, department chairs and administrators were sworn to silence by “gag orders” prohibiting them from discussing the shared services plan even with each other. Perturbed, close to 20 department chairs wrote a joint letter to top university executives expressing their dismay. As one department chair said, "The staff don't know if they can trust the faculty, the faculty don't know if they trust the administration.”

Within a few days, at least five LS&A departments had written collective letters of protest, signed by hundreds of faculty members and graduate students.  Over the past few weeks, that chorus of opposition has only intensified as faculty members from all corners of our campus have challenged AST. Some have called for a one- to two-year moratorium and others for an outright suspension of the program.

The outcry against the planned transition itself reflects the growing rift between departmental units and the central administration at the University of Michigan. Championed as an astute financial fix by a cadre hidden away in the upper-level bureaucracy, the shared-services model is the brainchild of Accenture, an outside consulting firm which our university has also contracted for a multimillion-dollar IT rationalization project.

Caught off-guard by the strong pushback, the administration has issued several messages admitting that their communication strategies around these changes were inadequate, stating that for now layoffs will be avoided, and assuring us that there will be greater consultation and transparency going forward. 

While these definitely are hopeful signs, important questions about institutional priorities and accountability have arisen.

Initially, the university’s consultants claimed that AST would render a savings of $17 million. Over time that figure shrunk to $5 million, and by some accounts now is reputed to be as low as $2 million. Yet the university has already reportedly spent at least $3 million on this effort with even more spending on the horizon.

Where are the cost savings? How much more will the university spend on Accenture and other outside consultants? How will replacing or shifting valued employees, even at lower numbers and salaries, from their departmental homes to what essentially is a glorified offsite “call center” actually enhance efficiency? How can a university ostensibly committed to gender equity justify making long-serving and superb female employees pay the price of AST? What credible proof is there that centralized management will provide any budgetary or administrative benefits to the specialized needs of individual departments?

The implications of these questions are thrown into starker relief when considering that almost to the day of the announced layoffs, the university launched its most ambitious capital campaign, “Victors for Michigan,” with festivities costing more than $750,000 and a goal of raising $4 billion.

Whether or not the collective protest initiated by a critical mass of faculty will result in change or reversal remains to be seen. Nevertheless, the past few weeks have been a wake-up call. Faculty must educate themselves about the basic fiscal operations of the institution in these changing times and reassert their leadership. Gardens, after all, require frequent tending.

Otherwise, we remain vulnerable to opportunistic management consultants seeking to use fiscal crisis as a source of profit. Public institutions that remain under the spell of misleading corporate promises will ultimately save little and lose a great deal.

 

Anthony Mora is associate professor of American culture and history at the University of Michigan. Alexandra Minna Stern is professor of American culture and history, and a professor of obstetrics and gynecology at the University of Michigan.

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Tuition revenue not keeping pace with inflation at 4 in 10 four-year universities

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Net revenue from tuition is no longer keeping pace with inflation at about 4 in 10 American universities. Without the money, what will be lost?

U. of Arizona's foundation had stake in offshore tax shelter, is suing donor's financial advisers

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The University of Arizona's foundation had a stake in an offshore tax shelter and is now joining with a major donor to sue his financial advisers.

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