Why not run a business like a good university?

[David Farber <farber () central cis upenn edu>]

Did you ever see this?  It's quite interesting.  (Copied w/o
permission.)  Tim

The Christian Science Monitor, Tuesday, March 23, 1993
"Why not run a business like a good university?"
Robert L. Woodbury

"If you only ran your college like a business..." is a phrase we in
university administration hear almost daily from our friends in the business
world.
        Frankly, we in higher education have learned much about operating in
a more business like manner. The stringencies of the last few years in
particular have helped us weed out unnecessary functions, use technology more
effectively, plan more strategically, and use limited resources more
efficiently. Most of us are better managers than we would have been if we had
been less attentive to recent developments in the private sector.
        Those in the private sector, however, might reflect on some
comparisons and strengths in the university world that might be helpful, in
turn, to them.
        First, higher education is one of the few United States "industries"
universally recognized as the best in the world. This is no longer true of
cars or electronics or most other areas of manufacturing. But our colleges
and universities, as a whole, dominate the globe as do few sectors other than
the entertainment industry, munitions, and soft drinks.
        Second, our favorable balance of payments is estimated to exceed $5
billion and is expanding. Almost 420, 000 foreign students, the vast majority
funded from abroad, study full time on our campuses. Perhaps 80, 000 US
students study abroad and then only for brief periods and mostly for
"cultural" reasons. 
        Third, higher education has been a growth industry for four decades, 
despite a dramatic decrease in the college-age population over the past 20
years. We have expanded from 2 million students to more than 14 million
since World War II. Growth in related areas, such as continuing eduction or
sponsored research, has grown as dramatically. 
        Fourth, cases of college bankruptcy, defaults on loans, or high
level malfeasance are all but unknown. Certainly many colleges are run better
than others, but the overall record of fiscal stewardship would be the envy of
many boards of directors.
        Fifth, no other industry that I know has assembled, retained, and
energized so much educated talent at such a low cost. At a single
institution, thousands of people have studied an average of six full years
past their bachelors degree (more than many MDs) and earn only $45,000 (the
average salary of a university professor in the US). 
        Sixth, undergraduates get a bargain, k despite the perception of
parents or taxpayers. A college supplies housing, food association with the
best minds in many fields, art centers, athletic events, entertainment, 
libraries, and all the amenities and intellectual resources of a small city.
Who else can do this for an average cost of $12, 000?
        Seventh, the return on investment is enviable. Aside from any
benefits of a human or cultural dimension, a graduate of a four-year
institution earns approximately 50 percent more than a high school graduate, or
$500, 000 more over a lifetime. The contributions of university research and
ancillary activities to society are incalculable.

        It is worth exploring the managerial reasons for this success.
Decision making is highly decentralized. Issues of curriculum, k teaching, 
scholarly support, admissions, selection of staff, rest with an academic
department--a group of faculty with common aspirations for the department, 
their discipline, and their students to succeed.
        The fundamental work of teaching and learning is controlled by
the faculty member, the "front line worker".  The most critical
issues depend on creativity, energy, and commitment in a particular
classroom or laboratory. There is minimal bureaucratic control over
"the work." The basic assumption is that management's job is to
provide the tools, encouragement, and security for faculty touse their
creativity and imagination. In this sense, a faculty member is
treated as a professional.
        The enterprise is daily in touch with the consumer. However passive
some students may be, colleges are influenced incessantly by consumers on
campus as well as indirectly by those who choose not to come. When the
"traditional" consumer market shrank, colleges aggressively pursued
non traditional markets. Our apparatus for quality control and improvement
are highly developed and regular. We have complex procedures for program
evaluation, institutional or professional accreditation, self-study, 
government program approval, peer reviewed journals, and even teacher
evaluation mechanisms. No less important are mechanisms for colleague review
in a department or profession. Whatever the critique of the tenure system, no
profession requires as intensive a year long review of an individual after
six years of probation than does a good university.
        Opportunities for professional renewal, growth, and continuing
education are well developed. Faculty and other professionals are expected
not only to keep up in their field, but are provided opportunities, including
study leaves, for major scholarly and professional development. Faculty are
hired for the long term.
        Universities are structured in a mode of "shared governance, " a
relatively flat bureaucracy and open information across the entire
enterprise. In an age when the notion of proprietary information is
disappearing, academic disciplines have been internationally open for
decades. In addition, universities have a reward system where the president
is paid about three times the average faculty member, four times the average
employee, and five times an entry level employee--a sharp contrast with the
70 plus multiplier in large businesses.
        Finally, universities and colleges seek long term results. The real
measures involve institutional reputation, successes of graduates, and
accomplishments of faculty, which require more sophisticated qualitative
assessments over long periods. Investment is something to assure stewardship
over the long haul.
        Does some of this sound familiar? Many of the current guides to
improved business structures and enterprises, from "total quality management"
to quality circles to other modes, are similar to processes and approaches
that colleges and universities have developed over decades. Plenty is wrong
with many colleges. More than most realize, however, businesses can learn a
great deal from higher education about management and leadership.


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