Why Not Run a Business Like a Good University?

`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 businesslike 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 education 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 bachelor's 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, despite the perceptions 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. Decisionmaking is highly decentralized. Issues of curriculum, 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 to use 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 nontraditional 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 pr ogram 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 mu ltiplier 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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