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Higher Education and the American Dream

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Marvin Lazerson

Part II. Governance and Managerial Dilemmas

Chapter 3. Who governs higher education?

Texte intégral

Marvin, the reason you are such a good
dean is that you think like a businessman.
(Conversation with a member of the University
of Pennsylvania’s Board of Trustees)

1No one really governs higher education. There are, however, lots of stakeholders, and various constituencies with high expectations and desires, who often act as if they were higher education’s rightful governors or, at least, the governors of particular institutions. The constituencies vary in influence and power, according to the institution and the particular issue. But even the most powerful decision-makers at any given moment do not govern higher education. Still, if I had to choose, I would make the case that the most powerful decision-makers are boards of trustees and the institution’s professional managers. The reasons are relatively simple: as market forces and capital funding have come to dominate universities and colleges, trustees with business acuity and corporate decision-making abilities shape educational decisions. As colleges and universities have come to resemble mini-cities, professional managers shape the long term plans and day-to-day decisions. Neither boards nor managers act unconstrained; they are almost always mindful that they preside over institutions that have educational responsibilities.

2The shifting locus of power is in itself neither good nor bad; it comes with both attractive and unattractive aspects. It is real and influential, and needs to be included in planning and decisions about higher education. Certainly the shift is not going away, not as long as universities and colleges continue to offer a wide spectrum of services and claim to prepare students for labor markets. The higher education industry has become too big to run without constant attention to finances and to professional management. Gone are the days where planning committees are told “focus on what is possible and we will think about the money later.” Not yet gone, but hope-fully on their last legs, are rhetorical flourishes—I would call it blathering—about needing more top-down management and more efficient management structures or about the sacred division of powers embedded in the ideology of shared governance. Quiet and considered decisions with respect to goals and objectives are needed, and how to manage their implementation. The relationships between educational outcomes and governance are ambiguous and we will just have to live with that.

3.1 A journey of awareness

3When I first decided to become an academic historian, I was convinced, primarily by my professors, that the faculty governed, for they did the research and teaching and had overall responsibility for the institution’s welfare. Most of all, the professors protected colleges and universities from the intrusions of the outside world. Two of my Columbia University history professors, Richard Hofstadter and Walter P. Metzger, had even written what was the bible for their generation, The Development of Academic Freedom (1955), which made clear that the professors’ right to pursue their scholarship and teaching in unbiased, non-ideological ways was the soul of higher education and the only security against the populist antiintellectualism of American society.

4By the end of 1960s, as I was finishing my doctoral dissertation, faith in professorial governance was harder to maintain. Student demonstrations around civil rights and the Vietnam War involved complaints that professorial neutrality and the non-biased, non-ideological approach to knowledge was itself ideological. Among graduate students new ideas about the social construction of reality gave intellectual substance to the criticism that professors were primarily interested in their own ends, that they lacked the moral fiber to stand up for what was right. Students were heirs of the university, and their voices needed to be taken more seriously than any others. This view, at least to me, was only partially successful in convincing me that students were important enough to take charge. And, when the students’ concerns in the 1970s ultimately translated into freedom from in loco parentis regulations (why after all should universities and colleges have the right to restrain student personal behavior when their parents had long since given up seemed to be the common view), when the highest moral value became being left alone to do what they wanted to do, I was sympathetic, but such an outcome left the idea of students as governors of higher education behind. In the 1980s students would be identified as consumers, meaning they had to be sold education and satisfied with the results, which gave students considerable influence but not the power of governance.

5For a while, the public became the potential owner, especially as the number of public institutions of higher education and the number of students enrolled in them skyrocketed after 1960. Carrying more and more of the costs of the rapidly expanding higher education system, it seemed clear that the public, through governors and state legislators, had taken over as the authoritative voice in higher education. The constituency that paid for the service owned the product, which seemed a simple truth of market economies. That turned out to be somewhat true, but in practice the public presence has been sporadic. The amount of money waxed and waned, and there were lots of moments when it seemed that public bodies and public regulations were going to take over, but higher education institutions seem to have myriad ways to preserve their autonomy. Despite the growing claim to govern higher education, public bodies have much better things to do with their time than manage colleges and universities. They intrude, but institutional autonomy remains the rule.

6My own view of the dominant governing voices took a substantial turn beginning in the 1980s, with the emergence of two groups of powerful decision-makers: governing boards and professional managers. The power of these two groups, often working closely with one another, certainly more closely than with either the students or faculty, was quite extraordinary. Their decisions made clear that higher education was an industry, a somewhat unique industry in which education and research were important, but which depended upon and looked to constant infusions of money and economical and efficient management in order to succeed. How this happened is the story that follows.

3.2 Changing locus of power

7I became dean of the Graduate School of Education at the University of Pennsylvania in 1987. At my first meeting with the university provost to go over the school’s budget I was introduced to the provost’s budget director, a person and position I didn’t know existed, who proceeded to grill me on the relationship between my plans for the school and the financial numbers staring me in the face. His basic message is: you can’t do what you want to do if you do not change the financial situation of the graduate school. Without the right numbers, your plans are nothing more than hot air. He turned out to be correct.

8Other venues furthered my learning curve. Internal faculty battles over the outcomes of searches for new professors often took much of my time. Which of the final three applicants was most deserving of a job offer? The question went to the heart of faculty governance, of faculty responsibility and power. It was here that the concept of shared governance gave faculty the critical decision of who would join them as peers. The protests and contentions over faculty appointments, as well as promotions and tenure, often took on the character of mini-wars. Rarely did anyone state the obvious, that the differences among the finalists were usually minimal and besides there was almost no way to predict which ones would flourish as scholars and teachers and which ones wouldn’t. The battles had to be taken seriously, in part because they were so divisive, but primarily because such appointments are one of the few serious powers the faculty still possesses.

9Meanwhile I was regularly participating in meetings in other parts of the university in which decisions that determined the future shape of the institution were taking place, decisions that revealed more fully the nature of power and responsibility. At the University of Pennsylvania, they occurred in unending fashion. Should a new chemistry building be built? Should we renovate the university’s landmark football stadium or build a new student center? What should be built on the huge parking lot adjacent to the main campus and how much of the new construction should be devoted to retail stores, private office space, or a first-class hotel—all ways of potentially expanding income? Expand the size of the School of Arts and Sciences or support the continuing growth of the Business School? Should one school be subsidized at the expense of another, one department funded disproportionately to others, and how large should the differences be? Should a neighboring hospital be bought and its medical school merged with the university’s existing medical school and hospital? How should the funds from billion dollar fundraising campaigns be allocated? What should be the size of a tuition increase?

10Although individual professors were sometimes participants in these decisions, faculty as a constituency was rarely consulted and if they were, the consultations were perfunctory, a pro forma tipping of the hat to older practices or codified rules that said the faculty must be consulted. When professors did complain, the complaints rarely came with genuine alternatives; usually the call was for more study and greater consultation, a kind of “let’s delay while we talk it over some more.” Such opinions were infrequently taken seriously, often being converted into “how do we get around the faculty complaints” by the administrators, professional managers, and board of trustee members. Claims by the faculty that they were the essential decision-makers in the university were treated as rather desperate pleas by professors to keep alive memories of professorial importance and the legacy of shared governance. In closed door sessions, administrators guided by the advice and information provided by professional managers made the recommendations. The information itself was often based on data provided by key members of the board of trustees, who in turn decided the future of the university.

11Individual students were occasionally part of various decisions, but students as a group were thought of as potential problems easily gotten around. After years of student-based planning for a new student center, Penn’s board of trustees decided that the plan should be shelved because it was too costly and the use of the available land rethought. Since the President and I, as Interim Provost, were in on the decision, I was then delegated to “handle” the students, which involved telling them that we were suspending the planning process to review the options. The student center plan was eventually dropped in favor of a new hotel, retail stores, and a bookstore managed by Barnes and Noble that included a café to attract the students, which was a sign of what really mattered.

12Another incident made clear how feeble the faculty had become. During a particularly difficult and controversial moment at Penn, following a series of racial incidents and the removal of the student newspaper from its distribution sites by a group of African American students, I appointed an African American professor of social work to review the event. His conclusion was that taking away the newspapers on the part of the African American students was a violation of the university’s policies on free speech, but he also recommended that no punitive action be taken by the administration against the students and that an educational process of understanding occur on what free speech constituted within the context of university life. I agreed and the President accepted my decision. Key members of the university’s board of trustees became quite upset. They were already angered by media reports, especially in The Wall Street Journal, chastising Penn for being too politically correct. Powerful trustees were determined to speak out publicly in order to separate themselves from what they viewed as the administration’s excessive softness on minority issues—privately complaining that if the newspapers were stolen by white students, they would have received considerably worse than a slap on the wrist. However, the trustees also thought highly of me and the President, so we entered into quiet negotiations over a public document that expressed disapproval of my decision, a result with which the President and I could live. This was easily accomplished, the board’s statement circulated and published, and the board and administration moved on. Indeed, so satisfactorily was this tempest put behind us, that the same board members who generated the document soon asked me to become the permanent Provost after a new President was appointed. (I said no. It was time for me to get out of administration.)

  • 1 See, however, the powerful defense of shared government in Scott, 1996.

13The university’s faculty senate was not satisfied; its members were incensed that the board of trustees would dare to mingle in the affairs of the administration, for such behavior violated the longstanding tradition of separation of powers, the much discussed “shared governance,” a tradition that in the faculty’s view relegates the trustees to fiduciary oversight and fundraising. This tradition is something of a standing joke, one in which everyone uses the shared governance phrase without really believing in it.1 The board of trustees took the faculty condemnation of what the board members considered a mild chastisement of the Provost and President in stride. Why fight over the past, especially when you feel secure that you (the trustees) have the right and the responsibility to protect the university from the misjudgments of the administration it appoints? Life moves on. But the lesson is clear: the board of trustees says and does what it wants, careful in this case not to provoke conflict with an administration it trusts. The faculty response is window dressing, a bit of theater, more or less interesting, but not especially important or significant.

14Over the last few decades the rising power of boards of trustees and professional managers has become ever more evident. This holds for boards at public universities (or boards that preside over public systems) as well as for boards at private institutions. In numerous states the politicization of public systems has forced the ouster or resignation of Chief Executive Officers at the University of Michigan, the State University of New York, University of Minnesota and Missouri at Columbia, and overruled the administration at the California university system over affirmative action. While this behavior has evoked some reaction, more evident is that the trustees can and do whatever they will, with little serious hindrance. At public institutions, trustees, often speaking in the name of the governor and state legislature, claim they have a direct responsibility to the taxpayers, which overrides everything else. At private institutions, trustees speak of representing the institution’s investors— alumni, students, philanthropists, and even the public, as well as the usual stakeholders—assert that they are the only ones who have the institution’s total welfare at heart. Moreover, trustees have become exceedingly reluctant to serve as rubber stampers of administration decisions, especially sensitive to how those decisions will look to the outside world. Trustee activism, the sense of institutional ownership, has dramatically changed the balance of power within higher education (Chait, 1995; Chait and Holland, 1996).

15For professional managers, the change has been dramatic. Between 1987 and 2007, staff positions in colleges and universities almost doubled, a rate much faster than enrollment growth and faculty growth. The ratio of staff and managers to students rose by 34 percent, compared to 10 percent rise in the ratio of instructors to students (Brainard, Fain, and Masterson, 2009). The numbers tell only a small part of the story, for the complexity of decision-making in what are increasingly mini-cities called colleges and universities has combined with a fascination for business-style management to make professional managers, with substantial expertise in complex and often highly technical areas, powerful decision-makers with substantial influence in governing board decisions.

16Neither trustee activism nor managerial responsibilities are new in higher education. Activist trustees and governing boards have frequently in the past made university and college presidents’ jobs extremely difficult (Link, 1995). But historically trustee activism was typically limited to grousing about student behavior, the rejection of applicants from the children of alumni, or the quality of football coaches. There were, of course, incidents which triggered more vigorous trustee interventions, as in the late 19th century, when professors were fired for their ‘socialist’ views, or during World War I, when anti-war faculty were forced to leave. During the McCarthy era in the 1950s and in the face of student demonstrations during the 1960s and early 1970s, the stakes escalated as boards accused administrators of being soft on lefties and student radicals. And as early as 1918, Thorstein Veblen published The Higher Learning in America: a Memorandum on the Conduct of Universities by Businessmen on the takeover of universities by leaders proposing to act like captains of industry. Even so, the assertion of board of trustee power as ‘normal’, as part of the responsibilities inherent in the job, as in the best interest of the institution was not the given, at least not in the sense that it was supposed to be that way.

17Even today it would be a mistake to judge the overarching influence of boards of trustees as a victory over all the other constituent groups in and outside higher education. At most institutions trustees and academic executives work closely together. With the growth of professional managers in most non-academic administrative offices, especially in areas of financing, fundraising, endowment investments, facilities, student affairs, public and governmental relations, legal representation, and human resources, trustees are often working with individuals similar to those they manage in their professional roles. Presidents often find trustee assertiveness useful when they want to rein in out of control fiscal expenditures. Boards tend to seek ways to better the conditions for faculty and for students, for they rely on strength in both groups for prestige and in promoting their institution. And, for many board members, simply going to the occasional football game, eating substantial meals, and seeing old friends (often business and political colleagues) suffice; they are not looking for intense, stressful, public spites with the university administration, faculty or students. For many college and university presidents, that is just fine and most meetings of boards are pretty much as they have always been—tell board members all the good things that are happening, give them a problem or two to chew on, and send them on their way with the admonishment to raise more money—these are still pretty standard. Increasingly, however, that has not been enough and in the past few decades the level of trustee activism has substantially broadened and intensified and become more open and conflict-ridden, a phenomenon that has become more extreme as economic conditions have worsened. The long-term consequences for the governance of higher education are significant: higher education has become the domain of those who understand money, power, and decision-making.

3.3 Return on investments really matters

18Governing board assertiveness goes beyond higher education, for the process has also been manifest in other sectors. Museums, hospitals and health-care systems, banks, insurance companies, entertainment and media industries, foundations and a host of non-government organizations (NGOs) have all seen greater activism on the part of oversight boards. Even where boards have clearly fallen down on the job, as they did with banks in the first decade of the new millennium, the call has been for greater activism and a less cozy relationship with executive leaders and management, a sign that trends of the last few decades will continue or intensify. Often pilloried for being gentleman’s clubs that paid little attention to the institutions they oversaw, boards of directors in the 1990s and 2000s changed, in composition and in the rules by which they were governed. Boards of directors in the profit and non-profit sectors began to evaluate CEO performance and sought benchmarks to determine institutional success. As the events at the end of the first decade of the 21st century revealed, these assertions of board activism were too little and too late. If boards are no longer gentleman’s clubs, they have still been too lackadaisical, too convinced that they understood all there was about corporate and institutional behavior to fulfill the fiduciary responsibilities and protect stakeholders. Their failures, however, have not changed the activist stance, but rather increased its degree and consequences. Institutional governance in every sector of the economy has been remolded in the last 20 years.

19The significant period of change was the 1990s, when the consolidation of stock in America’s publicly traded corporations gave unprecedented power to large institutional investors. Pension funds like the California Public Employees Retirement System, the New York State Common Retirement Fund, and the Teachers Insurance and Annuity Association/College Retirement Equities Fund (TIAACREF); giant mutual fund investment companies like Fidelity Investments and the Vanguard Group; insurance companies and banks; nonprofit organizations; and wealthy investor groups organized for leveraged buyouts began to assert major influence over corporate decisions. During the 1990s, these powerful investors instituted governance assessment procedures, forced executive dismissals, changed the composition and role of boards of directors, caused the sale of unprofitable units, and demanded mergers, all in the name of increasing shareholder value, even to the exclusion of long-held criteria like long-term corporate growth, worker security, and institutional stability. The name of the game was stock market value (Useem, 1996).

20Investor activism represented a sharp break with the past. Although executive authority had been eroding for some time, under the impact of environmental protection, health and safety requirements, and anti-discrimination regulation, the fact of stock dispersion among many small shareholders historically gave corporate managers substantial authority in directing their firms. The growth of large investors, especially through the exponential increase in investment funds and pension funds during the 1990s, dramatically circumscribed this autonomy, forcing corporate executives to accommodate an aroused, informed, and demanding investment community— who in turn were willing to tolerate huge salaries, bonuses, and incentives to corporate executives who followed the mandate to take company stock prices higher. While business publicly complained— and still complain—about government intrusion and control, the real revolution came in the growth of power over corporate decisions by those who managed large investment funds.

21America’s corporations thus became engaged in a governance revolution. Those who manage investor money came to identify themselves as owner representatives with rights of governance, and they made shareholder value—a euphemism for stock market price—the defining criterion of corporate success. One of the surest ways to increase stock prices became—and remains—bold announcements of substantial job cuts. While the last few years have seen high profile attention to extravagant salaries, perks, and bonuses to those who lead corporations, the real revolution occurred in the boards of directors and their relationship to the goals of large investment funds. Higher education boards quickly adopted the activism and the search for increased stock returns.

22Indeed, perhaps the most important trend in higher education since the mid-1980s has been the emphasis on growing endowments and returns on investments. Like much of the rest of America, the idea of saving for retirement—in the case of universities, saving in order to have funds in the future—got converted into investing at high returns in order to be substantially richer than you were before. The stakes were high as endowments in the 1990s grew, often by double-digit percentages annually. The rich got colossally richer, but every institution talked and acted as if it could become, if not rich, then at least affluent. Even with the downturn caused by the deflation of the technology bubble around 2000, endowments at many institutions continued to grow and checklists appeared showing which institution invested well and which ones did not. Whether one went up or down or had single or double-digit returns, the overriding theme was everywhere the same: return on investment. The financial crisis of 2009 had a profound effect on the universities and colleges, just as it profoundly affected the pension funds in which millions of Americans invested. But while the crisis made investors wary of stocks and more controversial investment alternatives, the fact is that it has not changed the apparently inescapable emphasis on getting richer through investing and the belief that money is the most important goal. And, that means that those who understand investing will continue to have a primary say in the major decisions of universities and colleges.

3.4 Managing higher education’s mini-cities

23Perhaps the least discussed and least understood of the governance changes in higher education has been the emergence of professional managers and their enhanced decision-making power. There has been a logic to this, for colleges and universities have emerged as mini-cities that deal directly and indirectly with huge sums of money and provide a bewildering array of services (Lazerson, Wagener, and Moneta, 2000). This change has been both necessary and worrisome. Necessary, because it reflects just how complex managing higher education institutions has become and worrisome, because it creates a domain that is entirely separate from and more powerful than the traditional academic one.

24The phenomenon is relatively new. Twenty-five years ago little attention was paid to the management of colleges and universities. The faculty members who took administrative positions had shortterm aspirations; other individuals who served as “non-academic administrators” were rarely noticed—and then primarily by students complaining about the quality of services or by faculty members railing against bureaucratic demands.

25Today this has mostly changed. Academic administration has attained a certain degree of respectability within institutions, with a fairly predictable career path, from departmental chair to dean to provost to president. Those in non-academic administrative roles often come with managerial training and experience outside higher education; they are in fact not “add-ons” to service the faculty and students, but trained professionals with genuine expertise. They possess skills appropriate to their domain—financial, human resource, information technology, planning, fundraising, public relations, legal, student life—and skills that are transferable across multiple domains. Their managerial roles have become larger, more complex, and more intrusive than ever before because the higher education industry has become larger, more complicated, and more important.

26Colleges provide a smorgasbord of services to a wide range and growing number of constituencies. As institutions seek to become better partners with their surrounding communities, develop more effective uses of technology, and construct buildings for all sorts of purposes—as well as continue to compete for students and faculty and staff members—they become more dependent upon professional managers to deliver services. Market and political pressures to cut costs and raise revenues, a fascination with corporate-style organization and decision-making, and calls for greater accountability have led to increased managerial influence.

27Campuses resemble modest sized municipalities, with an array of public works, social services, and market-sensitive functions. The managers of higher education’s mini-cities preside over complex infrastructures that include security and police; real-estate acquisition, management, and development; budgeting and finance; legal services; human resources; technology and information systems; public affairs, development, and alumni relations; student services; community relations; sometimes hospitals and medical centers; and a host of other business services. And because the skills required in undertaking these managerial and service activities parallel skills in other industries, the last decades have seen dramatic increases in the hiring of people from outside of higher education, with MBA degrees or experience in corporate, non-profit, and government settings.

28Some college jobs—admissions officer, registrar, bursar, director of student affairs—are traditional. But even those roles have expanded significantly. Admissions now includes bringing in students from other parts of the world, a hugely complex enterprise. Student life officers went from providing relatively straightforward services to becoming competent specialists who can negotiate contractual relationships, answer legal questions, and deal with budgetary constraints. At the same time, their relationships to students, faculty members, parents, and the news media has become more complex as a heightened consumer orientation among those constituencies pressures managers to provide higher-quality services at lower cost. The internet has further heightened pressures. Student affairs personnel are acutely aware that within minutes of an unsatisfactory phone conversation, e-mail, or SMS between a parent and child, they are likely to receive a complaint from the parent.

29Even the attempts to restrain some of these activities, save money, and reduce bureaucracy—the goals of out-sourcing—have often themselves enlarged managerial responsibilities by requiring decisions on the exact nature of the desired service, assessing competitive bids, choosing the provider, negotiating with unions, communicating the changes, evaluating the services provided by external firms, and not infrequently terminating contracts when the private service provider proves to be too costly and inadequate to the job.

30Many people in higher education, especially faculty members, still essentially ignore the service managers or begrudgingly accept them as necessary nuisances, viewing their responsibilities as ancillary to the real business of the institution. But such an attitude is foolhardy. Increasingly, faculty achievements are linked to managerial support, not only in the desire for clean and functional classrooms and labs, but also in the need for assistance in grant development, technology transfer, and online pedagogy. Faculty income, status, and working conditions depend heavily upon their institutions’ success. Managerial power, however, threatens the tradition of shared governance and faculty members often have little knowledge of management concerns and not much interest in becoming servicedelivery experts, and thus feel intruded upon when professional managers tell them what to do and what not to do. While managerial roles remain controversial and their costs are regularly being challenged (Brainerd, Fain, and Masterson, 2009), the need for them has become so great, that it is impossible to imagine them going away or their roles diminishing. In fact, their numbers and responsibilities will increase.

3.5 Are business and higher education the same?

31The trends of the last decades are clear. Governing boards have assumed greater power and are more aggressive in asserting it. Professional managers within higher education institutions have greater responsibilities and shape an institution’s day to day life more than the faculty or students. Does this mean higher education and business are the same? Yes and no, or in the words of a widely distributed Hertz rental car television commercial: “Yes, but not exactly.”

32Higher education does not like to identify with the corporate sector. Business expects to measure its bottom line easily—through profits and earnings and, if publicly traded, through stock prices. It can evaluate its product in the market place. Unions have very limited influence and until the recent incursions by governments, regulation has been more or less nonexistent. Business expects its managers to know what they are doing, to act swiftly when necessary, and to keep the profit-making goal clearly in mind. Business has a strong tradition of hierarchical decision-making, which despite the periodic fascinations with team-building and horizontal decision-making has hardly been dented. In contrast, higher education’s outcomes are less easily measured, and whatever the corruption of shared governance, its tradition still has some influence. Faculty tenure and academic freedom provide permanence of work and freedom of expression virtually unheard of in the corporate world.

33Still, if higher education and corporations play by somewhat different rules, the governance parallels between the two have become remarkable. Like the business community, higher education since the 1960s has regularly lamented its loss of autonomy, even though both sectors have been quite free to shape their respective destinies, at least until the financial crisis in 2008 and 2009 occurred, and even here long-term regulation does not seem likely. External oversight of individual firms, colleges, and universities has been the exception—high profile cases to the contrary—and that is likely to return with the economic recovery after 2010. Compared to the extent of federal and state investments in higher education, regulation has been modest and sporadic. As in the corporate sector, boards of trustees have existed to protect individual colleges and universities and to support the administration, a role corporate governing boards also play often to the detriment of their companies.

34The ways higher education went about its business exemplified its autonomy, even as institutions complained about government restraints and requirements. Few phenomena are as mysterious as the still largely hidden admissions process and the awarding of lifetime tenure for faculty. Even the much-vaunted peer review system for promotion and grants reinforced faculty autonomy. The network of self-reinforcing scholars looks remarkably like corporate CEOs serving on one another’s boards of directors, working to protect each other from the intrusions of outsiders who understand too little about the enterprise. The ideology of shared governance and academic freedom reinforced autonomy. The former articulated the notion of special expertise; the latter granted academic professionals a special kind of freedom.

35Higher education, however, has never had complete autonomy. Given the mutual relationships between higher education and society— its certification of professional status, defense and health-related research contracts, its role in economic development and in influencing social policies—total autonomy was never the norm. The larger and more important higher education became after World War II, the less autonomy it was granted. As in the corporate sector, higher education’s difficulties led to greater government intervention. What the federal financing of America’s highway system were to the automobile industry and the federal subsidization of low-cost mortgages and interest write-offs were to the housing industry, federal grants for student fellowships, for campus buildings, and for research were to the higher education industry—ways of asserting each industry’s importance to America’s aspirations for itself. Political events also affected the norm of autonomy, as the Civil Rights movement and the anti-Vietnam war protests and affirmative action and Title IX mandates made clear. There have thus been constant ebbs and flows in the relationships between government and higher education, although on balance, colleges and universities, despite their frequent protests, had and continue to have substantial institutional autonomy.

36In fact, the most substantial constraint on higher education came from the marketplace. Competition for students and resources drives individual colleges and universities, just as it does businesses. Higher education institutions compete for students, faculty, research funds, in fundraising and in athletics. Since the 1980s, published rankings of colleges and universities have intensified the competition, in ways similar to various consumer reports on the quality of every item that is available for sale. Like companies, institutions insistently affirm the value of their products and services. The creation of sectors within higher education imposes its own uniformity since a school cannot afford to look too different from its competitors: “We are a unique college but really not much different from the others with which we compete” is probably a good way of phrasing it.

37Obviously, higher education governance changed in the decades after World War II. The increased role of federal and state governments through funding and legislative regulations required greater political sensitivity and an eye on Washington and state capital politics, as well as on the idiosyncrasies of federal funding agencies like the National Institutes of Health, the National Science Foundation, and the Departments of Defense and Education. I once dis - covered this personally in the mid-1970s shortly after W. Norton Grubb and I had published a highly controversial and widely distributed critique of the career education movement. I was invited to the University of Wisconsin, Madison campus to give a talk on education. Having been told that the talk was going to be widely publicized, I discovered to my surprise there were no announcements around the campus when I got there. Instead of being held in the usual auditorium for such events, I was taken through a series of tunnels to a small basement room where I gave the talk to a small number of people. When I inquired of a professor friend about this, he informed me, quite apologetically, that some state legislators in Madison had gotten wind of my coming after having read a New York Times news report on our article. The legislators were strong supporters of vocational education and had made clear that someone like me should not be invited to the Madison campus.

38Greater dependence on alumni fundraising meant more energy and expenditures on development, dramatically modifying college and university presidencies. Older and more diverse student bodies ended the tradition of paternal administration. Administration itself became the preserve of specialists—legal counsels, budget directors, student services personnel, and a team of vice presidents to oversee the more efficient management of the institution. These changes were not imposed from the outside, although government regulations required somewhat different approaches to governance and management. They were much more powerfully required by the demands of market competition—for money and for students.

39At the beginning of the second decade of the 21st century, the constraints from outside are growing, in part, a product of the stunning reassertion of governmental responsibility in the wake of the financial crisis. But the constraints remain much determined, as they have been for some decades, by the interplay between the marketplace for money and students, on the one hand, and the activism of governing boards. Oversight and accountability are themes that have resonated, with waxing and waning of success, for more than a quarter century. Whether through accountability demands to improve the quality of learning outcomes or to make institutions run more efficiently and economically or through the forced resignations of presidents and chancellors for failing to reduce budgetary deficits, governing boards have entered almost every phase of university life. They are not minding their own business because everything is their business.

40The corporate comparisons are important. Many trustees are themselves corporation executives who are constantly in the business of “restructuring,” of having to develop new relationships with government and major investors. Those who are money managers search, sometimes desperately, for new ways to invest and manage institutions funds. The view point is direct: colleges and universities have to be managed in the ways businesses have to be managed and they have to show income returns that allow them to grow.

41Beginning in the 1980s, this view became particularly powerful, as governing boards of public and private universities and colleges added individuals who believed they could make their institution more competitive. They showed little patience and resisted accommodating presidential and faculty appeals to move more slowly or to take account of faculty prerogatives. They viewed colleges and universities as entities to be restructured in ways remarkably similar to those in which firms got re-engineered, downsized, fused, sold, dismembered, consolidated, and reconstituted. The fiscal crisis gave them even more influence—ironic in light of the financial disasters they helped engineer—as the necessity to redefine the financial and managing systems has become even more apparent.

42Students and parents have for decades been reinforcing this kind of trustee activism, raising questions about costs, the worth of degrees, the commitments to undergraduate teaching, and the quality of the facilities available to students. The language of both students and parents has been dominated by and patterned after the language of investors: what do I have to pay (tuition and other costs) and what are the likely returns (jobs and income)? When the payments become high and the returns are uncertain, doubt emerges. When the returns are insufficient, through high in-completion rates or the lack of available jobs upon graduation or being fired after only a few years on the job, doubt turns to anger, further fueling the pressure to reduce costs, increase accountability, and tighten the connection between labor markets and higher education.

43Colleges and universities, like businesses, have become consumed by the bottom line. The language of corporations and higher education are virtually identical: restructuring, increased productivity at less cost, accountability to stock holders/stakeholders, quality management, greater consumer satisfaction, reduced administrative fat, more expansive use of technology, a focus on core functions, green sustainability. Higher education, one of the nation’s largest industries, is in economic trouble, just like its counterparts in other industries. The pressure to reorganize budgetary and governance structures is all-pervasive.

44Take the development of multi-million and multi-billion fundraising campaigns. Over the last quarter century, success in getting people to give large sums of money and efforts to keep all possible donors affiliated to institutions dramatically altered the presidencies of universities and colleges. It also led to an unprecedented willingness, even necessity, to let the check writers be heard and to provide them with a constant flow of information and attention. These investors want the data, in ways quite different than previously, and they want to make judgments on how the institution is being run, judgments that are distinct from and sometimes in conflict with the judgments of the administration. Like corporate executives in contact with institutional investors—the CEOs of large corporations holding conference calls with large mutual fund managers about projected quarterly earnings, for example—university and college presidents engage in regular communication with major donors, many of whom serve as trustees.

45This has not gone unnoticed or ignored. Higher education has its own culture of resistance. When professors are criticized for their lack of accountability, limited productivity, mixed interest in teaching, political correctness, and the sinecure of tenure, they are quick to see their prerogatives threatened by external intervention. Their defense is by now familiar: outsiders have only short-term budgetary interests; they lack expertise in making academic decisions; they are ignorant of how their financial and managerial decisions affect the research-teaching balance; they do not understand nor do they value the shared governance culture of the academy; and they are frequently anti-intellectual and hostile to academic freedom.

46College and university administrators are forced into playing mediating roles, often with considerable ambivalence. On the one hand, they defend academic culture, the importance of research, and the legitimacy of tenure and academic freedom. On the other hand, they face the need for sharp budget cuts, are frustrated over the faculty’s shell-like defense of its prerogatives, want professors to teach more, and (despite protestations to the contrary) they think wistfully of a more hierarchical organizational structure that gives them greater freedom to impose needed changes. Caught somewhere in the middle, university administrators have increasingly come to identify with their governing boards or, at least, recognize that pleasing or managing their boards is their most critical obligation. Governing boards have become their most attended-to constituency.

3.6 Leaping into the future

47There is a certain exaggeration in my argument in order to increase the clarity of the overall picture. In practice, higher education is not primarily about conflict. Governing boards, professional managers, political figures, students, and faculty adjust to their competing and overlapping desires and reach compromises over what will and will not happen. Peaceful association exists, although often the result of what is left unsaid and without resolving long term tensions. Moreover, my stress on institutional autonomy would not be accepted by many within higher education, who over the last 50 years have seen increased amounts of oversight regulations, accounting requirements, and a battery of legal challenges over affirmative action, Title IX requiring gender equity, cost accounting for grants and other funds, the awarding of tenure, confidentiality of records, sexual harassment, and countless other big and small issues. While tensions exist between governing boards and university administrators, the fact is that trustee indifference, absenteeism, and a virtually unshakable allegiance to alma mater still prevails. Most boards are too large and poorly organized to assert effective control and are thus reduced to sporadic outbursts of resentment, to micromanaging a few decisions, and to hiring and firing presidents. The politics and visibility of public higher education tends to exaggerate instances of governing board activism making it sometimes seem as if governors and legislatures are in perpetual war with public universities.

48That said, the changes in the power relationships in higher education that have seen governing boards and professional managers become the primary institutional decision-makers are real and they are profound. Governance has changed. Power has shifted to governing boards and to managers with long term consequences. The continuing transfer of power to governing boards will continue to take place, especially as power within boards devolves to small executive committees—a phenomenon well established in the corporate sector—with the result that a small number of trustees have greater power, can act more efficiently and effectively, and can focus even more on budgetary and political criteria in decisions. The close relationships between governing boards and professional managers that have evolved over the last few decades will increase, as they agree on how and what decisions should be made and share the same criteria for making them. With more and more college and university managers coming from business backgrounds or being asked to think like business people in their jobs, as has happened in the student affairs arena, the shared normative principles that have already taken hold become even more influential. This also likely means increased reliance in presidential appointments on “floating” academic CEOs, individuals who may or may not have had previous academic careers, but are now full-time in the job market for presidential jobs. Shortly after I was defined as an excellent turnaround artist with a heart, the board of trustee chairs at two universities asked me to accept presidencies—both unsolicited by me. Had I accepted, I would have been well on my way to becoming a traveling university president. In the higher education marketplace, five years in any single presidential office is considered a long-term appointment. The very nature of such transitions means that the individuals involved in them are people whose primary allegiance is to the governing board that appoints them and whose audience is the governing board that potentially might appoint them. They are short-term accommodators.

49This has already happened at institutions where relations with the trustees guide almost every major decision (and lots of small ones) in presidential offices. The language of higher education decision-making is filled with a rhetoric imitative of corporate and investment communities. In the 1980s, I referred to a million dollar budget surplus as “profit,” for which I was chastised by a board of trustees’ member, who said, “it is a profit, but we are not allowed to use such language in the university.” The board member would not be so wary today of phrases like profit and loss. Indeed, university and college presidents have long become accustomed to being chosen based on commitments to restructure (i.e., do more with less people and thus smaller payrolls), consolidate and balance budgets, institute efficient and cost-saving technology, and increase productivity. As the rules of governance continue to be rewritten, power shifts upward to governing boards with faculty lagging a distant second or even third in the face of market driven needs intended to please students.

50One consequence of this has been occurring for some time: a growing focus on a narrow range of performance criteria for evaluating institutional success. Although harder to achieve than in the corporate sector, where institutional investors and executive management traditionally have concentrated on shareholder value or stock market prices, it is easy today to imagine boards and professional managers, with presidential acquiescence, making profitable bottom lines and higher student learning outcomes (as measured by standardized tests) the two most important criteria by which to assess institutional quality. Impatient with the ambiguities of higher education’s tradition of multiple missions and believing that pleas to recognize complexity are defenses against accountability, governing boards and professional managers could just agree to simplify the evaluative criteria by which to gauge institutional performance.

3.7 Resuscitating shared governance

51There is, of course, an alternative scenario, one which is more desirable and substantially harder to achieve—the invigoration of shared governance among trustees, administrators, and faculty. The premise behind this is that universities and colleges are in fact different than corporations; that shared goals are more likely to result in productive actions; and that mutually strengthened parties bring greater strength to the institution as a whole. Resuscitating shared governance would give presidents greater protection from the most extreme demands of marauding trustees and would engage faculty with the professional managers who have become so crucial to every institution’s success. Some presidents have begun to recognize this. Taking a page out of the trustees’ play book, they are giving to faculty the same hard data they now provide trustees and that professional managers use, engaging faculty in their presidential cabinets, coaching faculty on how to talk with trustees and managers (the number of professors who lecture trustees and managers as if they were a naïve 18 year-old is mind-boggling), and bringing trustees, administrators, and faculty together in more honest ways than before, when faculty “show and tell” was the order of the day and consultations with faculty were more or less insulting presentations of what was already decided.

52Invigorating shared governance will not be easy. Administrators remain dubious that faculty will use data to think broadly about the institution rather than as a source of proof that the institution neglects their needs. Some academic administrators are more reluctant to have faculty inside the organizational tent than they are about trustee decision-making. They worry that when provided with information, faculty will be primarily concerned with their own ends. This occurs frequently when overall salary data are shared, almost immediately followed by complaints from individuals over the fact they are below the average salary or not high enough above it.

53There are numerous other difficulties. Professors have enormous difficulty defining and working toward common institutional goals. I do not know if the kinds of people who become professors are not ones who enjoy working together with others, or if loners who are professors find it easier than in other occupations. Or whether the structures of universities and colleges, with separate silos that make shared language and shared goals difficult is the problem. Still as one businessman who served on an otherwise all-faculty strategic planning committee told me, he was shocked at the individualistic nature of the conversations. It was, he said, as if the primary purpose of the institution was to serve each individual faculty member. Faculty definitions of shared governance too often tend to revolve around vetoes and resistances, complaints that the institution is moving too fast or that more information needs to be gathered.

54Faculty governance is a network of committees with each committee frequently assuming that it has an obligation to stop any other committee’s recommendations, creating a culture of distrust. Presidents and other administrators are frustrated by this, but they also use it when they want to postpone action or let something die, reinforcing the prevailing mistrust. (Administrators, of course, also do this with student initiatives, delaying action until the summer holidays have arrived and counting on subsequent loss of memory before the fall semester begins.) Shared governance in practice has unfortunately become a corrupt bargain designed to induce stasis.

55These obstacles to a genuine form of shared governance are substantial but not insurmountable. One way to overcome them is to devolve decision-making to smaller units, combining greater autonomy with greater accountability. This requires increased data sharing, improved flows of communication (not simply more e-mails), and joint decision-making among trustees, managers, and faculty. It means ending the tendency to divorce budgetary considerations from faculty conversations about curriculum, teaching, faculty and staff appointments, and programs. And it means addressing serious issues too often kept off the table or relegated to the backroom, such as a unit’s responsibility to balance its budget, whether tenure is necessary, new approaches to promotion or to appointing different kinds of faculty, greater attention to teaching responsibilities and assessments of teaching with consequences attached to them, and an end to faculty complaints about violations of academic freedom when they are told to teach on Fridays or prohibited from counting classes of fewer than 10 students toward their teaching load. Contestations over these kinds of issues will be difficult, but they are more likely to be resolved productively when they are conducted in units of manageable size with the power to make such decisions and with budgetary accountability.

56It is a mistake to assume that trustee activism and professional management will whither away or that it is simply a good or bad thing. The threat to universities from the shift in the locus of power toward trustees and managers is matched by the healthy assertion that the academy is not so special that it can ignore economics and politics, consumer desires, and questions from and the participation by those the academy wants to pay for its activities. The shifting locus of governing power brings tremendous difficulties and stresses, but the outcome could be—and I emphasize the problematic in this—a system of higher education that is healthier for being held accountable, for being more articulate about what it does, and for being more engaged in managing itself.

Notes

1 See, however, the powerful defense of shared government in Scott, 1996.

© Central European University Press, 2010

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