TURNAROUND: LEADING STRESSED COLLEGES AND Universities to Excellence (The Johns Hopkins University Press, 2009) is the new book by University Business “Future Shock” columnists James Martin and James E. Samels. The book outlines how board members, presidents, and administrators can identify their institutions’ weaknesses, implement plans for improvement, and mitigate existing damage. Here we offer an excerpt summarizing the key strategies that must be implemented to turn around a stressed college or university. Read this story online at www.universitybusiness.com to get an additional collection of leadership lessons gathered from presidents and others who have managed a turnaround process firsthand. You’ll also find information for ordering a copy of the book for yourself.
IN REVIEWING SUMMARY RECOMMENDATIONS FROM THE BOOK’S core chapters on board leadership, the presidency, academic strategy, and the work of the cabinet, five areas emerge as central to turnaround success: clarity of mission, financial stability, infrastructure health, accreditation transparency, and engaged board, executive, and faculty leadership.
Each of these areas must be integrated into the overall turnaround plan for the institution finally to achieve and sustain stability, but we caution readers to realize that even in the face of a major enrollment decline or budget deficit, or the sudden defection of the president, there will remain multiple ways to address the institution’s most pressing problems. Thus we synthesize key strategies of approach and lessons learned with the understanding that they conclude a practitioner’s handbook designed to provide solutions for campus leaders who are contending with a broad scope of overlapping and ingrained weaknesses.
During the uncertainties of a turnaround, the mission of the college or university is sometimes taken for granted and is left unconsidered with the assumption that there must be dozens, if not hundreds, of issues that need addressing—particularly the hard core financial challenges—before time can be taken to sit and reflect on this sometimes overlooked element of community life. Amid many campus anxieties, discussions of mission sometimes seem to be a luxury that the leadership team cannot afford, but in our research we have noted how often it has been necessary to rethink the institution’s original vision and goals in order to get underneath the current causes of its fragility and to start addressing them seriously. Instead of beginning with a complex plan to reorganize personnel or an expensive outcomes-assessment system, the leadership team should more wisely use this energy to examine how dangerously dated and off-center the institutional mission has become.
William Weary, consultant to the Association of Governing Boards of Universities and Colleges on trustee leadership issues, advises, “The board’s final responsibility is not to its current faculty, staff, alumni, or even students. Rather, it is to the institution’s mission. Key members of the leadership team and trustees must keep asking: How well does this university implement that mission? From the perspective of best use of available human, financial, and physical resources, can current institutional sacrifices be justified? And, finally, what would the consequences be of shutting our doors?”
Rather than jumping too quickly to a new, expensive degree program or an expanded marketing campaign, experienced campus leaders working to mitigate risks learn to gauge early on if mission has been considered in any substantive way. As Sandra Elman, president of the Northwest Commission on Colleges and Universities, wrote, without a commonly understood vision across campus, “a weakened institution is likely to flounder and make arbitrary decisions that go unchallenged.” Placing mission first in a turnaround process focuses the leadership team on the institution’s core principles that should drive new program development, personnel hiring, and strategic marketing.
Daniel J. Levin, former vice president for publications at the Association of Governing Boards of Universities and Colleges, observes concerning the campus resource crunch, “The public policy debates in the nation’s capital should not preoccupy presidents of at-risk institutions. The real action is in their own backyards: fixing the school’s finances and establishing a solid relationship with an engaged board.”
The chapters of this book collectively confirm that restoring financial stability and confidence, in concert with an authentic reconsideration of the institutional mission, is the most essential element in a higher education turnaround. Debra Townsley, president of Nichols College (Mass.) and one of the nation’s few college CEOs to lead an institution back from junk bond status to a rating of BBB—, has raised Nichols’s endowment from $5 million to $14 million and its student enrollments from 610 to 1,030 during her eight years of leadership. She agrees that a turnaround must begin with mission and finances. On turning around the institution financially, Townsley is blunt about what was required: “The president and CFO must be totally up front with the board and all outside agencies that may be monitoring the institution’s progress, or lack thereof. Tell them, ‘This is what we are going to do,’ explain to them that it will take two years to accomplish, and then go out and do it, and remember always to design a highly conservative business plan that is realistic in the extreme. Then perform above that level.”
Townsley cites three classic indicators as trigger points for a group of more serious problems: tuition discounting of more than 35 percent, tuition dependency of more than 85 percent, and debt service of more than 10 percent. This group includes the most common at-risk characteristics we studied over the past six to eight years; we found dozens of presidents and CFOs who were wrestling with these three issues in order, as Joseph Short, former president of the now-closed Bradford College (Mass.), described it, “to make the financials work.” Michael Townsley, author of the chapter on managing financial challenges in a turnaround, adds a comment that synthesizes the thoughts of a group of higher education leaders on presidential awareness and response during a crisis: “Most presidents ... of an at-risk college or university are all too aware of the deteriorating condition of their institution if it has a history of deficits, declining enrollment, costs rising faster than revenues, or ever-increasing levels of short-term debt to cover daily cash requirements. — These presidents have learned to cope with decline: whether they are successful at coping is another issue.”
Clearly, after mission and money, the declining condition of the campus and the institution’s continuing inability to reverse almost all aspects of that decline form one of the most intractable problems within a turnaround. Considering the horizon of challenges from which to choose on a fragile campus, Dennis P. Jones, president of the National Center for Higher Education Management Systems and author of the 1986 study “Indicators of the Condition of Higher Education,” told the authors in an interview on the study’s 20th anniversary in 2006 that the two indicators of institutional vulnerability to which he pays most attention today are deferred maintenance and the technology budget.
He put it simply: “Pay attention to buildings and technology.” E.K. Fretwell believes that campus leaders need to reduce their budgetary appetites and that many are failing in this regard: “Avoid getting into difficult situations by not purchasing the attractive ‘bells and whistles’ during new construction. — Hold back the appetite of your institution and don’t go further than is necessary. Don’t pay for ‘frills.’”
Focusing on the area of technology, Kevin W. Sayers, assistant provost of Capital University (Ohio), and John F. Ryan, assistant provost of Ohio State University, co-authors of the chapter on the value of institutional research (IR) in a turnaround, comment on the dangers of underspending on technology while simultaneously trying to develop a long-term strategic plan and meet the immediate needs of fussy student consumers: “A key factor that must be taken into account in studying the nature of fragile institutions is the broader relationship that exists between information and decision making. — Partly because of many institutions’ traditional tendencies to underestimate the return on investment from the IR function, many colleges, especially resource-poor ones, devote insufficient resources to [these concerns].”
Plans for infrastructure improvements and technology expansion are typically met with familiar budgetary rejections from the chief financial officer. But if one remembers the persistent efforts and eventual success of presidents like Debra Townsley at Nichols, it is also clear that leadership teams that do not push forward and find new ways to raise funds even when there is no prior record of success in this area, or who give up trying to fix a dated institutional image after three, four, or even five years of declining enrollments, will eventually lose the courage and strength to turn their institution around. As a result, the college or university will continue to decline and, rather than close, will be merged into another institution that, ironically, may be no larger in size but considerably larger in vision and imagination.
In one sentence, institutions must avoid probation. There is little, if anything, more powerful in conveying institutional weakness and vulnerability across the national higher education community than appearing on a regional accreditation association’s probationary watch list. Robert Andringa, in his chapter on the fragility of religiously affiliated colleges and universities, cites institutional probation, warning, or financial watch by a regional or specialty accreditor as the foremost indicator of at-risk status acknowledged by presidents polled in an exclusive survey designed for this book. A college’s accrediting officer typically knows more about the institution’s vulnerabilities than any other outside observer and often more than even many internal constituents who may find multiple reasons to deny an institution’s declining fortunes during the press of daily business.
Beyond the specter of probation, in fact, Sandra Elman notes that the regional accreditation system in American higher education can play a pivotal, if sometimes-feared, role in turning around its member institutions by causing their systems to be assessed and standards raised. From the perspective of a turnaround, accreditation should be viewed as a mark of quality that institutions must earn without shortcuts: “Regional accreditors are continuously working with their member institutions to facilitate the design of models aimed at regeneration and renewal. The self-study process overall is focused on identifying limitations and bottlenecks in the system that thwart these objectives. — Fragile colleges and universities do not have the option of choosing whether to engage in a sustained appraisal of their chances for survival. If regional accreditors are not already closely monitoring the condition of the institution, the board needs to implement such an internal process immediately.”
The final strategy, campus engagement, can be described as the necessity to develop a group of collaborative, engaged faculty, administrative, and trustee leaders—or the need to manage an unprecedented degree of personnel turnover, depending on one’s view. At root, as many contributors have pointed to, the institution must take responsibility for itself as a community in danger and in need of new solutions if the turnaround is to succeed. Beyond phrases like “committed leadership team” and “dedicated trustees,” the drivers of a successful process are board and employee engagement, courage, and decisiveness. Although these qualities can be enhanced by professional development funds, retreats, and a vigorous, merit-based annual evaluation system, the community should nevertheless prepare for much higher levels of personnel transition than perhaps at any time in its history, coupled with the willingness of those who stay to assume new and expanded responsibilities.
Daniel J. Levin comments on the fact that there is no safety net under an institution’s leaders during a turnaround and that trust and candor between the board and the chief executive officer can make a critical difference: “Indeed, no institution that is facing financial and strategic challenges can possibly hope to improve itself if it lacks a strong and engaged leader who has earned board support.” Levin also makes the helpful distinction between causes of fragility that are controllable and those that are intractable. Drawing on the results of two surveys of more than 1,300 campus leaders that were analyzed by John D. Sellars and published a decade apart in Trusteeship magazine, Levin describes reasons for decline that are controllable as the continuing, or eroding, perception of academic quality, the percentage of budget resources dedicated to student aid, student body size and enrollment trends, and annual revenue from gifts and the endowment.
In closing, W. Stephen Jeffrey, charged with developing the plan for a fundraising campaign for fragile institutions, observes in his chapter in this book how important it remains for the entire community to step forward and to take responsibility for its own turnaround: “Higher education institutions do not become fragile overnight. The process usually takes time and includes several noticeable stages. During this period institutional leaders may have adopted some bad administrative habits, whether as a coping mechanism for significant daily anxieties or, in their view, simply to keep the institutions operating and moving forward. — Institutional leaders will need to reconnect with these administrators, at all levels of the college or university, and keep them engaged in the process of turning the institution around.”
Whether or not the process outlined by Jeffrey requires an immediate departure of one or more senior members of the institution’s faculty or administration, the school should prepare for a changing set of teaching and learning priorities, greatly increased individual accountability, and much hard work in mission review and new student recruitment practices as the turnaround moves from strategy to action.