Image credit: CEO Magazine
As I have written in previous articles, higher education in the U.S. was in the midst of an eight-year decline in enrollment, which had precipitated nearly 1,300 closures, many mergers, and a situation in which over a quarter of private, nonprofit institutions were technically insolvent, even before the wrenching COVID-19 crisis. The Corona virus pandemic will accelerate the decline and increase institutional failures across higher education over the next couple of years. Even in the short term, some material number of schools simply won’t reopen their campuses even when the current crisis subsides, and those who thought they were on solid footing, will suddenly realize they are at risk in the new normal. In short, as the weakest institutions fall off the bottom of the list, the deck will reshuffle with previously less vulnerable institutions facing their own existential reality. Most all colleges will become less exclusive, which is probably not a bad outcome.
It is clear that the precipitous, nearly decade long, contraction of higher education, both in terms of the size of the industry and its relevance in the public eye, has been driven by multiple external factors beyond the control of college and university administrations, including everything from demographics to economics. But it is also clear that generally speaking, higher education has suffered from a collective, catastrophic failure of leadership. Although there are exceptions, both the executive and board leadership in a majority of American institutions of higher education, regardless of sector (public, private, community college, career college, etc.), have broadly failed to respond to, or even understand, the fundamental market, political, financial, and demographic changes that have wreaked havoc across most all of American higher education. While college and university leaders have dottered around the edges of incremental change, addressing symptoms rather than causes, the sands under their feet have shifted so dramatically that much of what exists in terms of financial and operational models in many IHEs today is wholly irrational and unsustainable. The COVID-19 crisis has revealed, with ferocity, the underlying weakness and neglect that was already present. An analogue is what happened in retail, with thousands of retailers simply going away in the face of changing consumer habits and disruptive competitors.
How could so much of higher education leadership fail so miserably?
First, even worse than retail or other industries, the culture in higher education has never supported transformative thinking or change and the leadership typically incubated by colleges and universities has never developed the skills or attitudes required to lead in complex, hyper-change environments. Even basic concepts like return on investment or P&L or urgency or accountability are often foreign to higher education, let alone the requisites for surviving and thriving through paradigm-shifting change such as innovation, entrepreneurialism, quick action, risk-taking, emotional intelligence, empowering human capital, etc. In fact, with the exception of a handful of institutions (ironically, mostly large and public), leaders who have the abilities, skills, and orientation to lead effectively in complex, ambiguous, and even volatile environments are deeply threatening to typical higher education institutions which are heavily invested in the status quo and anachronisms that support institutional priorities rather than students, who, by the way, are increasingly seeing college as discretionary. Everything from class schedules to curriculum and degree requirements to faculty rank and tenure to research agendas to the absurd inputs that drive university rankings have almost nothing to do with market realities or value proposition or learning theory or supporting diversity and inclusion or social mobility for students or even graduation and employment!
In most cases, the profound leadership failures in the C-suites of higher education over the last couple of decades are not a result of malfeasance on the part of executives. They are the result of leaders who are simply ill-equipped to meet the challenges they actually face vs. the leadership challenges that academic leaders were groomed to face from a previous era. Evidence of this fundamental mismatch can be found in the implosion of the average president tenure just 15 years go from about 12 years to less than six today, with the number being closer to three if we include interim placements. Unfortunately, the traditional executive search process makes the situation worse by regularly delivering candidates with anachronistic skills and wholly inadequate leadership profiles.
And this failure to acknowledge and address the profound challenges that IHEs have been facing for years includes typical college boards as well, whose membership is rarely based on the experience, skills, and orientation that would actually benefit the institutions they oversee, but rather on cozy relationships, politics, fund raising, favors, political appointments, program affiliations, alumni status, etc. Even the most loyal and dedicated trustees (and there are many) are simply not capable of bringing value to the hard and critical conversations around strategy, accountability, transformative change, redefinition, alternative business models and revenue streams, etc. that, for the most part aren’t happening anyway! In short, most boards, even if they do possess relevant expertise on the part of some trustees are either too polite to engage in tough discussions or too dysfunctional to embrace healthy conflict. And because most boards have a preponderance of “insiders,” it is almost impossible for them to break the “group think” dynamic that allows so many institutions to weave their way down the road to oblivion. Interestingly, research on successful turnarounds in higher education suggests that such turnarounds are almost impossible using the same leadership that was in place during the decline. While not surprising, boards rarely pursue the kind of leadership that is necessary (and very different) from the status quo they are used to even when their institutions are in crisis.
The leadership failure that is compromising higher education in general is also exacerbated by a triad of regulatory and accreditation oversight that also values predictability, control, and the status quo over innovation, creativity and transformative change. In fact, it is very difficult for colleges and universities to experiment even in limited ways with the “sacred” in higher education such as how credit is awarded and transferred, how students demonstrate subject mastery, what qualifies for financial aid, new delivery models and even true absurdities such as “contact hours” vs. competency. It remains to be seen if some of the regulatory breakthroughs necessitated by the COVID-19 crisis will be sustained in the new normal or if regulators will go back to the century old command and control structure on which oversight has been based (and which has crippled innovation).
It also remains to be seen if the current crisis is the “dislodging” even that Robert Zemsky at the University of Pennsylvania suggests is required for fundamental change in higher education. The eight-year decline and over 1,200 closures was not enough to jar the complacency that was still in place across much of higher education just a few months ago, so we shall see. Unfortunately, the weakened state of many institutions before the COVID-19 crisis will create overwhelming leadership challenges going forward, even for those leaders and boards who would otherwise be up to the task–and for leaders whose boards cannot or will not support change, their chance of success is close to nil. While it’s impossible to know what number of closed institutions would still be open or what number of those that will not survive going forward would have been saved had there not been such egregious failures of leadership, what is clear is that higher education is already bifurcating and the institutions that were thriving despite the eight year contraction all have one very critical thing in common: Executive and board leadership that had the vision, capacity, and perseverance to meet foundational challenges head on with innovation, courage, and a willingness to question even the sacred in the interest of creating a sustainable future. They all have also figured out that student enrollment decisions are discretionary and that the value of choosing their institution over another must be compelling. The value proposition does not have to be the same. It just has to meet the needs of a large enough part of the market such that whatever challenges a given institution faces, meeting sustainable enrollment targets isn’t one of them.
On a sobering final note, the impending collapse of state funding will render many public institutions not only insolvent, but unable to deliver even basic services. Although public institutions have escaped outright bankruptcy and closure over the last decade, that will change with the COVID-19 crisis as we begin to see the first closures and continued mergers within public systems. Many states, as their tax receipts fall well below even the levels of the great recession, have already begun to “claw back” previously allocated funds for the current fiscal year. In the coming year, many state universities (particularly mid-tier institutions) and community colleges will see the greatest cuts in funding in their entire histories and will simply be unable to operate in any way approximating “normal.” This reality will exceed the capacity of even the most capable leaders and the priority will shift to mothballing facilities, eliminating academic majors and sports teams, shuttering learning sites, and in some cases, entire campuses. The saving grace for some flagship universities is that due to declining funding over many years, they have built revenue models that are far less dependent on actual state appropriations. Some of these universities received less than 10% of their operating budgets from state legislatures even before the current crisis. While they will also struggle significantly, the threat for them will be less existential, though no less challenging for their leadership.
Although I have written articles (and a book) that have been critical of American education, this article is the most direct critique I have written about the broad-based failure of leadership in higher education. I would add that it is also a moral failure as well. Both executive leaders and trustees, entrusted with the responsibility to protect the institutions they lead, have, in thousands of cases, been unable to find the courage to abandon the familiar and embrace the bold, audacious thinking that is required of transformative change. I wish to be clear that my critique is in no way a personal attack on the thousands of individuals who have, in some cases, dedicated their entire professional lives to serving educational institutions and the people in them—as I have. One can be well-meaning and even passionate, and still unable to meet the huge leadership challenges presented by shifting paradigms and crisis. And for those higher education leaders who were “brought up” through the ranks of traditional colleges and universities before becoming a president or chancellor, you were set up. Your leadership development was wholly inadequate for the challenge of today’s reality. Lastly, and unfortunately, many capable leaders have been ill-served and even sabotaged by boards who themselves did not have the vision or the courage to support an entrepreneurial spirit, risk-taking, and innovation, let alone the kind of transformational change necessary to survive and thrive in the recent past and current reality.
The last decade was a slow drip decline. COVID-19 will be quick, ruthless and indiscriminate in its remaking of the higher education landscape. Although there are many unknowns about the future of higher education, one thing is indisputable: The quality and effectiveness of leadership itself has become an existential issue (and competitive advantage). To thrive in the new normal, institutions must have leadership, executive and board level, that is up to the task.