Are Traditional Definitions of Success Hurting Us?

Those of us who have been in management positions since “pre-millennial” times have been led to believe that our “success” is defined relative to the performance objectives of the organizations in which we work rather than achievement of goals and outcomes that matter to us personally. Institutional objectives can vary widely, but a common theme is that our longevity, financial rewards, promotions, etc. tend to be dependent on our ability to achieve what the organizations we work for want us to achieve with our labor, rather than what we want for ourselves.

Over time that reality can create deep, even debilitating dissonance in us as human beings, particularly when we cannot see any connection between our work and some larger purpose. In fact, research on employee satisfaction and retention has found that having a connection to a greater purpose is often ranked higher than compensation. And interestingly, that connection can be as simple as understanding how one’s work contributes to the organization’s final “product” or as ambitious as providing opportunities to support important community or societal outcomes outside the workplace through volunteerism or other community service.

So, is there another way to think about success that better serves ourselves and the organizations in which we work? I am confident that the answer is yes, but it requires us to move beyond traditional paradigms. First, we have to be willing to take a more comprehensive view of what outcomes are “valuable” within an organization so that we can then expand the definition of success in terms of achieving those outcomes. Second, as leaders, it is essential that we provide opportunities for our employees to see tangible connections between their efforts and things that matter to them in ways beyond stated institutional performance goals—and we, as leaders, need the same connections as well. Another, more productive way to look at success, is related to how our work and experience facilitates growth and improvement in us personally. Traditionally, our professional success would be measured by achievement of specific performance targets, working long hours, promotions, etc., rather than the extent to which we develop new skills, mentor other employees, volunteer in the community, etc.

There are enlightened leaders and organizations who have already figured out that finding ways to make work more meaningful also results in more engaged, productive employees, which, of course, benefits the business side of the workplace as well. Success, then, becomes about the extent to which one effectively contributes to necessary organizational performance objectives and also contributes to outcomes that nurture our sense of “making a difference,” self-actualization, and the positive impact we have on others. In that context, the ultimate definition of success is when our efforts actually make the world a better place! For old-school skeptics, not only is that not “pie in the sky” thinking, in the current environment, it may actually be a core differentiator between organizations that thrive and those that don’t.

As a leader, you can redefine what success looks like, support the well being of your employees, and improve organizational performance outcomes by simply broadening the number of areas in which achievement is validated while also supporting activities that allow employees to feel connected to outcomes that matter to them and “make a difference.” If you believe that every business is a people business, then you can’t afford not to.

The Most Powerful Life And Leadership Hack Available Is Free And Easy. Really.

Want to improve your leadership effectiveness, make the world a better place, and make yourself and others feel better in the process? It’s actually possible and it’s surprisingly simple. There’s no magic (but a little neurochemistry) involved.

The very short answer has almost nothing to do with what you’ve probably been told about leadership, but everything to do with being a “better” person. And the beauty of this life and leadership hack is that it is free and probably easier than anything else you’ll attempt on any given day. Although it is generally more effective if it is authentic and comes from a place of altruism, that is actually not necessary. It is possible to “fake it ’til you make it” and still get significant benefit in the interim. So, what is this mysterious and powerful strategy? Just be a kind and thankful person. Really. And the identified behaviors themselves are incredibly simple. They include things like: Smiling, saying hello, listening actively, offering a gentle, platonic touch, saying thank you (and explaining why you’re thankful), telling people that you appreciate them and their efforts, and being generous among others. And, no, this is not just squishy, “let’s all be nice” stuff. It is supported by a compelling body of neuroscience and business research. Read on for the longer explanation.

Those of you who regularly read my articles on leadership know that I often speak to topics that are not common in traditional discussions, but that turn out to be central to effective leadership, while also helping us to create balance and address the human side of organizations. I have referenced everything from the Dalai Lama to Harvard Business Review published research, as well as my own thirty years of experience, and it is becoming abundantly clear that much of how we used to think about leadership is fading in both relevancy and effectiveness. Why is this?

On one hand, the human components of leadership have always been critical, but they’ve simply been ignored because they didn’t fit into the technical and mechanistic bias of traditional management theory, which is historically based on methodology for efficiently controlling human behavior and resources relative to work tasks. Possibly more importantly of late, however, is that the complexity of typical organizational environments and the depth and breadth of daily pressures faced by the people inside those organizations, can no longer be effectively addressed with traditional management and leadership practices.

In a recent article, I noted compelling research that shows how unlikely it is for a leader to be rated low in terms of “likability,” but rated highly in terms of leadership effectiveness. In fact, you have about a 1 in a thousand chance of that being true! Many characteristics have been ascribed to leadership over the last century of research and training, but “likability” has not been visible among them. It’s not just important for leadership effectiveness to be likable at some minimal level, however. At least as importantly, the behaviors that are associated with likability are also associated with interactions and experiences that support positive emotions and build resilience in us as humans—and this is the key to the focus of this article. Leaders who express positive emotion in the form of kindness and gratitude, for example, actually affect their own neurochemistry and the neurochemistry of those they interact with in powerfully positive ways. Not only that, but even people who witness acts of kindness experience similar benefits. The research shows that acts of kindness and generosity actually increase levels of three key neurotransmitters: serotonin, dopamine, and oxytocin, that provide a sense of well being and human bonding, while decreasing stress and anxiety, and at the same time activating centers of the brain related to pro-social behavior—in other words, the gift keeps on giving.

An extension of this phenomenon is what happens when we, as leaders, make people feel valued and appreciated. Research conducted by the Haas School of Business at UC Berkeley, found that when we recognize employees for achievements, their productivity and performance increases for a period of time by about 23%. But when we make them feel valued and appreciated, their performance increases by 43%!

The opposite dynamic is also powerfully true. Research at Georgetown University on incivility vs. kindness in the workplace found that 66% of workers report decreasing their work effort after an instance of incivility and 12% actually quit outright. There are outlier managers who are uncivil and successful—for a while—but research conducted by the Center for Creative Leadership found that bosses who are jerks eventually self-destruct and fall from their pedestals, usually because in a moment of weakness or need, they are not supported by others. The same research found that the single most important characteristic employees want in a boss is for him or her to be kind and respectful!

As noted, the great thing about this life and leadership hack is that it is free and probably easier than any other strategy for improving your leadership effectiveness and making your self (and others) feel better. And while it might be preferable morally if we pursue kindness, generosity, and gratitude from a place of altruism rather than pragmatism, both motivations will actually achieve similar results.

So, if you want to be a more effective leader, make the world a better place, and make yourself and others feel better in the bargain, just be a nicer person! Really. There is zero downside and almost certainly improved outcomes for both your personal and professional lives.

Ignore “Office Politics” at Your Own Peril

When we hear the word “politics,” particularly in a professional context, most of us instinctively interpret the word negatively. Sometimes, office politics can, in fact, be ugly and counter productive, but power relationships, which constitute the origin of the word in Greek, are endemic to any organization and exist regardless of how we feel about them. The extent to which organizational politics are negative or positive, however, is related more to culture and organizational health than to the nature of politics itself.

The way that power relationships and authority are communicated in most work places is through the tried and true organizational chart, which despite the terrible anachronism that it is, still shows relative power dynamics and authority vertically through reporting relationships. Effective organizations today no longer operate through fixed hierarchies. They distribute labor and tasks and autonomy to empowered employees and teams based on skills, experience, attitude, etc. with the desired outcomes driving the decisions rather than the relative positional authority of people in the organization.

This is all related to politics because whether we use an org chart or some other mechanism, every organization has the visible political structure and the hidden structure. As with culture, the hidden part is often far more powerful and pervasive than what we can see. It is critical to your success to understand the power relationships that actually drive organizational politics rather than the visible, professed relationships. In the healthiest organizations, there is a high degree of alignment between what is advertised and what actually happens. The least healthy organizations have the greatest disparity and generally the most negative and debilitating politics.

We have all probably experienced a situation in which something we thought was “approved” became un-approved, or a promised promotion did not happen/went to someone else, or an agreed upon resource did not materialize. Those examples are politics in action, in which the perceived or understood power relationship was superseded by an underlying power dynamic—the “real” power or authority.

So, how do we navigate organizational politics?

In the most-healthy organizations, it is an easier task because we don’t get blindsided by hidden power relationships because they aren’t hidden to begin with. We still have to be cognizant of politics in healthy organizations, but they are much less likely to be overly manipulative and damaging. In unhealthy organizations, politics can be down right toxic. In either case, it is critical to understand where the real power lies and where the “landmines” are.

This article purposely does not present a plan to effectively deal with politics in unhealthy organizations, because attempting to survive in a debilitating environment is not a wise or viable long-term strategy. Success in such environments, if it happens at all, comes at too high a price and the daily dissonance can be debilitating.

The fact is that some human beings are very willing to use manipulation, deceit, and other dishonest and damaging methods to achieve their own objectives within organizations. At its worst, politics can destroy trust, collaboration, and teamwork, while also compromising organizational outcomes. Because of human nature, no organization will ever be free of at least limited political games, but there are good reasons to consider leaving organizations that are highly political in negative ways. This is simply because the success of individuals is becoming more and more connected to working effectively with others, which doesn’t happen in unhealthy and dysfunctional organizations. Negative politics are also distracting and exhausting, which steals finite resources of time, energy, and motivation, and compromises the success of even good strategies and initiatives. Toxic environments are simply to be avoided.

There are, however, traits and skills that support successfully navigating both benign politics and even mildly negative politics, which are impossible to completely avoid. Even healthy organizations are inhabited by people and we are all susceptible to occasional manipulations and self-serving behavior. Moreover, we simply need to understand and be able to effectively manage both the formal and informal power relationships that we encounter on a daily basis. That is as much a requisite for success as technical skills, communication skills, etc.

So, what are the skills and approaches that support success with organizational politics?

People Skills

Individuals with the most developed emotional and cultural intelligence are also best prepared to recognize and successfully deal with organizational politics. The goal is not to “win,” but to recognize others’ motivations, needs, and behavior.

Intuition

This tends to be more innate than learned, but people with good intuition are generally better at sniffing out the hidden messages and misdirection that often exist as part of political maneuvering.

Networking

One of the best defenses against political games is to build strong networks with honest, dependable colleagues, who can provide objective interpretations of events and behaviors and also provide “protection” from less benignly motivated colleagues.

Assertiveness

The most vulnerable individuals in political situations tend to be the most passive. People with less than honorable intentions will take advantage of passivity—in fact need passivity—in order to achieve bad faith objectives. The antidote to that is assertively pushing back against behaviors in others that are unhealthy and disingenuous. A simple example is stamping out negative gossip or denigration of other colleagues, the organization, etc.

Being Trustful but Not Naïve

A critical element of healthy organizational environments is trust—assuming good intentions until you have good reason to believe otherwise. When we engage other people to begin with from a position of distrust or skepticism, that leads to cynicism, which is damaging in its own right. On the other hand, we are not served by being naïve either. There must be a balance.

Having a Really Good Crap Detector

Ernest Hemmingway once said that having a good crap detector is one of the most important skills one can have in life. This is related to intuition, but includes the ability to assess many elements of a situation at the same time (which comes from experience) and coming to a reasonable conclusion about what is legitimate and what is not. People with good crap detectors are much better positioned to effectively deal with political environments because they can quickly assess what is “baloney” and what is not.

In short, all organizations operate along a spectrum of political activity. No organization exists in a vacuum relative to power relationships, but the healthiest organizations are the least political in terms of negative, dishonest, and manipulative behaviors, while the most unhealthy organizations are generally the most politically toxic. It is important to understand the nature of political behavior and to respond effectively, but it is not advisable to invest the requisite time and energy to survive, let alone successfully navigate, truly toxic organizational environments. In less toxic and more healthy environments, being fully aware of organizational politics and having the skills to address them is an important element of your success.

Who Will Survive the Higher Education Shakeout?

In previous articles I have noted that higher education enrollments are declining, institutions are merging and closing, and that higher education as an “industry” will look quite different in the near future. Those things are already happening and the data is fairly stark. On the other hand, some institutions will thrive. Some, in fact, have already utterly reinvented themselves and are assuming leadership roles in the move toward what higher education will look like in the future. Some are very large, consumer-driven models like Southern New Hampshire University, Western Governor’s University, and Arizona State. They are true outliers and may, in some ways come to dominate some elements of education. Other examples are well funded, well connected public and private institutions that have the resources to experiment with educational and business models such as MIT, Purdue, and Grand Canyon. There are also what we might call “niche” players that are thriving on a much smaller scale. Examples include Evergreen State College, Colorado College and a host of proprietary career colleges that are experiencing unusual success, typically with non-traditional curricula and instructional models.

Interestingly, despite profoundly different size, structure, mission, resources, profit status, history and other factors, all of these institutions share some things in common and point to a road map for navigating our turbulent present to thrive in the future.

Innovation

One thing these institutions tend to have in common is leadership that embraces risk and is willing to make bold bets, particularly in ways that are purposely outside the expected status quo–they also tend to have high tolerance for ambiguity, complexity, and all around turbulence. Purdue University, for example, leaped into the deep end of the pool and acquired one of the largest, most established for-profit online operators in the U.S., immediately going from zero to sixty in terms of their ability to reach outside of the typical state university model of educational delivery and dramatically broaden their enrollment market. It would be difficult to overstate the boldness of this move relative to the political and financial blow back, accreditation challenges, etc. Grand Canyon built a Christian University with a for-profit tax status, in a large, combined residential and commuter campus model, then split the university into an academic component that is not-for-profit and an administrative and service component that is for-profit. Small institutions like Upper Iowa University, with a campus population of less than a thousand students, avoided closure by making a full throttle commitment to serving the military and international markets, as well as nearly two dozen U.S. locations outside of Iowa, which are now magnitudes larger than their home campus. Colleges like Vassar and Evergreen State committed to very non-traditional educational models that serve a small, but passionate group of students who choose those colleges because they are different. Relatedly, institutions that provide a pathway to professional licensure required for employment will also have an advantage—at least for a while. Good examples are vocational colleges that provide credentials for trades requiring licensure and just about anything in the health sciences that leads to careers as clinical practitioners. And importantly, the greatest outliers experiencing the greatest success, not only have the right institutional leadership, they also have boards that are equally up to the task—willing to take risk and endure the criticism that inevitably comes from being on the leading edge of any meaningful variance from the status quo.

Value Proposition for Customers

Another commonality in these outlier institutions is a willingness, if not enthusiasm, to see multiple stakeholders as customers, then to figure out how to meet those customers’ needs and desires on their (the customers’) terms. The historical higher education model has always been a sort of “my way or the highway” approach to students. When demand outstripped supply and education was a highly exclusive endeavor, that model worked fairly well. In the current and future reality of higher education as a commoditized endeavor in which supply exceeds demand, the “my way or the highway” approach is a ticket straight to irrelevance and obsolescence for most institutions. Arizona State and Colorado College, for example, at extremes of the educational spectrum, are both customer-centric institutions at which very different versions of flexibility attract students who want those experiences.

Aggressive Partnering

A third commonality tends to be an openness toward partnership, collaboration, and entrepreneurialism. IHEs have historically been purposely-isolated institutions (the ivory tower). Outlier institutions that are thriving or poised to thrive despite the overwhelming challenges facing higher education today, tend to actively pursue mutually beneficial and value-added partnerships with other IHEs, industry, the community, government, highly skilled vendors, and other entities that help them generate alternative revenues, improve efficiencies, improve quality, provide relevancy to students, grow enrollments, expand technology, and many other benefits that are only possible through partnerships or even joint ventures. This often requires that institutions look very differently at traditional notions of “ownership” of the higher education process. It also often requires an acceptance that other entities and industries may do some things a lot better than higher education institutions do those things and that even constructs as sacred as the degree itself may be only one of many potential credentials available to students.

Culture that Embraces Change and Improvement

There are cultural commonalities as well among institutions that are structured for success. These institutions tend to be wired to embrace rather than fear change–even highly disruptive change–and their leaders tend to be good strategists and change managers. In fact, they tend to accept and anticipate change as an on-going dynamic that is woven into normal operations. These institutions also have good clarity around a shared vision and they act rationally to achieve the vision. Interestingly, the most enlightened IHEs are also beginning to understand that survival in the marketplace is becoming more about accountability to stakeholders—students, parents, employers, the community, taxpayers, and others than it is to the traditional input driven and largely irrelevant system of regional accreditation, rankings, and Department of Education oversight. Institutions that can deliver value through solid outcomes and affordable cost will be stronger in the market and more likely to survive and thrive.

As a bonus, some institutions are also committed to assertively addressing challenges of access, affordability, support for diverse learners, creative and effective applications of technology, and the notion of the university as an incubator for robust thought leadership. Some institutions will survive well into the future simply by their exclusivity, but that is a small sliver of the academy overall.

Finance as a Core Competency

Lastly, outlier institutions that will lead the way going forward generally have figured out a sustainable financial model. They typically are supported by non-tuition and/or high margin revenue streams and actively manage institutional P&L. They understand the relative return on investment for one decision vs. another and have accepted that they simply cannot ignore financial realities. Despite the gnashing of teeth that typically accompanies any discussion of “business” in the academy, a requisite of survival for IHEs now and in the future is an active, purposeful commitment to manage themselves as businesses. This is not about profit vs. not-for-profit. It is about the reality that regardless of profit status, IHEs can only survive if they are financially sustainable and that does not happen as a passive activity. As an example, Southern New Hampshire University, the fastest growing, and arguably most innovative, not-for-profit, public university in the U.S., has staffed much of its non-academic senior management with professionals from outside of higher education who are experts in marketing, sales, technology, finance, and operations among other areas. Their strong profit margins in online education subsidize the main campus and finance a host of investments, and even acquisitions, that would not be possible otherwise. Arizona state has a similar financial model in which high margin operations subsidize lower margin ones and make it possible to offer highly discounted tuition to the employees of a corporate partner such as Starbucks.

Yes, many institutions will not survive the next ten to twenty years and fewer still will truly thrive. Fortunately, there is a model for both surviving and thriving, which a growing number of enlightened colleges and universities are slowly adopting.

What Might the Dalai Lama Have to Do with Your Professional Life? Maybe a Lot

One of the great contemporary challenges we face is finding balance in our lives. It seems that everywhere we turn we are faced with choices (or what seems like a lack of choice) around our relationships, our time, our finances, our health, our work, and many other examples. Most of us have realized that we cannot, in fact, have everything we want or have everything the way we want it. That knowledge, however, is not always reflected in our behavior! Four quotes below from the Dalai Lama might just provide a more effective way to think about the balance we’re all after.

“We need to learn to want what we have, not to have what we want.”

We often go about our lives as if having it all is, somehow, possible. When that happens, we are almost assuredly out of balance. Despite the fact that we know that dedicating all of a finite resource (time, money, energy) to one outcome means that we cannot dedicate the same amount of resource to another outcome, we often still try to do that. That irrational pursuit explains much of the financial stress, relationship stress, health stress, work stress, etc. that we often experience.

Part of achieving “balance” is simply giving up irrational pursuits—the ones we cannot achieve from the beginning no matter how hard we try. This applies to both our personal and professional lives and crosses both repeatedly. For example, we cannot choose to work until 7 pm and also choose to be at our child’s play or sporting event. We have to determine which outcome is more important—that we want or need more—and choose that outcome. Balance cannot come from always working late or always attending a child’s event. There are times when each choice makes more sense.

“A disciplined mind leads to happiness, and an undisciplined mind leads to suffering.”

Another part of achieving balance is giving our minds a break from the dilemmas of the day. This is often called mindfulness, but it can come from many sources—meditation, yoga, tai chi, prayer, walks in the woods—anything that allows your mind to find a state of calmness. That is not, by the way, a state devoid of thoughts, which for almost all of us is impossible regardless.

“Be kind whenever possible. It is always possible.”

A third big part of balance is finding a way to connect with something that is bigger than our daily pursuits. We are all susceptible to the myopia that comes from the daily grind of our lives. However, that short sightedness pulls our focus downward and inward instead of up and out. Something as simple as looking for opportunities to be kind and compassionate mitigates the myopia and supports balance. Fortunately, those opportunities are all around us, all the time.

“As you breathe in, cherish yourself. As you breathe out cherish others.”

Finally, balance comes from finding the equilibrium between yourself and others. We cannot reach our own potential without caring about ourselves. We cannot deliver on that potential without caring about others.

The Dalai Lama’s perspective rarely finds its way into the work place, but it provides a frame of reference that is perhaps more appropriate to help us achieve balance at work and in our personal lives. One of the reasons we struggle so much with achieving balance in our work lives in particular is because we often use the wrong frame of reference and the wrong tools. It is not just about our schedules. Balance involves feeling as much as it involves thinking. It includes purpose as much as it includes productivity. And it requires that we make decisions that serve us as human beings as much or more than they serve our organizations through our labor. Although we are not socialized to think this way in the workplace, doing so will not only benefit ourselves, it ultimately benefits our organizations as well. Stressed out, burned out people, struggling to balance the demands of work, within work, and with the broader demands of life, are compromised in their ability to bring value to the organizations in which they are employed. We are more likely to find balance, if we give ourselves permission to apply the right tools to the problem.


All Quotes are from the 14th Dalai Lama, Lhamo Dondrub.

Want to Be A Better Leader? Be A More Likable Person. Really.

In a previous post I referenced research in a Harvard Business Review article that found a devastatingly large inverse correlation between lack of likability and kindness among leaders on the one hand and leadership effectiveness among those same individuals on the other hand. In other words, if you are in the lowest quartile for likability, you have a 1 in 2,000 chance of being in the highest quartile for leadership effectiveness. Leaders should probably care about this—and not just because it’s “better” to be liked than not.

The reason likability and kindness matter, and the reason that unlikable and unkind leaders are profoundly less effective, is because of the impact that those behaviors have on the people within the sphere of a leader’s influence.

So, what can you do to improve your likability as a leader? The research suggests the following:

Engage your colleagues and employees from a place of positive emotion.

Leaders who instinctively use the language of optimism vs. pessimism are rated as more likable and more effective. Employees engage projects with more confidence and commitment if they believe their boss believes they will be successful. Conversely, anger and frustration de-motivate employees and make them less effective and more risk-averse.

Commit yourself to the highest integrity.

Interestingly, employees associate likability with integrity. The psychology behind this is that we are more apt to like those we trust and we are more apt to trust those with high integrity.

Focus on cooperation over competition.

Leaders who use and model cooperation are more likable because they are less threatening. Competition has a place in motivating behavior, but leaders whose primary modus operandi is to pit people against one another are not associated with likability or kindness.

Lead through coaching and teaching

People generally have fond memories of those who have helped them improve, build skills, grow confidence, etc., through mentoring and coaching. This approach also improves a leader’s effectiveness because it improves the employee’s effectiveness.

Be future oriented with a compelling vision

Interestingly, it turns out that one component of likability in a leader is confidence in where the organization is going. In other words, we tend to be drawn to leaders who make us feel confident and comfortable. The opposite makes us feel nervous and worried.

Be open to feedback and change

The research shows that one of the strongest correlations is between likability and openness to feedback and change—and to actively soliciting feedback. This makes sense. Leaders who are arrogant and aloof are simply less likable. They are also perceived as less kind. And, they are less effective because they are more likely to continue pursuing initiatives, strategies, etc., that are inappropriate because they are not open to feedback and changing course.

In short, if you care about your effectiveness as a leader, you can’t ignore how people perceive your likability and kindness. The good news about the Zenger-Folkman findings, though, is that you don’t need to become stellar at all of the options noted above. In fact, they suggest choosing just two of them that resonate most with you and making a concerted effort to do well at those two things. You can add more later over time!

Will Student Debt Take Down American Higher Education?

We know that over the last couple of decades American students have been borrowing more money to pay college tuition, but do we really understand the magnitude of the debt and its implications, not only for higher education, but for other significant outcomes in society?

In roughly ten years, student debt has tripled. It is currently more than 1.5 trillion dollars and will be two trillion dollars (that is twelve zeros) in less than five years. To put this in perspective, if you combine ALL of the credit card debt held by everyone in America with a credit card (over 180,000,000 people), it would only add up to two thirds of student debt. Student debt is also larger, by 400 billion dollars, than all the car loans in the U.S. combined.

It’s not just the amount of debt, however, that is overwhelming. The nature of the debt is also becoming extraordinarily problematic. Here are some examples:

  • Over 70% of all students take on loan debt (currently over 44,000,000 people)
  • The average debt is now over $37,000 per person and roughly 20% of students owe more than $100,000 dollars.
  • The average monthly student loan payment is now over $400 with about 20% of payments over $1,000 per month.
  • The average bachelor’s degree borrower takes 21 years to pay off student loans.
  • 64% of all student debt is held by women, but they earn 27% less than men after graduation.
  • Nearly 40% ($600,000,000,000) of student debt is held by borrowers under the age 30.
  • $100,000,000,000 of student debt is held by people over 60 years of age
  • Half of all borrowers are making interest-only payments (which means they still owe every dollar of debt they started with despite making years of payments)

The scale of the debt problem is so great that it is affecting other parts of the economy and society as well.

The Federal Reserve Board of Washington, D.C. found that an increase in student debt has led to a decrease in home ownership. Controlling for the recession, they found that home ownership for the most indebted students, aged 24 to 32 years of age, declined by twice the rate as for the rest of the population. Relatedly, the Fed Chairman, Jerome Powell, noted that student debt is beginning to weigh negatively on GDP, with research suggesting it could be costing the economy between $86 and $108 billion per year!

Another study predicts that students who graduated from college in 2015 will have to delay retirement until the age of 75, in large part because of the increasing burden of student debt. Relatedly, it seems that the debt itself reduces mobility, which reduces income. Analysis sponsored by the National Bureau of Economic Research determined that once student debt is paid off, individuals tend to increase their income by nearly 17% within three years due to their comfort with relocating for higher paying jobs. Likewise, the lack of mobility while still under debt repayment depresses income, which lasts as long as the debt repayment itself!

And yet another study found that millennials are delaying both marriage and children, in part, due to student loan debt.

So, back to the core question of this article, how might this reality impact higher education? If the student debt bubble pops (massive defaults), it will drastically decrease the availability of future loans, both public and private, while lenders and the government figure out what to do. This will significantly decrease revenues across all of higher education because more than half of all financial aid revenue today is paid via student loans. If that were to decrease even modestly, most institutions of higher education, across all sectors, would simply be insolvent. Clay Christiansen, of Harvard University, has already predicted that half of all colleges and universities in the U.S. will be closed or bankrupt in the next ten years and that is even if the student loan bubble doesn’t burst. His argument is that the underlying financial model in higher education is fundamentally unworkable across the board and that disruptive innovations will accelerate the demise of many IHEs.

How did we get here with student loan debt? The full answer to that question is far too long for this article, but the basic dynamic is that over the last 25 years or so, tuition has increased dramatically (far in excess of inflation) while state funding for education has declined precipitously (shifting the tuition burden from tax payers to students and their families). There was also an increase in the overall student population, and thus borrowers, through 2011, at which point student enrollment began to decline. The shift from public funding of tuition to student self-funding has resulted in massive increases in borrowing. In 2004, total student debt was less than $400 billion. Today, as noted, it is over $1.5 trillion. That happened in only 14 years!

Whether the bubble pops and brings down much of higher education with it or not, the status quo of student debt is simply not sustainable. Something will have to give. It might be massive debt amnesty (paid for by taxpayers) or an entire generation or two may live much of their lives unable to own homes, buy cars, or invest for retirement. Many debtors will default, but will not be able to discharge student debt through bankruptcy. Some others will last long enough to get through 20 years of income-sensitive repayment, then have their balances eliminated (current federal law provides for that)—but it only works if you don’t have any missed payments, delinquencies, or forbearances. And, based on a new trend, some students will actually leave the U.S. and live abroad to escape what they see as crippling student loan debt.

In the interim, if the Education Department and accreditors can manage to get out of the way of innovation, new, disruptive models may come onto the scene that many students can afford without loans. Likewise, industry may fill part of the post-secondary education need at far lower cost. Regardless, the monopolies that have kept traditional higher education afloat for well over a century may have met their match in the student loan crisis.

Want to Fail as a Leader? Ignore Organizational Culture!

Many leaders mistakenly believe that strategy or planning or management directives drive organizational behavior. While those things can certainly influence what people do, particularly in the short term or with discreet tasks, it is the deeply held beliefs and values within an organization that sway behavior over time more than any other factor. And this reality presents a more complicated leadership challenge than most managers realize because so much of organizational culture is implied, below the surface, rather than overt and easily visible.

For example, how many times have you seen an organization proclaim a set of values that says one thing, but notice that the organization actually incentivizes other values in its day to day operations? I recall an organization in my past in which the CEO claimed to value transparency—so much so that he built offices with glass walls as a symbol of transparency. In reality, the organization was so driven by fear that it was the least transparent culture I have ever observed in my entire professional life.

Because culture is so powerful, it can actually defeat even the most compelling strategy or initiative. It can also defeat the most talented managers. Fortunately, the reverse is also true. When you see organizations that are “world class” in some endeavor, those organizations invariably have cultures that support what they are really good at—their core competencies. In those organizations, strategy and incentives and operational plans are aligned with culture—with beliefs, mindsets, assumptions, etc. In fact, research over the last 25 years has shown that alignment of strong culture with strategy provides a huge competitive advantage and, according to Jim Collins at Harvard, such companies are typically six times more financially successful than companies with weak and poorly aligned cultures.

It is important to note that there is no “right” culture, but there is rational culture. In fact, quite different ethos or values can even lead to similar outcomes, but only if the culture is aligned with the objectives. For example, it is possible to deliver great service with a culture that supports autonomy and empowerment in its employees while another organization achieves great service by supporting extreme attention to detail. Those are different cultural values, but they are both aligned with the objective of providing great service.

As noted in this article from the consultants, Spencer-Stuart, one of the reasons that leaders often struggle to effectively align strategy and operations with culture is because most organizations don’t actively engage in dialog about culture—they don’t even possess a shared vocabulary for talking about it. Remember that most of an organization’s culture is like an iceberg, in which what you can see above the water (stated mission, vision, values) is only about 10% of the whole iceberg! Leaders must be highly cognizant of what is below the water line, because that is where the organization lives and where the cultural values that drive behavior lurk. It’s probably safe to say that the vast majority of an organization’s cultural rules are unwritten, although implicitly understood, by the people in the institution.

Because culture has a lot of inertia, it is not easily changed. If a leader determines that some key elements of culture above or below the waterline are counterproductive for the organization, then he or she must be prepared for a relatively long term commitment. You cannot change deeply held beliefs and behaviors with a memo or an all-staff meeting. For example, if a leader realizes that the organization needs to innovate, but is culturally averse to risk, he or she will need to take a comprehensive approach to shifting people from risk-averse to risk-tolerant. That may require an increase in employee autonomy and it absolutely requires that management stop punishing employees for “failure,” if not actually incentivize them for taking risks. And that has to happen repeatedly, over time. In most cases, aversion to risk is actually a manifestation of fear of failure, and that fear is usually deep in the organizational DNA.

So, cultural change is possible, but it is longitudinal and strategic. Culture is built and learned over a long time with great attention paid to what behaviors are rewarded and which are punished—regardless of what values are proclaimed publicly. In order to change culture, leaders must make an equally deep commitment to creating exceptional clarity around the ethos they want for the organization, which in turn must be supported by compelling language and communication, policy, incentives, targeted promotions, modeled behavior, and consistency, even when it would be easier slide backwards. In any high change environment, let alone one as fraught as culture change, people in the organization will be looking for any indication that the “new way” is not real or not lasting. People have a lot invested in existing beliefs and behaviors, even when they’re unpleasant or ineffective. In fact, this element of psychology is so strong that people will often choose the certainty of misery over what they see as the misery of uncertainty. As a result, if you as a leader determine that organizational culture is not aligned with strategic objectives in your organization, and you have the courage to change that, it will be one of the most difficult and long-term things you do. On the other hand, due to the power of culture over organizational behavior, if you don’t have the courage, you will dramatically limit your potential success before you even start.

Lastly, culture is also central to employee retention and success. Recent research found that nearly 70% of failed management hires were due to poor cultural “fit.” Again, this does not necessarily imply that the culture was bad or wrong, but that it wasn’t aligned with the values of the newly hired manager. This has significant implications for how we screen candidates for cultural alignment rather than simply skills or experience or even personality.

Clearly, there are multiple reasons to care about organizational culture—and significant risk if you don’t!

In a previous article I discussed the critical role that macro-culture plays in organizations. Although organizational culture tends to be its own microcosm of beliefs and values and behaviors, virtually all organizations are influenced by the macro-culture in which they find themselves. In other words, the people that make up organizations bring external beliefs and ethos into organizations, which then affect the culture inside the organization. These are often very deeply held values that span generations. They can be influenced by religion and politics and socio-economics and it generally is not wise to attempt to change those values, but rather to determine how the macro culture can be respected and even leveraged to achieve organizational objectives.

Keys to Leadership Success: A Simple Primer

Image credit: Getty Images

In previous posts, I have shared many thoughts on what I’ve learned as a manager/leader over roughly a quarter century. I’ve been asked for a short version of the most salient points, so here it is:

Have Great Clarity On What Success Looks Like

Everyone reports to someone and that person or people have (or should have) a clear idea of what success looks like, for you and your department/division/organization. Make sure that you have clarity from those to whom you report on what they are going to hold you accountable for and what it will look like if you are successful, then plan your priorities to achieve that definition of success. You can always include things that are important to you personally, but relative to accountability, what matters is what matters to those who employ you.

Learn the Invisible Rules of Organizational Culture that Lurk Below the Surface

As the famous management guru of the 20th century, Peter Drucker, said decades ago, culture eats strategy for breakfast. That is true. But the reason it is true is because it is culture that drives behavior—not management directives or mission statements or memos. It is also true that most of the cultural values in an organization are not what you easily see in mission or value statements on your website. Most of the unwritten rules for how an organization behaves are below the surface. Watch how people actually behave and that will tell you what the culture actually supports. If its aligned with your strategy, great. If not, you have a lot of hard work to do.

Make the People Who Work for You Successful

The “higher” you rise in leadership positions, the less your success is about your own technical knowledge or the tasks you complete and more about how effective you are in making the people who work for you successful. This also relates to how you treat people. There is no legacy worth having, no matter how much you achieve professionally, if you have hurt people a long the way.

Have a Plan and Work Your Plan

This may be the most simplistic piece of advice I can provide, but even the greatest ideas are just ideas without clear action plans and focused effort. In other words, really good leaders also care about and are good at execution of ideas, strategies, plans, initiatives, etc.

Integrity and Humility Will Sustain You Over Time

You can certainly achieve short-term wins with “flexible” ethics or by using/abusing people or by saying one thing and doing another. It’s also true that you can operate with unimpeachable integrity and experience failures. But your longevity as a leader, and sustainable success, requires integrity more than just about anything else. As for humility, it’s important because although ego gets attention, you don’t learn from your own ego. It is when we are most vulnerable and humble as leaders that we are the most empathetic and the best listeners and learners.

Of course, the list above is a very small sample of all of the skills and aptitudes and experience that successful leaders rely on to achieve success is ever more complex operating environments. You can see over 40 leadership related articles here. But, as a high level primer, the five items above are a good place to start!

College Enrollments Have Declined for Seven Straight Years and It’s Going to Get Worse

Recent data from the National Student Clearing House Resource Center confirms that the trend of declining college enrollment in the U.S. has now entered its seventh year and the rates of decline are getting steeper. Although the declines are more pronounced in the Midwest and Northeast, student populations have declined in 34 states and that will spread further as high school graduation rates continue to decline as well. And we’re not talking about small declines. While the reduction in enrollments nationally has been about 2% annually over the last several years, in many institutions, enrollments are 20% to 30% lower than they were even ten years ago. We are almost certainly on the cusp of a major shake out in American higher education.

What happened?

Even before the “Great Recession,” birth rates in the U.S. were declining, but during the recession, birth rates declined substantially. The additional GR impact will first affect the most traditional colleges in the early to mid 2020s, then hit community colleges hard a few years later—this is because of the slightly older average age of community college students.

On top of declining birth rates, the economy has steadily improved resulting in low unemployment and job opportunities for students who otherwise might be attending college.

Third, and maybe more importantly, people who would be college students of all kinds have broadly decided that they are unwilling to continue incurring unsustainable debt to pay continually increasing tuition costs. They simply don’t believe the return on investment is compelling enough to borrow the cost of attending college.

There is also a structural problem in much of higher education today, which is that only a small number of college degrees are built around specific job skills that make a graduate immediately employable upon graduation. A few examples are teacher education, computer programming, and nursing. But even degrees such as engineering are typically so theoretical in nature that many graduates are not able to bring value to employers until after a year or more of on-the-job training. It is true that broadly speaking, across the entire population, having a college degree still pays off over time. However, for a substantial number of people, the investment of time and money (often via debt) does not pay off—and in some cases—going to college makes people worse off financially. However, because almost all jobs that provide a living, “middle class” wage, do and will require some form of post-secondary education, most people will have to pursue education after high school–and then repeat the process multiple times over a working lifetime. But for more and more people, that won’t be in a traditional college or university.

So, what does this trend in declining enrollment mean for higher education as an “industry?” And what does it mean for society?

First, there are clearly winners and losers. Large state flagship universities and elite privates are generally doing quite well in the sense that they are still receiving more applications than they have seats. In the elite private IHEs, this can be extreme, with acceptance rates lower than 10% for incoming freshmen. “Second tier” public institutions (the ones that typically have a cardinal direction in the their name such as “Southern State University,” are experiencing significant declines and are at real risk as are small, un-endowed and less selective private institutions. Community Colleges are suffering from lower enrollments too, but they tend to be more nimble and less burdened by the massive overhead of four year state colleges, so some will recalibrate and ensure a place for themselves in the higher education ecosystem.

In effect, we are seeing the gentrification of higher education with the bulk of institutions being relegated to second and third class status, struggling to operate with declining revenues, deteriorating infrastructure and non-viable financial models. And the gap between haves and have-nots at the institutional level is growing. Harvard recently concluded a fund raising campaign that netted over 9 billion dollars, pushing their endowment to 40 billion dollars. In fact, the top 25 wealthiest universities in the U.S. own over 50% of all the wealth held by the thousands of other colleges in the country combined. As with extreme distributions of wealth in society, there are profound implications for higher education as well–particularly for institutions that tend to serve more socio-economically challenged students–because those institutions also tend to be less well off financially as well.

As with any market in which supply outstrips demand, let alone a market in which sales (tuition) cannot cover the cost of operations, there will inevitably be contraction, and potentially severe contraction. In a previous article, I mentioned three critical factors contributing to a tipping point in higher education that would dramatically change the landscape as we know it. Declining enrollment will exacerbate and accelerate some of those trends. However, as also noted in that article, there is actually a bright future for post-secondary education. It will just look a lot different than the system that we’ve had for more than a century.

The part of higher education that we call “traditional,” i.e., 18-24 year old students pursuing bachelor’s degrees on campus, will continue to shrink. Small liberal arts colleges and some mid-tier publics will close. Public systems will merge and end up with fewer campuses. All of this is already happening, by the way. It will just happen faster over the next couple of decades. There will be another round of for-profit closures, but that sector of higher education is getting near the bottom, already having experienced a profound contraction.

Who will thrive?

For the foreseeable future, elite privates and most large public flagship universities will do well. There are a variety of financial, structural, social, and political reasons for this, but Stanford and the University of Michigan will be around longer than anyone reading this article!

Any institutions that provide credentials or programs (degree or non-degree) that lead directly to good employment with limited student debt have a bright future. Such institutions will come in different forms, with different tax statuses (for-profit and not-for-profit), and with different funding mechanisms—some will depend on Title IV Federal aid and some will not. Relatedly, institutions that provide a pathway to professional licensure required for employment will also have a more stable future—at least for a while. Good examples are vocational colleges that provide credentials for trades requiring licensure and just about anything in the health sciences that leads to careers as clinical practitioners. There will also be opportunities for niche operators who deliver “passion” programs, but to survive and thrive, they will have to graduate students with manageable levels of debt.

As noted in this previous article, the reason that the American Higher Education System has been able to continue in a form that has fought off most innovation for over a century is because it is protected by two monopolies—Federal financial aid and accreditation—but even those monopolies are weakening under current market forces.

The stark reality is that most of the institutions of higher education operating in the U.S. today will have to compete for a decreasing number of students, and barring unforeseen demographic changes, lower enrollments will become a structural part of traditional higher education. Some of the decline can be backfilled by even more “non-traditional” adult students, who already make up the vast majority of all college students. There is also an opportunity for institutions that can effectively reach out to the many millions of Americans who have some college credits, but no credential. The basic pipeline, however—high school graduates—will be in decline at least until 2030* or later, which means that a major correction of supply and demand is still in the offing. And this correction is likely to be gut wrenching for an unfortunately large number of institutions. On the positive side, students are likely to find more flexible and less expensive choices as innovation finds its way into certain parts of post-secondary education.

*If current political trends against immigration and international students continue, the declines could be even worse.