Higher education is changing, challenging schools that have long relied on their traditions and reputations to pivot — or at least ask some tough questions about their identities, their target market, and their future.
John Griffith is a vice president and endowment specialist at investment firm Hirtle Callaghan, an endowment specialist who previously served as chief financial officer and treasurer of Bryn Mawr College, believes that a flawed governance model leaves many schools unable to adapt quickly to changes such as rising student debt and new technology.
By John Griffith
Higher education’s well-documented struggles have failed to help it learn the lessons needed to ensure its survival
Over the past decade, dozens of colleges and universities have had to shut down or merge and many others have been downgraded by credit agencies, seen enrollment decline, missed revenue targets and have been unable to properly maintain their physical plant.
But these widely reported struggles have not resulted in dramatic changes to their business models.
Marian Court College, in Massachusetts, was recently forced to close, according to a recent Boston Globe report. Two more institutions in the state, Wheelock College and Gordon College, are also struggling, according to the paper.
Sweet Briar College has been kept alive by the last-minute heroics of its alumnae, but should still serve as yet another wake-up call for the industry.
The current operating model for many small colleges is unsustainable. Small colleges are in crisis. The need for reform is clear, but the industry is making little progress.
The fundamental problem is governance. While the world has become far more complex, fast-moving and competitive, college and university boards are stuck in a dated governance paradigm.
Having worked in higher education for more than 25 years, I have seen firsthand the lack of responsiveness affecting these institutions. Instead of blaming tenured faculty or bureaucratic bloat, it is time to focus on the governing boards.
Problems with college and university boards of trustees include their size, often pegged at 30 or more members, and the scope of their duties. These trustees also often face the daunting tasks of both fundraising for an institution while being an integral part of its operations management. This leaves little time for strategic discussions.
The tendency of boards to be composed of alumni and insiders with little to no higher education experience only exacerbates their ineffectiveness.
The risk is that trustees will be appointed based on their ability to donate rather than to effectively respond to enrollment challenges.
Higher education enjoyed a long golden era of growth and prosperity. During these times, there was no need for strong governance to promote change, maximize value or keep costs down.
Times have changed, yet our industry practices and governance structure have not.
Instead of relying on the existing trustees for guidance, schools should consider a corporate board structure comprised of a small group of industry experts who focus on strategy rather than operations.
These directors could work with the president, administrators and academic leaders to create a sustainable business model.
It might be painful at first — change is hard — but I am certain the constituency of dozens of schools that have closed wish that their boards had made those hard decisions sooner.
To be successful, boards need to be effectively sized and comprised of independent directors who have the skills and experience to review management performance and challenge their communities to adopt an operating model that will guide their institution to long-term success.