What Small Colleges Need for Their Survival

News of the travails of small colleges has continued throughout the summer. Following Sweet Briar’s planned and later rescinded closure, we have watched others: Ashland’s release of tenured faculty, Bay Path University’s too-optimistic plans for online education, the failed merger of Montserrat College of Art with Salem State, and the yet-to-be consummated merger of Union Graduate College with Clarkson.

What is missing from many of the published stories of these transactions is the extent to which expert, objective, comprehensive analyses were undertaken before the announcement.  My own experience with two transactions at the Thunderbird School of Global Management has provided many lessons.

Small schools, like those mentioned, lack economies of scale, face heavy burdens of fixed, overhead costs, and are often highly dependent on annual tuition revenue. It is no surprise that they struggle. What is saddening is the potential loss of schools like Sweet Briar and Thunderbird. The very good news for Thunderbird is that it survives now as a unit within Arizona State University with the completed merger. We would have lost much if Thunderbird had closed its doors. Its historic origin from a World War II air-training base is palpable as you walk the campus grounds. Thunderbird’s specialized global education is needed now more than ever. Its students with their cognitive complexity and global outlook are terrific. Its independent-minded, globally dispersed alumni are assets to international companies, governments and NGOs around the world.

The presence of distinctive schools like Thunderbird and Sweet Briar strengthens higher education; they add diversity to students’ choices. But preserving them is complex and challenging. The challenge and complexity may not be so evident to those inside the institutions, and that is why expert help is often needed for the future of these valuable, but vulnerable institutions.

Small, vulnerable schools need an objective analysis that often comes best from the outside and those who have experienced the challenges and successes associated with improved institutional viability. Schools need an environmental analysis that offers blunt perspectives of their markets. They need an institutional analysis that reveals the trends and realistically confronts the culture, governance, and financial constraints. Schools have to take into account the complex issues of accreditation and the processes of accrediting bodies. Schools need alternatives; one size does not fit all.

For some small schools, a merger like Thunderbird’s may be the best alternative. For another, it may be new programs, including online ones. For still others, operational changes, including sophisticated CRM, may be the answer. For still others, it may be refinement of what the school stands for in its perceived brand. It may be a partnership with an outside company. And it may be a combination of all of these. But in every case, thorough, objective diagnostics with financial analyses and forecasted trends are the first steps.

I want to see schools like Thunderbird continue to work their magic and educate students. And many alumni and students may say the same for their schools. These great schools deserve an objective look at themselves and their alternatives. Experienced, external expertise is part of the answer.

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How University Leadership Matters

There is something to an educational leader with a vision for the institution along with engaged faculty, staff and students. Penley on Education and Energy made the case that Leadership Matters in K-12 education in an earlier blog. It matters as well in higher education where I have spent most of my career.

Diana Natalicio has transformed higher education in El Paso, Texas. Ms. Natalicio became president of the University of Texas at El Paso not quite 30 years ago. UTEP is a better place today as a result of her leadership. She has sought increased research support, based on UTEP’s historic science and engineering role; UTEP began as the School of Mining and Metallurgy. She has raised UTEP’s enrollment of Hispanics; it is more representative of the El Paso community now. She has increased graduation rates, including those of Hispanic students, in technical fields like healthcare, engineering and mathematics. UTEP has received national recognition as a Hispanic-serving institution.

Building hope, engendered by vision, is what Ms. Natalicio has done as UTEP’s leader. In 2013, the New York Times quoted her about what had transpired over the years of her presidency. “I think the biggest difference between then and now is our self-confidence as an institution.” Building hope began early in her tenure, she says in a video welcoming students on the UTEP website. “We saw liabilities where there were real assets. What I understood was that these were all opportunities just waiting to be capitalized on.”

Leadership matters, of course, in every organization.  One day in Denver an airline CEO and I awaited a panel discussion. We talked about what we really did – he as CEO of an airline and I as president of Colorado State University. It quickly became evident that the leader of an airline and the leader of a university had much in common. Both of us saw our prime responsibility as building hope through vision.

That combination of vision and hope builds employee engagement. Earlier in my career, a colleague and I developed a measure of employee engagement that was published in the Journal of Organizational Behavior. In that article, we labeled one type of engagement, moral commitment, a kind of engagement that mattered most for employees’ performance. Those individuals with moral commitment see their future aligned with that of the organization.  With personal hopes’ being achieved via the organization’s success, performance rises.

A good leader encourages engagement. That is exactly what Ms. Natalicio has done at UTEP as its leader. Upon becoming president, she saw what some considered the isolated, border location of UTEP as an opportunity. She viewed the often less-well-prepared, first generation college students as hard working with great potential. She took the substantially Hispanic community of El Paso as a bridge to more Hispanic graduates. She built hope from what many perceived as challenge. She did so by offering a glimpse of the possible in her vision that leapt beyond felt inferiority to hope and engagement.  Leadership matters, and Ms. Natalicio demonstrates it.

America’s Future Labor Force as a Majority-Minority Nation

America’s economic prosperity is at stake. For those of us committed to economic development, this is serious. Our future is in jeopardy. We have it within our power, however, to mitigate the risk. Between 2040 and 2060 projections from the US Census Bureau data are that the US becomes a majority-minority country. The state of Arizona does so by 2025; California, New Mexico and Texas are already majority-minority. It is now clearer than ever that our future prosperity will depend upon the minority population’s preparation for the workforce. This more diverse workforce is the future of American business labor.

The issue of workforce preparation and education was thoroughly addressed a few years ago by a Commission appointed by then Secretary of Education, Margaret Spellings. In meeting her with other university presidents, I was impressed with her understanding of the linkages among higher education, K-12 and America’s labor force. The Commission’s final report found that

America’s national capacity for excellence, innovation and leadership in higher education will be central to our ability to sustain economic growth and social cohesiveness. Our colleges and universities will be a key source of the human and intellectual capital needed to increase workforce productivity and growth.

In that report and in previous, preliminary draft reports, the Commission linked our future economic prosperity to the capacity of K-12 education to prepare students who were ready for college at graduation. Readiness for college in math, language and science is essentially the same for readiness for work. A major effort to raise high school standards ensued with the focus on college and work readiness.

As we approach a majority-minority US population by mid-century, the failure of our educational system becomes ever more alarming. A college education is increasingly essential for job preparation, and completion of high school is a prerequisite. Yet, too many minority students in our K-12 schools are still not succeeding. Across the US only 58% of Hispanics and 57% of Blacks graduated from high school while 85% of whites graduated on time in 2013. An alarmingly low number of Native Americans – only 49% – graduated on time.

There are policy initiatives that we can adopt in order to change the dismal future that appears to lie ahead. I will mention only a few:

  • Adoption of higher state and local standards that are linked directly to college and work readiness. The Common Core, despite the controversy, is focused on raising standards and increasing college and work readiness;
  • Access to private and charter schools for minority and low-income students. States like Arizona have led the way with charter schools and the introduction of rigorous reauthorization processes by the Arizona State Board for Charter Schools;
  • Higher teacher pay for schools that are remote and rural, e.g., schools on Indian reservations and low performing schools in city centers; and
  • Adoption of Move on When Ready, a program that the Center for the Future of Arizona has embraced from the National Center for Education and the Economy.

Educational policy choices are tough to implement. There is good reason. We experienced K-12 education, and we have strong feelings about it. But a failure to adopt innovations, a failure to introduce policy changes, and a failure to invest public money in selective policy changes is a mistake. We need to alter what appears to be a future of limited economic prosperity. It will become too late by mid-century. We still have a chance.

What Happens After College Matters

What happens after college matters – to graduates and their families. As a result of a college education, graduates should be prepared to begin their careers or enter more advanced education for specialized fields. Some companies are providing just what graduates need in order to find employment, and one of those is AfterCollege, a San Francisco-based company, started by a Stanford graduate, Roberto Angulo. I am honored to serve as an advisor to the company.

AfterCollege is committed to matching graduates and interns to potential employment opportunities and meeting companies’ needs to find knowledgeable and skilled employees for their job openings. Because AfterCollege is committed to matching the right graduate to the right job, it is very focused on the analytics associated with matching student to job opportunities. That means that AfterCollege addresses one of the critical outcomes of an undergraduate education – the right employment opportunity.

Besides its increasingly sophisticated analytics, AfterCollege works closely with a student’s faculty member. We know from students’ self-reports that a faculty member is the second most influential person in their career-related decisions, after their parents, of course. What may surprise many is that the same self-reported data place the university’s career center much lower in its relative influence on them. It is the self-report data that have confirmed AfterCollege’s commitment to work closely with faculty members. Metrics collected by AfterCollege show that faculty members read its emailed messages about jobs. That makes these influential people even more effective in supporting a student’s career decision-making.

AfterCollege is working hard to target jobs that it sends to a student who signed up for that service, and comments from users indicate that AfterCollege’s service is being well-received by those students. The company has made a practice of improving its analytics such that the right job is targeted to the right student. And the analytics confirm the successful targeting of jobs to students with students’ own positive responses. One student recently said, “I like the analytic-driven approach that AfterCollege seems to use.” Another user of AfterCollege pointed to its access to employment opportunities by saying, “So far, this is the site that allows me to apply to jobs I haven’t found at all on other sites.”

We depend heavily on colleges to provide the learning experience that prepares students for career success. Thankfully, there are companies like AfterCollege that have made a point of understanding how students make career decisions and what employers need from students. Luckily AfterCollege’s analytics and its faculty-driven focus are making it easier on both.

The Consumer and US Higher Education

Demonstrating that US Higher Education provides real benefits to society is essential. Society’s considerable support of higher education in federal and state funding merits it. Consumers – parents and students – deserve it in order to make wise choices among colleges and universities. America deserves it for its global competitiveness.

Two reports in the last month provide relevant criticism and direction. The first is from The Economist and the second comes from the Senate Committee on Health, Education, Labor & Pensions. The Economist’s criticism readily acknowledges that the results of a college education are clear.  Those with more education, especially a college degree, receive higher incomes. This relationship of income to college degree does not, however, prove that higher education is responsible. For those of us with long-term experience in higher education, we know the truth. Excellent learning opportunities abound in our best schools. Good advising helps to lead to career-enlarging choices by students. But despite best efforts, a student can coast by with reasonable intelligence and choices of less demanding majors and easier classes. Too many do.

Society is the loser.   When students graduate with little improvement in their knowledge and skills, US capacity to innovate and become more productive is harmed. We hear repeatedly from recruiters that graduates are too often ill-prepared. Re-training by the hiring business is a major, unnecessary expense; it should not be the norm.

While The Economist’s article, Excellence versus Equity, challenges the notion that US higher education is responsible for post-graduation income improvement, the recent work of the Senate Committee on Education offers potential direction. It points to the opportunity to alter the data provided from schools and it points to the need to alter how those data are used as information for parents and prospective students. It does so in its report, Federal Postsecondary Data Transparency and Consumer Information Concepts and Proposals.

Having had ultimate reporting responsibility at two higher educational institutions as president, I was consistently frustrated by the level of institutional resources devoted to federal reporting and discouraged by the inadequacy of the resulting consumer data. That is why as President of Colorado State University (CSU), I instituted the College Portrait to provide consumers with more information about CSU’s outcomes. It was why I sponsored a trial at CSU of the Collegiate Learning Assessment as a potential means to measure the value added for undergraduates by their education. It was also why I sponsored considerable improvements to the student career services as President of the Thunderbird School of Global Management and why I serve on the Advisory Board of AfterCollege, a career path service for college students.

Just graduating is not enough. It is not enough to warrant the investment and expense of college degrees. It is not enough to satisfy students and parents. It is not enough to meet the needs of society, and it is not enough to retain America’s global competitiveness. Change is essential, and that means collecting the right data in order to provide usable information to consumers. The reauthorization of the Higher Education Act is a potentially positive step.

Avoid Sweet Briar for Your College

The news of Sweet Briar’s closing saddens many, including those of us who grew up in the South. This is a region of many historic, liberal arts schools. But sadness does not avoid another Sweet Briar. It does not address the threats that face many schools. There are actions – tough actions – that can be taken to address the threats and avoid becoming the next Sweet Briar or worse.

My recent experience has introduced me to those actions that avoid becoming Sweet Briar – and closing. My Board and I just completed the merger into Arizona State University of the Thunderbird School of Global Management. I was its President. Like Sweet Briar, Thunderbird was a relatively small, private college – but one dedicated to global management education. We are lucky to still have Thunderbird – as a part of ASU. Its students can complete their degrees. New students can enroll in the Thunderbird’s great education, and executives can receive the School’s global management training.

The outcome for Thunderbird was a very good one.  It could have been much worse. Like Sweet Briar, Thunderbird faced increased competition for qualified applicants, changes in what students wanted and employers needed. Like many schools in its situation, Thunderbird was in a vulnerable state. It needed stability, renewal and working capital for its aspirations. Like many schools, its size, traditions and structure limited options.  Luckily its board and I saw a future for the school through partnerships and other alternatives.

There are lessons that can be learned and actions that can be taken:

  1. Be pragmatic about the financial conditions of your college or university. Look at changes over time to your balance sheet and income statement.
  2. If it’s not too late already, begin the “process” of redefining the brand and modifying operations consistent with brand in order to position the school more competitively.
  3. Whether it’s too late or not, implement a communication plan that provides a rationale for the change – in brand or in the search for alternatives.
  4. If it is too late, realistically look for alternatives: joint ventures, mergers, and closure.
  5. Work closely with accreditors to help them understand the school’s situation. Actively solicit their advice and support for alternatives that will be acceptable under regional and specialized accreditation.
  6. Consider consultants like Penley Consulting – and Implement your plan.

The media have made clear that Sweet Briar and Thunderbird are not alone. Both schools took affirmative steps – but with different outcomes. Leadership from presidents and boards will determine what kind of outcome another, similarly vulnerable school receives.

The President on Education – Choice and Vouchers

In his State of the Union address, President Obama emphasized the role of education in our economic recovery.  It is education that gives the middle class opportunity for participation in our economy.  The President is right.  Education’s potential for producing that outcome depends, however, upon two fundamental elements that underlie his thesis.  The first is market-based choice in education and the second is the money necessary for the children of working class parents.

A local friend of mine produces annually a map of high- and low-scoring school districts from his company, Maps & Facts, Unlimited.  The map is one of my favorites; it uses red for high scoring districts and blue for those that yield low or failing scores on standardized tests.  There is little surprise in the location of the red and blue on the map.  The top-scoring school districts are those with the highest per capita income where the best-educated parents live.

America’s promise of opportunity is belied by the increasingly differential opportunity that our children have based on their parents’ education and income.  If America is to make good on its promise – and sustain its economic prowess – change is essential.  Like their wealthier counterparts, poor children must have access to quality education. The President is right.

What is essential, however, is the means to educational access.  Already the President is making clear that parents deserve choice.  He did so via the Department of Education’s new College Scorecard that reveals important data about costs of higher education.  But that same commitment to giving students and their parents a choice should be extended to K-12 education as well.  Allowing more charter schools and providing students with vouchers makes available to working class parents what wealthier parents and their children already have – choice and the means to pay for it.

All of America’s citizens deserve educational opportunity.  Education drives economic growth along with market-based technological innovation.  Making education available to all, however, is the challenge.

For too long we have been reticent to let the market and market information drive educational choice.  The Department of Education’s website is a step in the right direction.  For too long we have assumed that poor children must accept only their local school.  And that local school may not be the best choice for some children from less wealthy households anymore than it is for some children from the wealthiest.  Vouchers give to the poor what the wealthy have long had – the means to that choice.  Let’s look for more action from Washington that encourages states and local school districts to act in favor of open enrollment opportunity and the money to make choice real for all.