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Running the University like a business

Observer Viewpoint | Monday, September 5, 2005

A long-time friend and colleague has been appointed President of the University of Notre Dame. I wish you well, John, in every respect, and am confident that the University will flourish under your stewardship.

The coming of a new president is a fitting occasion for a community-wide conversation on the path ND might follow in the years ahead. This letter is intended as a contribution to such a conversation. It will come in four installments, treating four closely related topics. The first concerns the issue of whether the University should be run as a commercial enterprise.

Your presidency got off to an auspicious start with the announcement in early July that ND will part company with its commercial TV station WNDU. The reason quoted in the South Bend Tribune is that commercial broadcasting “is not our business… What we do instead is run a university.” The question at this point is how your administration will deal with other problems stemming from the University’s involvement with commercial interests.

ND is not alone in facing such problems. You have taken the helm at a time when higher education generally is being buffeted by market forces. One problem has to do with increased dependence on the business sector for financing. Pharmaceutical and biotechnology firms, for example, often form alliances with universities in which research results are exchanged for the funding of equipment, graduate assistants, and faculty supervision. While such arrangements bring obvious benefits, the long-term result is that university research programs tend to be dominated by commercial agendas.

Another emerging problem comes with competition from a growing number of for-profit schools, particularly in the fields of business and medical technology. A recent estimate is that for-profit schools currently serve 600,000 students in this country alone. These students are eligible for federal Pell grants, and often for state-sponsored scholarships, which cuts into funds available for student support at non-profit institutions like ND. Admission policies in career schools are shaped entirely by market forces, putting pressure on non-profit universities to follow suit.

Consider also the burgeoning field of so-called “distance education,” which boils down to offering courses on-line. With an initial investment in digital equipment and photogenic faculty, an established university could draw tuition money from thousands upon thousands of students worldwide. Without the overhead of classrooms and other campus facilities, distance education has the potential of being enormously profitable. According to Derek Bok, former president of Harvard (in his recent Universities in the Marketplace), such prestigious universities as Columbia, Chicago, and Carnegie Mellon have already embarked on ventures of this sort.

It would be naïve to assume that ND is immune to economic pressures like these. Viewed from one perspective, ND has a product to sell (its degree), a well-defined base of potential customers, and a skillfully managed marketing program to make the product attractive. In the abstract, it seems natural that ND be run in a way that maximizes effectiveness in the sale of its particular product. In practice, this would amount to running the University like a degree-granting business.

Indeed, the University has several key components that seem to be run in this fashion already. Notable examples are the Development Office and the Investment Office, which quite reasonably are expected to show a healthy profit at the end of each accounting period. Examples of a different sort are Human Resources and the Controller’s Office, which function more or less like their corporate counterparts. Under the discipline of the Controller, all revenue-generating operations of the University are held accountable to the bottom-line (consider Food Services and the Joyce Center).

Also to be noted is the fact that many of the top officers of the University have a business background, and that the Board of Trustees tends to be dominated by business executives. The net result is that a sizeable portion of the people responsible for setting University policy think and act like corporate executives. This can only add to the external forces acting to transform ND into a business enterprise.

There is little likelihood, of course, that the University will ever be operated primarily to make a profit. This would void its tax-exempt status. More likely is that it will come to be managed exclusively in the manner of successful businesses, which is to say run according to a managerial model. This would amount, among other things, to treating its students like customers, its faculty like employees, and its managers as ultimately responsible for its institutional well-being.

There undoubtedly are some members of the University (mostly faculty) who feel we have gone too far along this path already. Others may differ. But all concerned parties should agree that the time is ripe for a comprehensive discussion of the extent to which the managerial model is compatible with our educational mission.

The point to be debated is not whether we need an efficiently managed Development Office, Investment Office and the like. Of course we do. The question at issue is whether, for purposes both of long-term planning and of day-by-day operation, the University should be conceived as an organization providing a product to a select group of consumers. My own view is that it should not. There are various reasons to be offered in support o this view.

One reason has to do with the conception of a ND education (and the degree symbolizing it) as a product. To be sure, there is a sense in which the training provided by a for-profit career school is a product. A diploma from such a program equips its holder to seek employment in the relevant field, which often is a benefit worth paying for. To some extent, the same may be said of professional training in law or business provided by ND and similar universities. Even in such fields, however, ND’s sense of mission should extend beyond professional training.

First and foremost, the goals of a ND education should be thought of in terms of the personal maturity of its students. This is the case without regard for field of specialization. For engineers, scientists, and business people alike, growth in personal maturity is a matter of gaining life-skills like critical thinking, multicultural sensitivity, and responsible citizenship. In keeping with the intent of its C.S.C. founders, ND should also concentrate on the development of personal traits like compassion and humility, along with other virtues ingredient to a mature Catholic faith.

The first reason for rejecting a business model of University governance is that life-skills of this sort simply are not products that can be exchanged on the market. Professional skills can be marketed to qualified buyers, and a university can be managed for efficiency in that transaction. But responsible citizenship, compassion, and such like, are not professional skills. The kind of education ND should be intent on providing, accordingly, cannot be accommodated by a managerial model.

Other reasons for rejecting this model concern untoward side-effects that go along with its employment. Consider, for example, ND’s seemingly obsessive concern with publicity, not unlike that of a business intent on maintaining a favorable public appearance. One may be excused for wondering why, given the quality of education it should be providing, the University is so preoccupied with a carefully managed public image.

Another concern is the effect of the business model upon grading. In the business world, success in selling a product hinges on customer satisfaction. When the product is a university degree, its perceived value is bound up with the quality of the academic record it represents. Since quality of an academic record is measured in terms of grade averages, an untoward consequence of the model is a tendency to sweeten the product by giving undeservedly good grades. This is a major source of the current epidemic of grade inflation.

A closely related matter is the need for a purveyor of a product to make a favorable impression on potential consumers. Under the business model, classrooms teachers are commonly thought of as salespersons and evaluated accordingly. A problem with ND’s current system of Teacher-Course Evaluations (TCEs) is that it measures customer satisfaction rather than success in imparting skills that are part of a sound education. This results in teachers being rewarded or penalized for reasons that might be extraneous to the University’s mission.

Excessive preoccupation with public image, grade inflation, and misleading TCEs are all by-products of the University’s drift toward commercialization. Each will be treated at more length in further installments of this letter. Suffice it for now to say that in the years ahead your administration will come to be known by the way it responds to problems of this sort.

Kenneth Sayre is a professor of philosophy.

The views expressed in this column are those of the author and not necessarily those of The Observer.