Wednesday, February 10, 2016

Is a university a business? Mount St. Mary's efforts to keep its doors open may backfire

The phrase "ivory tower" has a particular connotation when applied to a university, or to some other type of academic research organization. It implies a loftiness of purpose, an unfettered pursuit of knowledge. In this idealistic phase, a true university - and I'm not talking about the money-grubbing greedy people who run the University of Phoenix - is dedicated to the pursuit of truth. Words such as "censorship" are incompatible with this lofty purpose.

Of course, some on the political right argue that universities censor those who love Murica. But I digress.

However, when you look at a university objectively, there are fetters. A university needs money to run. If you have ever graduated from a university, or even attended a university for a short time, you are probably subjected to repeated requests for donations, offers to help with estate planning (with the estate going to the university, of course), and many other reminders that the chief duty of a university president is not to consider the lofty goals of higher education, but to make sure that the university has enough money to keep its doors open.

So if a university is a business, doesn't it make sense to get a businessman to run a university?

Mr. Newman has almost 30 years of experience working as an executive with a strong background in private equity, strategy consulting, and operations. He is the former managing director of the private equity fund JP Capital Partners, as well as president and CEO of Cornerstone Management Group, founded in 1997.

During his career he has started or co-founded four different businesses, completed more than $33 billion in transactions, and raised more than $3 billion in equity funding for ventures and bids he originated. He has led several business turnarounds and delivered more than $200 million in profit improvements.

Mr. Newman is Simon Newman, who was brought in to become the president of Mount St. Mary's University in Maryland - presumably to make sure that the doors remained open.

What could go wrong?

First off, you have to remember that universities are constantly rated - not only by U.S. News and World Report (which, ironically, was only the fourth best weekly newsmagazine), but by the U.S. Department of Education. Ratings mean money, so universities - whether they like it or not - have to pay attention to things such as retention rates. President Newman had an idea about this:

Is a valid strategy to improve a college's retention rate to encourage students at risk of dropping out to do so in the first few weeks, so they won't be counted in the total numbers reported to the U.S. Education Department and others?...

The president, Simon Newman, acknowledged to The Washington Post that he was pushing a plan to intervene early on with students who may be having difficulties. But he said that this was to help them, although he said that the help in some cases might be for them to see that they might be better off a less expensive public institution.

Unfortunately for President Newman, he chose some rather forceful words to impress on the faculty that they needed to take a businesslike approach to this:

The student newspaper also reported (and The Washington Post quoted a professor confirming) that Newman told some faculty members they needed to change the way they think of struggling students. He reportedly said, “This is hard for you because you think of the students as cuddly bunnies, but you can’t. You just have to drown the bunnies … put a Glock to their heads.”

In this process, Newman was not only opposed by the student newspaper, but also by a number of faculty members who disagreed with the idea.

In a university environment, this often means that the institution goes through a few semesters of soul-searching, debate, discussion, and the like. At a minimum, any decisions are reached in a joint effort by faculty and administration, in accordance with the concept of shared governance.

But that isn't what happens in a business (with a few notable exceptions). And Newman, with his business background, acted quickly:

The president of Mount St. Mary's University in Maryland on Monday fired two faculty members without any faculty review of his action or advance notice. One was a tenured professor who had recently criticized some of the president's policies. The other was the adviser to the student newspaper....

But gets better.

Newman's letter firing the tenured professor -- Thane M. Naberhaus of the philosophy department -- accused him of disloyalty.

"As an employee of Mount St. Mary's University, you owe a duty of loyalty to this university and to act in a manner consistent with that duty. However, your recent actions, in my opinion and that of others, have violated that duty and clearly justify your termination," said the letter.

Further, the letter said that Naberhaus's actions "have caused considerable damage" to the university and that the university might sue him. In addition, the letter told Naberhaus he was "designated persona non grata" and banned from the campus.

Now this is not completely unusual. Even colleges that are most dedicated to academic freedom sometimes demand loyalty from their faculty; my own alma mater, Reed College, famously dismissed Professor Stanley Moore during the McCarthy era.

But it certainly raises eyebrows.

How will this issue be resolved? Will dedicated faculty throughout the globe unite in an effort to champion academic freedom?

Perhaps...but it would have no effect.

The one way that Mount St. Mary's issues will be resolved will be by a method that President Newman clearly understands: money. If critical donors decide that the environment at Mount St. Mary's is so toxic that donations dry up, rest assured that President Newman will be asked to seek other employment.

In a businesslike manner.
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