The University President, CEO Of The Corporate University

In future articles I will examine the former UNM presidency of Louis Caldera.  Before he became UNM president, Caldera had an extensive background in military and corporate fields.  For now, I will examine the role of the university president position in general and how it epitomizes the structure of the corporate university.

The main sources for this article are from the magazine entitled, appropriately enough, University Business.

The president of a university, often called a chancellor, is a prestigious role in a community. As a university is often one of the largest employers in a city, a university president can be one of the more visible members of the community. Like CEO’s in a corporation, they attract much money.

The first article is by Robert Sevier and talks about “Building the Presidential Brand.”  Branding is a corporate concept.  Sevier talks about using the office of the president to build the branding of the university.  It suggests that a known president will have a “halo effect” in getting the institution’s name out there.  It can “increase and enhance a college’s standing in the media, before foundations, and among peer institutions.”  The president must not only run the university, but sell it too.

In the second article “Getting Behind the Salary Surge”, Tim Goral points out the importance of university presidents for a university, and the increasing compensation they are given.  Noting that then University of Michigan president Mary Sue Coleman received a base salary of $475,000, along with $102,500 in deferred compensation, for a total of $675,000 annually.  The chairman of the regents justifies it saying that the presidency is an important job and deserves adequate compensation.

At the same time that university administrators are getting extremely large salaries and compensation packages, they also bemoan that these salaries are way below what they could get in the private sector.  Giving the reason that they need to attract top talent, presidential salaries are going up.  As public institutions are limited by public funding on what they could give the president, many institutions are turning to the private sector to compensate their presidents.  Foundations connected to the universities are set up for this purpose.  Some examples include Mark Yudof of the University of Texas system, getting $787,000 in an annual compensation package.  Due to state law limiting the amount of tax money given to the top executive of the university, 91 percent of his money comes from private funds.  Other examples include John Shukaer of the University of Tennessee system gets $733,550 annually, with $250,000 of this from stock options bought by the University of Tennessee foundation; Coleman Evan Dobelle of University of Hawaii getting $599,500 annually, including $157,500 in a “golden handcuff” if he completes his seven year term; Mark Emmert of Louisiana State University in Baton Rouge getting $590,000, with $330,000 from private money.  The median compensation for university CEO’s at average four year colleges is $156,159, with total compensation packages just below $300,000.

While universities are facing budget cuts and loss of programs, presidential salaries are justified because of the supposed demand of the jobs.  It also shows the changing nature of the university president to fit the needs of a corporate university.  Anne Hayes Die, managing director of Academic Search Consultation Service (www.academic-search.org), says presidents face more challenges than they did in the past, including legal issues, regulatory issues, and fundraising, saying it is an increasingly demanding job.  Furthermore, vice president Jan Greenwood of A.T. Kearney, an executive search company (www.atkerney.com) says that job responsibilities have shifted more to fundraising.  Presidents traditionally did three things: provide leadership and vision for the institution, oversee management of the institution, and provide for resource development.  Now, Greenwood stated, as much as 80 percent of the presidents time is now on fundraising efforts.  So now the president is basically a glorified fundraiser.

On this last role, one writer, Richard Blow, bemoans in this article the fact that college presidents as a group have chosen to stay silent on big issues of the day. When written back in 2003, the issue was one of the Iraq War. Blow also looks at the fact that president spend most of their time raising money, and voicing a controversial opinion will alienate wealthy donors.

Also, the presidential search process has changed dramatically, especially with the role of search consultants increasing. A study back in 2000 by the American Council on Education titled The American College President: 2000 Edition, gathers data on search firms. It showed that search consultants were used in the recruitment of one-half of hired presidents in 2000, compared to only 16 percent of those hired before 1985 who reported that search consultants were used in the hiring process.

With universities turning to private funds to make up for loss of public funding, these private funds are coming under scrutiny.  These funds are seen as giving undue influence on the university.  For example, the University of Oregon had conflicts with Nike and their donations to that university.  The president of this institution had  his salary supplemented by a $40,000 endowed chair created by Nike founder Phil Knight.  Knight has given millions of dollars more throughout the years to the university, and had the Knight Institute at the law school created.  The university, due to protests by anti-sweatshop activists, joined the Workers Rights Consortium to monitor conditions U of O apparel was made in.  After this action Knight withdrew a $30 million he pledged to help build a new stadium.  This conflict was apparently worked out, but points to the problems when universities rely on private funds by donors who have their own interests.

Richard Ingram, president of the Association of Governing Boards of Universities and Colleges, stated that state governments must provide adequate compensation for their university presidents so the institutions do not have to rely on private money.

Universities Hiring More Presidents Directly From Business World

In an article by Jim Hopkins in USA Today in 2002, entitled “Universities Hire More Executives to Lead,” he documents how more colleges and universities are hiring presidents more from the business world than from inside academia.  Although the majority of presidents of the nation’s 3,100 higher education institutions still come from an academic background, the hiring of business executives is a growing trend.  According to statistics from the American Council on Education in 1986 and 1990 the share of college and university presidents from the business world was at 2.0 percent and 2.1 percent respectively.  In 1998 that figure increased to 3.2 percent.

Some of examples cited by Hopkins include the following:

*Babson College, a private business school, named Wall Street veteran Brian Barefoot to the job.  Before taking the position at Babson, Barefoot spent 30 years at PaineWebber and Merrill Lynch, and stated that he would make sure the curriculum reflects the needs of employers.  He was the third leader the school had from Corporate America.

*Bowdoin College chose a corporate lawyer, Barry Mills, to be its president in July 2001, the first non-academic to head the school.  Mills previously was the No. 2 lawyer at Devevoise and Plimpton in New York, a firm with 1,500 lawyers and staff, and there for 22 years.  He stated that decisions in the corporate world are made in hours, but a university setting required consensus that took longer.  It can be seen how business attitudes would come in to change the university in this statement.

*The University of Kentucky hired Lee Todd in July 2001 as president.  Previouly he served as senior Vice President of Lotus Development and before that served 18 years with two tech companies he founded.  Todd now has to work not only with co-workers and customers but with the Kentucky General Assembly, bringing more politics than he was used to.  Although he previously taught at the university for nine years after earning engineering degrees there, he peppers his speeches with business lingo and also stated that he wants the  UK to “be more competitive and to develop programs at a faster pace.”

*Harvard hired Lawrence Summers, former Treasury Secretary under Clinton, to be its new president  in 2001.  Summers had a high-profile dispute with professor Cornell West, who accused Summers of being dictatorial.  West left for Princeton University.

Hopkins also quotes the A.T. Kearney firm as saying business executives are better equipped to deal with 21st century universities.  The article states from Kearney “Universities need new sources of revenue, as government support dwindles.  There’s also more competition for students and more complex labor issues, such as unions organizing graduate-teaching assistants.”

All of this points to the increasing corporatization of the university.  Most universities have a board of trustees (or board of regents) that is structured like a corporate board of directors, with the president the CEO.  Along with being an undemocratic governance, the boards look at compensation the same as they would in the private sector.  The compensation packages are based on performance.  Also, the president serves at the pleasure of the trustee boards, who have ultimate power over the university and can remove a president.  These boards are often made up of people from the corporate sector and not academia.  It is no surprise they often choose presidents from the corporate sector too, as they want to run the university like a business.

Greenwood also states that more presidential searches are looking for presidential candidates not only outside of academia, but also outside of higher education itself.  Gary Posner, vice president of Educational Management Network/Witt/Kieffer (www.wittkieffer.com) says “Because of the economic challenges that some institutions are facing, there is an increasing movement to at least take a look at people who are not from the traditional, up-through-the-ranks world; people who are from the development world or finance.”

As the university becomes more corporate, its very structure will reflect that agenda.  Presidents are becoming chiefly fundraisers, and universities will be in service to business interests.  A more democratic university is possible, but only with a change to the entire structure of society.  These factors here influenced the University of New Mexico’s decision to hire Louis Caldera, which we will examine here in the near future.

Sources:

Sevier, Robert A.  “Building the Presidential Brand.”  University Business.  January 2003.  Pg. 11-12.

Goral, Tim.  “Getting Behind the Salary Surge.”  University Business.  February 2003.  Pg. 21-24.

Press Release. “ACE Study Shows Gains In Number of Women College Presidents, Smaller Gains for Minority CEO’s.” American Council On Education. September 11, 2000. http://www.acenet.edu/news/press_release/2000/09september/college-president.htm (Accessed June 10, 2003)

Hopkins, Jim.  “Universities Hire More Executives To Lead.”  USA Today.  April 25, 2002.  http://www.usatoday.com/money/mear.htm (accessed June 10, 2003).

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About elloborojo

Okay, as the subtitle states, this is a notebook from what I call a New Mexico diaspora (look up diaspora if you are asking). I was a former resident of New Mexico, now living elsewhere, but New Mexico is still my homeland. To get more in touch with your homeland one must be away from it. This is my attempt to understand it. I was a former anti-militarism activist in the Albuquerque area. Still believe that United Snakes militarism is the greatest threat to the world, as do the majority of the worlds population. Uncovered much information about the ties in New Mexico, but never processed it all. This blog is an attempt to do that. Also hope it may come of use to others with similar interests.
This entry was posted in Louis Caldera, Universities, University of New Mexico. Bookmark the permalink.

2 Responses to The University President, CEO Of The Corporate University

  1. Pingback: The Presidential Search of 2003, part 2 « El Lobo Rojo: Notes From A New Mexico Diaspora

  2. Pingback: The University of New Mexico and the Hispano Community « El Lobo Rojo: Notes From A New Mexico Diaspora

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