Universities Run Into Problems When They Hire Presidents From The Business World


Mount St. Mary’s University, a private, liberal arts Catholic university in Maryland, has recently been plagued with controversy thanks to comments from the university president that made an alarming comparison between students and bunnies.

After a career in the financial industry, president Simon Newman vowed to make sweeping changes in both finances and academics at Mount St. Mary’s. But some faculty were taken aback by his communication style, one that may have gone unnoticed in private equity, especially when he talked about encouraging struggling students to leave the university earlier in the semester for a better federally reported retention rate.

In one meeting, Newman allegedly told staff, “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.”

His remarks were published in the student newspaper and resulted in a university-wide conversation about the school’s mission. Newman resigned his position last week after widespread criticism of his leadership.


Newman’s story is not necessarily unusual. An increasing number of university presidents with business backgrounds are coming into colleges with the idea to reform them and make them more marketable, more desirable, and, in turn, more profitable. But the problem is that they often have little to no experience in academia — and may see education as something that serves the university’s financial needs rather than something that should serve students’ and professors’ needs.

The university president as CEO

Twenty percent of college presidents come from fields outside of academia, according to a 2012 national survey from the American Council on Education — a substantial increase from 13 percent six years earlier. And the salaries of presidents at prestigious universities keep rising.

For example, Yale University gave its ex-president Richard C. Levin $8.5 million as an “additional retirement benefit.” Levin already made seven figures, and according to The Chronicle of Higher Education, he was ranked 10th for overall compensation and third for base pay during that same year. From 2003 to 2012, private university presidents’ salaries rose from $200,000 to nearly $300,000 on average, according to The American Association of University Professors.

This shouldn’t be surprising considering the fact that a considerable portion of trustees at public universities (42 percent) had business occupations, including roles as executives at large corporations, and over half of trustees held such positions at private universities, according to a 2010 survey by the Association of Governing Boards of Universities and Colleges.


One example would be Michael Alexander, who was chosen as president of Lasell College in 2007, even though he previously worked in entertainment and as chief executive of a technology firm. In an interview with the Boston Globe, Lasell said, “Most search committees now want to make sure there’s at least one person in their pool who has a nontraditional or business background.”

There are a few important reasons, however, why people from business backgrounds may not make a great fit as university presidents, according to Benjamin Ginsberg, the author of The Fall of the Faculty: The Rise of the All-Administrative University and Why It Matters and a political science professor at Johns Hopkins University.

“Our customers are kids. And our job is to teach, not to cater to their whims, and business people have trouble processing that.”

Bernstein said that CEOs often compare students to customers when discussing the importance of running universities like a business. But he pointed out that the student-as-customer comparison doesn’t really work because students have to be challenged in order to receive the best education they can.

“They try to figure out what customers want and provide it for them and that’s consistent across the core of economics. But it’s not quite right for a college and university,” Ginsberg said. “Our customers are kids. And our job is to teach, not to cater to their whims, and business people have trouble processing that.”

Richard P. Chait, a research professor at the Harvard Graduate School of Education, adds that this mentality may be driven by the fact that more families tend to look at themselves as customers — especially the families of students with the most impressive applications who find themselves courted by Ivy League universities.


Since it may be difficult for students and parents to judge the academic quality of the campuses they’re considering, they may look toward campus amenities instead. It’s easier for them to judge things like stadiums, pools, wellness centers, and student groups than academic rigor. This feeds into idea that universities have to create a desirable customer experience for students, and in turn puts less emphasis on research and education.

How a university’s mission can go off track under a CEO

Universities have very different cultures and hierarchies than corporations, yet there is a belief that corporate management goals can easily be applied to schols, while no one would expect the reverse, according to Chait.

“If we were able to identify extraordinarily talented university presidents, I doubt that anyone would consider those individuals to be the CEO of General Electric, General Motors or Procter & Gamble. Why does the traffic flow one way and not the other?” Chait said. “It’s because there is a mistaken view that if you run a company you can run a university and if you can run a university you can run nothing.”

It’s not the case that people from corporate backgrounds can’t ever run universities well, Chait said. But in order to be successful, those presidents need to adapt to the culture of the institution they’re running rather than expect the institution to adapt to them. Unlike corporations, institutions of higher education often do not have the clear chains of command that corporations do, although some university presidents and administrative support staff have been making efforts to change that. But as President Simon Newman discovered, many faculty members did not subscribe to that culture, and Newman only inflamed faculty further when he fired faculty members who disagreed with him, accusing one tenured faculty member of disloyalty. Later, they were reinstated, but the damage was already done. The faculty members said they did not intend to return to the university.

“In higher education, power is broadly distributed and decentralized and faculty have enormous voice, influence, and sometimes positions of authority …”

“In higher education, power is broadly distributed and decentralized and faculty have enormous voice, influence, and sometimes positions of authority over curriculum to admissions decision to promotion and tenure processes,” Chait said. “I think the days of autocratic executive leadership are over, but there are still more levers, incentives, and sanctions to be exercised in the corporate sector. They have nothing that is equivalent to tenure faculty that have the economic security to, in their judgment, constructively challenge management at every turn.”

Ginsberg said there is often a mentality that instead of ensuring the institution serves the teaching, the teaching must serve the institution.

“From the professor’s perspective, everything else is judged based on how it contributes to teaching and research,” Ginsberg said. “From an administrative perspective, the purpose of the university is to generate revenue and teaching and research are just ways of bringing customers into the store, so the ends and means are different. It’s not that having fountains in the center of the campus and all this stuff is horrible, but from an admnistrator’s perspective this is more important than having a major in French literature.”

Ginsberg said presidents and other administrative faculty from corporate backgrounds favor a managerial hierarchy that suppresses innovation at universities and discourages faculty input. He also argues that although universities may think candidates from a business background will offer practicality in their financial management practices that those working in a academia don’t, it’s a “false practicality” that promotes short-term thinking.

“If all you do is teach people to fill the niches that are available today, what are they going to do in a few years when things change? To think, to reinvent, to innovate, that’s developing long-term skills, so I would say you’re better off being a philosophy major than majoring in some apparently practical but short-term activity,” Ginsberg said.

How faculty and students are pushing back

“CEO presidents” and their administrative staff may create an environment that stifles faculty and student involvement in decision-making. But in response, students and faculty — and especially adjunct professors — are organizing.

For example, Tim Wolfe stepped down from his position as president of the University of Missouri after failing to address several racial incidents on campus, but it probably didn’t help that Wolfe, a former executive at IBM and Novell Americas, had little support from faculty as the controversy unfolded. Wolfe made decisions with little input from faculty, ruling “autocratically” according to Arthur G. Jago, professor of management and a member of the Faculty Council on University Policy at the University of Missouri at Columbia, in a piece for The Chronicle for Higher Education.

Workers are also organizing as the corporatization of the university makes their jobs less secure and provides less room for advancement. For instance, presidents focused on the bottom line may demand that more work is contracted out, such as student dining services, and try to keep faculty in adjunct positions that provide them with little economic security.

Graduate students at Columbia University and Harvard University, for example, are trying to unionize and adjunct faculty have joined students protesting student debt at the Million Student March. Adjunct faculty involved in the Empower Adjuncts Community Coalition at Northeastern University were core organizers for the march, Keely Mullen, one of the lead organizers of the protests, told ThinkProgress.

“At many schools, the faculty has noticed that its place in the world is being sharply undermined and they’re no longer asked about what should be done,” Ginsberg said. “The faculties have begun to organize to try to recapture their lost influence. When you have a president with a business background, it seems utterly wrong to them and preposterous compared to this tradition of shared governance and faculty representation.”