Article
Different perch, same purview: Amplifying the power and promise of U.S. higher education
Dec 03, 2024 · Authored by Daniel Greenstein
It’s déjà vu all over again. In 2018, I delved deeply into the available literature and consulted extensively with diverse trailblazers in and around higher education. My mission: to understand catalysts and capabilities to affect transformational change in higher education institutions.
Why? Because colleges and universities are critical workforce development and social mobility engines and essential mainstays of a healthy, just and more civil society. And they’re experiencing enormous demographic, financial, political, reputational and other pressures that are forcing increasingly unsubtle change. Their ability to drive holistic organizational transformation and redesign rather than make mere tweaks around the edges is not only critical to their but to the nation’s well-being.
This article explores how the higher education landscape is substantially the same now as it was in 2018 and how it may be profoundly different. It’s a gloomy read. The challenges we face are real, complicated and in some cases, existential. They are not intractable. Good thing, given the industry’s criticality. And I promise I’ll dive deeper into “the how” in future (hopefully more uplifting) articles.
Change is constant.
Three aspects of constant change emerge so powerfully from my research that I am retooling them as foundational assumptions about the higher education industry.
- Change in higher education happens slowly but is possible and continuous. For example, U.S. higher education changed fundamentally in the last quarter century through three long-running and overlapping phases, each emphasizing a unique combination of opportunity and societal expectation. The first expanded access to historically underserved populations, the second focused on improving all students' educational progress and the third supported post-graduation (workforce, employment or salary) outcomes. All were, at once, shaped and reflected by new technology, regulatory changes and shifts in local, state and federal government higher education funding. Together, they resulted in significant institution-level changes in business, administrative and educational practices. They reshaped every function, from payroll and accounting to the classroom.
- There is no single transformational change journey. It differs for every institution.
At a systemic level, colleges and universities share a lot in common. They enroll students who register in courses from which they gain credit that, if accumulated along orderly and defined pathways, result in a credential. They have faculty with specialized knowledge who engage in its transmission and participate in defining and operationalizing the educational enterprise. Transformation is responsive to common demographic, financial, political and other challenges and draws from the same library of potential strategies (there are only so many colors on the palette). This is why change management and other “playbooks” outlining what works and why to guide improved outcomes alongside case studies describing best-of-breed implementations are so valuable.
At the same time, specific institutional circumstances vary tremendously. Higher education institutions have different organizational cultures, revenue sources, cost structures, student markets, strengths in their faculty-shared governance and community and government relations. So, while their change journeys share a lot in common, they are unique, rely heavily on local capabilities with strategy planning, execution and change leadership and are not so easily or readily replicated. - There are countless catalysts for change, but no one will overcome organizational inertia until it threatens an institution’s ability to maintain market share, public trust and the operating capabilities necessary to sustain itself financially. At that point, when change is finally engaged with deliberate intent, its conduct places a premium on people (leaders, faculty and staff) who understand higher education as a business and are restless in their pursuit of effectiveness, efficiency and reach into new markets. While generating revenue is not part of most institutions’ mission statements, these organizations cannot sustain themselves if they cannot operate within their fiscal means.
“The challenges the industry is facing are identified with a greater degree of urgency and concern now than they were six years ago. There’s no desperation or panic. It’s more like gravity.”
The pressures driving change in higher education have intensified and evolved.
Three developments will have the most profound implications for the sector:
Financial fragility is far greater now than in 2018.
The causes of fragility haven’t shifted significantly, but their magnitude has grown. Colleges appear to be closing or merging at a weekly rate. And the shakeout has only just started. Many state universities are competing for the same small and declining potential student pool and have more “seats” than they can fill. A significant drop in the traditional high-school-leaving population coupled with difficulties colleges and universities experience shifting effectively into new student markets, have diminished public funding and raised concerns about tuition costs and available return on investment.
What’s different about financial fragility in 2024 over 2018 is that many institutions have less money in the bank than they did in 2018 and thus less ability to invest in the transformational changes required to reach fiscally resilient ground.
There are two things I’ve learned over my career in higher education:
1. Transformation costs money. The most opportune time to make change is when the institution has the funding to make a real impact.
2. Making the case for change is tricky when there’s money in the bank. I can’t tell you how often I’ve heard variations of, “Why change? We’ve got $50 million in unrestricted net assets. We need a good budget year/fall enrollment.” Or worse, “Our new lacrosse team and renovated science building will drive the enrollment growth we need to stabilize financially.”
After years of using reserves to cover annual operating shortfalls, too many institutions run on fumes. COVID relief dollars provided a respite, but they’re exhausted. And guess what? Reserves are spent down in a non-linear pattern. The last $40-$50 million goes fast.
So, in 2024, I find universities exploring a broader range of more aggressive and more transformative cost-cutting and revenue-generating options than in 2018, having exhausted the utility of options tried previously:
- Shared service efficiencies that once focused exclusively on back-office functions (payroll, HR, etc.) are moving to the front office (e.g., universities seek to share academic programming)
- Outsourcing and public-private partnership (P3) solutions are moving from peripheral functions (facilities management, dining services) to core and strategic functions (program management, faculty professional development, enrollment management)
- Scale economies, once pursued almost exclusively through enrollment growth and multi-institutional shared service, resource sharing and partnership opportunities, are increasingly sought through mergers and acquisitions. And yes, we’re seeing more program eliminations and employee headcount reduction.
A few, sadly, are waiting too long to act and are forced to close their doors suddenly and without notice. This is desperately unfair for students and employees alike, and we need to do everything we can to encourage such institutions to act sooner – to address their challenges when there are still options available to them.
Negative public sentiment is another driver and acts to financially weaken higher education institutions.
It results from growing public distrust of the sector, as evidenced by longitudinal polling data from a Gallop Lumina poll and other sources. It’s as if higher education leaders are battling on two fronts:
- Demonstrating the value of higher education by emphasizing affordability (often through tuition discounting strategies that don’t have long-term financial viability) and relevance (with credentials that demonstrably launch and advance careers)
- Proving that higher education’s values haven’t been hijacked by faculty and enabling administrators, whether because they emphasize and promote identity politics and anti-colonialism or because they reproduce privilege and promulgate oppression of marginalized groups
Success demands fundamental shifts in how the industry presents itself and interacts with the general public and elected local, state and federal government representatives.
The locus of regulatory control over the industry may be shifting to the state level.
This reflects several trends, including:
- Sudden higher education institution closures are taking regulatory and compliance agencies by surprise when they should have seen the collapse coming
- Concern that industry exits will harm students and communities, leaving them without means of redress
- Dissatisfaction and frustration with and distrust of the U.S. Department of Education and regional accreditors
- Concern that state taxpayer dollars support institutions that are no longer viable and unnecessarily redundant academic program offerings in low-demand fields while needs in higher-demand fields (e.g., healthcare) go unmet
- The politicization of higher education issues
- Perceived opportunity to quickly and effectively adopt constructive innovation into more institutions
Such a shift would drive significant change across the higher education landscape as:
- State agencies seek the capability, authority and credibility to manage expanded responsibility for regulatory compliance, accountability, financial solvency and even program scope
- Higher education institution leaders and their boards navigate new and changing regulatory environments, governing bodies and accountability regimes
The capability gap has grown.
Transformational strategies are not in short supply – they never were. What appears in short supply today more than in 2018 are the capabilities necessary to implement those strategies effectively. Higher education as a business has changed more quickly and fundamentally than its talent pool.
While the industry attracts incredibly intelligent, highly dedicated and impressively mission-driven professionals, leaders can’t just tell enrollment managers who were effective in recruiting high school and community college graduates to find adults for short course certificates. Business officers can’t reasonably expect facilities management who’ve overseen capital project development and maintenance to figure out how to repurpose and monetize assets to confront today’s realities. Nor can they expect academic managers who’ve built exceptional, award-winning degree programs to implement similar success in hybrid and online modalities or non-degree credentialing programs. I haven’t even touched on artificial intelligence and machine learning or the more sensitive topic of institutions gracefully exiting through closure or merger. The former entails comprehensive upskilling of employees, the latter tapping into talent pools that are in short supply, if indeed they exist. (More to come on these topics in my future articles.)
The point is that organizations operating under these pressures, some only marginally viable, aren’t investing as much as they need to in upskilling their people. They are so busy dealing with the transactional load that they don’t have the time or capacity to step back and think about where the institution is going and how it will get there. Even if they know what talent development is needed, they may not yet have the purview to understand its role relative to other approaches and strategies.
I’m not one to outline a problem, drop the mic and leave. The challenges colleges and universities face are tremendous but opportunities exist to build a brighter future for our students, communities and this nation. I encounter them regularly. So, stay tuned for more articles that reflect on what I see – promising, transformational approaches, novel ideas, actionable strategies and observations about an industry that is in transition and that will undoubtedly emerge stronger.
