First Published on Stevens Strategy Blog
Scenario:
Assumptions and Conditions
Before we talk about the Transition Principles, I want to sketch out a small scenario about interviewing and taking a presidency at a college in need of a turn-around. The characteristics of the institution I present is not built upon any single college and, despite all the hoopla about Sweet Briar, none of the conditions are taken from that particular college. The institution in this scenario are located nearly seven hundred miles to the west of Sweet Briar.
The major premises of the scenario are: first, you would like to work at the college; second, you believe that you have the skills and experience to deliver a successful turn-around strategy; and third, you have sufficient due diligence background information to prepare for the interview.
What You Could Encounter at the Interview for a Turn-Around
If we assume that the board recognizes that a turn-around is needed, it does not necessarily mean that they are willing to do the heavy lifting required for a turn-around. Here are a few comments that have been heard over the past several years from board members:
“We (the board) believe that we can grow out of our current financial problem.”
This came from a college that needed five hundred new students in the next fiscal year to solve their problem. They would have needed to increase enrollment 50% in the next fiscal year. If they staged the turn-around over several years, they would have to had enrolled even more new students because the deficit was growing at a 20% clip annually. The belief by a board that the college can grow out of fiscal problems is a commonly held axiom. However, it assumes that they are not competing with any other colleges for more students.
“The college could do a better job of price discounting which will lead to more students enrolling.”
The problem is that the tuition discounts are simply a recognition by a college that its current price is out of equilibrium with supply (college’s need to enroll new students) and demand (student willingness to enroll). Also, these discounts are coming at a time when many colleges are finding that their potential student pool is shrinking. So simply setting higher enrollment goals and offering larger tuition discounts does not guarantee more students will enroll.
As part of the interview, you might suggest that maybe the college could combine both an enrollment increase and expense cutting as a turn-around strategy. However, you may then hear that expense cutting strategies can be stymied by the faculty because (the board) granted the faculty the authority to approve all expenditures.
In other words, an interview at a college looking for a turn-around strategy does not necessarily mean that it is ready for the angst of developing and implementing said turn-around strategy.
Presidential Candidates at Turn-Around Colleges Need This Information for the Interview:
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- Conflicts, culture, and relations within the institution, including with its alumni and with key external constituencies
- Financial condition – audits
- Status of accreditation
- Law suits
- Relationship with banks
- Position of the local press regarding the institution
Before the Employment Contract Is Signed, the Candidate Should Have This Understanding with the Board:
- Explicit acknowledgement that the Board understands and accepts the implications of strategies posed by the president during contract negotiations.
- The contingency plans in response to any known fall-out from decisions.
- The willingness of the Board, its chair, and executive committee to publicly meet with constituencies and state their support for the President as strategies are being implemented.
- What happens if the board chooses to meet with the faculty or other critical constituencies without the president and if those meetings have the potential of undermining the president.
- An explanation of what happens if a board member expresses to key constituencies lack of support for board approved strategies and plans.
- The conditions under which the president would leave the institution beyond the normal moral turpitude, incompetence, or insubordination.