Monday, March 07, 2011

An UPside Down Business Model Costs Studnets and Families

Though I may not win friends I hope to influence people with the following notions. First, Colleges are horribly run businesses that do their customers harm quite often. They are upside-down businesses models. Second, many of them should not even be allowed to stay in business and would not without taxpayer support.

First, colleges are businesses. There is no way around that fact. Unique businesses yes. Service and development businesses yes. They have all the aspects of any for-profit business except for a cash accrual accounting system or a real concern for their proclaimed customers.  Of course there are even some that do have cash accrual. These are the for-profit schools which realize they are businesses even some to the point that they may have forgotten they are colleges.

Colleges and universities have operational budgets that depend on selling the school (recruitment) to its customers (students and parents) by sales (admissions) and collecting revenue (tuition) by billing (bursar) based on the college's brand (reputation), products (courses, programs, degrees), services (advising, FA.) and creating a connection with the customer (client services) by employees (faculty, staff, administrators) (some in unions) who receive salaries and benefits, delivering product and services (learning opportunity) fulfilling customer need (degree and career/Grad school).

They are businesses.  This is obvious in the case of for-profit-schools but is also true of what we call not-for-profit colleges and universities.

When I was a president of a not-for-profit publically-assisted college I was even required to make a 3% surplus (profit) by the end of the year to meet the guidelines set for us by the public Board of Trustees. How is that different than a corporation that needs to make a 3% margin set by its corporate board? One might think that a difference is that the corporate board benefits from a profit in personal returns but don’t kid yourself too much. The college board may not have gotten money directly from the 3% surplus/profit but they had personal gains they took from the college and its success.

And when I call them businesses I am not necessarily supporting those who believe academia has become that way through the pressures of admitted corporate America and its money influencing research and schools through donations. America’s colleges have only been able to work so well with corporate America because they are part of it themselves and a major sector of the economy at 6% national GDP. We have presidents making salaries that are equal to and exceed that of business and corporate CEOs. We have professors who make more than many corporate managers and have as many if not more perks like not having to work all that much what with research, release time, semester breaks and summers off.

In fact when one thinks about it at all, it is realized that academia’s business model is all wrong.

We require the least from the most highly paid such as senior professors and many administrators and the most from those paid subsistence wages such as adjunct faculty. Senior professors in all but community colleges teach an average of six contact hours a year! A few maybe three courses a year. A few might be stuck with four if they are not doing research or haven’t figured out the release time system.

Two classes a year! Not bad but highly unproductive. These are the ones who are paid the most in the faculty ranks from an average annual salary low of $74,267 for a theology professor to a high of $134,162 for a professor teaching and areas of law.  So if we just do a little math, a law professor with even four classes a year is being paid $33,541which and a theology professor teaching the same load is being paid $18,567 a class; not a year – a class if they teach as many as four a year which is highly unlikely at a four year university. What the full professor of law earns per class I still more than an adjunct earning $3,200 (that’s on the high side) a class and teaching eight of them a year or $27,200 a year with no benefits.

And the full professor is teaching seminars and upper-level classes while the adjuncts are teaching the lower-level required and scut courses the professors refuse to teach because they take too much time and effort. (Granted this does not apply to every full professor. There are some who do teach the introductory classes but there are not many of these good souls.)

The lowest paid teach the most important classes. Adjuncts and instructors/associate professors are the ones who get the courses no one else wants to teach to the masses. You know, undergraduate students taking required and building block courses for the majors.  This is so the most highly paid professors cannot be encumbered with all the work required to teach these required courses.

How do I know they are the most important courses? Well, if they weren’t they wouldn’t be required of all students. Would they?

This is an upside down business and productivity model. Those who are the most able and best paid should be doing the most work to assure the mission of the business is met and the financial resources are put to their best use meeting the needs of the customers so the enterprise can succeed.

Sure there are some professors freed from teaching because they get grants which bring money into the institution; money which is desperately needed so the system can keep going. The system has the most highly paid be the least productive when it comes to the core mission of the university or college which is to teach students and primarily undergraduate students.  Moreover with the reductions in hiring of new full-time faculty, the group of full time professors doing the least teaching has become a larger and larger percentage of the full-time faculty core.

And who loses in this system besides the system itself since it wastes so much money under this scheme? Students Not necessarily because they are being taught by adjuncts and instructors. They can be as good if not better teachers than a full professor; especially one that sees teaching as a burden. No the students lose because this is a very expensive system to maintain. Paying highly paid people not to work is expensive and so tuition goes up and up and fees go up and up.

Yes I do realize that research is part of the academic world and life but I hate that it has replaced teaching and learning as the primary focus of the university. The university has more and more become run for the members of the “academic”  community than the students that community is supposed to educate. And let’s be honest here. Much of the so-called research is pointless, useless and deserving of the old Golden Fleece Award that Senator William Proxmire used to give out when he was in the Senate.

Students and their families are paying for a system that is killing their financial ability to afford college while rewarding the least instructionally productive. A quote from an excellent novel The Elegance of the Hedgehog by Muriel Barberry helps make the point about useless research quite eloquently

…the fact that the middle classes are working themselves to the bone, using their sweat and taxes to finance such pointless and pretentious research leaves me speechless. Every gray morning, day after gloomy day, secretaries, craftsmen, employees, petty civil servants, taxi drivers and concierges shoulder their burden so that the flower of French youth, duly housed and subsidized, can squander the fruit of all that dreariness upon the alter of ridiculous endeavors.

And this is just about teaching faculty so far. I have not even gotten to the empires of administrators who suck up huge amounts of money and produce very little. At most schools the administrations growth has outstripped all other areas and as a past administrator I know that most of the time what we did was produce meetings; most of which were just a total waste of time and did not help the mission or the students.

The business model of higher education is just not working and students are being forced to pay more and more for less and less. That is just wrong.

Next, why some colleges should not be in business.

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