Can a Business Leader Understand a Catholic University?

In an attempt to help their highly ranked—yet financially struggling—Catholic university, the Board of Trustees at Mount St. Mary’s in Emmitsburg, MD, hired Simon Newman, a Los Angeles private equity and strategic planning leader to be its new president in 2014. A year later, Newman found himself at the center of a faculty-led firestorm over some intemperate remarks. According to media sources, Newman was talking with some faculty members about retention strategies when he jokingly said: “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.”  The faculty did not appreciate the joke.

In fact, the controversy goes well beyond a bad joke. It appears that some faculty members simply do not welcome the kind of business culture Newman brought to the campus. Newman admitted to a reporter at the Washington Post that, although he does not remember the language he used in that informal (private) faculty meeting, he sometimes uses harsh language: “I have probably done more swearing here than anyone else… It wasn’t intended to be anything other than that… Some of these conversations you may need to have with people are hard.”

Those conversations needed to happen at Mount St. Mary’s. Newman believes that the university will continue to suffer if faculty members fail to focus on core strategies—including retention rates. While Mount St. Mary’s University has been ranked highly among regional schools in the 2016 edition of Best Colleges by US News, and has been lauded by the Cardinal Newman Society as one of the most “faithful” Catholic colleges in the country, the school struggles financially. In 2013, Forbes ranked it one of the least “financially fit schools in America,” assigning it a D grade on “financial fitness.” In the Forbes financial rankings of 927 colleges, Mount St. Mary’s was one of 107 colleges to receive the D grade—ranking 888th out of 927 in terms of the balance sheets and operational strength.

Forbes’s Matt Schifrin writes: “Almost all colleges have noble mission statements, but few have pervasive cultures or are able to focus employees on core competencies the way great companies like Coke, IBM and Wells Fargo do. Most colleges and universities try to be all things to all people.” The trend has been to expand majors and departments to attract more students, but such strategies can be costly. While catering to the desires of students may attract more applicants, it does not guarantee financial viability, or ensure high academic success. Such expansion of campus programs and personnel may have been justified when the number of college-bound high school graduates grew from 1990 to 2010. Yet, as Forbes points out, the pool of college applicants has begun to shrink in recent years, making it necessary to cut the programs institutions can no longer afford. Along with that demographic decline, there has been a decline in household wealth. And, the federal government has admitted that the current federal loan program is not sustainable. All of this combines to create the financial crisis that presidents like Newman were hired to fix.

Mount St. Mary’s made a strategic choice to bring in a successful businessman like Simon Newman, but the campus culture may take a while to adjust. The “bunny” story broke when faculty members forwarded confidential emails to the campus newspaper—in violation of the Code of Conduct at Mount St. Mary’s and the fair use policy of their electronic email system. It appeared to some on campus that their intention was to damage the credibility and authority of the new president. On January 25, Mount St. Mary’s Board Chair John E. Coyne made this claim on the university website, where he issued a statement suggesting that “we have found incontrovertible evidence of the existence of faculty and recent alums working to undermine and ultimately cause the exit of the president born out of a real resistance to positive change at Mount St. Mary’s.” He suggested that the ultimate goal of a small group of faculty members was to undermine the president by “circulating mischaracterized accounts and flat-out falsehoods.”

While the media characterizations of the retention scheme appeared counter to the goals of a mission-driven Catholic College, Coyne claims that the media has mischaracterized a strategy that was in “full consistency with our Catholic values.” Acknowledging that President Newman has apologized for using an “inappropriate metaphor” in a private conversation with a faculty member, Coyne maintains that Mount St. Mary’s will continue to implement that retention strategy because “it will make Mount St. Mary’s a better university and more broadly, because it’s the right thing to do for students and families.” The strategy, however, is highly contentious, because it employs a survey of poorly performing students as a means of encouraging them to leave, rather than helping them to succeed or improving the quality of student applicants.

Is a Business Leader Better Equipped to Deal with the Higher Ed Bubble?
Mount St. Mary’s is not alone in its precarious financial predicament. In his new book, The Higher Education Bubble, Glenn Harlan Reynolds writes: “America is facing a higher education bubble. Like the housing bubble, it is the product of cheap credit coupled with popular expectations of ever-increasing returns on investment, and as with housing prices, the cheap credit has caused college tuitions to vastly outpace inflation and family income. Now this bubble is bursting.” Reynolds cites a Money magazine report indicating that after adjusting for financial aid, the amount families pay for college tuition has skyrocketed 439 percent since 1982. Students and their families have been willing to take on tremendous debt because they always believed that whatever the cost, a college education was the ticket to prosperity. This created a bubble as students believed the value would continue to climb. The bubble is bursting now that there are no longer enough “excessively optimistic” students to fuel it.

To meet this new challenge, increasing numbers of colleges and universities—including Catholic colleges and universities—are turning to business leaders to run their institutions. According to a study by the American Council on Education, 20 percent of U.S. college presidents in 2012 came from fields outside academia, up from 13 percent six years earlier. It is likely that this figure has increased since the ACE study was done in 2012. Most of the non-academic college presidents come from the business world. Furthermore, Atlantic magazine points out that

Proponents of the non-academic candidates say that leaders from the world of business or government or law are needed to innovate, control costs and manage a complex organization like a college institution. They have proven skills in fundraising and important connections in their professional networks… With growing resistance to high tuition costs, increased administrative costs, and tightening government resources, business leaders would seem to be a good fit for the job.

But, Atlantic also points out that critics of what they see as the “corporatization of the university” charge that these nontraditional college presidents do not understand the culture and traditions of academia that value debate and shared governance. They charge that these business leaders act autocratically—cutting costs by replacing tenured faculty with lower paid adjuncts, implementing online alternatives to traditional classroom instruction, and, as in the case of President Newman, devising what they see as dubious retention schemes.

In October, Timothy M. Wolfe, the former president of the University of Missouri, paid the price for poor relations with faculty when he was forced to resign for failing to consult with faculty and students about several major decisions and being dismissive of students’ concerns when racial protests in nearby Ferguson, Missouri, spilled over onto campus.” Some charged that Wolfe’s non-academic roots meant that he wasn’t interested in fostering dialogue with students. Still, it is possible that some of the cost cutting strategies that Wolfe had implemented led—in part—to the poor relations he developed on campus. The Chronicle of Higher Education pointed out that Wolfe allowed the graduate student health insurance subsidy to expire. Graduate students marched, threatened to strike, and formed Facebook groups bringing national attention to their plight. Within a week, the decision was reversed—demonstrating weakness on the part of the president, and generating additional mistrust.

Likewise, the contributors to the “bunny drowning” controversy are much more complex than retention strategies. Like Missouri’s President Wolfe, Mount St. Mary’s president announced major changes to the retiree health insurance plan last fall. The decision engendered tremendous hostility toward the new president; three retired professors published a letter to the editor charging the new president with “dumping the retirees after decades of service.” They claimed: “Other cost cutting measures should have been implemented before burdening retirees and current employees with healthcare cuts, such as the exorbitant costs of the new administrative structure… Perhaps if it had been handled as graciously as (former) President Houston had handled negative financial news, the response would have been different… This is not the Mount we knew for decades.”

Indeed, it is not the Mount these professors knew for decades. That Mount may have been on firmer financial ground in years past. Today it is not. Nor is Newman to blame for the precarious financial situation he found at Mount St. Mary’s. There is much blame to go around. One area of excess may be executive compensation. Public records reveal some of the highest salaries in the tier of comparable colleges and universities. According to IRS filings, in 2012, Thomas H. Powell, who was then the president of Mount St. Mary’s, received a total compensation package of $581,551, which included $458,192 in salary and another $123,359 in benefits. In 2013, President Powell received a raise of 10.5 percent bringing his total compensation to $642,849, which included a salary of $495,772 and $147,077 in benefits. Other senior administration officials are also well-compensated. At a time when faculty health benefits are being cut to address the school’s financial challenges, some may ask whether there will be any shared sacrifice by members of the administration.

Mount St. Mary’s has so much to offer, but its strengths cannot be preserved if its financial challenges are not addressed. Strong leadership, as well as a recognition by all that changes are necessary, is needed if the university is to survive well into the future. Late last month, the university’s Board unanimously concluded that “President Newman continues to be the right kind of talented leader to be at the vanguard of Catholic higher education growth.” As one of a few dozen truly faithful Catholic universities in the country (as identified by the Cardinal Newman Society), Mount St. Mary’s is blessed with a faithful Catholic faculty fully committed to the goals of Catholic higher education as identified in Pope John Paul’s apostolic document Ex Corde Ecclesiae—from the heart of the Church.”

President Newman could be a transformational leader who can bring tremendous benefits to Mount St. Mary’s. But it is clear that some on the faculty do not believe he has the best interests of the students or the faculty at heart. Any business consultant will tell us that trust lies at the heart of a functioning, cohesive team. Patrick Lencioni writes in The Five Dysfunctions of a Team that “Trust is the confidence among team members that their peers’ (and their leaders’) intentions are good and that there is no reason to be protective or careful around the group.” Without it, teamwork is all but impossible. The most important action a leader must take to encourage the building of team trust is to demonstrate vulnerability first—to admit they do not know everything there is to know. President Newman needs to be willing to learn about the culture of a faithful Catholic community like Mount St. Mary’s and build bridges by creating a climate of trust with the faculty, staff, and students as valued partners in their institution’s recovery.

Anne Hendershott

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Anne Hendershott is Professor of Sociology and Director of the Veritas Center at Franciscan University in Steubenville, Ohio. She is the author of Status Envy: The Politics of Catholic Higher Education; The Politics of Abortion; and The Politics of Deviance (Encounter Books). She is also the co-author of Renewal: How a New Generation of Priests and Bishops are Revitalizing the Catholic Church (2013).

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