Gulliver, CEOs, and University Presidents

University presidents are starting to feel some of the constituency pressure visited since the 1980s on their CEO counterparts in corporate America. Until then, CEOs reigned supreme over their corporate bastions, many ruling with an iron fist. Directors were supportive and shareholders deferential.  There would be occasional upheaval but this was rare.  CEO tenures were long.  Those days have been long gone for some time.

Until the past few years, university presidents ruled their roosts as well, with helpful trustees and deferential faculty.  Not anymore.

As John Sexton of NYU found out in a “no-confidence” vote of his largest faculty group last week, the constituencies are restless.  NYU’s trustees pledge their continued support, but other NYU faculties and some of the school’s unionized employees promise further pressure. Last summer, Teresa Sullivan, president of U. Va., felt such pressure from the university’s trustees, who ousted her temporarily until the faculty came to her rescue. Similar upheaval occurred at Harvard a few years ago and more recently at Oregon, Texas and Wisconsin (and at several other places if academic leaders below the rank of president are counted).

Interestingly, presidents in quite a few of these episodes have been charged with the complaint of operating the university too much like a corporation.  That’s one of the central assertions of the NYU faculty voters, who say Sexton is too focused on growth. They cite his “Global Network University” with lucrative campus footprints worldwide and his tendency to pay high salaries to selected scholars rather than offer across-the-board increases.  Many are upset at plans to expand the Greenwich Village campus in a radical way. They despise his top-down management style. 

So presidents who run their universities like corporations now face the fate of corporate chiefs for doing so. The power of shareholders and directors increased exponentially in the past 20 years, making the all-powerful CEO a relic.  With the rising power of faculties and trustees in the university, academic presidents may soon turn into short-term caretakers as well.  

There is a good case that the pendulum swung too far in corporate America in favor of shareholder democracy and outside power. It will be a shame if a similar thing happens to America’s universities.  Maybe that’s the NYU faculty’s point. Sexton should probably not run NYU as if it were a modern corporation, given its educational mission and unique fiduciary duties to attend to student needs rather than to maximize profits for shareholders.  Running NYU that way not only subverts those goals, but will ultimately and ironically weaken the president’s position.

Photo: Gulliver’s Travels, an apt analogy for what happened to corporate CEOs from 1980 to 2000 and what may be happening to university presidents.

You may also like...

4 Responses

  1. Shag from Brookline says:

    Who speaks for the students? Do faculties speak for students more than their own interests?

  2. Lawrence Cunningham says:

    Faculty owe their schools and students fiduciary duties and, in my experience, law professors tend to fulfill those duties.

    Others looking out for students directly include student government associations within schools, accreditation commissions, federal and state departments of education, and various associations committed to education and students such as the American Council on Education and the American Council of Trustees and Alumni.

    One organization clearly not looking out for students? Mort Zuckerman’s U.S. News!

  3. AndyK says:

    Ironically, the rise in administrative costs are a function of the “corporatization” of universities. If I were a university CEO, I would be drawn look at faculty as the resource, students as the highly inelastic downmarket consumer, and major donors as the highly elastic upmarket consumer. Campus administration would primarily be designed to upsell to major donors, but I would also set up byzantine offshore call-center analogues to handle complaints from the downmarket students consumers.

  4. Shag from Brookline says:

    The reference in #2 regarding faculty owing students fiduciary duties may be questionable. I Googled:

    Fiduciary duties of faculty to students

    and the very first item was Ronald B. Standler’s 2007 paper “Professor-Student Is Not a Fiduciary Relationship.” This is followed by several items that also address this issue. Standler’s focus is on case law. He closes with a statement that whether a college has a fiduciary duty to its students is an open question (at least as of 2007 when his research ended).

    Some faculty members do look out for students as do the groups referenced in #2, but how effectively? Consider the issues currently concerning legal education and the outcomes of lawsuits brought by students based on alleged misstatements by law schools of jobs, jobs, jobs available to graduates.