The corporate university

Recently a number of early career academics met at a conference in Sydney to discuss the state of Australia’s universities. One of the conference organisers, Dr Gregg of the University of Sydney, wrote a thought-provoking piece of commentary in New Matilda bemoaning the corporatisation of Australian universities and identifying the increasing number of hurdles facing young academics.

Many Australian academics are concerned about the growth of a corporate culture within our universities. Much has been written about the intensification of workloads, the increasing demands of students, the perceived general lack of funding and the corresponding rise in stress levels of academic staff. While I agree with many of the points made by these academics in their writings I fear that some of their concerns are misplaced.

The corporatisation of Australian universities is not necessarily a bad thing. After the Hilmer Report and the Dawkins reforms of the late 80s Australia’s university landscape was set change. The implementation of the reforms lead to a change in the institutional mindset of most Australian universities. Some of the more notable results are:

1. that the goal posts for academics have shifted;
2. that more students are coming into the tertiary sector;
3. that standards have dropped in some areas; and
4. that profit is a greater concern for university managers.

It is understandable that junior academics would be disappointed with the shifting goalposts. But the reality is that as Australia’s labour market has become better educated the qualifications needed to gain an entry level academic position have lifted. So too have the requirements for tenure track positions.

It is hard to see what is confronting about having more highly qualified staff providing tertiary education. The better trained the staff are the more likely they are to have higher level research and teaching outcomes. Academia is facing much the same issue that other industries have faced; greater competition means rising standards.

The Dawkins reforms led to the creation of new universities. For example, there are now 38 Australian law schools providing legal education to undergraduates. A university education is now available to more Australians than has ever before been possible in our nation’s history. It is very hard to begrudge anybody a tertiary education. Particularly in law - where the bachelor of laws degree (LLB), is fast replacing the bachelor of arts degree as the generalist degree of choice - greater access to information results in a greater capability to participate in the social, cultural and economic life of our society.

But the increase in the number of students coming into the tertiary sector does not mean that those students are better prepared for university. What has been disappointing has been the failure of successive state and federal governments to greatly invest in high school and primary education. When students come through to university level they are largely reliant on the skills that they developed during the 12 years of primary and secondary education to give them the base from which to develop. No amount of scorecards for schools and other managerial tricks will compensate for the fact that poor remuneration discourages intelligent graduates from taking up a career in teaching.

While this may be a controversial point the fact that standards have dropped in some areas is not a cause for concern. It will rarely result in a diminution of a university’s reputation. Where a drop in student quality is most likely to manifest itself is where students who would otherwise fail a subject are being granted passing grades. This can happen legitimately through supplementary exams and conceded passes or less legitimately through lax marking. But either way, the students that fall into this category are likely only to earn a mark of between 50-52 per cent and this is a score that is routinely dismissed by prospective employers in a more competitive job market.

Whereas in previous decades such students might have failed a subject, they might be scraping through today. However, the outcome mostly remains unchanged, a student with a transcript full of scores between 50-52 per cent is very unlikely to get a job interview at either the mid-level or top of the graduate employment market. These students are all too easily left behind by their better performing counterparts whose performances invariably maintain the reputation of the institution.

But still, it is worth considering who is actually failing here - the sub-standard student or the society and education system that failed to equip that student with the knowledge base to succeed at university level. It is disappointing that so much of the public debate on school education gets wasted on hobby horses such as ideology and bias in the curriculum with little thought to the recruitment of quality teachers. Particularly with the semesterisation of units it is difficult for an academic to fix in six months the deficiencies that have been created by 12 years of neglect. It is heartbreaking to see that a small group of mostly poorer students will be almost permanently left behind by their more well-heeled classmates.

It is true that Australian universities are now run with a more corporate mindset. It is unfortunate that education is no longer seen as a public good. But this perception shift emanated from the federal government and not from the universities. Increasing the number of universities but not correspondingly increasing the level of funding was always going to cause the universities to look elsewhere for funds.

There is actually some justification for the corporate mindset because most Australian universities are statutory corporations. Therein lies the real problem which is the growth of a corporate culture without the corresponding advantage of any of the corporate governance safeguards. If you take a normal corporation there are some basic features that theoretically should prevent managerial malfeasance. It is an imperfect system, failures happen, but since corporate catastrophes are an exception rather than the rule, the system more or less works.

In a normal corporation the shareholders can exercise voting rights at an annual general meeting. Moreover the performance of the CEO is monitored by a board of directors who are in turn answerable to the shareholders. Even better still, since firms can be subject to hostile takeovers there is actually a market for corporate control. Most fundamentally, the discipline of the market applies to corporations because a poorly run corporation will go bankrupt.

The modern Australian university has absolutely none of these features. The head of the university, the Vice-Chancellor, will most likely to be answerable to a university council or a university senate. Technically, the Chancellor is the actual head of the university, but this is really a figure-head position. The university council is the rough equivalent of the board of directors. The university council will be a mix of ex-academics, professional staff, one or two student representatives, some external stakeholders and an all too easily out-voted academic representative.

The external stakeholders will likely lack the institutional knowledge and experience to fully perform their governance role. The student representatives can be discounted on the same basis due to their inexperience. Further, many of the external members will have been appointed by the Governor in council - and will likely be beholden to those who were influential in their appointment. The lack of a sizable number of academics on the council means that those who are engaged in the core business of the enterprise - teaching and research - play little role in management. The end result is a lack of skilled and independent oversight at the council level.

Worryingly, federal and state governments are lackadaisical shareholders. Basic regulations are in place, but the governments are not overly inquisitorial. Barring a major catastrophe it is difficult to see the government getting massively involved in the management of a university.

Even if the management is generally poor, bankruptcy is never really an issue, because the federal government will continue to fund the university as long as students keep enrolling. Where the government does get involved, in the funding of teaching and research outcomes and student enrolments, it is a little bit more akin to a slightly philanthropic banker than a shareholder. Either way, the government is not going to get a return on investment in monetary terms, it has to find its return in less tangible ways.

It is not that any of the senior management in the university sector would purposely set out to do anything wrong. There is little evidence of any deliberate rorting. But the lack of oversight with bite means that hidden inefficiencies get built up in the system. It also means that one group of university employees is over-managed, the academics and junior to mid-level professional staff - they are, after all answerable to senior management, while another group is under-managed. This is how money gets wasted on ineffective advertising campaigns, internal policy reviews and programs that are not needed, senior professional staff positions that duplicate existing positions and other projects that are not essential to the core business of the university. The absence of the market’s real disciplinary tool, profitability or bankruptcy, means that monies can be misallocated within the university system to redundant or non-value creating tasks.

One of the major problems is that academics no longer really run the universities. Somebody had the bright idea that people from industry made better managers. To be fair, the type of people who choose to do research for a living, and most academics do get into academia for the research and not the teaching, are not necessarily blessed with the best social or inter-personal skills. Management requires people skills. But it also requires institutional knowledge and some senior professional staff, and many of the external stakeholders, lack this type of knowledge or an appreciation of university culture.

The problem is that there is a growing number of professional managers who don’t really appreciate the core business of a university. If this is combined with a lack of real corporate governance the likely outcome is inefficiency.

It is worth noting that the rise of sessional and short term contract staff has corresponded with the emergence of the corporate culture within universities. The need to use sessional staff has arisen due to budgetary constraints which have been imposed on academic staff. Sessional staff can be useful gap-fillers and they do free up space for tenure track academics to engage in productive research. But, on the downside, finding quality sessional and short term contract staff is very difficult. Staff who lack job security obviously do not contribute well to morale and there is no incentive to train sessional staff to a high standard since they are only short term hires.

The variable standards of sessional and short term contract staff pose managerial problems for tenured staff. Furthermore, as sessional staff have more contact with students (the customers) if they perform poorly this becomes a factor in student turnover, thereby costing the university money through lost enrolments. So in fact, the money spent on overseas agents who procure students and on domestic marketing can wind up being wasted because of the failure to invest in more tenured staff.

If we can fix the corporate governance system at all our universities, then the corporate mindset won’t be such a problem. This is because a properly run corporation would focus on excelling in its core business and maintaining its long term profitability.

This means hanging onto and nurturing staff who create value in the core business.

It means offering a quality product to the consumer and creating brand value. After all every successful corporation, such as Hewlett-Packard, IBM, Microsoft, Sony, Mazda and even the dreaded McDonalds, succeeded by doing these things.

At this stage Australian universities are institutions in a state of transition and it may well be that a real education revolution would involve the federal and state governments restructuring the governance systems of our public universities to promote efficiency and excellence.