Universities and corporations: a misguided merger

The corporatization of higher education is now front page news. Prolonged strikes at York University and the University of Toronto interrupted classes for a month. Everest College, a for-profit school, closed 14 campuses in Ontario. Its U.S. owner, Corinthian, has declared bankruptcy in Canada. Increasing student loans raise concerns about a younger generation’s debt load. Meanwhile, university presidents fashion themselves as CEOs and garner ever larger compensation packages.

Universities are attractive targets for corporate interests. Many are extremely large, own valuable real estate, and control cash flows of millions of dollars. University-based scientists are encouraged to undertake research that can be easily patented and sold. An enormous and elastic clientele for educational programs (approximately 1.5 million students per year in Canada) promise revenues in the millions. Governments guarantee loans for students, so the risk is socialized.

University administrators now hire business consultants to advise them on managing these rich challenges. The rationale is that people who understand wealth optimization should run institutions that control university-scale resources. Large cash surpluses are a new priority, even though most universities are non-profit institutions. Long-term stakeholders, particularly faculty, are dismissed as troublesome if they ask about the need for corporate consultants and large financial reserves. Yet their teaching and research generate the revenues.

The corporatization of universities is, at best, ironic. In historical terms, universities are one of the great institutional innovations of the European world. The oldest are upwards of 800 years. By 1500 approximately 40 universities had been founded that are still operating in 2015. Many of those ancient institutions are among the world’s top universities.

Few institutions in human history have proved so resilient, long-lived, and adaptive to social changes. Universities transmit knowledge from one generation to the next; new knowledge is created, tested, and disseminated under their care; and their libraries are revered repositories of learning. They have successfully husbanded resources for centuries and deployed them in a diversity of ways that beggar the legacy of any corporation.

For-profit corporations as legal entities have a similarly long history, but few have the continuous existence of universities. Many have survived for decades, and a handful for a few centuries, but profit-seeking, risk-taking, and ruthless competition have contributed to their shorter existences relative to the longevity of universities.

In the late 20th and early 21st centuries, for-profit corporations have become increasingly volatile, unstable, and short-lived. Many corporate leaders now care more about making profits than about making a particular product. Industry-specific expertise is devalued, profit extraction optimized, and expedient pruning of under-performing units prized. These practices have accelerated corporate shape-shifting and ownership transfers, with some big winners and lots of small losers.

It therefore defies reason that universities are being encouraged to adopt corporate practices that engender volatility and to abandon institutional practices that placed a premium on resiliency, adaptability, and long-term goals.

Corporate mergers, raiding, restructuring, malfeasance, and bankruptcy became so intense in the late 20th century that a new service industry emerged: rebranding, a consulting business designed to help corporations refurbish their public image.

Rebranding is now fashionable among university administrators who hire consulting firms for institutional makeovers. Skeptical faculty and staff wonder why resources in their units are cut when so much money is paid to corporate consultants to rebrand their already successful work. They are told that universities have to adopt the progressive practices of the corporate world. The fact that rebranding emerged in response to rampant corporate weaknesses is conveniently forgotten.

The University of Western Ontario spent $200,000 on consultants to rebrand itself Western University. King’s College, London, a venerable university youngster at 186 years old, spent thousands of pounds on a recommendation to call itself simply “King’s London.” Such a non-descript name could easily be mistaken for an athletic club, a hotel, or microbrew ale. Thousands of outraged students and staff signed a petition of protest on the first day after the announcement. Within a month the new principal, Ed Byrne, had abandoned the plan.

University rebranding is often little more than institutional cosmetics, making Mike Duffy’s Senate expenses for a make-up artist look like a pittance. Unfortunately university presidents in Canada, as in the UK and U.S., can spend extravagant amounts of public money on window dressing with little accountability, as they try to prove their corporate credentials.

Few university employees would quarrel with the need for prudent fiscal management or the need to be responsive to the changing composition of the student body. All institutions need to upgrade administrative practices. But for university administrators to aspire to transform the institutions they lead into corporation-like entities is destructive of the public good.

One trait of successful universities is their relatively flat governance structure. They operate as a community of self-governing educational and research units that share resources and delegate certain common needs – admissions, payroll, facilities management, etc. – to a central administration. Historically, people moved into administration from the teaching and research faculty to serve the larger community.

Top administrative positions were seen as temporary opportunities to contribute to a common enterprise, rather than as careers dedicated to the acquisition of institutional power and material wealth common enterprise, rather than as careers dedicated to the acquisition of institutional power and material wealth. This leadership model assumed that administrators would return to teaching and research, and provided ways for poor administrators to step down graciously, while talented ones often stay for years. Today’s more hierarchical administrative structures, with presidents and vice presidents moving among universities and seldom facing their colleagues as equals in departments, has devastated the collegiality and flexibility in administrative culture that made universities so resilient.

Canadians should think carefully about the corporatization of their universities. There is no need to choose one institutional form over another. Universities and for-profit corporations have distinct functions in a healthy society. The structural volatility of corporations has advantages for economic growth and change. And strong, independent, collegially-run universities are critical for the social, cultural, and political health of the national and international communities in which corporations operate.

Elizabeth Mancke, PhD is professor and Canada Research Chair in Atlantic Canada Studies, and Director of the Atlantic Canada Studies Centre.