For Leaders, Colleges Turn to Business

Universities are hiring experienced corporate managers to cope with schools' growing size, complexity—and funding difficulties

by Geoff Gloeckler

This is the first of a multi-part BusinessWeek series on the business of colleges.

Call Steve Spinelli a businessman, or call him an academic. Either way, you're right. His career is split evenly between the two fields: 15 years in the business world as a member of the team that founded Jiffy Lube (RDSA) and 15 years as a professor of management at Babson College, during which time he earned tenure and the title of vice-provost. For anyone else, this would amount to a pretty good career, but not for Spinelli. Last September he accepted the position of president at Philadelphia University. He figured the job would be equal parts business and academia, but what he found surprised him.

After a week on the job, Spinelli saw that running a university was more like his experiences at Jiffy Lube than at Babson. "I was able to approach it like a business," he says.

Spinelli isn't the only one who has come to this realization. As higher education becomes more and more complex, especially on the funding side, many colleges—including the University of Missouri system, Oberlin College, the University of Kentucky, and Harvard—are turning to the corporate world for help, specifically to fill high-profile leadership positions. But given the sometimes strained relationship between the two worlds, this kind of change comes with a few hurdles.

Corporate-Style Structure

The main reason for the shift to corporate hires is that higher education's business model is changing rapidly, especially at public universities. State funding decreases more and more each year, and state schools are being forced to look elsewhere to meet budgets. Many times, this means partnerships with the business world. Moreover, today's university is structured a lot like a corporation. —Universities are complicated businesses," says Paul Osterman, an expert in work organization at companies and a professor at Massachusetts Institute of Technology's Sloan School of Management. "You need a good HR department, IT, construction, someone to manage the portfolio. You need someone with a business background running these operations."

In Spinelli's view, the trend is here to stay. "This change is continuous, and it's not going away," he says. "If we don't deal with it, we're in trouble."

Historically, academia and business have mixed like oil and water. The rule was to keep business talk in the business school. Lately, though, the old conflict has moved front and center as schools have started hiring corporate executives to be president or dean, positions traditionally reserved for members of the faculty. Some schools report more acceptance of business in academia, but it's still a long way to complete harmony. "The conflicts are self-evident," Osterman says. "You have the academic culture vs. the business culture. The leadership styles are very different." Osterman explains that while the academic mindset centers on such things as earning tenure or investing in research, the corporate side focuses on efficient management and growth. "There are trade-offs on both sides," he says.

Winning Over Faculty

When former Sprint-Nextel (S) CEO Gary Forsee accepted the position of president at the University of Missouri last fall, he knew that getting the faculty and administration on his side was crucial. "I came in early and wanted to dispel any animosity," Forsee says. To do this, he used the 45 days before taking office to get up to speed, visiting the four campuses, meeting with faculty and alumni groups, explaining his goals, and asking for help. "I know I have a steep learning curve. I wanted to make sure that they understood that I'm their loudest advocate," he says.