For Leaders, Colleges Turn to Business

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Lucky for Forsee and others in similar positions, it's not as tough a sell as it was, say, a decade ago. "The times have changed," says Judith B. McLaughlin, director of the Higher Education Program at Harvard. "The higher-ed community is more accepting now of people with [a business] skill set." But reassuring faculty still poses a major challenge to individuals taking on these high-profile positions. "They have to bring what they know to a world they don't know, and they have to find a way to make that work successfully," she says. "In the best cases, these marriages are enormously successful, but there is always the possibility for disaster."

Robert J. Birgeneau, chancellor of University of California at Berkeley, is aware of the pitfalls, but he is willing to take the risk. In his four years guiding the elite public university, Birgeneau says he has "professionalized" the staff. "A university is a very complicated business enterprise," he says. "Rather than use people who have spent most of their careers as academics, we need the kind of expertise you find in a major corporation."

Finance Help From Wall Street

His recent actions reflect this sentiment. Last month, Birgeneau announced the hiring of Frank D. Yeary, a longtime executive at Citigroup (C), to take a new vice-chancellor position. Yeary's assignment: to develop a financial plan that establishes more stable funding for the university. "We're looking to produce a financial model that is less vulnerable to fluctuations in state funding," Birgeneau says. No small task, considering that the school's budget is $1.7 billion this year, with money coming from a wide range of sources. But Yeary says he's up to the challenge. "There is an enormous amount to work with," he says. "I'm convinced that the skills and relationships I've developed over the past 25 years will be very useful."

Just as Berkeley hired Yeary, Harvard recently tapped Goldman Sachs (GS) executive Edward C. Forst to fill a newly created executive vice-president position. Forst's main job is to oversee finance, administration, and human resources, reporting directly to Harvard's president, Drew Gilpin Faust. While a new post at Harvard, executive vice-presidencies have existed at a handful of Ivy League schools for years. Columbia, Princeton, and MIT, among others, have similar back-office positions held by former corporate executives.

Philadelphia's Spinelli expects the trend of business people moving into academia will continue, especially as universities find the right blend between the two. "I think higher education, as an industry, is still figuring this out," he says. "Does it have to be the president who has the business experience? Can it be the provost or the chief operating officer?" These are questions that many universities are asking. But in Spinelli's mind, just the fact that schools are considering it is good for the future of higher education.

Gloeckler is a staff editor for BusinessWeek in New York.