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Shaking Up Oxford


Darkness is falling on the medieval buildings of New College, which despite its name is one of Oxford University's oldest institutions. The ethereal voices of the boys' choir, warming up in Latin for evensong, waft into the quadrangle, while in his comfortably cluttered rooms David Palfreyman, the college's bursar, pours gin-and-tonics. Palfreyman, who has published a series of books on university management, is one of many Oxford folk on edge about some of the changes for the university proposed by John Hood, the New Zealand-born vice-chancellor or chief executive. "Maybe we didn't do a good job of recruiting," Palfreyman muses about Hood. "Or we let him fall into bad company once he got here."

The object of Palfreyman's disquiet works in a plain office in the drab 1960s-style administration building. In an interview, the soft-spoken Hood shows flashes of the steely determination that first convinced Oxford's search committee to hire him to give the place a top-to-bottom management overhaul. But he also seems humbled by the buffeting he has received from dons opposed to his plan. "I am here as the servant of the scholars," he says. "One has no power or authority in this job. One has only the power of persuasion."

Hood, 53, has a record of being persuasive. He had a long career in the top echelons of Fletcher Challenge Corp., one of New Zealand's biggest companies, before he left the business life to run the University of Auckland, the national school. "He did a near-miraculous job at Auckland," says a member of the search committee. In five and a half years, Hood turned around a conflict-ridden institution, launched a drive for a new business school, and laid the groundwork for $500 million in investment in new facilities.

At Oxford, Hood has conceived a bold strategy to give the venerable institution the best shot at improving its standing in the globalized academic big leagues. The school no longer competes with Cambridge alone: It finds itself pitted against such elite U.S. universities as Yale, Harvard, and Stanford for the best teaching talent and students. To better prepare Oxford for this contest, Hood wants to boost the institution's relatively small $5 billion endowment and renew the campus' dated infrastructure. Perhaps hardest of all, he wants to streamline and modernize the university's archaic governance, a step Hood considers essential if he is to convince megadonors that their money will be wisely spent. The goal of all this activity is to turn Oxford into an international research leader across the board, and recruit not only the best British students and faculty but also the cr?me de la cr?me of the world -- even if that means cutting the number of Brits.

It'll be touch and go, but most campus pundits say Hood will ultimately prevail, since they think he has the right agenda. But what if he fails? Oxford has enormous intangible qualities that aren't a product of money. Most say, however, that without a shakeup a genteel decline will continue at what has been the world's premier educational institution throughout much of its 900-year history. "We are in real trouble" if Hood falls on his face, says W. Graham Richards, chairman of Oxford's chemistry department. One of Oxford's key modernizers, Richards, who recently raised $35 million from venture capitalists to help build a new $110 million chemistry lab, thinks Oxford badly needs administrative streamlining and a more global outlook.

Yet as Hood is finding out, he can't just order up the changes he deems necessary to gird Oxford for the rigors of the 21st century. He heads a uniquely decentralized institution where the ultimate power is held by a body of some 3,500 academics, administrators, and librarians, called Congregation. While in practice Congregation rarely meets, any two members can call a vote, as they did in May when the group overwhelmingly rejected Hood's proposal for mandatory faculty performance reviews. Opposition is also brewing over plans to build a massive new facility to house Oxford's millions of books. No wonder Hood and his team are frustrated. Changing Oxford's culture will require "decades, not years," says Giles Kerr, a former finance director at medical-equipment maker Amersham PLC whom Hood has brought in as finance chief. "It takes some getting used to. The process of change has to be a lot more consultative."

The problem is that there are so many constituents to consult. The university is a curious blend of a top-flight research institution -- still ranked by some sources as one of the top five in the world -- and a conglomeration of some 39 autonomous colleges, which house undergraduates and provide much of their teaching. Some, like New College, date from medieval times; others are modern. Some are poor; others are incredibly rich. But together they control some 70% of Oxford's total endowment funds as well as undergraduate admissions. Behind high walls and gates manned by porters, they fiercely guard their independence.

With Oxford remaining one of the two most prestigious universities in Britain, many wonder why there's any hurry to change, and some doubt that a seeming nobody from the University of Auckland has anything to teach them. Cambridge bests Oxford in some surveys, but few think any Continental European institution can touch Oxford. Admission slots at the university that has educated some 25 British Prime Ministers, including Tony Blair and Margaret Thatcher, as well as titans like Adam Smith and Christopher Wren, are in greater demand than ever. An Oxford education is still the best ticket to the upper reaches of British government and business. The individually tailored tutoring that goes on in the colleges is superb. Says Eve Bugler, a second-year undergraduate at Keble College: "The tutorial system stretches you academically because there is no way to hide."

What's more, even before Hood arrived, the school was starting to show some signs of business acumen. Oxford professors used to sneer at the idea of mixing academics with trade, "but that is not true anymore," says Michael Brady, an engineering professor who has founded several companies. Industry grants, intellectual-property licenses, and other collaboration with business brought in about $56 million in 2003-04.

NOT HUNGRY ENOUGH

For all its excellence, though, some professors say Oxford falls short of top rivals such as Harvard University and Massachusetts Institute of Technology. "There is a lack of aggression, of hunger for that really big prize," says John March-Russell, a young Oxford professor of theoretical physics who received his doctorate from Harvard and taught at Princeton's Institute of Advanced Study. At the same time, the colleges feel threatened by the rise of the hard sciences, which require big, expensive laboratories rather than medieval cloisters.

The government, Oxford's main source of money, is forever raising the bar for greater egalitarianism in admissions and for concrete results. Teachers are poorly paid: A full professor's salary is $88,000 before a possible bonus, compared with $163,000 at Harvard. Oxford's faculty members also feel deluged by a growing flood of paperwork. Well before Hood arrived, they had developed an antipathy toward the central administration because of a bungled financial-management system and other pratfalls. "I think there is a good deal of unhappiness and tension about the place," says Robin Butler, a former Cabinet Secretary, Britain's top civil servant, now master of University College.

Few disagree with Hood's contention that Oxford needs a massive cash infusion. Its endowment is leagues behind Harvard's $25.9 billion. At the same time, Oxford's dependence on the government puts the university in a fiscal straitjacket. Funding of undergraduate teaching and research does not come close to covering the costs, yet the government mandates extremely low caps on the fees Oxford can charge undergraduates. That means students from wealthy backgrounds get a top education almost free of charge. Top fees are currently about $2,000 per year and are set to rise to about $5,150 next year.

The increase is a step in the right direction but does not go far enough. The university estimates it loses $12,000 to $14,000 per year on each British and EU undergraduate. Financial infusions of more than $419 million over the past eight years from lucrative Oxford University Press have been needed to help make up the deficits.

Because Oxford and Cambridge are so central to the British Establishment, they are the subject of endless scrutiny and debate. Many among the wider Oxford community think the school should declare itself independent from the government so that, among other things, it could charge the fees it wants. Another idea is to sell off Oxford University Press, which made $128 million in profits last year, to raise an endowment kitty. Hood shrugs off such thinking as "seriously flawed." To replace the $350 million or so a year that Oxford gets from the government, he says, would require $8.6 billion in endowment funds alone -- if they paid 4% interest.

The pain from strained finances is felt across the university. Oxford, according to a study by Palfreyman's OxCHEPS consultancy and the Ulanov Partnership, spends only about one-third what Harvard and Princeton do per student. Despite all its charms, Hood concedes, Oxford has a tough time luring faculty members that top U.S. universities want to retain. "Of course we have a major problem with funding," he says.

To help him reach his goals, Hood has hired Oxford's first development director, Jon Dellandrea, from the University of Toronto, where he was considered Canada's top fund-raiser. Dellandrea has been in place only five weeks, but he plans to orchestrate a quantum increase in fund-raising to pay for, among other things, a new humanities campus that Hood wants to build at a cost of more than $1 billion on the 10.5-acre site of the Radcliffe Infirmary, a hospital complex near the university.

Though he proclaims that "Oxford is the best brand in the world," Dellandrea knows he faces a huge challenge. While Britain has grown much wealthier in the past two decades, the ranks of its superrich are still dwarfed by those across the Atlantic. Moreover, British tax laws are not as favorable for philanthropy as America's. One key problem for Oxford, says John Lippincott, president of the Washington-based Council for the Advancement and Support of Education, is that British universities "lack a culture of asking."

That's about to change at Oxford. Dellandrea plans to launch a major campaign in the next 12 to 18 months to reach out to potential donors. A campaign is badly needed. Those Oxford colleges willing to disclose their fund-raising levels report only an average of 13% of alumni contributing, compared with close to 50% at Harvard and around 60% at Princeton. Hood says Oxford raises only an average of $120 million to $140 million a year from private donors, vs. several times that at some of the top U.S. players.

While just about everyone at Oxford welcomes the prospect of more money, some of Hood's other forays have caused friction. The most bitter battle came over his proposal, published in a strategy paper in February, to introduce mandatory reviews of staff "with scope to enhance financial rewards, rebalance academic duties, and address underperformance."

Performance reviews, of course, are a standard feature of life at most corporations. What's more, Hood wants to use reviews to help give better career guidance to junior and midlevel professors, whom Oxford faculty say receive little such help now. Yet to many dons, Hood's plan looked like a punitive ploy to weed out faculty and cut costs. "Academic work is not something you do because someone is whipping you on the back," says one. The proposal was voted down by a huge margin by Congregation in May, a damaging early loss.

CONTENTIOUS

His ideas for reforming the university's constitution have also been contentious. The highest body at Oxford is the 28-member Council, mostly drawn from the faculty-dominated Congregation. Many find this structure unsatisfactory: Diverse matters come up at the Council's monthly meetings, and only four outside members are there to provide a dispassionate view. The Council, says Andrew Dilnot, a member of the Council and Master of St. Hugh's College, "is too big and has too many things on its plate."

Hood has proposed dividing the Council's powers among two boards. An academic council would rule on scholarly matters. A 15-member group comprising seven outside trustees and seven insiders, chaired by University Chancellor Chris Patten, would have responsibility for broad strategy and finances.

The opposition isn't satisfied. "The adoption of these proposals would not contribute in any way toward restoring the severely damaged trust of Oxford's academic community," says a document from a group that styles itself "Democratic Governance." The group fears that Oxford's freewheeling creative environment, which they say is more important than pay, will be snuffed out by a new top-down management style.

Even some of Hood's supporters think he has moved too fast and without enough consultation. "Hood hasn't played his cards very well," says Richards. "He started off acting [like] the CEO of a large corporation."

The critics also say that Hood should have stuck with fund-raising and not tried to restructure the whole institution. "Ninety percent of the problem is money," says Palfreyman. "Three percent is governance." He adds a warning: "It doesn't help the university to be seen as tearing itself apart." Indeed, potential damage to Oxford's reputation from the infighting is a matter that concerns both influential alumni and Oxford grandees.

Will Hood be able to pull off a major restructuring of one of the world's oldest institutions? "I think he is going to take Oxford all the way," says Anthony Smith, the recently retired president of Magdalen College. "He knows where Oxford needs to place itself in the world." He'll certainly need a thick skin to get there.

By Stanley Reed, with Maha Aziz in Oxford and William Symonds in Boston


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