Monday, December 09, 2013

If You Were a President...

Ry Rivard has been on a roll lately.  If you haven’t seen his latest at IHE, check it out.  It’s about the increasingly perilous state of many private colleges, particularly in the Northeast.  It makes an effective, if depressing, companion piece to the one from last week about public universities in Pennsylvania.  

In both cases, a combination of awful political choices, difficult demographic changes, and long-deferred economic dilemmas threatens the survival of many small, private  colleges.  A declining population of high school graduates in the region, particularly from higher-income families, is really starting to bite.  And with increasing numbers of options and increased marketing of those options, it’s harder for high-priced colleges to get by on local kids who see that college as the only option.  

There’s no painless and elegant way to correct regional overcapacity.  That’s especially true in an industry like higher education that is both labor-intensive and built on the assumption of growth.  

If you were the president of a small, struggling, not-terribly-prestigious liberal arts college in a region without much population growth, what would you do?  For the sake of argument, let’s assume that you’ve hit the practical limits of tuition discounting (“presidential scholarships”) as a strategy, and let’s further assume that you’ve already done a decent job of marketing.  And let’s say that your budget is mostly tuition-driven, so you can’t rely on a hefty endowment to bail you out. The freebies have already been taken.  And keep in mind that presidents can’t act alone; they have to work with trustees, alumni, faculty, students, faculty, and staff, among others.  Each of those has its own interests, and if it perceives those interests as threatened, will respond accordingly.

You could try to cut your way out.  In the very short term, this is probably the path of least resistance, at least if it starts with cutting by attrition.  But over time, this strategy has natural limits.  Beyond a certain point, it threatens the ability of the college to compete.  

You could try to counter population decline by importing students from countries that export them, like Brazil or China.  I’d love to hear from readers in colleges that have done that.  How well has it worked?  

You could branch out into the working-adult and online markets, though in most cases, it’s safe to assume that you already have.  Your competition probably has, as well.

You could try to grow your way out.  This was a favored strategy in the 2000’s.  If you’re already suffering declining enrollments, though, you’ll need first to figure out the “hook” that will bring in new students, and you’ll need to be able to spend money on it.  If you’re already struggling, this may not be an option.

You could try merging with another college.  

You could try high-risk financial shenanigans, and hope for the best.  This tends not to end well, but sometimes lightning strikes.

You could ramp up your alumni campaigns, though again, I’ll assume you’ve already done that.

Or, and this is where I expect to see much of the action in the next five years or so, you could decide to specialize.  It’s one thing to be an average liberal arts college among many.  It’s quite another to be a national leader in Nuclear Basketweaving, or Applied Widgetry, or whatever the distinctive local industry is.  

The specialization option is both costly and risky.  It’s costly internally, since it involves picking winners and losers.  The losers will not go gently into that good night.  And it’s risky externally; if you pick the wrong winner, you’re in trouble.  But some level of specialization offers the possibility of owning a distinct niche, and thereby of distinguishing yourself from the competition.  If you’re charging thirty thousand a year in this economy, you’d better offer some sort of value proposition that’s easy to explain.  

Some colleges achieve niche status through demographic identity, whether religious or racial.  (I don’t see a market for moving a coed college to single-sex, though I guess it’s conceptually possible.)  Others achieve prominence in a tentpole program, and rely on that.  A unique location can do the trick, if you have it.  A few have even adopted self-consciously conservative politics as their core identity, and have made themselves famous that way.  

If this is the direction of the next several years for small private colleges, and I think it will be, I expect to see escalating conflicts over shared governance and presidential powers.  It’s hard to pick winners in a shared governance setting, and it’s hard politically to do layoffs in some programs while actually growing others.  My guess is that we’ll see more stories about governance, process, and institutional identity.

Of course, I could be wrong.  Wise and worldly readers, if you were a president at a college like that, what would you do?