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Business Intel

A roundup of short news articles and useful resources for business officers

Working in Tandem to Better Distribute Revenues

As the 2011–12 academic year progressed, Oklahoma State University (OSU), Stillwater, found itself in a bad place with respect to one aspect of revenue sharing: Our model for funding electronic, Internet-based courses had become unsustainable.

Typically, at OSU, revenue from courses flows into central administration and then is distributed as needed to the various colleges and schools that make up our institution. The distribution model takes into account numerous factors, such as historical precedent, numbers of new students, and pressing financial needs. That system has worked well for us.

The problem was that distribution of revenue emerging from electronic education was based on an entirely different approach, in which 100 percent of the revenue went directly back to the college administering the program and zero went to the central administration. It was a way for the colleges to retain all revenue rather than roughly 60 percent, which otherwise would have been typical.

The financial model had become unsustainable because, as more and more courses were delivered electronically, the central administration recognized that eventually it would be unable to meet its own needs, which reflected the needs of the university as a whole.

The 800-pound gorilla in the room was the fact that, understandably, the deans were not eager to change 
the system, since they had come to depend on the funds to support various needs of their particular colleges, including possibilities for expansion in their outreach to the university community.

The question for the university CFO Joseph Weaver, and me, as provost, was how to extricate ourselves from what had become an unbalanced revenue distribution system—but one that the deans had no incentive to change. (For more examples of collaborative decision making, see "A Solid Front.")

An Incentive Becomes Untenable

Five Steps to Decision Making 

Follow these five principles when making difficult decisions 
about change at your institution.

  • Recognize and define the scope of the problem.
  • Form a task force involving all relevant stakeholders.
  • Seek relevant input from all groups.
  • Take a risk and put the solution to a vote.
  • Implement the solution gradually.

As a relatively new provost at the time, I found this revenue model for online courses puzzling, because it failed to take into account even the minimum overhead the colleges required to teach courses, electronic or otherwise. We eventually realized that the previous provost had set up the system as an incentive for the various colleges to offer electronic courses. At that point, online course delivery was just beginning, but the previous provost correctly realized that it potentially represented a future trend.

What that provost may not have realized is (1) how quickly electronic education would take hold, and (2) how effective the reward system would be in encouraging deans to teach courses electronically, regardless of educational benefits. On the whole, a system that once might have been perfectly functional had become seriously dysfunctional with respect to meeting the needs of the university.

Researching Options

To address the problem, Weaver and I set up a task force to be headed by David Henneberry, an associate vice president and economist who reported directly to the provost. All stakeholders were at the table: The task force consisted of representatives both of central administration and of all the colleges—basically, any unit that had a stake in revenue allocation. 

Henneberry charged the group with designing a system of revenue allocation that would equitably meet the needs both of the colleges and the central administration. Although deans were not enthusiastic about any change, at least they knew their views would be represented.

The task force considered the relevant economic issues from four different perspectives:

  • Calculating the costs the specific college incurred in offering an online course.
  • Considering best practices and compensation rates at peer institutions.
  • Taking a comparative approach and looking at the costs and infrastructure for online courses compared to those of face-to-face courses.
  • Considering the bigger picture of college outreach offices and the totality of their activities and expenditures.

Costs and Compromises

After much work and consultation with diverse groups, the task force produced a solution that would allocate 60 percent of the revenue to the colleges and 40 percent to the central administration. This figure was not arbitrary, as it had been calculated to represent the actual needs of the colleges and the central administration respectively in financing the functions of the university.

We brought the proposal to the deans' council, which includes all deans and some central administrators, to be put to a vote. After much discussion, not all of it harmonious, the council adopted the proposal by a unanimous vote. However, it was clear that the now-approved proposal would put a sudden and relatively heavy burden on deans, who had become accustomed to using all revenues generated by online courses.

Recognizing the seriousness of the situation, the central administration proposed—and the deans agreed—to implement the new system in waves over a course of four years. During this time, deans could generate new sources of revenue to compensate for what they were losing under the new system.

Tactical Takeaways

So far, the system is working and has left most stakeholders, for the most part, satisfied.

In implementing not-universally-desired change, we observed five principles that might be relevant to other universities in making decisions of similar magnitude.

  • Recognize and define the scope of the problem. Do not leave it to fester, despite knowing that it will be difficult to solve-and that any solution will engender friction among stakeholder groups.
  • Form a task force involving all relevant stakeholders. Head it with someone knowledgeable about the issues.
  • Seek relevant input from all groups. Give them the time to ensure that the various groups will be satisfied with the decision process.
  • Take a risk and put the solution to a vote, knowing there is a chance that the vote might be negative.
  • Implement the solution gradually. Allow time for all stakeholders to adjust to the new system.

By following this process, the eventual result for us is a new system that works better for all with a stake in the outcome.

SUBMITTED BY Robert J. Sternberg, provost and senior vice president, Oklahoma State University, Stillwater

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By the Numbers

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QUICK CLICKS

TUFTS UNIVERSITY PARTNERS IN MILLENNIALS STUDY

www.ncoc.net/MillennialsCHI

Four civic organizations, including Tufts University's Tisch College of Citizenship and Public Service and Harvard University's Institute of Politics, released in early February the findings from the "Millennials Civic Health Index," a new report analyzing civic activity and engagement of America's 18- to 29-year-olds. The report's executive summary notes that "the Millennial generation represents a critical civil asset for the nation," numbering 46 million American citizens who make up 21.3 percent of the eligible voter population. Of that group, 50 percent did not vote in 2012. The study made use of four composite measures to summarize the level of engagement: social cohesion, civic leadership and voice, discussion and expression of political and community issues, and engagement in the community. "Working to better understand and engage with the Millennial generation," said Harvard's Institute of Politics Director Trey Grayson, "is critical ... to ensuring a healthy democracy and citizenry."

FOOD TRUCK TREND HITS CAMPUSES

www.parkhurstdining.com/news/releases/12-08-09.html

Maryland Institute College of Art, Baltimore, is sporting a new food truck, the Artist's Palate, designed by MICA alumni from local graphic design company Ashton Design. The mobile eatery serves a variety of hot and cold "street food" favorites, including turkey burgers and vegan falafel patties, while it stops at strategic locations around the campus. Future plans call for more menu items that will be available on a rotational basis as well as movement of the truck off campus during weekends to serve community events.

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WLI Conference: Core Values Fuel Capabilities

Success is not really a secret, but success is magical," said Erma Johnson Hadley, chancellor, Tarrant County College, Fort Worth, Texas, in her remarks at the Women's Leadership Institute (WLI) last December. The seventh annual institute, coproduced by members of the Council of Higher Education Management Associations (CHEMA), took place in Amelia Island, Florida.

One of the greatest benefits of attending WLI has always been its networking opportunity. This year's programming enhanced that activity with two keynote speakers who helped participants also focus on looking within and reconnecting with themselves.

Core Values, Common Threads

Sarah Brokaw, author of Fortytude: Making the Next Decades the Best Years of Your Life (Hyperion Books, 2011), explained to the audience that starting at about 35, women's biggest worry is the calendar. The 40th birthday looms as a critical milestone, not necessarily viewed as a positive one.

After much research in her work as a licensed therapist, Brokaw, daughter of former NBC news anchor Tom Brokaw, found some common threads among women who are able to move through life smoothly in the decades following that significant birthday. "Women exhibiting certain core values," said Brokaw, "were able to thrive as they navigated the journey from age 35 onward." Here are the key values they embraced:

  • Grace. When a woman lives with integrity, she capitalizes on her own strengths while admiring the strengths of others. Brokaw writes, "Life is that of a highway. There will always be the metaphorical traffic jams, accidents, thunderstorms, and other drivers filled with road rage interfering with our plans and creating imbalance in our world. Unpredictability is the one constant. So it's not whether we'll encounter challenges in life but rather how we handle them that matters."
  • Connectedness. Connectedness means experiencing satisfaction in connections with others—for example, empathetic laughing with friends and loved ones as a way to keep going during the most challenging times in our lives. "It means mentoring and being mentored by people," writes Brokaw, "as well as simply cutting loose and having fun."
  • Accomplishment. Brokaw considers this the sense of realizing goals and getting things done. It doesn't necessarily define a woman who has "the perfect" husband, house, car, or children, she notes. Nor a woman who has founded her own multimillion-dollar high-tech company or climbed the ranks of the largest law firm in town. Rather, she explains, "it's a woman who knows and appreciates what she is capable of, and sees the strengths in other women as well."
  • Adventure. A willingness to seek challenges outside the normal comfort zone. "It means stepping outside the routine for one or several days," says Brokaw. Adventure can include anything from trying a new restaurant to planning a weekend activity that goes beyond your habitual tendencies or current level of skill.
  • Spirituality. By this, Brokaw means a personal approach to religion, and an understanding that life has a meaning beyond the day-to-day details. "Spirituality is not about achieving enlightenment or mindlessly obeying a set of rules," she says, "but rather about looking for inner peace. It helps you understand your life experiences and give them meaning. It provides a way to take yourself out of your own head, so that you can delight in the smallest things."

The Characteristics of Your "Brand"

As the closing speaker, Chancellor Hadley emphasized the importance of each woman getting her brand in order. "What is it that you stand for?" she asked. She then posed six questions to guide attendees in thinking about, evaluating, and crystalizing the behaviors that define them:

  • Who are you?
  • What do you stand for?
  • How do you present yourself?
  • What is your performance like?
  • How creative are you?
  • What impression do you make and leave with people?

Armed with a set of core values and other pointers for individual success, participants at the 2012 Women's Leadership Institute committed to returning to their workplaces to help motivate others and pay this opportunity forward.

SUBMITTED BY Amy Hemphill, director of customer support, NACUBO.

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