Making It as a Multinational University
If your destination is to go international in a big way, business officers who are taking the trip have some news for you: Be prepared for a bumpy ride.
By Hal Irvin and Robert Thompson
From our experiences in France, Singapore, and Ireland, and our planning efforts in other nations, the Georgia Institute of Technology, Atlanta, has learned a great deal about the keys to success as we evolve into a multinational university. While we don't have all the answers, we outline the critical questions the campus business officer must address with the chief academic officer in implementing strategic international initiatives.
What Do We Mean By Multinational?
American universities are still defining what it means to go global. For most higher education institutions, global in the university context will continue to mean recruiting international students, offering student exchanges, providing study abroad programs, and facilitating faculty collaborations and joint degrees with foreign universities.
With the United States positioned as the world leader in higher education, it is little wonder that some universities are taking globalization a step further. A number of institutions, particularly research universities, are developing strategies to be truly multinational—including establishing a physical presence abroad to extend the institution's mission on a global scale while delivering educational programs in foreign countries.
While certain corporations jump to mind when using the term multinational, the American Heritage dictionary definition is silent about organizational type: "having operations, subsidiaries, or investments in more than two countries." Using this broad definition, the number of multinational American universities will likely grow considerably in the 21st century.
Figure 1 shows the continuum of international activities in which a college or university might engage. We believe the level of risk increases with investments in facilities and people in another country—the right side of the continuum—which is our focus here. An increasing level of commitment and risk requires careful analysis and planning to address issues and opportunities, as well as open communication and thoughtful discussion by all involved. Chief academic officers and chief business officers must work closely together to ensure that financial and operational realities align with strategic mission priorities.
The president, provost, and executive vice president for administration and finance at Georgia Tech meet regularly to discuss major strategic opportunities, challenges, and priority issues. Additionally, the provost and executive vice president for administration and finance meet regularly on strategic program plans, budgets, and financial strategies to move the university forward. They plan major international initiatives together—assigning lead people to shepherd the planning process from our respective areas, and traveling together with key deans, department chairs, faculty, and administrative leaders to assess the potential of major undertakings.
As the institution digs deeper into the details, we engage more people to bring different viewpoints and skill sets to the table. We discuss our plans with corporations that might want access to our students, faculty, and research. Our brand and our reputation are on the line, so we must be appropriately engaged as leaders to deliver the best thinking from our campus community.
Why Go Global?
With more than 550,000 international students studying in the United States and with faculty collaborating with colleagues around the world, American colleges and universities do not necessarily have to establish a physical presence abroad to be active members of the global academic community. Even without active recruitment in most cases, so many international students apply to major U.S. graduate programs that not enough spots exist. With 2,600 graduate school applicants from China and India alone for fall 2006, Georgia Tech does not have to be in Asia to attract students from the region.
And, delivering programs in new locations is not always easy for universities, even in markets for which success seems like a slam dunk. A July 20, 2007, article in the Chronicle of Higher Education reported "an unprecedented number of Australian universities are withdrawing from overseas ventures." This trend was highlighted after the University of New South Wales Asia, an undergraduate-focused campus based in Singapore, closed after only one semester of operation. Like their U.S. counterparts, Australian universities viewed the huge Asian student market as an opportunity for growth. Despite the obvious advantages of proximity to and experience with Asian student markets, many Australian universities have apparently decided to rethink their strategies.
Whether the focus is on graduate or undergraduate education, why expand beyond the United States? Each institution must have its own reasons. Georgia Tech's reasons are clear: Our vision is to "define the technological research university of the 21st century and educate the leaders of a technologically driven world." To achieve our vision, we believe our institution has a leadership responsibility to address global issues where we can make a difference. While Georgia Tech's reputation and brand come from more than 100 years in Atlanta, we believe we can have a positive impact around the world by leveraging our strengths in such areas as energy, the environment, security, public policy, and health.
There is nothing in our vision that dictates we must be overseas to achieve it. Our judgment is that we can best "educate the leaders of a technologically driven world" by establishing satellite research and academic operations in a limited number of strategic locations where we can have a major impact beyond Atlanta. The exchange of ideas, of faculty and student talent, of cultures, of broadened understanding that will occur by being there—all this will enrich our academic community and enhance our reputation.
If you think that's a great leap of logic, you are not alone. Thoughtful people—board members, alumni, university system officials, taxpayers, politicians, faculty members—question the need, the cost, the risk, the assistance we might provide our economic competitors, and the very idea that we should export our higher education institutions after decades of success importing talent.
And yet, we are not alone as we challenge ourselves to consider our place in the world. Many American universities are setting up academic programs and research centers abroad, either in partnership or on their own. We don't have a formula to follow or hard-and-fast lessons learned that we can apply as we make these decisions. It's a long and difficult trip, with no end in sight.
We suspect other institutions are taking the same winding road. Going global is messy, it is challenging—but it is so important that we owe it to our institutions and to our constituents to arm ourselves with the information required to make the best decisions possible. Academic priorities and institutional vision must remain at the forefront; this is the proper domain of the faculty, department chairs, deans, and the chief academic officer. Given the need to properly capitalize any new initiative, particularly one involving the good name of the institution in a different part of the world, careful consideration must be given to the size, scope, and sustainability of the institution's investment in a new market.
Far short of a formula, we outline factors for academic and business leaders to consider as they think through their strategies for globalization. While there is no single way to approach these decisions, several factors should be taken into account to increase the likelihood for success over the long term.
With the primacy of the academic mission in mind, we begin with academic program considerations for international ventures before moving on to outline administrative support considerations. We use a simple two-by-two matrix as a framework for making decisions about global ventures. Rather than providing you answers (which will depend on your situation), we highlight key questions and thoughts—and provide a few of our own examples—to consider as you use the matrix to assess your circumstances.
Thinking Strategically—Academic Program Considerations
How many institutions assess their competitive program advantages, identify areas of growth, select a program, and pick a place in which to offer it? We doubt very many. If our experience is a guide, most international initiatives are built on relationships.
A faculty member knows a colleague, a delegation is visiting from Ireland, a dean serves on an advisory board for a program in South Africa. A discussion sparks an idea and the idea sparks more discussion. Either enthusiasm builds as the circle of support grows larger or interest wanes if the mountain appears too high to climb. At times, the administration may prompt a targeted strategic discussion about opportunities in a particular geographic area. In either scenario, bottom-up or top-down, successful initiatives end up with a champion: a faculty member, department chair, or dean with quixotic zeal and absolute passion.
The International Academic Program Decision Matrix shows the two primary variables regarding delivery of academic programs internationally, as well as locally: academic program quality and market potential. Each variable includes several elements.
Academic Program Quality
We believe the following five elements need to be taken into account when evaluating academic program quality in the international context.
LEADERSHIP. You will have to think carefully about the characteristics that will be most important for leadership success in a start-up operation.
- Is the champion leading the charge on campus the right person to take the leadership role in your new location?
- If you have no one on your campus to assume a leadership role and have to hire someone from outside permanently for your new effort, how will you ensure that the new person translates your organizational culture to the new setting?
- How long do you expect the leader to serve overseas?
- Will you need to provide the leader a better incentive package than the rest of the team at the new location?
The ability to connect to local business and government leaders is paramount. The ideal candidate would combine excellent people skills, a strong drive to excel, the adaptability to look for a solution from multiple angles, some experience in leading a team, and a thorough understanding of the culture where he or she will work (including fluency in the local language). Because we are a research institution, we prefer a leader with a strong research portfolio. If the individual is not from the country where we wish to locate, he or she must be well connected in some way—preferably through collaborative research efforts in the proposed location. The candidate's chances for success, as well as yours, increase to the extent that the individual already possesses strong relationships in your new locale.
REPUTATION. Reputational quality provides a competitive advantage in a new market.
- How strong is the reputation in the United States of the program(s) being considered for delivery abroad?
- How will delivering the program abroad enhance its reputation at home?
- Can the program be delivered overseas without degrading the home program?
Georgia Tech's graduates have a strong reputation in the corporate community for being highly skilled, hard-working, and innovative problem solvers as well as self-starters. We promote that reputation, along with our strengths in technology transfer and commercialization as well as interdisciplinary programs when we seek students and faculty, because employability is so critical to recruitment efforts. Government entities and academic partners care about reputational rankings, not even allowing institutions below a certain perceived quality threshold to participate in the conversation. Since we deliver highly ranked programs overseas, we highlight their reputation in the United States as we recruit abroad.
PARTNERSHIPS. A program delivery partnership may quickly assist you in understanding the complexity of the new market, although it may water down your brand name in the new setting.
- What are the advantages and disadvantages for program delivery of partnering with an institution of similar or better quality in the new location?
- Short of a formal partnership, are there opportunities for faculty collaborations that will benefit your institution?
If you are a newcomer to the market, collaboration might reduce potential threats and political undermining. We have a dual-degree program with the National University of Singapore (NUS) and our School of Industrial Engineering in logistics, with strong support from the government of Singapore through its Economic Development Board. NUS is a world-class institution, and Georgia Tech's School of Industrial Engineering is the top program in the United States. NUS understands the student market in the region, Singapore serves as a logistics hub, and Georgia Tech extends its reach beyond the United States to Asia—a win for all involved.
CONSISTENCY. To invest the necessary resources in building a top-quality program, your institution must adopt the mind-set that an overseas program will be permanent.
- Will you be able to develop a research program or deliver an academic program equal to or better than the quality of the programs at your main campus?
- If you have to build quality over time, how many years will it take?
There is likely no advantage to a first-tier university delivering a second-tier program overseas. In fact, it could negatively affect brand reputation at home if it can't be sustained over time.
CONTINUITY. Start-up efforts are so fragile and so dependent on deep relationships built over time that the departure of a champion from either the institution or the host country can throw the whole enterprise into confusion.
- How likely is turnover of the key players involved in this new initiative?
- What are your backup plans if someone who is essential to the new effort should depart?
- Can faculty be recruited and retained over the long term?
International academic initiatives are notoriously slow starters, and a quick pullout can hurt the institution's academic reputation abroad and at home. Campuses should factor succession planning into their thinking by having possible replacements in mind and getting them actively engaged. For example, Georgia Tech Lorraine, our European campus in Metz, France, has several faculty permanently based there. If the president were to leave, we could appoint one of those faculty members as an interim or permanent replacement—knowing that several of our faculty in France have strong ties with our main campus and understand our culture.
When it comes to assessing market potential, it is tempting to make an educated guess. The logic goes something like this: Country X has a lot of students, so we are bound to succeed if we get only a fraction of them to enroll. A research university might assume it could tap into the economic development and research potential of a country, only to find it is an unwelcome competitor with local institutions. Four elements are critical when assessing the market.
KNOWLEDGE OF THE MARKET. Competition, program pricing, program length, the job market for graduates, your reputation in that market—all these are fundamental to your success.
- What does your institution really know about the market now and in the future?
- If international students can be accepted in the same program in this country or at a competing U.S. program, how do you convince them to stay in their home country to enroll in your new program there?
- How will you engage a firm to do a market study and how much will it cost?
- If your business model depends on research dollars, how firm are corporate or government commitments for funding support?
- If your initiative falls flat, do you want to tell your campus stakeholders that you gave it your best guess and it didn't work out?
- How will the market change over time as new competitors emerge?
Even if your institution plans to establish a research center without an educational program, a careful assessment of the funding sources, funding practices, and competitive environment should be completed before launching the new effort. Georgia Tech uses several strategies, which vary with the situation, to understand the local market. We have used local firms to scope out the size of the market and our name recognition. We have relied on the knowledge of our local academic partner(s) to understand the market potential. We have received multiyear funding guarantees, so we are not as dependent on enrollment. We have worked with multinational corporations with local operations to gauge their interest in our students.
ENROLLMENT PROJECTIONS. Given enough financial backing, enough time, and conservative enrollment projections, an institution may be able to learn from experience—even without a solid marketing plan.
- What enrollment goals do you have by program for the first five years that you enroll students?
- Where will your students come from (mix of countries and regions) and how did you make that determination?
- When will you have the infrastructure in place (faculty, staff, space) to enroll students?
- What is the ideal size for your program to be noticed in this new market?
- Will the market support your projections?
The cost per student of the ramp-up phase will be dizzying if the enrollment numbers are small. As long as overall expenses are in sync with available funding, the institution can wait it out. But if the level of investment assumes enrollment numbers that are not being met, the pressure will grow to retool plans or cut back operations. In our start-up phases, we try to build from a guaranteed base—either from government funding so we are less dependent on full-tuition-paying students or from corporations guaranteeing a certain number of students they will fund. To be realistic, we assume the guaranteed base to be 75 percent to 80 percent of our enrollment the first few years while we develop a better understanding of effective recruitment and marketing strategies.
STUDENT FLOW. A one-way flow may fall far short of the potential global impact of your new operation.
- Do you want students in your overseas campus to spend time on your home campus?
- Do you want students on your home campus to spend time on your overseas campus?
- How attractive might your program be to students from other countries and from other operating regions (e.g., might U.S. and European students want to study at your Asian campus)?
- Where will students come from and go to?
We build an expectation that students studying primarily in one of our overseas programs will also study in Atlanta. Not only does it round out their educational experience, it means they can take advantage of a broader range of course offerings when they are in Atlanta (and we don't have to mirror our Atlanta operations abroad). We are working hard to recruit undergraduates from Atlanta to study at our campus in France; the numbers are small but growing and we expect those efforts to pay off over time. We need to expose students to our international operations, even before they arrive on campus, so they can plan ahead.
TUITION PRICING. Without tuition parity, an institution runs the risk of undercutting its own campus. With tuition parity, however, the foreign campus runs the risk of pricing itself out of the new market.
- Will your tuition be priced the same for your overseas program as it is on your home campus? Why or why not?
- If priced differently, how does this affect your brand in the global marketplace?
- How much is your program worth in the new setting?
- What is the role of tuition relative to the cost of education and funding strategies?
If quality institutions are already operating in the new market offering substantially lower tuition (subsidized by the local government, for example), the institution will need time to demonstrate the value of the new degree. Brand impacts globally will need to be considered. India provides a perfect example. As we plan our new campus in India, we are confronted with tough choices for tuition pricing. Offering a tuition scaled to the Indian economy would severely undercut tuition on our Atlanta campus. Since many Indian students already study in Atlanta, we believe there should be tuition parity—not just in this instance but as a general operating principle. We will need our corporate partners to understand that education is a unique commodity and they need to fund the tuition of the employees they send our way.
Thinking Operationally—International Administrative Support
Whether faculty teach for short periods of time or relocate to live abroad for a year or longer, they will expect a high level of support in their transition. Yes, it can be an adventure living abroad and many of those interested in the experience will be excited about the opportunity. Even the most adventuresome people will consider the effect on their careers and their families, counting on the institution to provide expert advice, counsel, and expatriate packages to support them in their new location. Beyond that, they will expect graduate student support and classroom facilities that will ease their transition. Students may not expect dormitories, but they will at least expect a comfortable place to live.
Too little is made of these issues, particularly if the proposed location is in the developing world. Multinational corporations have been operating abroad for years, either building capacity within to advise on cost-of-living issues, tax, and benefits, or working with contract providers to support expatriate arrangements. They know an expat package can cost two-and-a-half to three times a base salary and build those costs into their planning. These issues drive up costs and affect long-term success. The International Program Support Decision Matrix shows the two primary variables regarding the viability of academic programs abroad: quality of life and financial sustainability.
No matter how prime the market and great the academic program, success is predicated on talented people who are happy with their decision to participate in the new enterprise. While the chief business officer must keep the bottom line in mind, he or she must work with the chief academic officer to insist that faculty and students enjoy excellent work and home environments.
Higher education institutions can't be so focused on globalization that they forget to address fundamental quality-of-life issues. These costs must be budgeted, even though they appear to inflate the total cost of the enterprise. They are the total cost of the enterprise and do factor into its sustainability. If going abroad is nothing but a huge hassle, if the work and living environments are not comfortable, if currency exchange rates reduce the value of a paycheck, if medical insurance makes people sick just thinking about it, people will bail out before the enterprise hits its stride.
At the same time, the business officer needs to help the academic team think beyond the start-up phase. How sustainable is the initial funding, and will the financial model in the first three to five years be successful for the long term? Revenues and expenses need to be estimated as accurately as possible. The president and the board need to have confidence that a solid business plan supports the new venture. As a state university, we need to demonstrate that our international initiatives operate without state dollars. A convincing, considered budget case needs to accurately reflect the financial complexity of the initiative and its prospects.
An administrative leader will need to be identified to oversee implementation of support plans. Without a business officer supporting the new initiative, the academic leader will quickly become overwhelmed. As chief business officer, you should insist on a senior administrative leader on the ground with a dotted-line relationship to you (assuming the individual will report directly to the leader of the new initiative).
Quality of Life
The following seven elements are critical when considering the quality-of-life issues essential to long-term success.
EXPATRIATE PACKAGES. If you do not invest appropriately in the people you send overseas, your program will be dead on arrival.
- What is your policy for faculty and staff serving on an overseas assignment?
- How will you determine an appropriate expatriate package to keep your faculty and staff financially whole for the duration of their assignment?
- Depending in part on the scope of your plans, will you build up international expertise in your office of human resources, contract it out, or use a combined approach?
The first people (and their families, where relevant) who participate in the program must have a positive and productive experience, or no one will take their place. The absence of secure, comfortable housing will be a deal breaker for people considering an overseas assignment from your institution. Put yourself in the shoes of the people you are sending over and ask yourself what you and your family would need. Ensure that your pioneers are financially whole from the experience, but go a step further to think through what you must do to help them be productive and happy. Sending a few graduate students abroad to do research with a faculty member serving overseas sounds expensive, but how will the faculty member be productive without them?
MEDICAL CARE. The insurance package that works at home may not provide coverage in Asia or Europe.
- What is the standard of medical care in your proposed location relative to the standard at home?
- If the faculty members abroad still pay for the health insurance in their standard benefits package, does the package serve their needs?
There is no need to reinvent the wheel—ask consulting firms or corporations with whom you have connections for recommendations about what you should do.
BUSINESS SYSTEMS. The collection and maintenance of institutional financial, student, and human resources data should be a major consideration.
- How will local data integrate with business systems on the home campus?
- Should information systems be outsourced early on, and what should be the enterprise's size and scope to maintain its own systems?
- Should the home campus outsource some of its information technology support if it is less expensive in the new location?
Outsourcing key functions and contracting for the maintenance of institutional data through a local provider may be the only option at first, but may not scale as the organization grows. Georgia Tech struggled with its information technology systems at its campus in France until hiring a full-time IT staff person and connecting that person on a regular basis with a key IT contact in Atlanta. The two individuals work through opportunities collaboratively to improve service and support, facilitating the transitions of our faculty who travel between the campuses. You may need a key point of contact on the main campus for all services offered at the overseas location, depending on the scale of the operation.
PAYROLL. The value of the monthly paycheck paid in U.S. dollars to an individual serving abroad may go up or down depending on exchange rates.
- How does the business officer help the faculty or staff member serving overseas hedge against currency market fluctuations?
- Should salaries be paid in local currency to avoid currency fluctuations?
For our permanent faculty serving in France, the value of the dollar relative to the Euro has been a financial issue. We have taken steps to lessen the impact of the fluctuation on their take-home pay.
RESEARCH CONTINUITY. Faculty who relocate may feel they are interrupting their research careers.
- What type of research relocation package will you need to establish to support a productive career transition?
An annual package that would cover funding for several graduate students, travel, and incidental expenses could be a positive investment toward faculty success. At Georgia Tech, we do not have a standard protocol for this, since it depends in part on the type of funding the faculty member receives and the funding arrangements we have for our overseas operation. We try to build this arrangement into our funding model wherever possible.
CLASSROOM AND RESEARCH FACILITIES. Facilities will help establish your brand in the new environment.
- What investments in space and equipment will be required for the people in your new program to be successful?
- How do you engage staff from the library, information technology, distance learning, and capital planning to work with faculty from the relevant academic disciplines to create interim and permanent facilities plans?
Accurately projecting utility, rental, fit-out, and construction costs will require careful coordination between home campus units and local firms with required expertise. At Georgia Tech, we engage our campus staff in real estate and capital planning with expertise in our overseas location. We do not use a cookie-cutter approach; instead we collaborate with local experts to ensure that our facilities fit in the local environment and that our cost estimates make sense. Our operations are generally co-located with another institution or near a corporate park, so appearance has not been as big an issue as accurately estimating the cost and speed of construction. Assuming we go forward with our new campus in India, we will be working with a local developer, so a campus master plan will be much more critical.
PERMANENT FACULTY AND LOCAL SUPPORT. Permanent faculty will talk to their colleagues back home. They will expect similar reward structures and a high level of service and support.
- Will faculty be hired for permanent assignment at your new location?
- If permanent faculty are hired, what role will the home department play in hiring, tenure, and promotion, and what budget support will the home department receive for recruiting?
- Where appropriate, will permanent faculty receive research start-up packages comparable to their colleagues at home?
- How will the new operation use local firms to hire local staff, provide legal advice, develop marketing plans, assist with accounting and financial reporting, and so forth?
- When will you depend on local firms and when will you hire staff? Why?
We did not locate permanent faculty at our French campus until 2005. For more than 10 years, Atlanta-based faculty traveled back and forth to teach for one or two academic terms at a time. Now that we have permanent faculty in France, we have received local government support to build comparable research facilities and technology support. Faculty serving overseas for an extended period of time must have the necessary tools at their disposal. We build these costs into our financial plan because we will not succeed institutionally if our faculty cannot succeed individually.
The following three elements are critical when considering the financial sustainability required to survive and thrive in the proposed new location.
FUNDING SOURCES. The mix of possible funding includes institutional investments; tuition; direct government support; contributions from corporations, foundations, wealthy individuals, or alumni; research funding; and borrowing.
- If you are a state institution, how will you ensure that state funding does not support the new overseas enterprise?
- Were you invited in by a federal, state, or municipal government and how does that translate into funding support?
- If local government support is part of your funding plan, how will you assure your funding does not negatively affect existing local institutions?
- Where will research funding come from?
- What is the potential for philanthropic support?
The best scenario starting out would be substantial funding support from foreign government sources at the federal, state, or local level. The foreign government funding assumes another critical factor: that the institution is an invited guest with strong local relationships. What can an institution do without an invitation? A key relationship with a multinational company could lead to an opportunity abroad by helping the company address a research need or skill deficit abroad. Strategically identifying relationships within your state and joining economic or business development missions abroad could position your institution for future initiatives internationally.
BUDGET PROJECTIONS. The chief business officer must engage the budget office to prepare a formal five-year budget for review by key campus officials.
- How confident are members of your leadership team, including your president, in the budget projections and your potential for success?
The chief business officer is uniquely positioned to take the emotion out of these decisions by putting a planning team together with the chief academic officer to paint the financial picture for the new research center, study abroad housing complex, or campus.
FUNDING STABILITY. As you plan for financial sustainability, you should be able to model a financial future that takes you beyond the start-up phase.
- Will your institution make it out of the start-up phase to steady-state?
- What are the financial scenarios for success or failure and what are your contingency plans for each scenario?
- Is your campus willing to give the new initiative at least five years to hit its stride? If not, are you prepared to walk away now before you even get started?
In the event your model fails, you should know your alternatives.
Breaking From the Pack
A handful of institutions, not just American universities, will go global effectively. As they develop the new model of the multinational university, they will distinguish themselves in the academic marketplace in ways that will enhance their reputations around the world. Their students will be in greater demand because of experiences abroad. Their corporate, government, and alumni connections will help them make a global contribution in teaching, research, and economic development.
Even though American higher education institutions have been recruiting and collaborating globally for years, operating our institutions overseas offers new challenges and opportunities. At the beginning of the 21st century, those institutions that make the right strategic decisions around the globe will be positioned for success for this century and beyond. Getting key faculty and administrators, the chief academic officer, the chief business officer, and the president strategically and operationally aligned may make the difference in achieving your global ambitions.
And even in financially hard times, if your team can see a path forward that takes advantage of your program quality, that reaches a new market and builds your reputation, that provides your faculty and students with a high quality of life in an intellectually stimulating environment, your institution will break from the pack as a leader on a global scale.
HAL IRVIN, formerly of the Georgia Institute of Technology, Atlanta, is associate vice president, human resources, Virginia Tech, Blacksburg; and ROBERT THOMPSON is executive vice president emeritus, administration and finance, Georgia Institute of Technology.
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