WHAT'S KILLING THE BUSINESS SCHOOL DEANS OF AMERICA? Tighter budgets, unruly faculty, slack demand for MBAs -- all are shortening tenures for B-school chiefs. Their job has become almost impossible to do well.
(FORTUNE Magazine) – LOITER in the impressive antechambers outside a business school dean's office, and odds are good your attention will fall on a row of framed pictures -- former deans. The images are amusing at first: those funny round eyeglasses and nubby mustaches on the deans from the 1930s, the plaid suits and self- assured postures of the postwar and Space Age deans. Keep shuffling rightward, though, and a vaguely ominous feeling creeps in as you move to modern times: Something bad is happening to these guys. Their & terms in office seem to get shorter. No more serene-looking Franklin Delano Deans reigning for decades, but plenty of troubled faces whizzing by, brass nameplates revealing that one lasted three years, another four. What's going on? For all their resident talent and calm exteriors, august schools of management are almost impossible to manage well. Strange cultures, bizarre organizational structures, and weird attempts at democracy make them messier than all but the looniest for-profit company. And the people who try to run or repair them are getting burned out and eased out with astonishing speed. ''Most deans now seem to fail,'' says Edward Lawler, a professor of management at the University of Southern California who studies organizational effectiveness and B-schools. ''It's a terribly difficult balancing act.'' Yes, yes, your job is tough too. But is the pressure as unsubtle and public as that suffered by a recent dean at the Yale School of Management? Alumni unhappy with changes Michael E. Levine made at the school hired an airplane to fly over the Yale Bowl during football games, towing a banner urging Yale's president to fire him. Alumni, students, and faculty held anti-dean demonstrations and denounced Levine to reporters. A still-angry professor recently likened him to Mussolini. After four mostly tumultuous years, he quit in 1992 and took a top marketing job at Northwest Airlines. Images of departed deans will likely get framed and hung on corridor walls even faster than before. The years of booming demand for MBAs are past, enrollments are flat, budgets are tight. Like many other industries, this one carries overcapacity: More than 300 new MBA programs in the past 20 years bring America's total to about 700. Big-name schools are not necessarily better off than smaller, newer ones, which often have greater control over their costs, with more rented facilities and nontenured faculty. University presidents are increasingly desperate for money to run the arts and sciences schools, sparking tense wrangles over the B-school's resources. Would-be donors, sensing deans' desperation, feel more willing to dispense advice and criticism with their money. Students, worried about landing a job, want professors to research less and teach more.
All of which might be manageable if everybody thought the MBA education process was just fine. Few do. B-schools are under enormous pressure to produce fundamentally different kinds of graduates than those of six or seven years ago. Employers claim too many MBAs in the 1980s were great at narrowly focused skills like accounting and finance but dreadful at motivating colleagues or diagnosing complex business problems. Now, they say, MBAs must be inspiring leaders, capable also of applying know-how from a dozen different disciplines to unravel and solve the most convoluted problem. The upheaval those changes require in B-school curriculums and teaching methods is enormous. Arjay Miller, a former Ford Motor president who served a decade as dean at Stanford in the 1970s, describes the challenge of trying to change an outmoded curriculum: ''It's like moving a cemetery.'' That's partly because many business schools maintain the rigid organizational structure of a 1950s manufacturing company. There are wide separations between the finance department, say, and the marketing professors, and yawning gaps in the status of an old-timer and that of a newly arrived teacher. Yet pressure for reform may mean long-established courses taught by revered senior faculty have to be eliminated or shortened. A marketing teacher accustomed to ignoring his peers may be asked to spend months collaborating with a young organizational behavior teacher to develop a hybrid course. Result: conflict, even crisis. Business school faculty are often so isolated from changes in the real world of business that they don't comprehend the need to reform themselves, argues Ross Webber, chairman of the management department at the University of Pennsylvania's Wharton School. ''The business world is ahead of the university in promoting teams, cross-functionality, and project groups that bring together disparate elements,'' he says. Professors ''are not sufficiently in touch with the competitive environment, so the pace of change is too slow.'' A dean whose contacts with outsiders make him recognize the need to change often comes across to faculty as imposing, says Webber, ''so the stress level is high.'' The dean's position in the middle can be fatal, observes George Daly, still dean (after one year) at New York University's Stern School. ''You'll see a lot of acrimony, tension, forced dismissals,'' he says. ''Over the next few years, the ground is likely to be covered with dead dean bodies. The messengers announcing these changes will be shot with alarming regularity.'' Seriously compounding deans' problems is the scope of their authority -- it's far more limited and tenuous than a corporate executive's. Like colleges everywhere, business schools are run as clumsy democracies. The dean is a bit like a Speaker of the House who holds his job as long as he keeps a lot of powerful, smart egomaniacs -- mostly faculty -- happy. Unfortunately for the dean, most faculty have tenure, don't need to please the boss, and get to vote on nearly every major issue. There's not much deans can do to pressure them. They can dish out a few summer research assignments or withhold pay increases, but tenured faculty with consulting projects are not frightened. ''I can make more in one day on Wall Street than the dean can add on for a year,'' scoffs a professor. On paper, the dean serves at the pleasure of the university president. But if the faculty are unhappy and lobby the president, the dean is doomed. Says an assistant dean: ''You have to realize that the relation of the dean to the faculty is like the relationship of a fire hydrant to a pack of male dogs.'' Why would anyone accept that role? About 90% of deans are former faculty members or assistant deans, and many have to be coaxed to take a job they know will be difficult. ''There's a shortage of willing candidates,'' says Charles Hickman, an official at the American Assembly of Collegiate Schools of Business, a B-school accrediting body. ''Most faculty who would make good deans would make more money and have more time if they weren't deans. You've got to have an ego -- in a good way -- and believe you can do some good.'' The other 10% come mainly from business and often are surprised and exhausted by what the job entails. Says Arjay Miller: ''At Ford I had two secretaries, two drivers, and we had 12 airplanes. At Stanford everybody felt they could drop in on me anytime. I found that rather difficult.'' Alan Merten, recently reappointed to a second five-year term as dean at the Johnson School of Management at Cornell, has no illusions about the extent of deanly power. Like the professor he once was, he springs to a blackboard and draws a deceptively simple organization chart that looks like this:
FACULTY DEAN FACULTY
''Something, isn't it?'' he asks with a grin. Individual faculty report to the dean, and the dean reports to the faculty as a group. When he explains that reality to alumni, donors, and business leaders who are urging him to do something dramatic with the school, ''they are shocked at the conflict with a normal organization chart.'' Things get done, he says, ''but slowly.'' ! Merten, a Ph.D. in computer science who spent years as faculty member, dean, and administrator at other business schools, had plenty of time to learn the ropes. But as Edward Fox at Dartmouth discovered, a dean hired directly from the corporate world faces a far rougher ride. Fox was a highly successful CEO who started the Student Loan Marketing Association (Sallie Mae) and grew it to $42 billion in assets. In 1990 he took over Dartmouth's Amos Tuck School, one of America's best. Most observers thought he was doing fine. Colin Blaydon, his predecessor, says Fox was hired in part because he could tap prominent business leaders to visit the school. Michael Eisner and Warren Buffett gave speeches; Philip Benton, formerly of Ford, taught a case on Toyota; and John Pepper of P&G did one on Pampers. Fox was a successful fundraiser too. He planned to raise $27 million in six years but did it in two. The Tuck faculty, however, were unimpressed. Some were wary from the start, recalls Fox. ''The first day I was here, a faculty member came up to me and warned me not to be a 'corporatist.' I don't know what that meant. I think it meant acting unilaterally.'' He tried to expand Tuck's courses in strategy, information systems, and environmental management. But in an era of limited resources -- returns on the school's small endowment had dropped since the 1980s -- that meant shrinking other departments, which set off turf battles. The schmoozy art of academic politics eluded him. Fox complains that faculty senate meetings could get tied up for hours by one or two people pressing a point. Professors griped that he never got the hang of the consensus building required to move faculty. ''He was arrogant and insecure,'' says one. ''He had his secretary dial teachers he wanted to talk to, rather than call himself.'' Fox's great sin, though, in the eyes of some faculty members, was a failure to appreciate scholarly research. A B-school teacher's obsession with research drives outside observers wild, since much of such work seems arcane and virtually useless to business. Research is, however, the currency of the B- school professor's realm. It's what wins him tenure or a place at a better school. Not least, it raises his dubious status among other professors on campus -- many of whom secretly sneer at business professors as mere ''practitioners,'' not fellow advancers of knowledge. Says a Cornell B- school professor: ''The physics department doesn't think we're hyperintellectual, but business people do.'' If Fox had limited himself to fundraising and alumni stroking, he might have lasted longer. But he infuriated faculty by appointing as dean of students Mary Munter, a popular teacher of communications who lacked a Ph.D. ''He's not an academic,'' says one professor. ''He can't tell world-class faculty.'' When Fox's four-year term was ending early this year, Dartmouth President James O. Freedman sent a letter to faculty, students, and Tuck's overseers, an advisory board of business leaders, asking for comments. Fox says he got unanimous support from the overseers. Students generally approved of Fox, says Ken Carangelo, editor of the Tuck student paper last year. Blaydon, the former dean, thought Fox was a shoo-in. It wasn't enough. ''He alienated six or seven powerful faculty members,'' says one of them. Freedman called Fox to his office in March and ''in a very short conversation,'' Fox recalls, told him he would not be reappointed. He remains visibly stunned. He says he still isn't sure what went wrong, but he seems aware there was a culture of scholarship that he couldn't penetrate. ''There's a rite of passage by which an academic becomes a scholar, and there's a fear that a person who hasn't gone through it won't value it,'' he says. ''That is a valid concern.'' If ornery faculty don't shorten a dean's life, clashes with university presidents and administrators often will. Rarely are they highfalutin disputes about curriculum either. Many surround money, money, money. Small wonder. Business schools are often the most profitable operation on campus. They are relatively cheap to run -- MBA students don't need zillion- dollar cyclotrons, they tolerate large classes, and two-thirds pay full tuition. Combined with lucrative executive education programs, ''earnings can be 20% of revenues,'' says a dean, or about $5 million to $10 million a year at a school with around 1,200 full-time students. ''If you're making 10% at a big school, you're doing something wrong.'' Prosperous MBAs are also far more likely to give to fund drives than are impoverished graduates of the school of architecture or public health. JUST HOW HARD the dean and president collide, or how much money the university can appropriate from the B-school, often depends on how the institution is organized. Under an extraordinary arrangement at Harvard, the business school's vast riches are virtually untouchable, at least for now. That's because long-standing policy treats each Harvard school as a ''tub on its own bottom,'' responsible for its own finances. But Neil Rudenstine, Harvard's president since 1991, has made no secret that he wants to siphon off some of the contents of brimming tubs like that in the hands of HBS dean John McArthur. A close colleague of McArthur's says the battle for control of the business school is all but lost: ''I think Rudenstine will gain control of McArthur's fiefdom -- tie him down and rope him and brand him.'' Down the Charles River at MIT, finances are vastly different. Revenues and gifts, including those generated by the Sloan School, flow through the central administration, which decides how to parcel them out. Officials at the management school have never felt they got back what they deserved; they even feel a bit like orphans at times.
Lester Thurow, an economist, stepped down as the Sloan School's dean in 1993 after seven highly visible and successful years, and all evidence and gossip indicate the decision and timing were his own. He admits he got weary: ''The first years were more fun than the last.'' Budget pressures appear to have been part of the problem. A quarter of MIT's $1.1 billion annual budget used to come from defense and energy research contracts, but as that dries up, the Sloan School is under pressure to contribute more to science and technology programs. William Pounds, a Sloan dean in the 1970s and 1980s, says Thurow's proposal to combine a Sloan program in management with courses given by the engineering department got an enthusiastic response from the administration and the engineers but attracted little money from them. Says Thurow: ''They're using your money for good purposes. But I'm competing with the Harvard business school, which doesn't have to do that.'' At the University of Rochester, William Mayer was not as patient as Thurow and quit in a dispute over money only eight months after he arrived. Mayer had been president of First Boston, the big investment bank, until a reshuffling there in 1990; he accepted a headhunter's suggestion that he try being dean at Rochester's Simon School. Mayer, now dean at the University of Maryland's B-school, labors to be diplomatic about events at Rochester. But he says he was lured to the school by promises that the administration was dedicated to making Simon one of the best in the country. ''I said it would be expensive. They said, 'Yeah, yeah.' '' When he planned a major marketing effort to improve the school's visibility, however, he found himself wrangling with the central administration over a few hundred thousand dollars. ''It dawned on me, it's not the money, it's the commitment,'' he recalls. ''They couldn't get their arms around the fact that this is what it would take to get ahead in the rankings. I think they wanted to do it as long as it wouldn't cost any money.'' Rochester's president at that time, Dennis O'Brien, says he and the board of trustees ''were surprised, to say the least,'' when Mayer resigned over ''such a relatively small amount'' in a budget of $16 million. Senior staff members then at the Simon School weren't surprised, says one. University of Rochester administrators were already siphoning off the returns from a $15 million gift to the B-school from former Treasury Secretary William Simon, by raising the ''taxes'' the university imposed for administration and central services. ''The president used to joke, 'You keep the endowment, I'll keep the returns,' '' he says. Mayer walked out of the first budget meeting, the staff member recalls. ''They told him he was stuck -- that he couldn't quit. They figured he'd be too embarrassed to leave. He wasn't. He was major league.'' Before Mayer became dean at Maryland, his alma mater, he made sure he knew the administration's commitment to the business school. ''When it was settled, I suggested to the president that we write each other a letter. My advice to anybody is to get it in writing.'' Mayer says that since he left, the University of Rochester has enhanced programs at the Simon School and allocated more resources to it. Some schools seem like dean eaters from the start. You'd think the savants at Yale would have been able to design a nifty business school from scratch when they started back in 1977. Instead they put together an unwieldy contraption that never really got off the runway, and any dean sent in to repair it was probably doomed to a short tour of duty. Mike Levine had no illusions he would retire in office when Yale President Benno C. Schmidt Jr. appointed him dean of the Yale School of Management in 1988. ''I knew it would be extraordinarily difficult,'' says Levine, a law and economics professor and former president of New York Air who had been on the SOM faculty for a year before his elevation. He was correct. The school was running a big deficit, enrollments were weak, job offers to graduates weren't robust, and he had orders to restructure the institution. Though the school had a good reputation for its organizational economics programs, its overall mission was always unclear. The SOM was the brainchild of an unlikely union between touchy-feely industrial psychologists and hypercerebral mathematical types teaching management science. It was never intended to be an ordinary B-school, and awards a master's degree in Public and Private Management -- an MPPM instead of the usual MBA. ''They wanted something very different,'' says Paul MacAvoy, an early faculty member and now dean. ''Nothing so crass as an MBA, but the usual Yale heavy dosage of advanced theory and intensive practice.'' BY THE TIME Levine took over, Yale was still debating the school's direction and value, and faculty factions were at war. ''The place was riven,'' he says. A brusque, impatient sort (''I'd be talking as fast as I could, and Mike would be staring at the ceiling waiting for me to make my point,'' says a colleague), Levine decided to send the mathematical types back to the school of arts and sciences. He gave notice as well to all untenured organizational behavior teachers that they would have to leave. He shut down a Ph.D. program that required a fifth of the faculty to devote much of their time to teaching some two dozen students. Some faculty members viewed the moves as part of a plot by economists at the school to oust rivals and expand their department. These faculty were predictably furious and felt that Benno Schmidt and Levine had acted by fiat. ''Schmidt made Levine king,'' complains professor Vic Vroom. ''It was martial law.'' The events angered Yale faculty elsewhere at the university and created bitter feelings toward Schmidt and Levine. Alumni, many of whom were enormously fond of their organizational behavior teachers, united in opposition to Levine. In addition to hiring airplanes to tow messages, they stopped sending money to the school. The annual alumni contribution fell by one-third from the level of five years earlier. On graduation day in 1992, Schmidt announced he was retiring. A month later, Levine resigned. Opponents of the two gleefully concluded they had toppled Schmidt and sent Levine running for cover. Levine insists that isn't true, that he'd gotten an offer weeks earlier to be an executive vice president at Northwest Airlines. ''There's no doubt that the dean's job was frustrating. But it was a great offer,'' he says. Levine's experience makes him wonder about the ability of business schools, or any academic institution, to adapt quickly to solve problems or respond to change. Universities, he complains, ''are terrible for organizing and getting things done. And the better the school, the more it's a loose association of craftspeople who want to be left alone, so change is very difficult.'' The tendency of faculty to engage in bitter, public, political battles when their world is threatened is more damaging than many of them realize, he adds. ''Academics don't worry about the consequences to the institution. No academic thinks he can sink Yale.'' But the damage may have been done. Hired to replace Levine was Paul MacAvoy, who returned after eight years as dean at Rochester. He met with alumni, who boosted the annual alumni contribution from $75,000 to $300,000 and stopped flying that damned airplane over bowl games. Vroom thinks MacAvoy has ''done much to get the school back on track.'' None of that may matter soon. MacAvoy took over the unexpired portion of Levine's term and expected to hold the job until 1995. But when early this year the president of Yale started a search for a new dean, MacAvoy, to avoid becoming ''a lame duck,'' said he would step down when a replacement is named, probably this fall, and return to research and teaching. He sounds pessimistic about the future of research at the school: ''I don't see room for developing new programs. I don't see where the money is to develop them.'' What bedevils some deans isn't academic squabbles but such universally thorny real-world problems as sex, race, and gender. John Rosenblum served more than 11 years as dean at the University of Virginia's Darden School and was considered a wunderkind most of that time. Darden became one of America's best schools, and Rosenblum raised money for its expansion into a complex of five new buildings.
But four years ago, controversy over the Darden faculty's vote to deny tenure to Melissa Birch, an associate professor of business administration, got picked up by the local paper and then the Washington Post, and a major brouhaha ensued. A few vocal faculty members criticized Rosenblum for supporting the decision. A UVA provost overruled it and granted Birch tenure. Rosenblum decided to appoint a panel to investigate morale and management issues at Darden; three of its five members were women from other schools and business. But the idea blew up in his face. The panel declared a ''hostile + climate for women'' on Darden's faculty and staff, though not for women students. Faculty and administrators on both sides of the issue then criticized the five-page report for making blanket statements about the school without revealing how many people were interviewed or what proportion of them were unhappy, and women on the Darden faculty later issued statements insisting they hadn't experienced discrimination. Both Duke B-school dean Thomas F. Keller, a member of the panel, and Birch declined to comment. For Rosenblum it was an exhausting and dispiriting end to an otherwise successful two-term stint as dean. He hadn't seriously considered asking for a third term -- ''If you can't accomplish your objectives after 11 years, you won't do it in 16,'' he says -- and the tenure flap extinguished all temptation. Last year he reverted to being a member of Darden's faculty and reacquainted himself with his spectacular 15-acre farm just outside Charlottesville, Virginia. ARE the managerial problems of business schools and their deans enough to paralyze them at a time when they are under pressure to evolve rapidly? Deans don't seem especially worried about that. MIT's Thurow and Lawler at USC observe that universities are some of the longest-lived institutions on the planet. Several deans predict that most schools will adapt rapidly -- eventually. Few will put themselves through wrenching change or brave experiments until forced. Most, they say, will wait until some other school does something that truly impresses students and recruiters, and shamelessly imitate them if they must to survive. For now, the pace of change at business schools seems remarkably slower than the pace of change in business. Tenured faculties still feel free to pull the rug out from under anyone who threatens to change their world too much. Revenue-hungry administrators continue to squeeze B-schools until they're blue. And pictures of slightly startled, now departed deans will continue to go up on corridor walls.