Collaborative Combinations

Charting a Strategic Path to Student Success and Institutional Sustainability

By Christine Smith and Raina Rose Tagle    //    Volume 29,  Number 4   //    July/August 2021

Higher Education is the last, most reliable engine of economic development and social mobility, yet even before COVID-19, the industry was grappling with grave challenges such as declining affordability and decreasing enrollment. The pandemic might not have caused these issues, but it surely amplified them. Budgets and resources are strained, and students, faculty, and staff are feeling the effects. Many students are postponing or significantly changing their college plans, with historically underserved students doing so disproportionately. To address these challenges impacting many institutions’ long-term viability, colleges and universities are pursuing bold changes.

A collaborative combination, or integration, is one strategic approach to achieving bold and transformative change. Such combinations can bring together two or more separate institutions in their entirety, integrate programs or administrative functions, and/or combine components within an institution. These approaches can free up resources to support an institution’s laser focus on student success and future institutional sustainability. The vision for any collaboration should embrace futuristic, innovative thinking that results in the ability to resolve challenges around affordability, expand student access to in-demand degrees and/or skills, and cost-effectively leverage resources for positive student, faculty, and staff impact.

Baker Tilly’s higher education advisory practice collaborates with college and university board members and leaders on these critical transformative initiatives. Most recently, the Baker Tilly team has advised and facilitated key project activities for Pennsylvania’s State System of Higher Education (PASSHE or the system) related to the integration of two sets of combining institutions comprised of three currently separate yet geographically proximate institutions. The integration planning process, in its final stages, has already produced invaluable lessons for any higher education institution looking to combine or integrate.

Effective Governance to Drive Transformative Change

Integration success is possible only through effective governance. From articulating the vision, to identifying expected outcomes, to executing the process for stakeholder engagement, it is critical that the board and institutional leaders’ partnership in pursuit of and advocacy for the integration is unwavering.

At PASSHE, it was the Board of Governors that first articulated and acted on the need for fundamental transformation. In 2016, a “System Redesign” began and an impartial third-party analysis was commissioned in 2017 highlighting required steps to position the board and the chancellor’s office to oversee the system’s redesign effort. With key policy groundwork completed, in 2018 the board hired a chancellor, titled chief executive officer (CEO), to lead the transformative effort, and conveyed through that title the expected actions as courageous as any in admitting to the system’s challenges and its need for strategic innovation. The board established clear expectations through the hiring process so transformation would:

  • Put students first—emphasizing their growth and success above all else;
  • Ensure financially sustainable operations at all system universities;
  • Leverage distributed resources and talent across the 14 universities through deeper forms of collaboration in both back and front office functions;
  • Be driven in an analytical, goal-oriented approach using comparable measures;
  • Embrace radical transparency;
  • Adopt inclusive and consultative processes that respect traditions of shared governance; and
  • Execute plans at a pace reflective of the criticality of the system’s challenges.

In this regard, the board created alignment with the CEO search by carefully examining integration objectives and needs, and hiring for them. The board also restructured its administratively focused standing committee structure to mirror the system’s strategic priorities, instituted faculty shared governance at the board level, and initiated a serious focus on diversity, equity, and inclusion—all part of the larger effort by the board chair to evolve to governance for the 21st century.

Multiuniversity integration also requires leadership to take a holistic view of the issues and align around a set of core principles. These core principles serve as a “North Star” for transcending individual agendas, keeping in mind the bigger picture and articulating the case for change to the public and other stakeholders.

PASSHE’s seven core principles for integration focused on student success, academic excellence and innovation, enrollment growth, affordability, fiscal sustainability and efficiency, diversity, equity, and inclusion, and career readiness to meet Commonwealth of Pennsylvania needs.

“Throughout the process, a key to our success has been to focus on the needs of the student and to think bigger than ourselves—to resist the struggle to mediocrity, and to ensure our thinking was grounded in data and moved beyond the practices that we were accustomed to. My integrating president partners were instrumental in helping the integration teams keep their eyes on the prize of a change to something better than what we currently have, yet realistic to achieve in the timeframe we set,” said Chancellor Daniel Greenstein.

The complexity of creative combinations should not be underestimated. Bringing together two or more entities (for any reason) rarely fails from the factual justification supporting the need for change. Rather, these efforts fail due to uninspiring aspirations, unclear expectations, insufficient stakeholder engagement, or the perception of effort exceeding the benefits

PASSHE committed early to stakeholder involvement in actively driving the integration design. Key to the PASSHE integration plan development was thorough board and stakeholder understanding of the uniqueness of the opportunity and the severity of the challenges.

It is not often that an institution can bring its academic program array in line with current market demands or changing student needs all at one time. Who better, and how exciting for faculty and academic administrators, to align academic strengths into key disciplinary areas to differentiate the institution.

Managing an integration’s complexity requires intentional project governance frameworks that reflect the institutions’ cultures. Ideally, these include campus community engagement and communication plans that clearly outline stakeholder input points and create buy-in through future state design sessions. Transparent plans and engagement processes to analyze anticipated impacts, design integrated organization structures, identify estimated fiscal outcomes, and highlight implementation considerations are vital.

Given its iterative nature, board involvement is critical at multiple steps along the way, including clear board advocacy and service in the role of “questioner in chief.”

Key to Collaboratively Figuring “the Future It” Out

The board and leadership must be on the same page relative to achieving what “the future it” looks like. And that goes beyond saying, “We are going to be an integrated university.” How does an institution know when they have accomplished “it” and what specific outcomes are critical to ensure the integration or collaboration was a success?

The vision for the PASSHE integrations clearly laid out that each integration would result in a single leadership team, a single faculty and staff, a single academic program array, shared student and faculty support infrastructures, a unified enrollment management strategy, and a combined budget. Beyond that, getting to “what else” required being transparent and intentional, leveraging data analytics from the start. This included clearly identifying specific student-centric outcomes to drive every decision.

Similar to the work of many other Baker Tilly clients, a key piece of the PASSHE work was charging working groups to “dig deep” in exploring how not only to combine operations and programs, but more importantly, how to achieve greater student success and institutional performance through the integration. This work was grounded in translating the core principles (previously defined by the board and leadership) into aspirational goals, metrics, and targets.

Targets were set for all core principle areas and included expected items such as increased retention, improved graduation rates, stronger operating margin and primary reserve ratios, and improved liquidity. Most interesting were some of the specific outcomes and annual targets set relative to diversity of students and staff, enhancements to student involvement, alignment of academic programs with market demand, and elimination of opportunity gaps. For all outcomes, student focus is first; cost efficiency is not a driver of productive change in behavior.

Impact analysis is a key factor of understanding and articulating the “future it” for any multi-institution collaboration. The impact analysis must consider all constituency groups and intentionally map key input points for the various stakeholder groups to be consulted on their needs, expectations, and preferences. In the case of a higher education integration, the accrediting bodies are keenly interested in how the positive impacts to constituents will be prioritized and the negative impacts minimized.

Given the PASSHE institutions’ extreme importance as strategic workforce development and economic drivers within their respective regions, fact-based information on market demands and the potential impact on communities, businesses, and industries throughout the region was at the forefront of integration conversations, deliberations, and decisions. Impact analysis was required as part of the legislation that served as the impetus for the integration.

Mitigating Risks and Staying the Course

Despite a data-driven and analytically robust approach, in most cases, the facts alone are not enough. Across all industries, integrations and consolidations are often viewed with skepticism and distrust.

Boards play a critical role in staying the course to explore the possibilities, assess the options available, and, hopefully, achieve a successful integration when warranted. Given the highly regulated and requirement-driven nature of higher education (especially in the public sector), the decision-making and approval process for any integration must be viewed with patience. A carefully crafted plan for each step of the approval process (e.g., faculty, Council of Trustees, Board of Governors, union, accreditors, state/federal departments of education) and iterative consultation/communication plans are key.

For PASSHE, the key risks to the integration in particular have included: need for adequate leadership at all levels, fortitude to make difficult decisions and stay the course, oppositions to change by faculty/staff, including open opposition from union membership, confusion for incoming or prospective students/parents, and running out of time to “right” the financial ship.

The other critical risk for PASSHE was recognizing the importance of maintaining intact the brand, identity, and culture of the individual integrating institutions. Educational offerings and administrative efficiencies may be shared among the institutions, but the unique campus histories and their respective mascots and athletic teams should be honored. For PASSHE, the brands and athletic identities of their campuses are strongly revered by stakeholders and something the integration design is working hard to honor across regulatory requirements and despite fiscal realities.

PASSHE has worked carefully to be transparent in the process and has addressed the integration risks through:

  • Board partnership/aligned leadership;
  • Proactive governance;
  • Consistent and data-driven approach;
  • Broadened inputs and perspectives through partners;
  • Clarity on decision-making (who/when);
  • Understanding stakeholders and their needs;
  • Proactive and continuous communication;
  • Recognizing the sense of urgency; and
  • Well-planned and executed integration design/working group management.

PASSHE has a long road ahead in navigating the required integration approvals and sustaining the presence of region-based institutions despite the fiscal realities. The opportunities an integrated university presents have supporters as well as detractors. This example of creative combinations offers a unique position to all stakeholders who embrace this opportunity to think big and commit to bold changes at a time when students and those driving regional economies need advocates on their behalf.

Lessons for Boards and Governing Bodies from the PASSHE Process

  • Think broadly and boldly about the possible: PASSHE leadership decided from the beginning not to be beholden to what had worked in the past.
  • Take courageous action: PASSHE engaged an outside adviser that could help them thoroughly explore their possibilities.
  • Request a data-driven approach: The PASSHE approach asked not just for ideas but for the numbers and assumptions to back them up.
  • Move quickly and call for action over a reasonable, yet compressed period: The fiscal realities for the institutions were not going to get better if they delayed any longer.
  • Expect a planning/exploration process with extensive stakeholder involvement: This type of undertaking is not a top-down or bottom-up exercise; rather, it requires participation at the board governance and leadership level as well as from stakeholders across the entire spectrum of institutions and their communities.
  • Align innovation to market and student demand: The basis for academic program modifications and investments should be grounded in regional and statewide economic and workforce demands and in student-specific expectations and needs.
  • Consider the identity of communities: In addition to how businesses in the community are affected by the institutions, the process should also take into consideration what it means to the identity of a smaller community to have its own sports teams.
  • Undertake an iterative process: This is a multistep process that can be improved as one looks through different lenses. Start with a student success and financial lens, align for enhanced access and service or program quality, and then consider impacts from all different perspectives, including students, faculty, other personnel, and the community.
  • Focus on measurements: From the beginning, decide how success of the collaboration will be measured, and keep that in mind throughout the process.
  • Highlight benefits around transformation: Keep the benefits front and center. Remind stakeholders repeatedly what this will mean for students, the institution, and the community.

Christine Smith is a managing director with Baker Tilly US, LLP.

Raina Rose Tagle is a retired partner with Baker Tilly US, LLP.

Note: Baker Tilly would like to thank Daniel Greenstein, the chancellor and chief executive officer, Pennsylvania’s State System of Higher Education and Cynthia Shapira, the chair, Board of Governors, Pennsylvania’s State System of Higher Education, for their contributions to this article.