Focus on the Presidency: Great Expectations

By Roseann O'Reilly Runte    //    Volume 22,  Number 6   //    November/December 2014

Times change, and so do expectations. Not so long ago, the goal of the corporate board was fairly straightforward: Make money for the shareholder. And the CEO who turned a nice profit was recompensed accordingly, with his or her salary, in model cases, tied to profitability. CEOs answered to the board, and their achievements were measurable in terms of profitability, efficiency, and effectiveness in managing resources directed toward clear targets. Board members were usually shareholders and represented the interests of shareholders first and foremost.

In the same, not-too-distant past, boards of universities also had fairly clear goals: to meet general institutional aims to serve the greater social good while, ideally, breaking even. Successful leadership was then as hard to define as the “greater social good.” Universities, for example, sought excellence in all areas of endeavor: teaching, learning and research, general accessibility, and supportive services that ensured student and faculty success. If faculty members were evaluated by students in their classes, administrators were judged by students, faculty, staff, alumni, government leaders, and the community at large as well as their boards, which were composed of representatives of all of those groups.

Times have changed and corporations’ profitability and success are affected by the perception of a public in possession of extraordinary means of communications. People can send messages via social media that can be heard around the world. Some corporations, promoting sustainability and socially responsible action, while remaining profitable, are pursuing more compassionate capitalism; they are becoming more engaged in their communities. Corporate board members, after Sarbanes-Oxley, are also expected to share greater levels of responsibility and to possess skill sets that will enable the board to perform more audit functions, propose new governance models, and ensure that all rules are followed in an increasingly complex and highly regulated world of business—while ensuring both profitability and transparency for shareholders.

In short, corporate goals have begun including “unmeasurables” (assigning value to something invaluable). Meanwhile, nonprofit colleges and universities have had to begin acting more like corporate entities, with “measurables” that focus attention on clear goals and performance.

Indeed, in the college and university sector, accountability has become a key word. The public and policy makers are demanding that colleges and universities demonstrate measurable results. In turn, the CEO’s salary is being linked to the achievement of quantifiable goals. Performance metrics are, of necessity, more short-term and are limited by imperfect means of measurement. In fact, leaders of colleges and universities are also haunted by the difficulty of determining success in educational areas that are often difficult to quantify. The need to establish metrics is providing impetus to boards to focus goals more cohesively.

The world needs both accountability and social responsibility. Success, both in the corporate and the higher education world, must be defined by each board and must include the investment of wealth in the social fabric. While for-profit boards may expand the definition of success, higher education boards need to focus more on accomplishing measurable results. The challenge for college and university boards will be to define the terms and determine what should be measured and how to do so. Simplistic formulas will not work.

If corporate boards bear increasing levels of responsibility, so too must university boards, by sharing a common vision that requires board members to invest their energies, expertise, time, and resources in realizing it. When university boards find the means to measure and report success (beyond graduation and employment rates), support from governments and corporations will increase. When business boards espouse long-term goals tied to social enterprise, they will demonstrate an ethical corporate conscience that is more attractive to shareholders. This transfer of ways of perceiving and functioning between sectors will inspire creativity and ingenuity. It will generate new energy for discovery and enterprise, and ultimately create the building blocks for economic development and social good.

The owner of this website has made a commitment to accessibility and inclusion, please report any problems that you encounter using the contact form on this website. This site uses the WP ADA Compliance Check plugin to enhance accessibility.