David Fleming
It's All Academic   www.davidflemingsite.com   
We Need A Clean-Up in Semester Four

January 8, 2012:  We Need A Clean-Up in Semester Four

Is there anything to learn here?  Jim Sinegal, former CEO of Costco, has been named CEO of the year by Morningstar.

I know nothing about Morningstar, identified as apparently a Chicago-based financial data provider.  So, I'm not going to proclaim that their choice is correct, appropriate or even indicative of business CEOs.

I also have barely been in a Costco.  My wife had us join Costco many years ago, and while she shopped there fairly regularly for maybe a year or more, I may have only gone into one four or five times.  It was a clean, pleasant store in my mind.  I didn't pay close enough attention to prices to be able to judge just how much we could save.  As a frequent shopper of Meijer's and a frequent avoider of Wal-Mart, in my mind Costco was a suitable and comparable store to Meijer's.

Thus, my appreciation for this honor is simply in the statements made about Mr. Sinegal.  I can't help but hope that if there was a President of the Year award for college or university presidents the same kind of criteria would be used.  I would argue they should be.  After all, hopefully few people are still naive enough to believe that higher education isn't being run like businesses.

In general, Senegal was picked for the way he embodies "corporate stewardship, independent thinking, lasting value for shareholders and leaving a legacy in his or her industry."  I have spoken before in these blogs about the difficulty of having truly independent thinking among some college leadership.  If one college develops a business incubator, you can rest assure dozens will follow.  If one university develops an online MBA program, you can be sure dozens will follow.  If one university president proclaims a "green" campus, dozens will follow.  It seems to me that if we struggle to find truly independent thinkers among university leadership, then we may struggle to find lasting legacies. 

One of the factors Morningstar cites about Sinegal is that "the average Costco employee is attractively compensated relative to other retail workers, keeping employee turnover low and productivity high. Although its top-notch benefits package and superior wages are costly on the surface, the firm is reimbursed handsomely, generating more than $500,000 in sales per employee.”  I'm not going to suggest that higher salaries and benefits solve everything, but one clearly can see a relationship between turnover and productivity.   Turnover at colleges and universities can be damaging in many different ways.  The turnover of an adjunct faculty population (which often can be tied to the relatively low pay associated with adjunct teaching) will leave an imprint on the college product--students who may not have acquired a consistently directed education.  Turnover among non-faculty staff can mean that students end up with three or four advisors over the course of their degree.  And turnover among administration inevitably results in changed priorities, goals, and initiatives, setting institutions back, thwarting growth among previous and still existing priorities, goals, and initiatives.

Even though I am a university "brat," university life is pretty much all I've ever known, I have valued the notion that colleges should be run more like businesses.  Generally, many institutions have switched to this model, but probably without a clear understanding of what they means.  It's no wonder that the for-profits can make such a dent in the college marketplace.  It's a business run like a business, not a philosophical concept run like a business.