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Higher education is in the midst of great change and transformation, and SPH Consulting Group is here to guide you. Not unexpectedly, major future-oriented institutional restructuring, including mergers, acquisitions, consolidations, corporate conversions, and closures, are increasingly common. An environment that is characterized not only by significant challenges, but also by even greater opportunities. Important and complex institutional transformations that require careful consideration of many potential partner opportunities, a defined pace and process, and expert support.
SPH Consulting Group is ready to serve as the partner of choice, advising, guiding, and assisting college and university governing boards and executives as they consider major future-oriented institutional restructuring strategies. SPH Consulting Group is a team of experienced higher education experts who have actively and directly managed to success the many major restructuring events institutions of higher education face and consider in today’s climate. We provide a variety of services that will help ensure full and complete consideration of the strategic options for major institutional transformation available to higher education leaders and, when it is the right decision, the successful execution and implementation of the chosen strategy.
Gary D Stocker (00:06.786)
Welcome to the multi podcast discussion of the new higher education book, Leading Existential Change in Higher Ed, Mergers, Closures and Other Major Institutional Restructuring. Hi everybody, Gary Stocker back in front of the blue Jedi microphone. And I'm the founder of College Viability and joining me today for the, I'm starting off.
Ricardo Azziz (00:32.878)
And then why don't you, you want to hold for a minute? I'm trying to get my wife to bring me something to drink so I don't dry up in the middle of this talk here.
Gary D Stocker (00:45.262)
Alrighty, ready?
Ricardo Azziz (00:58.618)
She's on the phone, doesn't matter. Okay, let's go ahead. I'm sorry? Yeah, let me just do that here real quick,
Gary D Stocker (01:00.509)
I'm step out and grab something, I'm good.
Do want to step out and grab something? Yeah, take your time.
Ricardo Azziz (05:20.192)
Alright, I'm back again. At some point, Gary, we need to talk about writings for the Chima because I have a number of different materials. Did I circulate that to you guys already?
Gary D Stocker (05:23.468)
Alright.
Gary D Stocker (05:33.87)
I don't know that I've seen that.
Ricardo Azziz (05:36.676)
I have about five pieces that we can reformat to do it through Chima. I think you had some as well.
Gary D Stocker (05:43.342)
Okay? Okay.
Ricardo Azziz (05:47.492)
something to decide. Okay, let's rock and roll. You're recording still,
Gary D Stocker (05:51.118)
All right. Yeah, Mr. recording. All right, I'm gonna go ahead and start again. Welcome back to the multi podcast discussion of the new higher education book, Leading Existential Change in Higher Ed Mergers, Closures and Other Major Institutional Restructuring. Hi, I'm Gary Stocker, founder of College Viability. Joining me in this continuing series is author and physician and former college president, Dr. Ricardo Aziz.
He I have created a series of seven podcasts we're using to review the book in detail, but more importantly to dig into these topics in greater depth. If you have questions about today's podcast or for future podcasts on this book, send them to me, gary, at collegeviability.com. Today, the topic is on chapter 10, competency number seven, courage. And Dr. Aziz, that's a big word. And then the case study that you used,
for the Competency 7 Courage was the closure of St. Joseph's College in Rensselaer, Indiana back in 2017. And I really just want to focus on today's podcast on the lessons learned. And the first lesson learned from this closure is the need for governing boards to understand and accept the hard and sometimes ugly truth. And as you and I well know, there are colleges, probably many that cannot and will not survive. Talk about that part of Courage.
Ricardo Azziz (07:17.722)
So I think that courage, of course, is a big word, as you said. And it's a word that lots of people use but really don't recognize. And one of the things that I think in the book, and a lot of this, colleague, Lloyd Jacobs, did a nice job of working on that, is that courage really is really embedded in fear. In other words, if you don't fear something, you really don't have the courage to face it, right? I mean, because there's nothing to be fearful about.
So to be courageous, and to be a courageous leader today, and we need many, many more of those, you have to actually recognize your fear, recognize the anxiety, and then address that, right? So I think what happens often is that boards really are quite concerned about perhaps their school and so on. Many of them are alumni. But what happens is that they don't really face the ugly truth. They don't face
the fear of the true numbers, right? And one of the things that we've always said is that many boards are simply unprepared to understand the finances and the future and the environment of higher education. They come from different sectors of business, which is helpful sometimes, but not always. They're alumni, so they're very emotionally invested in the existence of their institution rather than understanding how the environment is changing and how their job is to try to preserve the mission and the heritage of the institution, but not necessarily its structure.
But one of the things I think that has been recognized is that most boards just simply don't have the fiscal or financial acumen to actually understand what's going on. And so very often, you know, financial people, president, etc. will present year-to-year budgets and present year-to-year changes and
And those are generally smaller, right? 1 % down in enrollment or 3 % down enrollment or 1 % up in enrollment and so on and so forth. And that all looks good, right? You celebrate these 1 % increases. The problem is they're not really studying the long-term financials, right? I mean, in order to understand where your school is and where any institution is, you really need to look at the last decade.
Ricardo Azziz (09:32.045)
or more of time. Where are you? What is the trajectory? Are you going down or going up? Don't look at year to year. It's a little bit like saying, okay, the stock market is up this year. That must mean the stock market is always up. Well, that's not entirely true. For those of us who have ridden those recessions, it can go down badly as well. So I think it's important to understand the long term of these financials and to be prepared to face it with fear, with angst.
and understand then that to have the courage to actually make the necessary changes.
Gary D Stocker (10:08.053)
And Ricardo used the term big scary change, BSC is the acronym, throughout the book. And we've talked about this in previous podcasts. The importance for big scary change leaders to engage directly with faculty and staff and students and community. When I read the case about St. Joseph's and Rensselaer, they didn't really do that, did they?
Ricardo Azziz (10:31.044)
Well, they actually did, but in different ways. I think it is important to understand that engaging the faculty, the staff, the students really comes in different manners, right? We've talked about the fact that mergers often have this dichotomy, that the first part of a merger, the consideration, the negotiation, the identifying a partner, these kind of things, these things occur in general confidence, meaning that
They're confidential, they're restricted to a smaller group of individuals, they may be members of the board, they may be even members of faculty representative students, but they're all really sworn to confidentiality, right? And they all should, you know, follow their honor and their NDAs and keep that confidential. So in that setting, you don't really widely engage the students because at the end of the day,
the decisions around the corporate structure of an institution and I say corporate a lot of times listeners get confused about know, high rate is not a corporation. Well actually if you look at the corporate documents you will notice that each of your institutions actually is an incorporated, you know, it's a corporation either nonprofit or otherwise. So the point is the corporate structure of an institution
Gary D Stocker (11:38.466)
Hahaha
Ricardo Azziz (11:50.021)
you know, how is it structured, who's the board, what the board decides, etc. are all board decisions, And so, the decisions about whether an institution needs to close, because sometimes, you you can't rescue an institution. You simply need to say that my job and my history and the need for me is now...
you know, is now satiated and it's time now to close in a orderly fashion to try to preserve the heritage of our place, to create centers, to invest and so on. If you do that with time, you can do that. If you do that, if you don't, then clearly you are not doing your students any favor, not doing your faculty any favor, and you're going to close abruptly. But again, this is, this is all the things that need to be thought through. So,
It's true that the St. Joseph, you know, people could criticize and say, well, there wasn't enough engagement and so on and so forth. But I will tell you, almost every merger that I've been involved with, people will say, well, you I was engaged, but after the fact, after they told me what to do, after the decision was made, but that's generally true. That's generally true because, you know, you don't make decisions about, you know, I'm not sure if we're going to close or not. What do you all think? Let's put it to a vote.
to the entire faculty. That just doesn't work and it's actually totally irresponsible of a board and an executive to do that by basically absconding their responsibility.
Gary D Stocker (13:23.734)
So for listeners, the case study for competency seven, courage, is the 2017 closure of St. Joseph's College in Rensselaer, Indiana. And you mentioned in previous chapters in the book, the importance of creating the right amount of urgency. Dr. Z's mergers in higher education cannot be slow moving processes, can they?
Ricardo Azziz (13:44.965)
They can't. this is one of the things that I think is an error. when we studied mergers in both successful and unsuccessful mergers, one of the key factors in unsuccessful mergers, and again, we have to be careful about the word success. I'll talk a little bit about it in a minute because how we define success varies significantly. But in general, we do know that the slow moving process, the same process we use incrementalism and other things that we talked about to say implement our
are quote transformative initiatives around classes and so on and so forth that people talk about. know, those kind of rules do not apply to merger or these kind of major closures, et cetera. I you can't say we're gonna close five years from now, right? You have to actually make decisions relatively quickly. You can't say we're gonna merge three years from now.
you need to make a decision and once you make a decision public and then begin to engage everybody in the process, In the process, not the decision necessarily, but the process, you then have to move relatively quickly. And the reason is that the longer you go, the greater the level of anxiety, the greater the level of uncertainty, the greater the change in the environment, the greater the change in your partner's expectations and so on and so forth. And that imperils all of the work that you're trying to do.
Gary D Stocker (15:10.122)
final bullet points I think on the lessons learned from St. Joseph's. And you say state is the need, and I'm quoting you here, the need for extraordinary courage. That's a tough standard.
Ricardo Azziz (15:24.622)
Well, I think it is a tough standard, and that's why managing these large restructuring initiatives, whether it's a closure, a merger, an acquisition, et cetera, these are not for the faint of heart. Not everybody can deal with it. mean, there are many things that I, for example, though I'm an experienced leader and I find that I like leading, et cetera, there are many things that I'm not set up for.
situations that I realized I wouldn't be a good leader for. And one has to understand that for these kind of major restructurings, not everybody is prepared for it nor should do it, right? I mean, it's not a matter of, can I not do it because maybe I can get trained? No, it's a matter of you just simply, this is not your leadership, right? For me, for example, running for elected office as a leader is just not in my cards. I don't have that kind of acumen and that kind of...
desire to do that, right? So I'm just giving an example of why, just because we say not all leaders can manage these large restructurings like a merger, that doesn't mean that you're a bad leader. It simply means that that's not what you're in for. But mergers require an extraordinary amount of courage, namely because many of the leaders that are actually leading this and moving them forward actually are working themselves out of a job, right?
They're working themselves out of what they feel comfortable and the future is pretty nebulous. It's unknown what is going to be with me. I I remember speaking to number of presidents who had led mergers who said, listen, I never knew if I'd ever be hired again. mean, did they or presidents actually closed institutions. Will anybody hire me again just because I led a closure and so on?
Gary D Stocker (16:50.382)
Right.
Ricardo Azziz (17:17.328)
And again, I speak about narratives, right, and how to build your own narrative. In fact, this week's Higher Ed Dive column on mergers is really about building your own narrative. But having said that, it requires a lot of courage to say, I'm going to take this institution into the future for the good of its people, for the good of its students particularly, whether that's a closure in an organized way or a merger.
Gary D Stocker (17:17.667)
Yeah.
Ricardo Azziz (17:47.541)
knowing that my personal professional future is going to be unknown.
Gary D Stocker (17:53.262)
And I want to go back to what you just said about students. again, from the lessons learned, this was the very first item. I'm going to go back to it now. It's the importance, as you just said, it's the importance of always keeping student welfare front and center. And in the book we've talked about before, Requiem for College, it was written by Jonathan Nichols, who was a faculty member present during the lead up and closure announcement at St. Joseph's in Rensselaer, Indiana. And it addressed in really emotional detail the human impact
If you would talk about that in the context of when a college leadership team should share that the financial health is not good with all of their stakeholders.
Ricardo Azziz (18:34.703)
I think it's important to be transparent about what's happening. Remember that we have this dichotomy. Presidents, executives of universities and colleges really are paid to be the cheerleaders. mean, if you want to know what their principal job is, it's to fundraise, right? And to be a cheerleader. I mean, to be a positive force, right? You can't really fundraise if you say, you know, want you to give me money, but, you know, we're just really toast. I mean, that doesn't really work very well. So...
So to be fair, we hire them because they are charismatic and they're positive and all these kinds of things, right? So therein lies some of the dichotomy of leadership in higher education. And many leaders embrace the role of cheerleader very well, speak about all the programs that they're doing, the special services they're providing their students, their athletic teams, et cetera, et cetera.
But they really don't want to be communicating too widely that things are not well financially. And to be fair, there is some wisdom in that, right? I mean, you don't want to necessarily scare all your people away and your potential and future students from that. Alternatively, I think it is important to be as truthful to your stakeholders and to your community as possible. So when you start seeing issues, I think it's important to say, this is the situation we have.
These are some of the options we will look at. But it's important for the community, the universities or colleges community to know that things are not as rosy as we'd like to picture them. But it has to be balanced. You don't want to create fear so that in fact you lose all your faculty, for example, you lose all your students or however. So it's important to be truthful while at the same time
not creating unnecessary fear. And that's a balance that requires a skill and a skilled communicator to do that, which is one of the reasons that one of the essential competencies of leading existential change is communication. Because it's not just any communication, it's that kind of communication.
Gary D Stocker (20:50.39)
Yeah, and I know I've talked before about that self-fulfilling prophecy. If you say you're in trouble, you're going to be in trouble. And you really can't do that without thinking it all the way through.
So last question, finally. So my contribution to this book is a section entitled, The Roots of Courage Are in the Data. And the essence of the section, Dr. Aziz, is that data, in the form of comparisons and trends, is key in helping to sell mergers and even closures to faculty, staff, students, and communities. In your experience, how challenging is it for college leaders to use data to sell their decisions?
Ricardo Azziz (21:31.621)
So I think your section was masterful in that regard. And I say that not just because it's your post-podcast, but because, I found it to be very insightful. And so let's start out with a general fact of data. What is data? Data are facts. Data are not guesses. You can model data. You can create estimates in the future scenarios using that data.
But the data is the data, right? The data are the facts as you like them. Now, it is also true that not all data can be facts and it's important for the listener to understand that you can't present numbers in ways that make it look either positive or negative. We're seeing that in our government. We're seeing that in many other parts, right? But the issue is it's important for executive leaders to manage on facts. And many of our executive leaders of
colleges, universities arose who as faculty have an intuitive relationship with students and with other faculty, with the community, really understand and feel it in their gut, but they have very limited ability to understand financial data, to understand enrollment data, to understand market data, and that is a problem, right? When you don't understand, it's a little bit like trying to fly
Boeing 747 over the Andes when your gauges are off and all you have is your gut. That may or may not be a good thing. I'd rather have the gauges working and have pilots to know how to read them, right? So that's about data. But in your case, your piece talks not just about the data to make a decision, which is important, but also to sell the decision, right? To sell that. And I think
Gary D Stocker (23:04.046)
Ha
Ricardo Azziz (23:21.701)
you need to be able to present data in a way that is intelligible and understandable so that people begin to understand, okay, this is where we are and these are our options. And that generally starts to be fair in the intimate setting of an executive and his or her board, you know, of their board as they meet because that understanding needs to be there and very, it has to be very candid and very transparent. But also as you talk to the community, I think it's important to let
the community understand why decisions were made and why there was a need for confidentiality in the first part. Using data can be helpful, but I will also tell you that you have to balance the amount of data you share. I always say to people, if I want to hide a fact, I will give you an enormous amount of data. I will give you so much data, you won't even know where to start. And that's a problem.
Gary D Stocker (24:09.55)
you
Ricardo Azziz (24:15.745)
You have to be careful that you know how to build your narrative and that you can actually be candid and transparent while being also educational.
Gary D Stocker (24:26.434)
So the book is Leading Existential Change in Higher Ed, Mergers, Closures, and Other Major Institutional Restructuring. It's from Johns Hopkins University Press. Doctors Lloyd Jacobs, Bonita Jacobs, and Richard Katzman, and me, Gary Stocker, are all contributing authors. The book is available at Amazon and other online retailers. Dr. Z, it was a pleasure. Let's do it again next week.
Ricardo Azziz (24:48.891)
Thank you very much as always.