Leading Existential Change in Higher Ed, Mergers, Closures and other Major Restructuring Ep 3 of 7

Here are the questions, Dr. Azziz addressed during this podcast episode.

1.      The case you used for this competency ( Sensing and driving the pace of change)  was the merger of Kendall College and Louis National University.  Share with our listeners the need for speed in merger in higher education.

2.      Talk about incrementalism and how it is not necessarily a good approach for colleges considering mergers.
 

3.      The need for speed. P. 107 Box 6.2    Let’s talk about a few of your recommendations.

     a.      Delaying implementation furthers anxiety and discomfort on campus and throughout the community

     b.     a lack of speed simply favors forces of opposition the environment will change while institutional leaders make incremental decisions 

     c.      speed minimizes the risk of burnout and change 
 

4.      p. 109 How is setting the drum beat that you reference set up. You note that leaders undertaking big scary change must recognize that in the usual course of business a college or university uses incremental approaches to change things. And you write that kind of approach won't necessarily work for mergers

Competency 4:  Prioritizing and driving communication

5.      Talk about the best communication approach with which to engage the variety of stakeholders involved in any merger
 

6.      You note that the first phase of a merger will involve one-on-one conversations. This phase will be carried out in relative confidentiality and only a limited number of individuals privy to the discussions. Talk first about the confidentiality piece. Then talk about transitioning to selling the vision that you note involves “creating urgency without creating chaos”.
 

7.      You have a section on page 128 entitled the ‘opprobrium of being acquired’ and you note that when a college or university is “being acquired” (you put that in quotes) its impact may be ego shattering for the institution and for the individuals who comprise that college. Step listeners of the podcast through a communication process to help buffer that being acquired mindset.
 

8.     Finally, let's talk about the media. We know in general that the media focuses on controversial, negative, and emotional stories. Step us through some guidance you would provide to college leaders, College Board members on how to prepare their interactions with the media - knowing that most stories will be on the negative side in regards to proposed mergers
 

What is SPH Consulting: Mergers and Acquisitions in Higher Education?

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 (00:01.388)
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. Thanks for joining. I'm Gary Stocker, founder of College Viability. My guest, as is the regulator of the case, is author and physician and former college president, Dr. Ricardo Aziz. Dr. Aziz, always a pleasure to have you on the show to talk about

this book because so you have written the book on higher education mergers.

Ricardo Azziz (00:35.406)
Well, thank you, Gary, for having me. And again, I always remind you that it's all a team effort, including you. So we appreciate the contributors and the co-authors on the book, which we're very proud.

Gary D Stocker (00:48.27)
And for those listening to the podcast now or in the future, if you have questions or comments or would like us to delve into different topics, drop me a note to gary, G-A-R-Y at college viability, gary at college viability, that's viability, that's one long word, .com. I'll be happy to get that worked in to the show. Today we're talking about chapters six and seven in the book. And it's two competencies, two of the seven that Dr. Aziz and his co-authors put in the book.

Competency three is sensing and driving the pace of change. And competency number four is prioritizing and driving communication. And as we've discussed, Dr. Aziz in previous podcasts, you use case studies. And for this competency number three, sensing and driving the pace of change, to use the merger of Kendall College and Lewis National University, share with our listeners, I guess, the need for speed.

in higher education mentors.

Ricardo Azziz (01:48.59)
So once, to be fair, the consideration and exploration phase, sometimes can take a year or two or even three years. But once a merger is announced, once you've made a decision about the partner and you're going to move into a letter of intent, a definitive partnership agreement, and then all the approvals necessary from the regulatory agencies, you really do need to move fast.

And the reason is that obviously there's a tremendous amount of anxiety among all stakeholders, right? It's alumni and students and faculty and executives and people who have jobs on the line and so on and so forth. And they want this resolved relatively soon. That is the principal reason that you need to move fast. And we in higher ed are not accustomed to that level of speed. We just simply are not. I mean, we...

We tend to be thoughtful and considerate, and we want to mold things over and check them out and recheck them out and maybe name a committee or two. And it may take three years to implement any kind of significant process. But in this case, really, you need to move fast. Six months to 18 months is really the timeline that we tend to see. There's also another reason, a very pragmatic reason for speed.

And that is that you will always have opposition. I mean, I've said this a million times, you you must have opposition. If you don't have opposition, then somehow you're not actually doing the right thing, right? It's not radical enough. So if you have opposition, the longer you go, the more anxiety you provoke among your stakeholders. And the more time you give your opposition groups to sort of set up a opposition, right? Resistance, if you would.

This is not to say that people who don't agree with the strategy don't have a voice. They should have a voice and many of them have ways that they can actually modify what's happening. But once a decision is made by the board, it's time to move forward fast because of the anxiety of your stakeholders and the fact that your opposition will be organizing, if you will.

Gary D Stocker (04:03.809)
You mentioned higher education committees. And again, in the book you talk about incrementalism and mention how incrementalism and how it's not necessarily a good approach for colleges really considering mergers. Can you expand on that for us,

Ricardo Azziz (04:20.226)
So, you know, for a long time, we really were in the golden era of higher education. Every year we'd have more students coming in. Every year we'd know that our value was high. Every year we'd know that we were doing the right thing. Every year the government was supporting us more and more. And it was a great time. But the reality is that the environment is changing very rapidly. The environment from a federal point of view, they're...

their stance that they are approaching higher ed as almost an adversary, adversary, and cutting funding, that enrollment is tanking, that the number of students desiring to go into higher education is less, that simply the number available of students wanting to go into higher education is less, and so on. So the environment is changing rapidly. And for major restructuring approaches, you've got to move fast because frankly,

And I'm going to paraphrase our former GE executive, you know, when the environment is moving fast, if you're moving less fast than the environment, you're in trouble, right? And I paraphrase it terribly, I'm sure I should quote it better. But nevertheless, the point is today's environment is changing very rapidly. It's not the same environment that gave us the continuous supportive growth from the World War II all the way to the early 2000s.

Gary D Stocker (05:33.15)
Ha ha ha.

Gary D Stocker (05:50.324)
On page 107 in the book, you have a box 6.2 that focuses on the case study for this competency. And we've already talked about a couple of them. I want to look at one. You talk about the why the need for speed, page 107 in the book, leading existential change. The environment will not remain static while institutional leaders make incremental decisions.

Ricardo Azziz (06:17.772)
Yeah, and I think that's one of the mistakes that many higher education leaders actually do today. And again, many of them came through the ranks of academics, and I came through the ranks of academia. We're accustomed to things being relatively the same year to year, a little bit of change, these kind of things. But the reality is that the environment is changing rapidly. And it's going to change even faster when you begin to announce things or even begin to consider things.

You say, okay, let's start thinking about a merger today. But that's assuming that all your partners that support you, that your alumni that support you, that the federal government, that the state government, all of that is supporting, but it's actually changing. And so what happens is that all of a sudden you now were considering that your environment was A and you thought, well, I got at least a couple of years to make a decision about this. And all of a sudden you find out you don't have a couple of years, right? Because it's changed dramatically.

And so you can expect that everybody else will stand still while you think this through and while you consider things. And I think that's a mistake that we're seeing.

Gary D Stocker (07:29.015)
We talk about competency for, and I mentioned that on the top of the show, prioritizing and driving communication. And I know when I read this part of the book, it struck me as one that was obvious, but maybe not to everybody. And so really the best communication approach with which to engage the variety of stakeholders involved in any mergers is what? What's that best communication approach?

Ricardo Azziz (07:57.167)
So communication may be obvious, but actually, you know, when we interviewed leaders of higher education that actually had attempted to undertake a major restriction or had succeeded, it became very clear that that was an important thing that they actually weren't prepared for. The level of communication that actually is required during this time is actually different. And it's different because, in fact, during the first part of the merger, right, when you're negotiating, you're considering, you're thinking about it,

It's actually communication is actually very confidential, right? Communication is actually done with individual leaders. You have to be very careful about how it's spread. You may want to involve your faculty, but do it in a selective fashion and so on and so forth. So during the first part, this consideration negotiation phase, right? It's fairly confidential and you have to manage it. And many of us are not accustomed to doing that, right? We're accustomed to speaking loudly from the hilltop about what we are doing.

And that would be actually, obviously, like any other business negotiation, it would not be very helpful. The second is, at the moment you actually identify your partner and you announce that you're going to be pursuing or attempting to pursue a merger with your partner, then it flips. It flips completely. The switch goes from confidentiality to great transparency and great communication and over communication. In fact, you can't over communicate.

at that phase of the process. And that's a little bit of the, one of the challenges of communicating during a merger. You have to do this switch from very confidential to very transparent and somehow do it in a manner that, you know, people can't immediately accuse you of being not honest, right? That you have simply kept everything closed.

because in fact you have to explain that these parts of the negotiation can't be made a a public kind of process even though many faculty of course will disagree with you.

Gary D Stocker (10:04.366)
Yeah, yeah. And you mentioned in a section on page 128 in the book, and it was entitled, Approprium of Being Acquired. And you note that when a college or university is being acquired, and you put that in quotes, its impact, being acquired, may be ego-shattering for the institution and for the individuals who comprise that college. If you can, Dr. Aziz, step listeners through a communication process to help

buffer that being acquired mindset.

Ricardo Azziz (10:38.21)
No, I think that I was asked, in fact, at a meeting yesterday of CFOs in North Carolina, independent colleges and universities, was there something, was there a merger of equals? And the reality is that there's almost never a merger of equals. I've actually never found it, even though we've studied well over 100 different mergers in the United States.

And the reason that there is no merger of equals is that even though sizes may be different, right, sizes of endowment or sizes of enrollment or sizes of budgets, right, they may be very different. Institutions bring different things to the table. Some of them may have a great athletic program or an athletic program at all. When we emerged, I had the merger that I led, we didn't have a athletic program because we were a health-sized university, right?

in our sister university with which we merged had a very good athletic program and so on. or you maybe bring in branding or location or history or a number of different things, right? Or specialty programs or, you know, things that you're renowned for or awards that you brought and so on. So, the point is that every institution brings something to the table because if they don't bring something to the table, why would they, anybody want to merge with them anyway, right? And so,

So the point is that in general, we don't just simply say, OK, you're the smaller one. You're then hence being acquired. And so we have to fight that deliberately, because every time the smaller university feels that they're being acquired, or the less wealthy university feels that they're being acquired, right? And so I think it's important to be very deliberate and to recognize this beforehand.

And to speak to this, to speak how much one institution is bringing to the table of the other. But actually both partners need to do this, right? I I often run into advising mergers where one partner just doesn't recognize, because they're in the dominant position, if you would, just doesn't recognize their role and their responsibility in trying to ameliorate the anxiety of the other campus. So we try to educate.

Ricardo Azziz (13:00.14)
both partners that this is their responsibility to communicate that this is not a takeover, okay, that this is a partnership even though in the end one institution will be the dominant institution.

Gary D Stocker (13:16.072)
And we see so many of these mergers that are in the news. They try initially, I think, to say, well, we're equals. And naturally, not the case.

Ricardo Azziz (13:25.432)
That's correct. think the alternative to the being acquired syndrome is the syndrome where you falsely say we're equal. You it may sound okay, but what happens with that is you begin to create false expectations, right? And this is one of the things that is important. No.

Gary D Stocker (13:33.336)
Yep, yep, yep.

Ricardo Azziz (13:47.887)
In most situations of a merger, there will be a dominant partner. The partner is going to put in the most money. The partner has the better stability, etc. So you don't have to say, well, I'm the dominant and so we're just acquiring you. That's not very helpful either. You have to understand it. But also you don't want to just simply say we're equals when you're not really equals. So I think it's better to speak to the things that each partner brings to the table and allow the

dominance around negotiation, process, really to be led by the leaders. They're going to have to face, obviously, the fact that there may be differences in control, in financial strength, and so on.

Gary D Stocker (14:36.62)
And then finally, Ricardo, let's talk about the media. And we know in general that the media focuses on controversial, on negative, and emotional stories. Step us through some guidance you would provide college leaders, college board members on how to prepare for those interactions with the media, knowing upfront that most stories will be on the negative side in regards to proposed mergers.

Ricardo Azziz (15:04.14)
Yeah, I think that that's an excellent thing. Many of us don't have a lot of experience dealing with the media, to be fair. And even though we go through media training and we've spoken to the media and so on, we don't really understand the media. And the media, to be fair, has a job. And the job is to get the readers, right? mean, obviously if a tree falls in the woods and nobody hears it, then it doesn't exist, right? So.

So in order to do that, and humans, and this is our flaws as human beings, our evolutionary psychology problem, we tend to actually be more fearful about things. So we are interested in things that are controversial, that are negative, and so on. There's only so many stories that we're gonna hear about, everything is good in town. Well, know, that's a one-liner, right? Everything good in town, and that's it? I mean, there's nothing else.

No, no, but then when you have to report on robberies and fires and this and that, then there's lots of stories. And that's one thing that actually all leaders should remember. Their stories are just gonna be made somewhat negative, because that's actually what people wanna know. Yeah, yeah, it's good, but what's the problem, right? Yeah, yeah, it's good, but what's the backstory, right? And so that's what they're gonna do, and that's what the media is gonna do. So you have to be prepared for that.

Gary D Stocker (15:56.621)
Ha

Ricardo Azziz (16:24.032)
The second thing you have to remember is that the media is not your friend. I don't really care how friendly they look. I don't care how friendly they act. I don't care how many times they've written good stories about you. The truth is they are not your friends. They work for another entity. They work again for the third state, as you would remember. And simply they are not really your partners in this. So you have to manage them intelligently.

You'll want to be transparent, but you also have to recognize that in the end, they are not going to carry your message the way you want it.

Gary D Stocker (17:01.134)
And I recall that famously the late great Paul Harvey would say all the time that negative stories sell. And that's adage that we should always remember at all times, whatever the business is, but in particular in the context of college mergers and acquisitions in the coming months and years. The book is leading existential change in higher education, mergers, closures, and other major institutional restructuring.

Ricardo Azziz (17:11.295)
Absolutely.

Gary D Stocker (17:30.584)
The main author is Dr. Ricardo Aziz. The book is published by Johns Hopkins University Press. Doctors Lloyd Jacobs, Bonita Jacobs, Richard Katzman and me, Gary Stocker are all contributing authors. The book is available at Amazon and other online retailers. Dr. Aziz, always a pleasure. We'll do it again next week.

Ricardo Azziz (17:48.13)
Thank you for having me.