Best governance structure for b-schools?

Here is the headline from Financial Times editor Della Bradshaw: From the editor: Trouble at the top. “A spate of deans’ departures raises questions about the way they were appointed,” writes Bradshaw. The examples given in the article are the short tenures of Robin Buchanan at LBS, John Wells at IMD, and Frank Brown at Insead. The basic gist of the article is that these examples illustrate bad governance practices at non-university-based schools. What’s bad? Well, according to Ms. Bradshaw, too much faculty involvement in the Dean selection process.

Of course, most US and UK university-based business schools follow a straight­forward system in which the president (US) or vice-chancellor (UK) appoints the dean of the business school based on recommendations from a search committee or firm. Presidents hire and only presidents can fire.

But, at non-university schools, faculty meddling is allowed to a shocking degree …

It is hard to imagine any other organisation – commercial or academic – allowing the workers to effectively decide who will be their new boss. When the FT is next looking for an editor, will jobbing journalists be asked to vote?

Can you imagine?!

I’m not quite sure where to begin with this. But, let me try. First, Bradshaw cites no evidence  that these short tenures were bad outcomes. Rather, they may be the kind of flexible, timely, and appropriate decisions that schools should make upon learning that the new Dean is a dud. Managing a research-based business school is a tricky endeavor. On the one hand, a Dean needs to have the management chops to run an organization constrained (yes, constrained) by insanely dense complementarities between policy variables. On the other hand, he or she also needs to understand the research world, both in order to construct a sensible educational vision as well as to manage faculty resources. The problem is that each of these skill sets typically takes a career to develop and, hence, are rarely co-occurrent  in a single individual. Perhaps we should be surprised that the rate of Dean turnover isn’t higher.

Second, it appears that Ms. Bradshaw has never heard of a governance form called the “partnership.” Traditionally, faculty have been run along the lines of a partnership, much the same as in law firms and consulting practices … and for most of the same reasons (aligning decision rights with inherently decentralized information and creating effective incentives). True, the partnership model for b-school governance has been greatly degraded in recent years.  In its place, we now have the corporate-style administration. This modern administrative form — untethered from from faculty oversight — is, in the parlance of our times, a bug and not feature. Treating faculty as mere “workers” (or, worse, as a frustrating “problem” to be sidestepped whenever possible) results in misaligned decision rights and incentives, which then contribute to undesirable behaviors like: the mindless chasing of rankings put out by popular business periodicals; expanding capacity to what may be an unsustainable level; the dumbing down of graduate business education; and, a shocking rate of tuition inflation. This is why, whenever I hear university administrators refer to themselves as “The Senior Management Team” (typically, embedded within some self-congratulatory announcement), it really makes my skin crawl.

By the way, in terms of her own experience, Ms. Bradshaw was an English teacher before joining the FT, where she has served as a journalist for the past 20 years. As far as I can ascertain, her experience includes neither scholarly research nor business unit management. She has been involved in the FT rankings since their inception in the 1990s. Think on that.

5 Comments on “Best governance structure for b-schools?”

  1. David Hoopes says:

    Nice post Mike.

  2. @teppofelin says:

    So, I actually enjoy perusing through FT’s business education section (some interesting features and news) – but this op-ed is out of character and strange. Simply doesn’t make sense. The op-ed is aghast that faculty would have input in hiring a dean. Perhaps it partly mirrors a difference in governance at universities in the UK versus governance in the US (well, and many other places with a faculty governance model).

    And yes, professional services and the partnership model are a very common form where you can have ‘bottom-up’ governance. As you say, this form is pervasive and rapidly growing (legal, consulting, open source models, etc etc).

  3. srp says:

    Excellent post. Of course, “bottom-up” governance can be a problem if taken to an extreme. Check out John Kay on the problems at Oxford:

    He also has a much longer essay elaborating on these themes which I found quite entertaining.

  4. David Hoopes says:

    Great link SRP, I love this: ‘The procedure was elegantly satirised by Francis Cornford the Cambridge classicist a century ago “The Principle of the Dangerous Precedent is that you should not now do an admittedly right action for fear you, or your equally timid successors, should not have the courage to do right in some future case, which, ex hypothesi, is essentially different, but superficially resembles the present one. Every public action which is not customary, either is wrong, or, if it is right, is a dangerous precedent. It follows that nothing should ever be done for the first time.” ‘

    For the moment I am faculty, but in a few more moments I’ll be an administrator again. I am always amazed at how long faculty can take in getting nothing done. And the Alice-in-Wonderland allusions are dead on. I often feel as if I’ve crawled through the looking glass listening to faculty committees trying to decided what they should decide, what they have decided, and whether they should decided to not decided anymore.

    Still, the faculty need to be involved in the search for deans. They do a bit better at such things.

    I really like the idea of “nothing should ever be done for the first time.” Perhaps it’s my Anglican heritage.

  5. David Hoopes says:

    Sorry for all the typos on decide.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s