May Update 3: A Member Submission on the Change Proposal, College of Arts

A submission by Dr. V. Nilakant, Associate Professor in the Department of Management.


SUBMISSION ON CHANGE PROPOSAL – COLLEGE OF ARTS

1. Introduction

This submission consists of three sections. First, I suggest that the present proposal for change outlined in the document of March 25, 2006 carries significant risks for both the College of Arts and for the University. Specifically, the proposal heightens the risk to the college and the university by ignoring: (a) the lack of critical mass in some subject areas, (b) the human costs of downsizing, and (c) the unpredictable consequences of downsizing interdisciplinary programmes. Second, I suggest that the present proposal is also based on a flawed mental model which assumes that: (a) enrolments are the same as demand, (b) students are interested in courses and subjects instead of qualifications, (c) academic staff represent costs, not strategic assets. Third, I make a case for positive change based on an alternative model and provide a tentative outline for meaningful change.

2. Risks associated with the Change Proposal

The present proposal seeks to build a “stronger College of Arts that better reflects student demand and continues to be nationally and internationally respected for the research of its staff.” It seeks to achieve this by reducing “ongoing academic staffing costs” in the following areas: (a) American Studies, (b) English, (c) Education, (d) History, (e) Chinese, (f) Russian, (g) Music, and (h) Religious Studies. In summary, the proposal seeks to build a nationally and internationally credible College of Arts by disestablishing eight full-time positions. It is argued that the staff cuts are necessitated by an increase in contribution margin (CM) from 36.5% in 2004 to 41% in 2007. Given the assumption of “little or no growth in EFTs in the short to medium term” coupled with increases in expenditure and the internal tax rate (CM), cutting staff costs seems to be an attractive and easy option to balance the budget. However, this strategy is fraught with three significant risks. First, growth of this college and the university requires a minimum number of staff in all subject areas for credible teaching and research. The proposed cuts will render some subjects/areas unviable, necessitating more cuts in the future. Second, there are significant human costs associated with downsizing. Organizations that ignore such costs are unlikely to achieve the intended aims of downsizing. Third, staff cuts in interdisciplinary programmes can have unpredictable consequences given the interdependence inherent in such programmes.

2.1 Staff Cuts Will Put Some Subject Areas below the Necessary Critical Mass

The over-all liberal arts programme at the University of Canterbury is small by international standards. To achieve research and teaching credibility both nationally and internationally, the various subject areas that constitute the College of Arts need to a have a minimum size that is often referred to as the critical mass. This is the minimum number of academic staff necessary to sustain a credible research and teaching programme. The present staff cuts will render most of these subject areas such as English (18th/19th century literature), Asian History, Chinese, Russian, and Religious Studies below the critical mass, making them non-sustainable. In the medium to long–term, the college runs the risk of closing down these areas permanently. The loss of subjects such as Chinese/Russian, Asian History and Religious Studies will render the qualifications that the university markets unattractive and uncompetitive. For instance China, Brazil, India and Russia will be among the ten largest economies in the next few years and in the top five economies (in purchasing power parity terms) by 2015. Together, these countries will also constitute the largest market for tertiary education. For instance, around 22,000 Indian and 70,000 Chinese students are enrolled in Australian universities, contributing about 15% of university revenue to that country. Therefore, staff cuts in these subject areas will not only not achieve the intended objectives but will also lead to further decline in demand as the programme will be seen as sparse.

2.2 The Proposal Ignores the Human Costs of Staff Reductions

Staff redundancies extract a heavy cost in human terms in organizations. As Cascio (1) argues:

Employee morale is often the first casualty of downsizing, as survivors become narrow-minded, self-absorbed, and risk averse. Many firms underestimate the emotional damage that survivors suffer by watching others lose their jobs. In fact, a great deal of research shows that survivors often suffer from heightened levels of stress, burnout, uncertainty about their own roles in the new organization, and an overall sense of betrayal. In unionized environments, downsizing may be related to increased grievances, higher absenteeism rates, workplace conflict, and poorer supervisor-union member relations. In fact, survivors are looking for signals such as the following: Were departing employees treated fairly, and with dignity and respect? Why should I stay? What new opportunities will be available to me if I choose to do so? Is there a new business strategy to help us do a better job of competing in the marketplace?

In the present instance, the justification for staff cuts in the proposed areas is not particularly convincing. It is probably easier to justify cuts based on explicit criteria such as research productivity and quality of teaching. However, this hasn’t been done. The present proposal may be viewed as arbitrary and lead to resentment and mistrust between the staff and those in change of managing the college. Not only is the proposal silent on how these human issues would be addressed, it does not even acknowledge the high quality of scholarship and pedagogy that is displayed in many courses of the college. Failure to address the human issues would lead to lower staff satisfaction and productivity that will adversely impact on the quality of research and teaching. This would exacerbate an already sensitive situation putting both the College and the university at risk.

2.3 The Proposal Ignores the Effects of Staff Cuts in Interdisciplinary Programmes

The American Studies programme is an inter-disciplinary programme. Staff cuts in such a programme can have cascading effects on areas/subjects that make up this programme. The proposal is silent on how the reduction of one FTE will impact on other subject areas. Ignoring the effects of interdependence can potentially lead to unanticipated consequences in the future that will tie up significant managerial resources in dealing with unanticipated consequences.

2.4 Overall Impact of the Three Factors

Research in management suggests that most downsizing efforts fail to achieve their intended objectives, which in this case is long-term viability of the college. Based on a series of empirical studies of firms in the Standard & Poor’s 500 in the United States, Cascio concludes that: “We found no significant, consistent evidence that employment downsizing led to improved financial performance, as measured by return on assets or industry-adjusted return on assets.” (p. 40). Cascio argues that unless the downsizing effort is part of a broader business plan, downsizing can sometimes put an organization into a doom loop by eroding goodwill and trust that is so essential for high performance in organizations. What is missing in the present proposal is the broader business plan that underlies the staff cuts. In the absence of such a plan, the proposal can put both the college and the university at risk of long-term decline due to the three factors discussed above. The change proposal, though well-intentioned, is misguided because it is based on flawed assumptions. I discuss these in the following section.

3. Three Flawed Assumptions in the Proposal

The present proposal is based on three unsound assumptions. First, it equates enrolments with demand. The data indicate that enrolments in the identified subject areas have been more or less constant except for a significant drop between 2004 and 2005. The reasons for the change between 2004 and 2005 are not discussed in the document. Declining enrolments do not necessarily mean a decline in demand. Enrolments represent the sales or market share of the university in business terms. Just as no business firm would equate its sales with total demand or market size, it would be wrong for the university to treat EFTS as demand for the subjects/areas.

As the late Peter Drucker, regarded as the creator of the profession of modern management, so forcefully stated, the purpose of any business is to create a customer. In my view, the EFTS figures suggest that the university has failed to create a market for its Arts qualifications. Long years of relative community neglect coupled with insularity have rendered university education an unattractive option in Canterbury. It seems to me that academic staff are being penalised for what is essentially a collective institutional failure in building credibility for university education. This is partly due to the inability to understand what students are looking for in university education, which leads to the second flawed assumption.

There is a basic disconnection between what students expect and what the university offers as university education. In the present era of mass education, an average student expects the university to provide a marketable qualification and is less interested in individual courses or subject areas. The university, on the other hand, is almost exclusively focussed on courses. Academic staff are also partly to blame for this mismatch between student expectations and university offerings. Individual staff members are specialists in specific areas or disciplines and draw their identity as specialists in a specific discipline. Across the university, qualifications have evolved as a set of courses through a process of negotiation and accommodation between individual disciplines that constitute a subject area rather than through deliberate design. There is little discussion in any faculty about the overall qualification – its composition, structure and relevance.

A potential student who is currently faced with the prospect of investing almost $15,000 to $20, 000 in a qualification, needs assurance that the qualification will have credibility and value in the employment market. This requires crafting a qualification from available courses in a manner that leads to enhancement of marketable skills and capabilities in relevant areas for the student. It requires focusing on the output as well as the processes of pedagogy and scholarship. Unless the university as a whole is able to shift its focus from courses to qualifications, tertiary education at the University of Canterbury will continue to remain an unattractive option for both domestic and overseas students. However, this is a daunting task because academic staff are evaluated for their teaching and research in individual disciplines and have little incentive to collaborate across disciplines.

Crafting credible qualifications requires academic staff to work together collaboratively across sub-specialities and disciplines. They need to be motivated and committed to the task of making university offerings relevant. The current proposal’s third flawed assumption is a barrier to this need for collaboration and commitment. It treats academic staff as costs rather than strategic assets. Academic staff constitute the human capital of this institution. This capital needs to be nurtured and developed to ensure the future of the institution. As Cascio observes: “The downsizers see employees as commodities—like paper clips or light bulbs, interchangeable and substitutable one for another. This is a “plugin” mentality: plug them in when you need them; pull the plug when you no longer need them. In contrast, responsible restructurers see employees as sources of innovation and renewal. They see in employees the potential to grow their businesses.” (p. 43).

Cost cutting in a university setting needs to be at the administrative level, not at the academic level. Administrative overheads have to be kept at a minimal level. Since the university is in the business of developing and marketing qualifications, there must be a relentless quest to identify and eliminate bureaucratic procedures and practices that do not add value to a qualification. Till recently, this university had the unique distinction of having one of the lowest overheads among the New Zealand universities. Both capital and overhead expenses need to be closely monitored and managed for potential cost savings. It is not clear from the proposal whether this has been done.

4. Way Forward: A Positive Change Programme

It is clear from the proposal that there is a need for change. Colleges need to be financially viable in the long run. The CM model is intended to provide a framework to achieve financial viability. However, it can not be a substitute for a sound strategy for growth. What is missing in the present proposal is the contour of such a strategy and a roadmap for change in the College of Arts. I propose the following as an alternative change plan:

• First, financial viability needs to be ensured through cost savings in capital expenditure and overhead expenses;


• A change plan must address the underlying issues for declining enrolments, which in this case include a lack of focus on qualifications rather than courses. Establish a team consisting of academic staff drawn from the major disciplines and who are seen to be most credible and competent within the College of Arts. They must be charged with the task of putting together a draft qualification (Bachelor of Arts) that is rigorous, relevant and exciting. This will include core courses with a set of electives and provide explicit pathways for advancement. The current offering has too much flexibility and expects prospective students to make informed choices from a variety of unfamiliar subject areas. Current regulations provide for 106 points that can be taken outside the Arts Faculty. There is a need to construct a degree structure that explicitly identifies Science/Commerce courses that would make the qualification valued in the employment market.


• This draft qualification needs to be crafted into a final product after getting inputs from staff, students, potential employers and the community. The final product needs to be aggressively promoted through advertising and school visits. The target date for launch of the new qualification should be 2008. It is unlikely that the university will see any immediate results in terms of enrolment. Therefore, the college will need to be financially supported till 2009.


• With a clear timetable for change, the positive strategy outlined here is a feasible option because the staff would be highly motivated in view of the crisis that they currently face in the college. A positive change strategy will also create the necessary trust and goodwill that is essential for the success of this strategy.

In the long run, the university needs to invest in staff to develop and deliver credible qualifications. With the recently announced shift in government’s funding policy, the university is faced with an opportunity to adopt an outcome-based approach to tertiary education by building on the teaching and research strengths of the College of Arts. The current funding crisis in the College of Arts presents the university with a tremendous opportunity to launch an outcome-based qualification that is rigorous and relevant. The way forward is appreciative change that identifies and builds on the strengths of the college. The process of change needs to be inclusive, transparent and open. A strategy, such as the present one, that seeks to impose an internal tax rate that is seen as arbitrary and unfair is not only risky for the college but has the potential to undermine goodwill and trust across the whole university.

Notes
(1) Cascio, W. F. (2005). Strategies for responsible restructuring. Academy of Management Executive, 19(4), 39-50; p. 44-45.