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Ethical Considerations of College and University Downsizing and Outsourcing


Uni Works  5 | -   Freelance Writer
May 21, 2018 | #1
The recession of the past three years has resulted in losses to the educational industry. As credit tightens, it is much more difficult to secure loans and enrollment at liberal arts institutions have dropped as people in a recession tend to focus on faster, more practical training. Predictably, many students with responsibilities of raising a family would drop out in order to work full time. In addition, the image of Hypothetical College is not attractive enough to have applicants pick it as their first choice school gleaned from the briefing of the previous administration. Even some of the most prestigious universities have fallen prey to financial difficulties and one study had shown that during the 1990s, Harvard had a $42 million deficit, MIT offered 1,400 employees severance packages, and Yale made fifty arts and sciences professors redundant. While downsizing has been the primary modus operandi for private corporations experiencing financial difficulties, these examples have shown that it had made its way into the educational system as well. This has become detrimental to the performance of many institutions as morale drops among the remaining faculty and staff and stability is compromised as tenured professors, fully released from the old-fashioned ties of loyalty that existed between university and faculty members, look for better positions elsewhere. According to Applebaum and Patton, "The bottom line is that downsizing has altered the psychological contract, the emotional bond between employer and employee, and between the individual and the organization' (p. 128).

Higher Education DownsizingIn addition, it is possible that downsizing may have a negative effect on student attraction and retention, especially if those under the proverbial Sword of Damocles teach the undergraduate requirements that students need to graduate. For example in the California State University system, it is taking longer for students to graduate (an average of five years) because there are not enough professors on staff for the number of students needing to take the core liberal arts subjects. This does push much more financial obligation onto the students and does not save the university that much money since many students factor in time until graduation when it comes to choosing a university. For this reason, teacher cut backs are often the last action taken when the university finds itself in financial difficulty. According to Applebaum & Patton, university administrators facing a financial crisis go through several stages, the first of which is denial and then begin the necessary practice of making budget cuts.

The previous president had denied reality for so long that the debt was beginning to cripple the university. Once he had finally accepted that a crisis was at hand, he tried to increase revenues by holding fund raisers, raising tuition costs, and cutting costs from the budget on anything not directly related to education, such as maintenance of the Student Union Building, which is falling apart and in desperate need of construction. Other saving methods involved merging departments (e.g. philosophy and Western Civilization, or Math and Physics). One suggestion for implementing downsizing would be to offer faculty early retirement incentives, which may not preclude them from teaching elsewhere, but may help maintain morale if the cuts are necessary. In addition, layoffs may generate lawsuits and union disputes, which would threaten the cohesiveness of the campus community. Unlike most private organizations, universities are not as keen on downsizing as the first step to budget control. Nevertheless, because Hypothetical College is on its last legs unless costs are dramatically reduced with a corresponding increase in income, we have been currently been reviewing four different strategies: outsourcing, organizational restructuring, programmatic reduction, and utilizing the services of adjunct professors more often.

Outsourcing



Long the subject of national debate (as well as an independent film), outsourcing is replacing inside employees with people that run their own private enterprise or are otherwise unaffiliated with any other organization. For instance, many corporations have outsourced their customer service departments to nations such as India and China in order to save money as costs of employment (as well as the cost of living in those countries) are so much lower than in the United States. In the case of higher education, Hypothetical College would establish an agreement with an external firm in order to provide a service. For example, rather than paying cafeteria workers to make lunch for hungry college students and providing them with benefits and paid vacation, they contracted with several fast food places such as Subway, Chick-Fil-A, and Panda Express, who then are responsible for paying the on-site staff.

According to Phipps & Merisotis, the problems inherent in outsourcing in the business sector does not necessarily apply to higher education because these functions are not likely to be undertaken by foreign workers. "The real issue in higher education is if and how institutions are adequately contending with their own cost structures" (p. 1). From the situation with Hypothetical College, it is clear that the prior administration did not have a firm handle on the cost structures and keeping expenditures within budgetary constraints. "A major concern of outsourcing is that outside vendors may not understand the culture and mission of a higher education institution, which directly influence students, faculty, and staff's experience on the campus. This may translate into a diminution of service quality and customer satisfaction" (Phipps & Merisotis 2005, p. 4). Nevertheless, outsourcing functions that were not teaching related were positive or neutral for the campus community. As of 2002, approximately half of all colleges outsourced the function of the campus bookstore and food preparation. Curiously, more than 80% of institutions were in favor of outsourcing-stating that universities should focus on the core competencies of research, teaching and service and that all other functions should be outsourced to outside vendors. Since Hypothetical College was rather old fashioned in the sense that it was carrying out most of the functions itself (including bookstore and food preparation), that following the path that 80% of all colleges desire (freedom from meeting goals other than the triad) will save Hypothetical an inordinate amount of money, which is why this may be a desired path for the College to take.

Curiously, several interviews with executives had shown that outsourcing in fields such as Human Resources and Finance/Accounting would be undesirable because it would be akin to having someone else brush your teeth for you. Outsourcing information services, however, were considered positively by college executives because they believed that IT workers would provide additional expertise. In contrast, outsourcing Human Resources and Accounting was perceived as creating yet another layer of bureaucratic red tape within the college climate. Other areas where outsourcing may be desirable would be in such departments as copy centers, student health centers, print shops, parking, grounds keeping, mail service, transit buses. Phipps & Merisotis mention that while these measures would be quite actionable for universities located in urban areas, rural schools would lose out because they would not be able to find a firm able or willing to provide services from more than 30 miles away (p. 8).

The main ethical consideration when it comes to outsourcing is determining who benefits. For instance, some presidents may make the decision to outsource practically every function they have in order to fulfill short term financial objectives, but utterly fail in bettering the university as a whole and improving the welfare of the students, faculty and staff members that are currently on board. Fortunately, these do not represent the majority, as most campus leaders prefer to create a strategy that would benefit everyone. While outsourcing some functions have proven beneficial to the university and students (e.g. lower cost books at Barnes & Noble), each outsourcing decision needs to be weighed carefully against cost and impact on culture. "Oversight was seen as a critical component of an outsource. Many were quick to note that the institution cannot assume that the provider is solely responsible or can be left unmanaged. Indeed, loss of control was cited as a concern by most respondents in several areas, including flexibility, employees, costs, quality, priorities, loyalty, and responsiveness" (Phipps & Merisotis, p. 9).

Implementing outsourcing can be quite difficult for many administrators because of intense faculty resistance. While a failing university must use corporate-style turn-around practices in order to survive, the administration must keep in mind that higher education is a business with learning as a product and that it would be very difficult to distribute this product if the key representatives are not supportive of cost-cutting initiatives. Thus, presentation and marketing these ideas to educators as in the best interest of the university and the students would be successful-especially if the administration can show how these cuts would lead to long-term success for their departments.

In sum, Phipps & Merisotis concluded that while corporations would employ outsourcing in order to maximize the bottom line, it is the rare university that considers the profit motive above all else, as most academics are idealists that are keen on doing the right thing, even if it lands them in the proverbial black hole financially. It is possible that several functions at Hypothetical College can be outsourced without impacting departments and the College's commitment to excellence in education and research, but since the paperwork looked rather dismal, it is possible that the college may consider organizational restructuring.

Organizational Restructuring



In the realm of higher education, organization restructuring means that departments get disbanded or merged with others, in addition to changing leadership both within academic departments and the administration. Currently, Hypothetical College is undergoing organizational restructuring because the previous administration did not solve the problem of the financial crisis in time. This would include merging some of the smaller departments into a larger department and merging majors.

Programmatic Reduction



Programmatic reduction can be especially useful when there are very few students studying a particular major. For example, the number of people seeking to major in purely intellectual pursuits such as philosophy and the humanities are declining as a growing percentage of students feel that college should prepare them for the working world. Thus, more resources of the school should be put toward business, information systems, and communications majors while the funding for the humanities is cut. From a purely financial perspective, this strategy makes perfect sense. Nevertheless, it does present an ethical dilemma: by switching to a purely vocational curriculum it would shortchange people seeking to attend college in order to become intellectually well rounded.

Increasing Use of Adjunct Faculty



When most businesses outsource a product, they typically retain all essential functions in house while outsourcing additional functions to other businesses. For instance, Toyota creates and sells cars, yet it hires an advertising company to create the commercials we see on television. It is less expensive for Toyota because they do not have to manage the advertising and can spend all the time creating and selling cars. Higher education often outsources the function of teaching to adjunct professors, which does contravene conventional corporate wisdom according to Schibik & Harrington.

Tenured professors known for their insights and research give character to a university. For example, Stanford University is known as a school that produces some of the best minds in business and law because these students have mentorship from some of the most brilliant professors in the field. While having prominent fixtures can attract students searching for the best possible instruction, increasing the use of adjunct faculty may be a way for colleges to fill the demand for certain courses without incurring the costs that are necessary to fund full-time faculty. Nevertheless, some educators and administrators are leery of overly relying upon adjunct faculty because they usually have less experience and/or lower qualifications. In addition, it is also possible that they may have been victims of a profession that is already 'full' and lacking available positions.

From the point of view of the faculty, remaining on permanent adjunct status is undesirable because they do not have benefits such as paid vacation, retirement benefits, or job security as sometimes their contracts are up for renewal on a semester-by-semester basis. According to Phipps & Merisotis: "From a purely financial perspective, it's a no-brainer to outsource teaching, because it saves so much money. But the true costs to higher education-even if hard to quantify-are very high. To rely on contract labor in the classroom creates a cadre of interchangeable instructors with no sustained responsibility for their students, scholars with no attachment to the intellectual life of the institution through which they are passing" (p. 3). One of the biggest mistakes university departments make in dealing with adjuncts is treating them as though they are dispensable with the underlying assumption that there would be plenty of other talent out there. While that may be true, college professors have options and as the university network is a rather small one, word does get around when a particular college does not treat its faculty well.

While the use of adjunct professors saves the school a significant sum in overhead, they have faculty that are not fully vested in the well-being of the institution as they are free to move on if the work becomes too boring. In addition, adjuncts are typically newly minted PhDs that lack teaching experience and would not be able to offer the same caliber of education as a full time faculty member. In addition, they would not have the incentive to do so. Since the university system is one that is very competitive, each school tries to attract the best possible faculty and that includes offering at least some semblance of security.

Nevertheless, the adjunct faculty approach has been very successful at community colleges as professors are able to gain teaching experience-especially in the arts and the sciences. However, it is not a path they want to consider unless they are interested in becoming teachers full time as research scholars typically seek to get into a tenure track position as soon as humanly possible. In major universities, many adjunct professors are very talented and can offer world-class instruction to students.

Conclusion

While we were discussing the many ways it is possible for the university to remain solvent, it is clear that the chosen method must be something that would also fail to sacrifice the interests of higher education for short-term financial goals. In speaking with administrators and professors from other colleges, it is clear that outsourcing key functions will be a necessity, especially in areas that do not traditionally require a significant degree of university oversight, such as the campus bookstore. Nevertheless, it is possible that we may employ adjuncts during times of over-enrollment when many students have to take a certain series of classes and add more part-time teachers as older professors take advantage of early retirement incentives.

It is a win for the students who get to graduate on time and good for the university-able to now fully provide for the classroom needs of the students without incurring the prohibitive cost of hiring more tenure track faculty members. The best way to ensure that the university remains solvent is to invest in proven strategies "avoiding optimistic income forecasts, especially income from governments, and avoiding heavy forward commitments that depend on anticipated growth" (Applebaum & Patton 2002, p. 131). In addition, there needs to be a clear line of communication between adjunct professors and the department in order for the partnership to be successful. This clear line means: "Part-time teaching staff should also have a complete understanding of how, when, and by whom they are to be evaluated."

Use of adjunct professors could have a beneficial impact on the college community, especially when utilizing the knowledge of guest lecturers from other universities. In many of the larger colleges, it is not uncommon for people to be taught by graduate students when, in fact they were paying for instruction from full professors. Yet there are several ethical considerations for maintaining adjunct professors-including keeping clear lines of communication, treating them like valuable members of the campus community, and negotiating fair contracts.

Hypothetical College must ensure that it does not engage in the common abuses to which these faculty members are vulnerable because of their unaffiliated status. Just because one is acting to ensure the financial integrity of the university and to make sure that the bottom line is in the black does not mean that it is acceptable to begin treating people as commodities. The human element definitely adds a great deal of complexity to decisions that would be extremely simple if it were to do with the manufacturing of certain widgets. Hypothetical College is not keen on outsourcing, but this administration realizes that it should have been done a long time ago to avoid the primary crisis in the first place. Perhaps with this move, it would be possible to achieve financial remission.

REFERENCES

Applebaum, S.H. & Patton, E. (2002). Downsizing the University: Bonne Chance! The International Journal of Educational Management, 16(3), pp. 126-136

Gupta, A., Herath, K. & Mikouiza, N.C. (2005). Outsourcing in Higher Education: An Empirical Examination. The International Journal of Educational Management, 19(4/5), pp. 396-412

Phipps, R. & Merisotis, J. (2005). Is Outsourcing Part of the Solution to the Higher Education Cost Dilemma? A Preliminary Examination. Retrieved September 16, 2010, from Institute for Higher Education Policy website.

Schibik, T.J. & Harrington, C.F. (2004). The Outsourcing of Classroom Instruction in Higher Education. Journal of Higher Education Policy and Management, 26(3), pp. 393-400




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