Ricardo Azziz has held numerous executive positions in higher education and led the merger that resulted in Georgia Regents University, now Augusta University. He is principal at Strategic Partnerships in Higher Education Consulting Group.
He writes the regular Merger Watch opinion series on corporate restructuring in higher education.
Recently, several universities and colleges have explored or implemented consolidations of schools within their campuses. How do consolidations or mergers of schools within the same higher education institution relate to mergers between different institutions? The short answer — there are important similarities but also significant distinctions that leaders must recognize to facilitate a more successful and less disruptive consolidation.
How are these mergers similar?
Mergers between institutions, when they are not solely about survival, stem from shared motivators: a desire to create operational efficiencies, collaborations, new programs, expanded scholarship opportunities, and a general rejuvenation and reenergizing of the parties.
So too are mergers of schools or colleges within the same institution.
Mergers between institutions are also driven by a desire to create greater operational efficiencies and financial savings. It's the same when a university or college aims to reduce the number of colleges or schools on campus through consolidation, particularly if their enrollment has been flat or declining. While it would be optimal to redirect savings to enhance the student and faculty experience, they are often needed to offset existing deficits.
For example, North Dakota State University President David Cook recently proposed reducing his institution's seven academic colleges to five. The move would begin to address a $7.6 million reduction in state funding related to declining student credit hours at the university. The University of Wisconsin-River Falls proposed a plan to reduce the number of colleges on campus from four to three and save on administrative costs. Pennsylvania Western University, itself the result of a recent three-way merger, will consolidate its six academic colleges into three as the university seeks to cut costs while reversing enrollment losses. And the College of St. Scholastica, in Minnesota, announced in April that it is consolidating its six schools to three.
Consolidation of schools often means a concomitant reduction in the number of executives, staff and even faculty, enhancing savings. However, similar to institutional mergers, the savings in human capital are important but relatively modest compared to the entirety of an institution’s budget.
For example, PennWest estimates it will save approximately $2 million — or 0.67% of its roughly $300 million budget. This should not come as a surprise since, despite what some faculty think, the cost of administrative support within higher education institutions is generally modest relative to the operating budget of the entire enterprise.
One final similarity lies in the level of authorization required to execute this organizational restructuring. Such proposals require the approval of the institution’s governing boards.
What are the differences?
There are, however, crucial differences between internal mergers and institutional mergers. Most significant is the degree of transparency, communication, and faculty and staff involvement. Usually, when mergers, consolidations or acquisitions of institutions are being explored, the entirety of the consideration and negotiation phase is confidential. It involves just a few members of the campus community, namely the board and high-level executives. Only when the deal is finalized does the remainder of the campus and local community find out and engage in the implementation process.
Alternatively, when an internal merger of schools or colleges is being considered, the intention is telegraphed well in advance, feedback is sought, and committees of staff and faculty are appointed. While this doesn't mean that faculty and staff have the power to approve such a consolidation — the governing board has that sole authority — the initiative does not come as a surprise. Stakeholders usually have the opportunity to, at a minimum, ensure their voices are heard and influence the shape of the consolidation.
A final difference lies in the board’s willingness to support the initiative. Internal mergers are often supported readily, unlike mergers between institutions, which generally entail painstaking and difficult deliberations by board members.
As for institutional mergers, it is important to note that not all internal consolidations are necessarily the right strategy.
I was previously president of Georgia Regents University, now called Augusta University, right after it had been created through a merger of institutions. Following the merger, we deliberately split the then College of Arts & Sciences. The massive college, which had housed over 60% of all undergraduates, became the Pamplin College of Arts, Humanities, and Social Sciences and the College of Science & Mathematics. This allowed for greater and distinct attention to be paid to the liberal arts and, separately, to the STEM fields. It also leveraged the new relationship to the academic health sciences resulting from the merger of Georgia Health Sciences University and Augusta State University.
Nonetheless, there is no doubt that in today’s increasingly difficult environment, internal mergers may enhance needed efficiencies, collaborations, and interdisciplinary scholarship and education, while providing a modicum of savings. We should also remember that the structure of higher education institutions should not be immutable — it should be flexible enough to adapt to a rapidly changing environment.