Empowering U: Open-Book Management and Employee Engagement in Higher Education

Note: The views expressed herein are my personal opinions and are not necessarily those of Missouri Southern State University (MSSU). This post does not contain any confidential information and the knowledge I provide is publicly available.

Higher Education as a Business?

Shared governance is a struggle for many universities. The classic model usually consists of a Faculty Senate and Faculty Senate Committees, on the one hand, and the Administration and Administrative Committees on the other. Decisions are often supposed to be collaborative, and in many cases, they are. However, when decisions involve the budget, especially when state governments begin to curtail spending, Administration officials need to make quick decisions that are often criticized and misunderstood by university employees.

In most cases, university employees are unaware of the financial side of the house, and budget cuts come as a disturbing surprise. In even worse cases, the Administration mishandles the budget, and when the house of cards comes crumbling down, programs are cut, and people lose their jobs. To make matters worse, public funding for Higher Education continues to diminish, and the tuition-centric model has become the norm (for both public and private schools). Budget cuts are not the only thing to worry about. Enrollment decreases have dramatic consequences. During the recent COVID-19 pandemic, many schools have been hit with both budget cuts and lower enrollment. Those schools with massive endowments, waitlists, prestigious reputations, a plethora of research grants, and massive giving campaigns usually weather the storm. However, the large majority of universities are heavily affected by state budget cuts and enrollment dips. Even when these issues are not present, bureaucratic competition for funds is something every school deals with.

Over time, many universities have adopted more “corporate” leadership models. Universities are run as though they were “businesses.” In my opinion, universities are not businesses, and the corporate model often fails when applied to colleges. However, there are aspects of Higher Education that might benefit from *some* private-sector models. This debate on whether or not universities are “businesses” is ongoing (see here and here for arguments on why universities are businesses and here and here for why they should not be treated as corporate entities). No matter where you fall in this debate philosophically, it is tough to argue that administrators don’t treat universities as businesses. As Stoller (2014) notes in his Inside Higher Ed article,

“Money is exchanged, debt is incurred, and a valuable asset in the form of a degree, certificate, or badge is obtained… Keeping those folks [students] at our schools, often called “retention” and “engagement” is quite similar to what businesses do when they try to retain their customers. This is why we sometimes try really hard to retain students (and increase an overall campus retention percentage) even if our particular program or school isn’t a good fit for all.”

Stoller, Eric. (2014). “The Business of Higher Education” Inside Higher Ed.

Even though there is an argument to made about higher education as a business, faculty are not convinced, and for good reason. This is because higher education is not a “business” to most faculty. It is a calling. Higher Education is not a business in the same way as manufacturing, sales, or service. In a 2018 Chronicle of Higher Education article, Freeland highlights the tension between finances and students-success. Freeland (2018) notes that George Keller’s vision in his 1983 book, Academic Strategy, that universities could advance their purposes more effectively by adopting a more professional and business-oriented approach to campus leadership has been widely accepted in higher education. However, this has led to competing and sometimes conflicting notions of higher education. Freeland states (2018),

“Higher education faces a dilemma: We undoubtedly need the more sophisticated administrative leadership that George Keller called for so many years ago, including being smart about generating revenue. We also must be true to our roots in educating young people, seeking the truth, helping communities, and preserving the most important values of our culture. We need to find our way back to our academic center of gravity without losing the administrative capacities so crucial to the health of our institutions and the effective pursuit of our missions.”

Freeland, Richard M. (2018). “Yes, Higher Education is a Business – But It’s Also a Calling.” Chronicle of Higher Education, 64(28).

To this end, universities must ensure that their strategies and initiatives are driven primarily by education and social purposes, even as they tend to their financial well-being and administrative structures. The rest of this post will introduce readers to a new higher education initiative called Empowering U, an open-book management and employee engagement program that I helped develop at Missouri Southern State University (MSSU). I believe that the Empowering U initiative can: (1) enhance shared governance structures, (2) improve employee engagement, (3) break down barriers between faculty and staff, and (4) help universities manage both financial well-being and student success. In addition, the program helps employees learn about, and impact, the strategic concerns of the administration in a way that acknowledges the business elements of higher education while simultaneously making decision-making more transparent.

How It All Started

In 2013, Missouri Southern State University (MSSU) – a regional public university located in Southwest Missouri – faced a sizable budget deficit. The full history of the Empowering U initiative can be found here. MSSU’s cash reserves were being depleted, and its financial outlook was troublesome. This was also my first year as an Assistant Professor of International Relations. I was fresh out of graduate school, ready to dive into my research, teach my classes, and dig into university service! However, my graduate program (as is true with most) never taught me anything about university bureaucracy. Sure, I heard rumblings about finances, budget cuts, hiring lines, and the like. But it wasn’t something I experienced directly in graduate school. But as a probationary faculty member, budgets matter; after all, contracts were year-to-year.

To fix the problem, MSSU created a Financial Stability Committee, which had representation from all across the university (the Board of Governors, Administration, Faculty Senate, and Staff Senate). The root of the problem was clear, state funding for higher education has waned over time. In 1972, 68% of MSSU’s budget came from state appropriations. By 2002, the percentage dropped to 49%. In the present day, the percentage hovers just above 30%. Obviously, this puts the financial burden on tuition dollars, and we all know what has happened to college tuition over time. To make matters much worse, Senate Bill 389 (SB 389) passed in 2007. According to the Missouri Department of Higher Education and Workforce Development,

“The act limited public institutions of higher education to raising tuition and required fees for Missouri resident undergraduate students to that of the consumer price index. If public institutions of higher education exceeded their allowable increase, they incurred a penalty or could request a waiver of the penalty.”

So, MSSU was suffering diminishing state funding but could not raise tuition by law. If we include decreased high school enrollment from the surrounding high schools, we have a serious financial disaster recipe. This was when MSSU adopted a ground-breaking open-book management program. The Financial Stability Committee, led by then-University President Alan Marble, embarked on something completely new. The committee decided to adopt the Great Game of Business (GGOB) initiative, developed by the CEO of SRC Corporation, Jack Stack. Mr. Stack outlines the entire program in his book. The program is based on both open-book management and employee engagement. The essential idea is that companies must teach their employees how to read the businesses’ financial documents, learn how they can impact the “Critical Numbers” that drive success, and finally develop fun and exciting ways to gamify processes that affect the critical number. The gamification aspect, which GGOB calls minigames, are a fundamental part of the process, using employee-developed “minigames” to make positive differences in the “Critical Number.”

In the beginning, MSSU needed to do something about the deficit and depleting cash reserves. The GGOB platform was very business-focused (developed in manufacturing), and MSSU used it to target costs. As a new faculty member, newly elected to the Faculty Senate, I was skeptical of adopting a corporate program to higher education. After all, higher education was not a business! We did not “sell” degrees; students earned them. I earned a Ph.D. because I loved political science. I wanted to create knowledge. I wanted to foster interest in undergraduate students and introduce them to the field of international relations. So, when volunteers were sought, I jumped on board. I joined the team mainly to challenge the model’s assumptions and become a bulwark against the intrusion of corporate interests in higher education. Over the next eight years, I would come to find that certain aspects of the program *could* work under the right conditions. In fact, eventually, I would end up leading the program and helping adapt it to the higher education environment. MSSU’s journey with GGOB taught us some valuable lessons and led to what we now call Empowering U.

As the program was implemented further, several challenges became evident in the higher education environment. The following issues with GGOB are taken from MSSU’s current Empowering U Training Manual which I helped to write this year.

  • Institutions of Higher Education often have multiple strategic objectives beyond just financial, which was the sole focus of GGOB. At MSSU, our mission is to “educate and graduate knowledgeable, responsible, successful global citizens.”
  • MSSU employees have several employment options, with some having 10-month contracts making it difficult, if not impossible, to ensure participation over the summer months. 
  • Higher education personnel have high standards for “proof” of hypotheses. GGOB claimed “proof” of some assertions without sufficient evidence causing a lack of interest and skepticism. Even when starting on the path of GGOB, we knew that empirical analysis and confirmation would be a cultural difference between higher education and other sectors.
  • Many of the critical academic metrics in higher education are only measured once a semester or academic year, making the implementation of a 3-month minigame design difficult. As we implemented the GGOB initiative, we found a wide-rage of academic metrics that could be measured, with some being more dynamic (i.e., change more or less often through time) than others. The key is that many of the most critical metrics tended to be relatively static.
  • Some campus employees have been put off by the game-based nomenclature of GGOB, stating “higher education is not a game…” This view was another essential cultural difference between the companies successfully implementing GGOB and the academic environment. Some employees were more encouraged by the initiative’s open-book management aspects but did not care for the gamification elements. The opposite was also true for some employees.

Based on the need to overcome these challenges, we developed a higher education initiative that combined open-book management, employee engagement, and strict evidence-based decision-making. We call this program Empowering U, and the rest of this post will briefly outline how it works within higher education.

Empowering U

Choosing Critical Metrics

At its core, Empowering U is an open-book management program that empowers employees to work toward the entire organization’s success. Employees are trained on the day-to-day operation of the university, focusing on our Critical Metrics. According to the training manual referend above, a “Critical Metric” is an operational or financial number that represents a weakness or vulnerability that, if not addressed and corrected, will negatively impact the overall performance and long-term security of our University. When MSSU first adopted the program, the Critical Metric chosen was operating cash (or cash reserves). This metric was chosen because without healthy cash reserves, there was no way the university could move forward to pursue its mission.

The first thing we did was teach employees – faculty and staff – how to read the university’s balance sheet. Employees were taught how student revenue is generated from student credit hours. Employees were taught how scholarship discounting works. Operating costs (expenses such as compensation and benefits) are made clear. The finances of academic units, support units, and auxiliary units were outlined. The goal was for all university employees to understand how cash reserves are calculated. When employees understand what metrics drive the university’s financial health and how they can make a difference in those metrics, they can take action to make significant improvements. The university worked together across units to develop a financial dashboard. This Dashboard provides a breakdown of MSSU’s financial statements by unit (academic and otherwise) and auxiliary units. Every department on campus can see a breakdown of their balance sheet and track those numbers in real-time. Every employee can see the aggregated dashboard of the university balance sheet in real-time as well. We called this stage-one of the initiative. Finances will always be vital in any university’s operation, especially those that rely on tight state budgets and affordable tuition. However, once the finances were in order, we moved to stage-two of the initiative, focusing on student success.

One of the biggest issues with the previous program was that faculty felt uncomfortable with the primary focus on finances. I was one of those who rejected the notion that financial success was the most important university focus. Empowering U is not about financial success. It is about student success. Yes, student success indeed translates into financial success (via recruitment, retention, and graduation). Regardless, if you want to engage the employees within higher education, let them focus on why they work there in the first place! We chose student retention as our second, parallel, critical metric. The entire campus – all employees – work toward retaining students and increasing operating cash. This brings us to the employee engagement aspect of Empowering U.

Employee Engagement

The centerpiece of Empowering U’s employee engagement pillar is called the Process Improvement Challenge (PIC). Challenges are grass-roots initiatives to improve a unit-level metric that feeds – directly or indirectly – into the University Critical Metrics. As noted above, every unit on campus is looking to help improve either operating cash or retention. And it is important to note that these critical metrics can change as the university’s outside environment changes. Critical Metrics are dynamic and respond to operational concerns. So, while we focus on operating cash and retention now, we might focus on student recruitment and growth in a future period.

Each unit on campus knows its processes best. They are on the ground performing their jobs every day. Who better than they to discover new ways to make their processes more efficient? I would argue nobody! Empowering U fits very well with the participatory action research (PAR) paradigm. For examples within several disciplines, see here, here, and here. According to Participate, an organization that advocates for PAR,

“Participatory research comprises a range of methodological approaches and techniques, all with the objective of handing power from the researcher to research participants, who are often community members or community-based organisations. In participatory research, participants have control over the research agenda, the process and actions. Most importantly, people themselves are the ones who analyse and reflect on the information generated, in order to obtain the findings and conclusions of the research process.” 

Challenges allow employees at MSSU to:

  1. Choose a unit-level metric that will impact the critical metric(s) and one they believe can be improved upon by making alterations to their processes.
  2. Set goals for improving the metric that they believe they can achieve. The units will also collect baseline data on the chosen metric for comparison over time.
  3. Set a time frame for which to implement their process improvement. They also choose who will participate, often everyone who controls the unit-level metrics and process, sometimes working across units.
  4. Design a fun and engaging theme for the Challenge, which adds a “gamification” aspect to the initiative. According to Robson et al. (2016), “Gamification—defined as the application of game design principles to change behavior in non-gaming contexts—is a tool that, if crafted and implemented properly, can increase engagement.” Research shows that gamification can increase emotional investment in one’s work, which increases engagement in the process (Kumar and Raghavendran, 2015; Robson et al., 2016). Gamification can also enhance teamwork and collaboration. The unit will also create a theme-inspired dashboard to keep track of their chosen metric in real-time.
  5. During the Challenge, units will track their progress, celebrate earned successes, and when the Challenge is complete, they will debrief on whether or not the process improvement was successful and should be retained. Most importantly, units reflect on their accomplishments and celebrate the difference they made for the University. Highlighting our collective successes and continuing to strive toward our common goals is what makes Empowering U unique. The university supports units with modest resources to developed and purchase rewards for meeting set goals. However, in many cases, these rewards are experiential and cost very little (for example, University swag or a night out bowling).
  6. Units develop a Check-In Schedule where information about the process and the metric are shared with everyone in the unit by the people collecting the data. Check-Ins are not meetings! They are short (often lasting less than 10 minutes) and have the singular purpose of updating participants on the metric’s progress, as well as celebrating improvements. Participants will also share the “stories behind the metrics” and how they contributed to metric advancement.

It is easy to see how employees are allowed to use their judgment to choose aspects of their jobs they perform every day, and make incremental improvements that collectively enhance the University’s well-being. It is also easy to see how Empowering U fits with PAR. Collective improvements in operating cash and retention have been one factor that has helped MSSU to survive tough economic conditions during COVID-19 and state budget cuts. I am not saying Empowering U was the linchpin that saved MSSU from economic hardships. It was not, and economic hardship from COVID-19 has impacted the University. Like most Higher Education institutions, MSSU faces enormous struggles (mainly from state budget reduction, even in normal non-pandemic times). However, Empowering U has helped the University weather the storm better than if the program did not exist. This brings us to the final element of the initiative, University Support.

Support and Evaluation

I am proud to say that Empowering U is embedded in MSSU’s shared governance framework. Empowering U is a large committee representing every employee-type on campus – Administration, Staff, and Faculty. The larger committee is also broken up into several subcommittees: (1) Training, (2) Communication, (3) Process Improvement Challenge, and (4) Research. The Empowering U Committee has also helped develop the Recognition and Rewards Committee that acknowledges amazing employees on campus. Moreover, Empowering U has a liaison to both Faculty and Staff Senates and a representative on the University Council, a large leadership body on campus with representation from all areas. Plus, whenever an ad hoc committee is formed, Empowering U will likely get representation on that committee (e.g., Strategic Planning, COVID-19 Task Force, Enrolment Workgroup, etc.). Empowering U has been deeply integrated into the shared governance framework, facilitating the program’s open-book management transparency objective.

Empowering U’s Research Subcommittee also monitors the progress of the initiative with empirical study. We monitor employees’ affective response to the Empowering U initiative. We distribute annual employee engagement surveys to gauge many aspects of MSSU’s workplace engagement. Finally, we select samples of Challenges on campus to test for what we call The Challenge Effect. The Challenge Effect posits that the metric chosen during a Challenge will improve over the baseline because it works closely toward its goals. However, we also posit that there should be lasting change even when the challenge has ended because there has been a positive process improvement. This lasting improvement is what we call the Challenge Effect.

In the social sciences, we also recognize that the “Hawthorne Effect” is an issue for measuring a real change in a setting where people are being monitored. The Hawthorne Effect is a change in the behavior of individuals who are being watched, usually in the context of a research study. There is an argument to be made that this logic applies to a Challenge. Those participating in a Challenge are monitoring the behavior of themselves and others. During a Challenge, there is likely to be improved performance, regardless of the process improvement.

The theoretical framework that leads us to make the Challenge Impact hypothesis is simple. Successful Challenges make changes to vital processes that improve efficiency. During the Challenge, these efficiencies become apparent, but individuals continue the behaviors even after the Challenge is over, which leads to lasting change. We use an interrupted time-series research design to test this hypothesis empirically. Everything in the Empowering U program is evaluated on an ongoing basis. Currently, we are still evaluating the Challenge Impact hypothesis.

Conclusion

The goal of this post was to share with you an innovative approach to Higher Education. I believe that MSSU’s open-book management and employee engagement initiative is a powerful tool that blends shared-governance with a “business-like” model of administration. One of the most interesting things about Empowering U is that everyone on campus can easily see how everyone else on the campus performs on the financial dashboard.

The University finances are wide-open and economic decisions can be influenced by everyone. More importantly, everyone is trained on how to read the University’s financial documents. The administration knows this and often makes an effort to justify the higher-level financial decisions they make (especially the tough ones). Employees know the University’s bond position. Know how much of the budget comes from tuition credit hours. Know how tuition discounts (scholarships) impact the bottom-line. They also know how much their unit contributes to the University’s bottom line and how much their unit costs to operate. Academic units know which programs contribute to operating cash surplus and the ones that need to be subsidized. They also know how academic units are doing in terms of persistence and retention. Our custom enrollment dashboard allows academic units to view their persistence and retention positions from semester to semester in real-time. It also allows them to see how they are performing relative to other academic units. We even have a custom dashboard to track student flow and bottlenecks as they move through an academic major. Evidence-based decision-making is a primary focus on Empowering U.

One issue with this system might be increased competition between units. However, in MSSU’s experience, Empowering U has led to a community understanding that in a Liberal Arts college, we want to work together to preserve all programs, even in tough times. The system is not perfect, but I argue that many positives have enhanced MSSU’s workplace.

Overall, Empowering U is a novel way to run a university. It blends a business model with a Higher Education twist. I think that MSSU’s experience might be valuable to many public institutions that struggle with state budgets, beauracratic obstacles to understanding organization operations, and a need to get employees engaged toward improvement. So, I put this brief synopsis out there for those interested. MSSU has a long way to go with the Empowering U process, but I have been happy with the results thus far and encouraged by our successes.

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