Budget Woes in Higher Education: A Call for Leadership
Steven W. Graham, Ph.D.
University of Missouri ? System
Suzette Heiman
University of Missouri- Columbia
Rob Williams
Fanning Institute for Leadership
University of Georgia-Athens
Abstract: The data from the survey suggested that the budget crisis that is affecting the states is having an impact on many institutions of higher education across the country. An overwhelming 83% of those experiencing cuts also expected additional budget reductions during the coming two to three years. While the budget cuts have been substantial, most departments have been able to deal with them through a variety of strategies. Despite the budget reductions and the anxiety about future cuts, not all the results stemming from the budget reductions have been negative. About half of the academic department chairs said they were making better use of their current faculty and were participating in fund-raising. The academic department chairs suggested other chairs who are facing budget reductions be honest, positive and creative, build their influence on campus, and be sure to align their department mission with that of college or University. They also offered specific advice to their leaders during tough fiscal times.
A Bloomberg news article noted that 30 states have proposed $5.5 billion in higher education cuts, including $1.5 billion that have already occurred. At least 10 states are considering double-digit increases in tuition at their public universities. The rising tuition costs could mean that as many as 110,000 of the 2.8 million students slated to graduate from high school this spring may not be able to afford to attend state colleges and universities next fall (Ziegler, 2002). Private colleges are feeling the pain, too, with higher tuition and reduced monies for scholarships
The financial problems faced by academic departments do not appear short term in nature (Jones, 2003; Selingo, 2003). Ray Scheppach, respected economist and veteran executive director of the National Governors Association, stated that without major system corrections in state funding mechanisms, it is quite likely that the $40 billion worth of budget deficits the state legislatures now face may be the beginning of "perpetual fiscal crisis'' for state governments (Pierce, 2002).
States whose finances are being strained by a deteriorating tax base still have to balance their budgets. To complicate the budget situation, states also face dramatic increases in federal program costs like Medicaid (The Fiscal Survey of States, May, 2002) and will likely look first to cuts in so-called ?discretionary areas? of their budgets. These areas often include secondary and higher education, transportation, and the health and welfare programs (Pierce, 2002).
Public institutions are facing declining support, yet private institutions have not escaped the budget difficulties either. High and rising tuitions as well as declining endowments have forced many private institutions to cut their budgets in an attempt to make ends meet. While tuition discounting has brought in some students who cannot afford the full tuition charged, many families are feeling the economic pinch and are unwilling to pay full tuition or even the substantially discounted tuition private colleges need to maintain current budgets (Breneman, 2002).
Despite some signs that the economy is making a recovery, states still face dismal budget situations. Almost 80% of the states reduced fiscal budgets by almost 15 billion after their budgets were passed, almost half made across-the-board cuts and almost half dipped into their ?rainy day funds? to balance budgets this fiscal year (The Fiscal Survey of States, May, 2002).
No doubt about it ? funding for higher education has taken - and promises to take - major hits. Colleges and universities will continue to face lean times in the next few years to come as most of the state budget projections show a slow recovery and adjustment to these fiscal conditions.
While the downward spiral in macro-economics affecting higher education appear frequently in print, the impact of these cuts on the leadership within higher education remains less visible, especially at the department level. Department chairs may not have the budgetary flexibility and scope to sway the course of educational economics, but they are the leaders who most interact with the students, staff and faculty affected by these cuts. For chairs, it is hard to balance the requirements of research, teaching and service with faculty layoffs, reduced or eliminated resources for travel and supplies, and little administrative support. But negative thinking is not productive and, in the long-term, could damage a department worse than any budget cuts. Department chairs need strategies and tactics that can help their academic unit to not only survive the tough times, but also to thrive during them. In a word, department chairs need to be
proactive.
In many other ways, the future for higher education is bright. Some analysts are predicting that during the next 20 years the economy will need an additional 12 million workers with some form of postsecondary education (Conklin, 2002). By 2015, college enrollment of students 18 to 24 is expected to rise by 1.6 billion. The programs implemented by high schools to prepare all students for college regardless of their income level appear to be working. Students who attend and complete college raise their personal potential income level to 75 percent more than those who only obtain a high school diploma. They also have the potential to add $250 billion to the gross domestic product and $85 billion in tax revenue (Rogers, 2001). On the federal and state levels, the challenge is trying to figure out how to fund postsecondary education. It has been a concern of business leaders as higher education is seen as an engine for a lagging economy and a source of further inventions and patents (Conklin, 2003).
This article will focus on how department chairs might manage their dwindling budgets and find new resources to maintain and improve program integrity, to retain and recruit quality faculty, and to attract top students.
Method
An online survey was designed to collect data about the conditions and the extent of the budget reductions in academic departments across the country. Academic departments that experienced significant budget reductions provided numerical data about the extent of their budget cuts, rated a number of strategies used at their campuses, and elaborated on their answers with written comments to further explain their reactions and how both they and their campus leaders dealt with the budget crisis. The survey included questions on the amount of current and planned budget cuts, the strategies that were being used to address cuts, the effects on programs and faculty morale, and a number of questions about what these academic unit leaders wanted from their campus-wide leaders and what advice they would have to offer to others. A complete list of the questions can be found by accessing the on-line instrument at: http://www.triangle-associates.com/surveys/deptleaders.htm .
The survey was sent via email to approximately 275 participants who had attended the National Academic Department Chairs Conference in Orlando, Florida, in February 2002. This group represented both public and private colleges and universities across the country. After eliminating inaccurate email addresses and those who were not currently serving as chairs, a group of 242 potential participants representing a variety of disciplines and types of universities was asked to complete the on-line survey. Two additional reminders were sent during a four-week period and 97 people completed the questionnaire for a response rate of approximately 40%. This compares very favorably to other online surveys that report response rates for electronic formats at about 20% (Bachmann et al., 1999; Schuldt & Totten, 1994). Although cognitive styles of the respondents might affect the responses in the electronic medium, recent research suggests that the data collected from electronic surveys is as accurate as the data obtained through identical paper-based surveys (Carini, Hayek, Kuh & Ouimet, 2001; Elfrink, & Vazzana, 1999).
The open-ended responses were collected ?word for word? and for each separate question. Numerical data from the responses were collected for each question and frequency counts and percentages were computed for each. In some cases where respondents were asked to ?check all that apply?, the frequencies were calculated based on the numbers of respondents who completed the previous multiple-choice item.
The open-ended comments were analyzed for repeated themes. Using the constant comparison method, conceptual categories were derived from the written responses. As respondents often listed several key points in one written response, each distinct point within the comment was separated and treated as a new item. That allowed each key point to be evaluated on its own merit without confusion and permitted the richness of the comments to be fully exploited. Comments were coded into these categories through a process of comparison with other instances assigned to that category (Glaser & Strauss, 1967). The numbers noted in parentheses in the text below next to the categories refer to the frequency of responses used to generate the themes. This provides a measure of the relative frequency and strength of the responses. The number of responses varied by item, based on the reaction to the question and the numbers of chairs who chose to elaborate on their answers.
Respondents overwhelmingly worked at public institutions (75%) and received a significant portion of their general funds from state support ? with almost two-thirds reporting 30% or more of their funding coming from state sources. Almost all of their universities (98%) offered graduate degrees and approximately 70% of the departments responding offered graduate programs within the units. Half of the respondents were from professional schools and the other respondents were roughly equally distributed among humanities, social sciences, and natural sciences (13-15% each). A slightly smaller group (9%) was from fine arts departments.
About 70% of the respondents worked in universities with over 5,000 students and 35% were from institutions with over 15,000 students. Almost two-thirds of their departments had over 100 majors and almost one-half had over 250 academic majors. The number of full-time faculty varied across the spectrum from fewer than 10 to more than 40 with approximately one-third representing departments with over 20 full-time faculty members. On average, the faculty at these institutions spent the greatest share of their time teaching (average reported was 57%) and research was listed second in rank order (average was 26%). Service activities received the least amount of their attention (average was 18%).
Findings
Among the 97 participants who responded to the survey, the majority reported their academic units had experienced budget cuts or withholdings in the past 24 months. Of the total group, two-thirds (67%) reported they had experienced budget reductions and their responses comprise the answers to the specific questions on how budget reductions were addressed. The other one-third of the participants also completed the background information that is cited in the above section.
Budget Reductions Addressed
With regard to how the departments addressed their budget reductions, participants responded to three categories of items -- personnel, financial, curriculum. They were asked to identify the primary ways they dealt with department budget reductions and to check all items that applied in each category.
The most common response strategy used related to personnel matters was to not fill open positions, with almost two-thirds of the department chairs citing this as a tactic that was used. The second most common strategy was to increase the use of adjuncts (41%) with an almost equal number stating they decreased the use of adjuncts in their departments (34%). Just over a quarter reported using early retirement programs for faculty or staff. About one-fifth reported staff layoffs on their campus and only one chair reported faculty lay-offs.
The financial strategies that were reported showed a fairly consistent pattern with participants using a number of strategies. Almost all reported reducing office expenses or equipment (84%) and seventy percent had increased student tuition or fees. Over two-thirds of the chairs had reduced or eliminated travel and only a quarter reported adding a special surcharge for enrolling in courses.
The strategies that affected the curriculum or class offerings included increasing class size (64%), reducing the number of courses offered (42%), and reducing programs (28%). At this point, only three percent of the chairs reported turning away qualified students as majors.
Participants? written responses provided further elaboration on their answers as they commented on the ?two or three primary actions? their own departments took to deal with budget problems. Their comments were organized into the following nine themes.
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Reduced operating expenses to deal with budget cuts (21);
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Reduced professional development for faculty (17);
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Modified the instructional climate for students by increasing class size; eliminating courses, or reducing the number of students admitted (16);
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Changed the way adjunct faculty were used or changed the nature of existing positions (12);
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Reduced workforce by not filling faculty or staff vacancies (12);
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Made minor adjustments (9);
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Revised curriculum or changed or eliminated programs (6);
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Focused more on grants or used grant funds to address budget cuts (5);
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Changed fee structure for students (3).
Primary Actions Taken
The primary actions taken campus-wide were much like those that the department chairs reported for their departments. The chairs? written comments indicated they had not replaced vacant positions (22%), cut expense and operational budgets (16%), raised tuition and fees (4%), reduced travel (9%), hired fewer adjuncts or used them more often (6%), and eliminated programs or increased class size (7%).
The themes were very similar to those noted above so they are not repeated. However, three additional themes emerged:
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Freezing or cutting salaries;
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Creating early-retirement programs; and
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Focusing on enrollment increases.
Chairs Input to Budget Adjustments
Another question the chairs addressed related to the discretion they had in determining how to handle budget reductions. In general, when looking at the multiple response items, almost one-half (45%) reported that those above them made the decisions for the departments in the organization. Another quarter (24%) was allowed complete discretion and the same percentage reported that they were allowed major input to the decisions. Lastly, a small number reported department discussions or vote that was passed on to those making the final decisions (7%).
In assessing the comments chairs provided when they were asked to elaborate on the departments? roles in decision-making, many cited frustration with the budget conditions. Most expressed the desire to be more involved in making decisions although a sizeable number of the comments indicated quite a bit of leeway in making local decisions. Among the written comments, four general themes emerged.
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Allowed to make decisions at departmental level (12);
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Very little or minimal input allowed in final decisions (10);
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Deans or vice presidents made the decisions even though chairs might have had input (9);
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Chairs allowed input or vote through discussions or faculty representation (9).
Overall Scope of Budget Reductions
Academic department chairs were asked to articulate the one best statement that described the scope of their recent budget cuts and then to elaborate with comments. The responses indicated about one fourth had only seen mild effects at this point with about one-fifth citing ?mild, with no significant long-term effects? and another six percent reported those above them handled budget cuts. However, over half (56%) reported ?substantial? cuts, though they reported they were able to deal with them so far. Only seven percent reported cuts severe enough to endanger their current missions and no one reported ?devastating? effects that would require elimination of their program or a merger with other units.
In evaluating the comments written by the academic department chairs to elaborate on their answers, there were four general categories that expressed the effects the budget cuts had on their departments as well as their concerns for the future.
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Continued budget cuts could have a severe impact on programs (7);
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Cuts currently affecting instructional mission ? including increased class size and reduced offerings (6);
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Lack of adequate resources and supplies to run the department (5);
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Mild level of impact so far that allowed the department to continue its work (5).
Effects and Predictions If Budget Cuts Continue
The next two questions focused on what areas were most dramatically affected and what the academic department chairs felt further cuts would do to the departments. Currently, the largest number of chairs (41%) felt that professional development for faculty was the hardest hit. That was followed by approximately equal numbers of chairs reporting effects on teaching or student learning (22%); research and scholarly productivity (17%), and student access to programs (16%). Only five percent noted an effect on the prestige of the department.
Examining how future budget cuts might affect the department produced somewhat more dramatic answers from the department chairs. In this question, participants were allowed to check all areas that applied. In several items almost two-thirds of the chairs reported the potential for reducing the scope of programs (64%), increased teaching loads (69%), and less research productivity by faculty members (61%). Forty percent of the chairs predicted a merger or elimination of programs and approximately one-fourth cited items such as shared administrative positions (23%), fewer research grants (25%), and caps on enrollments (27%). Other negative effects cited by one-fifth or less of the chairs included fewer majors (19%), lower national rankings (16%), less contact with industry (13%), or provisional or loss of accreditation (11%).
In examining other negative effects not listed above, most of the general themes focused on faculty members. Three general themes emerged from the comments:
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Fewer faculty members resulted in increased loads for faculty (8);
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Lower faculty morale and problems recruiting and retaining quality faculty members (5);
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Lack of adequate supplies or funds to operate department or programs (5).
Faculty Morale
The next question focused on the impact that the budget reductions were having on faculty morale. While faculty morale was an issue that had been mentioned by respondents in several earlier questions, this question focused specifically on the issue and allowed respondents to pinpoint the nature of the effects. The participants answered the question ?Faculty morale can be attributed to many variables. What effect have the budget reductions had on your departments? morale??
Answers to this question covered the entire spectrum, even showing that despite reductions, some faculty members were doing quite well with regards to the morale issue. There were five general themes that emerged:
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Faculty morale is significantly lower due to budget conditions (15);
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Effects on morale are mild ? faculty have been protected (14);
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Effects on morale are mild ? but anxiety exists about future budget reductions (12);
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General lack of trust and feeling undervalued ? affecting ability to do the job (5);
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Morale good despite negative impacts ? faculty holding up quite well despite cuts (5).
Positive Results During Tough Budget Times
Even during tough financial times, there are positive results that can occur. Sometimes a lack of resources causes academic departments to focus on their most important missions or perhaps generate other creative ideas or solutions. Department chairs responded to a question on the survey that asked them to identify any positive results or actions that had occurred as a result of budget cuts. On this question they were allowed to check all that applied.
The main positive result of austere times was that departments increased their efforts to secure external funds, either by seeking additional external grants (58%) or through fund-raising activities (52%). Approximately two-fifths (42%) of the respondents reported improving retention through better services for students. About one-third of the respondents reported developing or expanding on-line offerings (34%), developing or expanding nontraditional markets (31%), or using staff better (34%). About a quarter of the chairs (23%) reported increased lobbying activities with the state legislature.
Chairs were more selective in providing elaboration and only a few offered additional comments on positive changes. Most of these related to a re-examination of department priorities or strategic planning (7%) or more efficient use of resources or better strategic planning (2%).
Advice for Other Chairs Facing Budget Reductions
Academic department chairs were also asked to offer solutions or ideas to their colleagues that would help them lead during tough times. In responding to the question ?What advice do you have for other department chairs facing budget reductions?? chairs responded with a variety of both general admonitions as well as specific ideas or suggestions. The responses generated six separate themes:
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Specific suggestions, strategies or ideas (13);
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Build influence on campus or with external constituents (10);
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Be honest, share information with faculty, and seek faculty input (7);
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Don?t take it personally ? just live through it (6);
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Be positive and creative (6);
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Identify and focus on priorities and align mission with the campus (5).
Most Significant Leadership Challenges
When academic department chairs were asked what their most significant challenges were during tough fiscal times, they responded overwhelmingly with the barriers and obstacles they faced as leaders of their departments. They provided a number of comments, many of which focused on concerns for their faculty members, the quality of their programs, and the students. Seven separate themes emerged, including:
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Recruiting and retaining faculty members (21);
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Maintaining academic and program quality (18);
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Using resources wisely, focusing on priorities, and doing more with less (18);
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Maintaining morale and motivating faculty members (17);
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Finding new resources (15);
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Travel, professional development, and research and scholarship (14);
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Meeting students? expectations and instructional needs (13).
Most Important Leadership Actions
When academic department chairs were asked what key actions they could take as leaders during tough fiscal times, they responded with a variety of strategies that provided ideas for others facing tough situations. They offered a wide variety of suggestions and their comments covered nine distinct themes.
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Communicate openly and honestly and keep everyone fully informed (18);
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Replace hard money with grants, fundraising, or linkages to industry partners (17);
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Be visible and involved on campus and lobby on behalf of faculty (14);
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Be calm, provide encouragement, and create an environment where people can still get things done (14);
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Lead by belt tightening, look for cost efficiencies, and see that cuts are equitable (11);
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Be positive and upbeat and think long-term (10);
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Focus on departmental priorities and "pick your fights" (8);
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Be creative and network with colleagues to develop potential ideas (5).
What Chairs Want from Their Leaders
The academic department chairs were also asked to comment on what key leadership traits they expect from the upper level administration during tough budget times at their college or university. This allowed them to articulate some of the things that they expected from those above them and perhaps to reflect on what might be expected of them.
Chairs offered a wide variety of comments on this issue and the comments were grouped into nine different themes that addressed what they expected of their leaders.
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Provide open communications, involvement in discussions, and explanations (16);
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Be fair and equitable, leaders should share in cuts, and work responsibly for the departments (14);
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Give leadership and vision, role-modeling, morale support, and respect (13);
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Be honest, share accurate information, and full information (12);
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Show willingness to act on stated priorities and essential programs (8);
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Provide innovative or long-term solutions (8);
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Demonstrate thoughtfulness, willingness to make tough decisions, and flexibility in allowing departments decide how to make cuts (7);
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Miscellaneous suggestions (6);
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Avoid undesirable behavior (4).
Summary
The data from the survey suggested that the budget crisis that is affecting the states is having a significant impact at the departmental level. Department chairs were concerned about the long-term effects the budget reductions will have on their missions and in retaining key faculty. About two thirds of the academic chairs reported cuts of up to 5% during the current fiscal year and another quarter had cuts ranging as high as 10% of their total budgets in this fiscal year alone. An overwhelming 83% of those experiencing cuts expected additional budget reductions during the coming 2-3 years, with one-third of them anticipating total reductions as much as 15% of their current budgets.
Roughly half of department chairs surveyed were not allowed to determine how to handle budget reductions affecting their departments. Of those who did have input into the decisions, most reduced the number of full-time faculty in their departments. They hired adjuncts to cover courses, reduced the amount spent on office expenses and equipment, and reduced or eliminated professional development activities. The remaining faculty members saw increased class sizes and course loads. Research productivity was expected to drop.
Department chairs felt like they must shoulder much of the work to keep their departments afloat: trying to keep faculty morale up, focus on program quality, recruit and retain quality faculty, fundraising, focusing on accounting details and justifying decisions. These activities took more time, more political maneuvering, and more communication.
Despite the budget reductions and the anxiety about future cuts, not all the results stemming from the budget reductions were negative. About half of the academic department chairs said they were making better use of their current faculty and were participating in fundraising efforts with alumni and other groups. Other positive outcomes included improving student retention, expanding on-line offerings, using department staff better, and increasing lobbying efforts with state legislatures.
The academic department chairs offered helpful strategies for other chairs who are facing budget reductions. Their suggestions included admonitions for chairs to be honest, positive and creative, build their influence on campus, and be sure to align their department mission with that of college or university.
The recommendations that academic department chairs offered to their colleagues regarding the leadership roles they assume during tough times is much like what they expected from the campus leaders above them. They recommended that chairs be honest, communicate clearly, lead by example, be positive and think long-term, and be willing to make tough, but fair decisions.
Advice for Academic Leaders
Some conclusions can be made as a result of this study and provide useful advice for academic leaders during tough fiscal times.
What faculty need from their department chairs in times of crisis is much like what they need all of the time. The themes and characteristics expressed by many leadership theories are consistent with what the chairs recommend that others do, as well as what they wanted from their leaders. The traits of honesty, competence, forward-looking, being inspirational, and having credibility top the list (Kouzes and Posner 1995).
Transactional, transformational, and charismatic leadership theories suggest that leadership is critical in motivating people to go beyond traditional organizational expectations (Bass, 1985; Burns, 1978; Bennis and Nanus, 1985; Leithwood & Duke, 1999; Smith, 1992; Thomas, 2002; Waldman & Bass, 1990). Chairs hoped that their leaders would set high standards of honesty and communication, lead by example, offer respect and foster high morale, act on stated priorities and make reductions based on stated priorities. All of these principles are consistent with transformational leaders.
?Servant leadership? is another theme expressed by department chairs. Chairs expressed concern about the morale and feelings of their faculty, giving scant mention of their own personal fears and anxieties. Followers give authority only to those who have given freely of their services by truly being willing to serve those they lead (Greenleaf, 1970; Useem, 2001) and this theme was clearly evident in the approaches chairs recommended.
Department chairs want to be more involved in upper-level financial decisions affecting their academic units. Department chairs often found themselves suspended between two worlds ? not quite management but with more administration responsibility than regular faculty. Because tight budget situations affect how a department is run, the chairs need to be included in discussions about cuts and reductions. There was defensiveness in many of the comments of this survey, with respondents noting their frustrations, lack of choices and little input. Perhaps a new structure
needs to be established if department chairs are to be treated like part of the management team by college and university administration. What is important is that members want their leaders to actually lead and be willing to act on stated principles. For many faculty members, leadership begins with their department chair.
Department chairs should have a long-term perspective and recognize
these cuts will affect their departments and the overall scholarship in
their respective areas in the years to come. Chairs were concerned about quality ? for their schools, faculty and students. Many have spent years trying to build a national reputation for their departments by recruiting and retaining leading scholars, presenting at prestigious conferences and inspiring promising young talent to study at their institutions. Severe budget cuts have the potential to slow or halt the progress as scholars depart and students choose to study elsewhere.
Top faculty performers do not take a hiatus during times of poor economic conditions and department chairs often feel like they do not have the resources to retain their very best faculty members. These resources go beyond money, although financial incentives obviously rank very high. Other factors include the morale of faculty colleagues, the ability to develop proposals for grants and the availability of technology and other appropriate tools in which to conduct research and teach classes
The skills and knowledge required of department chairs during tight
budgets are much broader and more personally taxing during tough
economic times.The leadership theories cited by Kouzes and Posner (1995), Burns (1978), Bass (1985), Spears (1998), Greenleaf (1970) and others all point to the almost superhuman qualities a chair must possess under normal conditions. When budget cuts endanger the core mission of the department, the task of department leadership can be almost overwhelming. Chairs demonstrate their commitment to the department by tackling this enormous task.
Conundrums and the art of leadership. Most forms of prescriptive leadership tend to work in one situation or another but cannot be generalized to all situations. What does remain consistent in both the literature on leadership and in this survey data is the notion of ?balancing of opposites? or the reliance on conundrums. For example, many of the department chairs surveyed pointed to the need to find a point of ?realistic optimism? during times of budget cuts.
During times of budget cuts, it is easy to create simplistic rationalizations for what is happening, typically by blaming others. Respondents seemed to be aware that while that tactic might rally department members in the short run, it does little to create a positive view for the future. At the same time, unbridled optimism brought only short-term comfort and became, and in the words of one respondent, ?annoying? after a while.
Communication ? in all forms ? seems to be the key for department chairs. Faculty members are paying attention not only to what department chairs say, but also through their actions. Faculty members want their chairs to be honest about their situations, even if it?s not what they want to hear. A department chair?s positive attitude and long-term perspective can inspire and motivate others to work through the situation.
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