Judith Wilde and James Finkelstein join SPLC for this month’s Podcast to discuss the troubling trend of public universities hiring private head-hunting firms to conduct presidential searches in secret. Wilde and Finkelstein, both working from the Schar School of Policy and Government at George Mason University, recently released the result of their own research breaking down the details of private search firm contracts for high-level executive positions at college and universities across the country.
Frank LoMonte: Hi everyone, and thanks for joining us for another monthly installment of the Student Press Law Center’s Podcast, a rundown on developments in the law affecting the rights of journalists to gather and publish the news.
I’m Frank LoMonte, director of the Student Press Law Center. We’re online at splc.org and reachable by email: splc@splc.org with any questions about your legal rights as a journalist.
One of the recurring issues with which the Student Press law Center deals is journalists’ ability to meaningfully cover the selection of college and university presidents. In many communities this is the most powerful government official and one increasingly impervious to public accountability as a result of the secretive way in which presidents are selected.
In recent years, the states of Nebraska, Wyoming, and Wisconsin have taken formerly open presidential search processes behind closed doors. In the absence of clear legal mandates to open presidential searches, abuses have proliferated, most notably at Louisiana State University where trustees literally defied a court order to disclose the names of applicants for the vacant presidency, daring a state court judge to imprison them for contempt from which they were spared when an appeals court split the difference and required only the disclosure of a limited number of candidates.
In Washington State University, recently, in order to avoid compliance with laws requiring the open selection of presidential candidates, the board actually assigned code names to the candidates and made the offer amongst presidential candidates A, B, and C.
What is going on, here? Why are these powerful government positions being filled behind closed doors? Well, our guests are here to address this. They’re two expert researchers from George Mason University who spent many years looking at the way college and university presidents are selected, and we’re so pleased to be joined by James Finkelstein and Judith Wilde.
Doctor Wilde is the chief operating officer at the Schar School of Policy and Government at George Mason University. She’s previously taught at George Washington University, New Mexico Highlands University, and the University of New Mexico from which she holds Ph.D. in educational foundations.
Doctor Finkelstein is Professor Emeritus of public policy at George Mason University. He has held a variety of academic administrative positions at GMU. He was the founding vice dean at the school of public policy, associate dean at the college of education and much more. Both of them have been widely published and quoted on the subject of the secrecy of the presidential selection process and the increasing reliance on private head-hunting firms to hire these powerful chief executives.
So, James Finkelstein and Judith Wilde, thanks so much for being here with us and I’m going to ask James to please get us started by just talking about this issue in general, about why does this matter to the public? Why should we care that these chief executive positions at universities are being elected through the use of private search firms rather than, as might have been true a generation ago, through committees of people on the campus holding open public meetings.
James Finkelstein: Frank, thanks for having us, and we’re pleased to be part of the Student Press Law Center’s Podcast. Just want to say that your work is extremely important, and in fact it’s more important today than ever before. Helping young and aspiring journalists to understand both their First Amendment rights as well as their responsibilities is really essential in preserving and promoting our democracy. So, thanks for all the work that you do in this regard.
Let me try to respond to your question this way. According to recent Gallup surveys, the public trust in our various institutions in our society has been eroding over the last several decades. This is true whether it’s government, the media, banks, business, religion, just to name a few. In fact, in looking at the most recent survey, the only institution in our society that enjoys more than 50% of the public’s trust is the military.
And while Gallup doesn’t track the public’s confidence in our universities, there’s some reason to be optimistic there, because a recent Princeton study found that over 60% of Americans still believe that a college education’s a good investment. Although I have to note that that’s down from nearly 85% just five years ago.
Some speculate the reason for this decline in the public trust in our universities is, as you suggested before, they’re behaving more and more like corporations. Some use the term the “corporatization” of higher education. I’ve spent nearly 30 years as a university administrator and nearly two decades studying various aspects of the university presidency, and I have to tell you I tend to agree with those critics. And I really think that the use of executive search firms is probably a good case study to prove this point.
Let me take your listeners through just a little bit of background. There’s an organization called the Association of Governing Boards which is a trade association for university trustees. They publish a book ever so often called “The Complete Guide to Presidential Searches for Universities and Colleges,” and let me just quote the opening sentence from their book:
They say “Few moments have more consequence for a college and university than the selection of a new president,” and they go on to say that the legal responsibility for electing a president is born solely by the governing boards.
You said in your introduction that in the good old days, a search for president was a joint effort of trustees, the faculty, alumni, maybe some students, members of the community. And back probably when you or I were in school, if search firms existed at all they were only involved in a small handful of searches and probably only at private universities.
But today, the vast majority of presidential searches; and not just searches for presidents, we’re finding this with searches for provosts, deans, and other senior administrators; are being conducted with the assistance of these executive search firms. So, what we’re saying is that trustees, when looking for a president, are really outsourcing their most important and primary responsibilities, and we’d say that universities are also beginning to outsource this responsibility on almost a wholesale basis.
So, what are the implications of this in terms of public policy or the public interest? Well, we’ve just completed a large study, the first of its kind, looking at the contracts between executive search firms and public universities. Judith’s going to talk a little bit about the specific findings, but let me just give you an idea of the issues that arose from our research.
Probably the first and most obvious reason that people should be concerned is the cost of these search firms. The typical fees alone, not including reimbursement for expenses, for a presidential search runs well into the six-figures. In many cases these fees are on what we call a contingency basis, that is it’s a percentage of the first-year compensation of a president.
Sometimes that compensation isn’t just their salary. It could be their bonuses, it could be the value of their deferred compensation, it could include other things as well. In those cases where a search firms is getting, most often, a third of that first-year total compensation, you could have a fee that’s in the $200-250,000 range.
We found one search, this happened to be in a medical center, where the search fee was $750,000. Just the fee. If you just look at a typical search fee, it could support about maybe 10-15 full-ride scholarships at in-state tuition rates today. And remember, this doesn’t include the expenses that the search firms get reimbursed for for travel and the like.
So, cost is the first reason. The second reason, based on our research is that search firms are often contractually obligated to do some type of due diligence, and hopefully your listeners know what due diligence is, but it’s looking into the background of these folks. But the most surprising finding in our research was how little due diligence these search firms actually conduct. Judith will talk a little bit more about that as we go on.
Another reason for concern is that the search firms actually participate in the screening of the candidates. When this happens, it means that the search firm can actually be favoring certain candidates over another. And in the case of a contingency contract, maybe they’re favoring the candidate that’s most likely to draw the highest compensation.
And finally you need to remember that these search firms are private, for-profit entities. They exist to maximize the profits for their owners and investors, and that can often mean that their interests and the interests of the university may be divergent.
So, those are some of the things that I think people should think about, the public should know about, in having search firms participate in hiring our university presidents today.
Frank LoMonte: And I should add to that that it is often the search firms who are encouraging these college boards of regents and trustees to conduct the search in a secret, closed-door fashion rather than in an open fashion even when state laws seem to require openness.
It has been the position of many of these search firms that “good people” will not apply in an open and above-board process where the public has meaningful participation, and we can talk a little bit more if we have a chance about whether that’s really proven to be the case or not, but certainly that’s the line that’s been advanced by these search firms which results in their being able to keep their own candidate list close to their vest and not expend their candidates in any public way.
I do want to pivot to Judith and get her to talk a bit in more detail about the recently published research that looks at what universities are actually for their many hundreds of thousands of dollars in professional services. I think most of us would presume that there was some pretty rigorous background-checking going on for that kind of money, but in fact it turns out that that may infrequently be the case.
Judith Wilde: Exactly, Frank, and that’s one of the major issues. So I’ll be really brief and succinct about some of the background of the research, but I think it’s important for everyone to understand where our data come from.
We looked at the Chronicle of Higher Education, which is one of the two or three major online and print sources for news and to search for a job. From September 2015 to January 2016, we identified 106 searches for presidents, chancellors, or provosts at public universities.
We only looked at public because they’re the only ones that are required, really, to respond, or the most chance to respond to a request to see the documents that we needed to see. A FOIA request.
So, we did send out the FOIA requests, and after several follow-ups, we found that 82 of these 106 searches did indeed use a search firm. by the time we got through things, we had 61 contracts at 60 colleges or universities. One college had two searches going on simultaneously.
Most of these were four-year colleges. Most of the jobs were for president. There were 21 different search firms that were used with each of these having anywhere form one to nine searches ongoing at the same time.
Some of the things that surprised us most were, for instance, the contracts themselves. Of those that we were able to get, well over half were prepared by the search firms and most of those were on the search firm’s letterhead. We did find that if there was a formal contract, it was much more likely to be prepared by the college or university itself.
Very few of them actually had any kind of work plan. In fact it was only 36 out of 61 that actually had a work plan saying, “Here’s what we will do. Here’s the timeline. Here’s what you can expect as a deliverable.”
Costs are what you asked about, and Jim mentioned $250,000 roughly value. We found that the initial fees varied from 25,000-160,000 with most of those, little over half, being firm-fixed price. However, what you have is, those are the basic fees. Then they have expenses, such as flying people in to interviews, anything of that sort.
They have extra services, many of them say, “Our contract covers this much, if you want other services, then indeed we will charge you an extra fee.” And then on top of any of those is an administrative fee. So the total search ends up costing potentially much more than what it started out. In fact, we found one state in a different study we did, that spent $25 million over ten years just on searches.
Looking at the services they provided, these actually were only listed specifically in 47 of the 61 contracts or agreements that we had, and that’s pretty surprising in and of itself. The most frequent regarded outreach and screening and scheduling with candidates. After that, everything else they did, it was less than half.
Confidentiality was mentioned in every one of these, in some form or another. The firm had a policy about it, the institution had a policy about confidentiality. In about a third of the cases, the search committee located at the university had to sign a confidentiality agreement. And we’ve seen a few of these, and there are a few of them that actually basically threaten the faculty member with firing if they say anything.
And in a quarter of them, the firm owns all the data. But here’s the one that you hit on Frank that really struck us, and that is the due diligence. Only half of them included reference checks among the services they automatically provided. None of them said they would do an on-list reference check with an additional fee, but half of them did on-list. That is, they would check people that the candidate said, “You should check this with this person about me.”
Going off that list was offered by less than half as an included activity. None of them mentioned doing it with an additional fee. Degree checks only a quarter of them did automatically. Some of the contracts we saw, though, made it clear, for instance, in some cases that they would use public sources to identify and check a degree.
Well, I have my own website. I can put any degree on there I want. So, if they only check that as a public source, that’s not much. Criminal reports were rarely checked. Credit reports were rarely checked. There really was not much checking, and along with that, there was virtually no indemnification. There were very hard to get out of anything from this once the contract was set. So, that’s a really quick overview.
Frank LoMonte: Yeah, and two pointers for the college journalists who are listening. Pointer one, if you’re at a public institution by all means, whenever there is a high profile search going on do use your state public records act to obtain the contract with the head-hunting or search firm and any accompanying documents such as these confidentially agreements that members of the search committee may be required to sign.
We saw this, for example, at Kent State University several years ago when they went through their presidential search and actually ordered the members of the search committee to shred all of the notes that they created specifically so as to avoid the risk of being served with a request for public records that might turn up the identities of candidates other than the ones selected.
The oner pointer is, this phenomenon goes directly to the secrecy issue in that many candidates seem to be selected without their current campus having been thoroughly questioned about their performance. This whole idea of sparing people the embarrassment or humiliation or loss of face of being selected in a public process depends upon the assumption that no one involved with the search is actually going to make calls to their current employer, which of course would alert the current employer that they’re a candidate. And the idea that someone could be hired for a position as powerful and responsible as president of a university without anyone speaking with their current employer other that the people listed who’ve been approved as references on their own resume is a rather scary one. And let me ask Jim to jump in, there. Is the outsourcing and corporatizing of this search process a part of a bigger phenomenon about the CEO-ization of college presidencies and is that something that we should be concerned about?
James Finkelstein: Well, Frank, yeah, I think you’re right about that. I mean, Judith and I completed another study this last spring looking at the structure of presidents’ contracts. this was an expanded follow-up to a study I did in 2010, so we had a basis of comparing the sophistication of contracts and any changes that we might have seen in that over the last five or six years.
And there’s no question that we’re seeing an evolution in these employment agreements to more closely resemble those of a CEO. We’re seeing complex deferred compensation plans, bonus structures, parachutes, and the like. And there’s some emerging evidence to suggest that this increasing sophist action in value of these agreements is tied more and more to board members coming from the corporate sector.
So, in that sense it probably isn’t much of a stretch to conclude that the use of search firms is just one more example of how corporate values and practices are being infused into our universities. So, let me use that as sort of a preface to talk about what I’d call “secret searches.” And I’ll acknowledge at the outset and accept the need for a certain degree of confidentiality in the search process, but really only up and to a point.
It doesn’t make a lot of sense for the name of every applicant and every nominee for a presidency to be made public. And I’m even willing to accept that confidentiality for what are commonly referred to as “airport interviews” or Skype interviews for sort of the first cut of candidates. But I’d say that once the finalists are identified, not only should their names be public, but they should be required to come to campus to be interviewed and make public presentations.
And there are three reasons for this. First, I really can’t imagine someone being willing to accept a presidency on a campus they’ve never visited, and having only met members of a search committee. In fact, I’d argue that anyone willing to accept a position on that basis, can’t possibly be the right person to do the job.
Second, since we know from our research that search firms conduct limited due diligence at best, why not subject candidates to the most thorough form of due diligence that exists, the faculty. I can tell you based on my experience as an administrator that they are the single most efficient and comprehensive source of information. They have vast networks across disciplines and across institutions.
But I think the really reason for these increasing demands for secrecy is not so much for the protection of candidates, as we’re often told by the search firms, but, as you suggested a moment ago, protecting the interests of the search firm.
Think of it this way: If it becomes widely known who was a finalist for several searches and wasn’t selected, a search firm could have a hard time placing that candidate. So it’s in their interest to keep all of the names secret, making every candidate a fresh face in the next search. That makes the candidate a lot more attractive.
I’m almost certain that the public would never tolerate this type of search process for other senior public executives. Because, after all, that’s what a public university president is. Every cabinet secretary in a state goes through some public review process. So do agency heads. So, it’s unclear why the heads of our public universities, who as you noted are the most highly paid public executives in a state, should be appointed in secret.
It’s contrary to the values of our universities and it simply doesn’t serve the public interest.
Frank LoMonte: Just with the couple of minutes that we have left, let me ask Judith to just address what’s the public policy solution to this? Should there be statues that foreclose reliance on head-hunting firms entirely. Should the entire process be open by legislative fiat, should there be some hybrid process. What do you think is the right balance
Judith Wilde: I think in general, Frank you’re going to look at a hybrid process of some type. But we have found that the state of Illinois actually by statue only allows search firms for presidential searches. that’s as of about a year ago. I’d also say there’s a difference between transparency and disclosure. And in my mind because these are public universities, funded by the public, that the contracts should be open and available so that anybody can look at the contracts for these search firms and move on from there. And once we have some of that public seeing the contracts it may lead to some changes in the indemnification language, in the due diligence language and so on.
James Finkelstein: As Justice Brandeis said, I’m certain these young journalists know, sunlight is the best disinfectant.
Frank LoMonte: That’s a great way to close the discussion. And so, I want to thank Judith Wilde and James Finkelstein for joining us this month on the Student Press Law Center’s Podcast. Real quick, where could somebody go to read about your research?
Judith Wilde: They can go to my website; shortly, I’m in the process of redoing it; but it’s betagroupconsulting.com
Frank LoMonte: Terrific. Well, we’ll make sure and share that link as well. We hope anyone with questions about their rights to access to presidential search meetings, records and other information will feel free to contact the Student Press Law Center. We’re online at www.splc.org, reachable through email, splc@splc.org, or on Twitter @SPLC. Thanks again to George Mason University’s Judith Wilde and James Finkelstein for their work and for joining us this month. And thank you for joint us, as well. We’ll look forward to talking to you next month.