Destroying the University to Save the University

On April 16, 1996, the Minnesota Daily carried two front-page stories that had a lot to say about the changing priorities of the University of Minnesota. On the right side of the page, an article and photo reported on the installation of Coca-Cola vending machines at the student union, the first tangible sign of a 10-year, $28 million contract ensuring that Coke's brand of sugar waters would be virtually the only ones available to patrons on University property. The second story concerned three letters of anguished protest sent to the University's Board of Regents by faculty members from the School of Nursing, the School of Public Health, and the School of Dentistry. Each of the letters claimed that the administrators and corporate consultants who were "re-engineering" the seven schools that comprise the University's Academic Health Center had excluded them from the process in a secretive and autocratic manner.

Of the two news items, the Coke machines were an easier concept to grasp--they represented the cut-and-dried exchange of hard cash for a captive market. By comparison, faculty complaints over bureaucratic restructuring were a subtler matter. Yet what was happening--and, many say, continues to happen--at the Academic Health Center was far more insidious to the core principles and national reputation of the University than the institution's role as a well-paid pawn in the cola wars. Now, nearly a year later, it is clear that the faculty letters of protest were but one incident in a continuum of events that has made the U notorious across the country for recklessly allowing business interests to interfere with basic tenets of academic freedom.

Nine months before the letters were written, on July 19, 1995, nearly 100 upper-level faculty, administrators, and local business and political figures began a two-day "leadership retreat" to consider how to restructure the Academic Health Center and what impact that might have on the University's future. Given that the AHC comprised more than a third of the University's $1.7 billion budget at the time, and generated the bulk of its research dollars, the topic was a matter of no small importance. The featured speaker that first day was an animated, somewhat rumpled management consultant named James Champy, who was glowingly introduced by new AHC Provost William Brody as the co-author of the New York Times best-seller Reengineering the Corporation.

In the course of his talk, Champy cited some of the corporations his consulting firm, CSC Index, had helped to re-engineer, including Taco Bell, the Hallmark greeting card company, and an unnamed major insurance company. Re-engineering, he said, was "not pure downsizing, although you learn how to do dramatically more with dramatically less, and that might suggest fewer people operating in certain parts of the organization." Within the first 15 minutes, the subject of faculty tenure was raised. Champy called it a "constraint" comparable to the trade unions of Europe. And by accepting those constraints, he went on, managers became "resigned too quickly to the way things have to be." Re-engineering, conversely, was about swift and radical change, about "starting out with a blank sheet of paper."

And how would such massive change be implemented? "We live in debate; faculties [especially] live in debate," Champy told University officials. "But you may have to exercise powers and say sometimes, 'The debate is over. This is the way we are going to be.'" Later, he added that "visions are not built by groups, not many more than three to six people... It is less true in a University, but people in organizations want to be told what to do. There is a thirst for leadership, for top-down direction." The University would eventually pay Champy and CSC Index $2.2 million to put his philosophy into practice at AHC.

On Sept. 5, 1996--more than a year after Champy's speech and less than five months after the faculty letters of protest--the University's Board of Regents met at the branch campus in Morris, Minnesota, and unveiled their proposed changes to the faculty tenure code. The regents' proposal was written in collaboration with Martin Michaelson, a Washington D.C. lawyer who had recently done legal work on re-engineering at the AHC. Their revised tenure code would have made it easier for the regents to lay off faculty members when programs at the University were being restructured. It would have allowed faculty salaries to be cut not only for reasons of gross misconduct or extreme fiscal emergency, but for unspecified "compelling reason[s]" as well. And it would have enabled faculty members to be disciplined for, among other things, not demonstrating "a proper attitude of industry and cooperation."

According to a September letter from the American Association of University Professors, the regents' proposal violates the AAUP's 57-year-old Statement of Principles on Academic Freedom Tenure on 15 different counts. In arbitrary and inflammatory language, the regents' proposals sought to erode the two essential protections traditionally afforded by tenure: a secure job and a stable salary. To the thousands of unemployed and underemployed Minnesotans ground up in the global economy, the safeguards could seem like luxurious privileges, and some regents, particularly board chairman Tom Reagan, played on that potential resentment by implying that it was time the professors joined the real world--meaning the business world. But the business of a university is pursuing inquiry and communicating knowledge, and by serving as a buffer against political pressure, tenure has long been deemed vital to that project--protecting unpopular political views and, at times, the prerogatives of scientific researchers. Without tenure, for instance, research that ran counter to such powerful interests as alcohol and tobacco companies would be almost unthinkable.  

"Just the other day there was an e-mail about a faculty member who had been threatened and had her home picketed because she uses animals in her research," says Virginia Gray, the chair of the faculty consultative committee that submitted their own tenure code revisions to the regents. "But most of the threats are from corporate interests. If your research shows that one kind of swine production is better than another, you may have a whole group of swine producers on your back. There have been many instances where legislators have called and demanded a faculty member be fired because of their research. And it is important to be able to point to tenure and say, 'That is simply out of the question.'"

Not surprisingly, the regents' tenure proposal was immediately greeted with a firestorm of protest from academic institutions across the country, accompanied by raft of negative media coverage, from the Minnesota Daily and the Star Tribune to Business Week and the MacNeil-Lehrer Report. That, along with a strong union-organizing drive among the faculty (who narrowly decided not to unionize when it was eventually put to a vote in February), compelled the regents to withdraw their proposal. Later this month, the board is expected to approve a less draconian code that is nevertheless much tougher on tenured faculty than the one currently in place. Meanwhile, over in the Academic Health Center, the contract with the corporate consultants from CSC Index has been terminated. It would appear that the upheavals that have rocked the University over the past few years finally have begun to abate.

Beneath the surface, however, the fallout continues. Department heads note that there has been a greater than usual exodus of the faculty's best and brightest, and that it has become increasingly difficult to fill the openings with quality applicants. Currently, half of the University's tenured faculty is over 55 and due to retire within a decade--a bad time to acquire a reputation of being hostile to academic freedom. As for the situation at the Academic Health Center, a tremendous amount of fear and mistrust still exists among the faculty. "The stuff they are doing is so controversial that they have learned to lie about it," says one prominent faculty member. "They say it isn't happening but, believe me, the re-engineering process is still going on. I prefer you not use my name because I believe there would be retribution against me; there is something evil and totalitarian about what is happening. This place is changing and it is never going to be the same."

Ironically, the crisis that brought the corporate consultants into the Academic Health Center was created in large measure by a medical marketplace bent on bankrupting the teaching and research-oriented hospitals so crucial to its long-term future. The managed care revolution has given us a health care system dominated by large HMOs that compete on the basis of price more than quality and have realized some of their greatest cost savings by agreeing to deliver bundles of patients in their networks to certain hospitals in exchange for sharply reduced fees. (More recently, they have simply bought the hospitals.) With the pricey baggage of its academic and research mission, the University of Minnesota Hospital couldn't hope to compete. Patient loads plummeted, and took revenues crucial to the operation of the AHC down with them.

Nor was that the only problem confronting the AHC during the early '90s. The Najarian fiasco was in full bloom, culminating in a series of scandals at the medical school that bitterly divided the faculty and led to a number of prominent resignations. For years, funding from the Legislature had not kept pace with that accorded most of the AHC's peer institutions. And the place had become bureaucratically hidebound.

Retired Medtronic CEO Win Wallin was brought in as an unpaid assistant to University President Nils Hasselmo to help straighten out the mess. In 1993, Hasselmo decided to create a powerful new provost position at the AHC that would report directly to the president. Wallin was the most influential member of the search committee. Although four names were eventually submitted to Hasselmo, a faculty member also on the search committee says that Wallin was especially keen on William Brody, who, in addition to his academic credentials as chair of the radiology department at Johns Hopkins University in Baltimore, had once owned his own biomedical engineering company (a manufacturer of MRI equipment) in California.  

Energetic and charismatic, Brody said all the right things about pride and teamwork when he first arrived. Soon, however, he discovered that under provisions of the University's tenure code, some of the AHC faculty were provided a salary that included a set amount for clinical work at the hospital in addition to their base pay as teachers. When the hospital was doing well, it was a relatively painless way to retain faculty members who could be earning much more working exclusively in private practice. But with business at the hospital dramatically reduced, the salaries were costing the AHC money. Rather than buy these faculty members out, or otherwise promote early retirement, Brody took the politically charged step of agitating for changes in the tenure code.

On the surface, this might appear to be mere fiscal prudence on the part of a top administrator. In practice, it was more complicated and risky. By earning (mostly federal) research grants and contributing a portion of their private-practice income, faculty members actually were generating more revenue for AHC operations than was provided through state funding in 1994. By attacking tenure, Brody took the chance of alienating some of the cash cows in his beleaguered realm of the University.

By the spring of 1995, the bureaucratic machinations necessary to implement Brody's plans were underway. On May 11, according to the minutes of the University's Board of Regents meeting, "Regent [Jean] Keffeler noted she would like to review the information available on faculty productivity and engage in an in-depth discussion about tenure issues, including academic freedom." Many faculty members believe that Keffeler, herself a management consultant, was in cahoots with Brody at the time. She flatly denies it, claiming that in her six years on the board, the tenure code had never been seriously reviewed and was overdue for discussion.

A month later, on June 12, Brody announced the formation of the Quality Re-engineering and Technology Committee (QRTC), composed of himself and a member from each of the seven schools under the aegis of the AHC--people chosen, Brody said, for their talents as "broad thinkers." He added that QRTC members would be working full time on the committee, and that its purpose was nothing less than the radical reinvention of the Academic Health Center. In designing a totally new structure, Brody said, the committee couldn't look to other academic health centers for guidance because of the uniquely large market penetration of managed-care medicine in the Twin Cities. He suggested that the QRTC instead study how corporations had reorganized to meet market challenges. In that way, the provost said, the AHC could learn the critical importance of being "the best in the eyes of our customers, not our competitors."

Within a few days of Brody's announcement, the QRTC embarked on its first order of business: hiring consultants to guide it through the re-engineering process. There was never any doubt about its choice. One of three reference books given to committee members by Brody was Reengineering The Corporation: A Manifesto for Business Revolution, by Michael Hammer and James Champy. Those who bothered to read it couldn't help noticing that the jargon in the book reflected Brody's own language, such as his emphasis on the word "radical" and the notion of "starting with a blank piece of paper." Even those who didn't read it would have had little difficulty gleaning that Jim Champy was both co-author of the book and co-founder of one of the firms applying to become the QRTC's consultant.

Whether QRTC members were aware of it or not, Brody and Champy knew each other, having served together on the Massachusetts Institute of Technology's board of governors. Each man had a lot to gain from a high-profile re-engineering of the AHC. Brody needed to establish himself as a bold administrator in order to foster his ambitious career goals (and in that respect he succeeded, accepting an offer to become president of Johns Hopkins after less than two years at Minnesota). For Champy, it was a chance to be in the vanguard of a lucrative new market niche. Management consultants had been all the rage of the business world over the previous 15 to 20 years, but by the mid-'90s, in the wake of mergers, global trade agreements, and downsizing trends, almost every major corporation had some version of a retooling program underway.  

Academia, however, was virgin territory. And with HMO-style medical constraints gradually sweeping the country, other prominent universities with hospitals for teaching and research would soon be confronting financial upheavals similar to the University of Minnesota's. When Champy gave his "people in organizations like to be told what to do" speech at the leadership retreat in July, Brody pointedly noted that this hot consultant with a book on the New York Times bestseller list was dispensing his wisdom pro bono. In reality, it was the pitch that helped to close a big sale: The next month, Champy's CSC Index was signed to the first of three contracts totalling millions of dollars.

Meanwhile, Brody and the Board of Regents continued to push hard for changes in the tenure code that would give faculty less job security. In his inaugural speech upon becoming chair of the board, regent Tom Reagan stated, "We may have to make programmatic cuts or take a fresh look at policies such as tenure." On Sept. 8, Brody went to the regents and asked that the board assist the re-engineering process by considering "modifications to governance and tenure to achieve the goals of the AHC." The regents not only agreed to help, but asked Brody and Hasselmo to "advise the board at the earliest possible point of the kinds of changes that would facilitate what the Academic Health Center is trying to accomplish."

Two weeks later, at the first "town meeting" of the QRTC, committee member Leo Furcht told more than 300 AHC faculty and staff that "tenure is constraining our flexibility and ability to change." Audience evaluation cards indicate that the message was received with a high degree of anxiety and concern about AHC priorities. "Where do the academic units fit? Rarely is education mentioned... " wrote one. "It continues to feel like the focus is NOT on the 'A' in AHC," echoed another. Others wanted to know, "How will people be treated in reaching the vision?" and "What's the cost of re-engineering (productivity, faculty and staff losses, morale) no matter how necessary it is?" One exasperated audience member wrote, "The environment is getting so poisoned that we need to start getting some answers before we all go crazy!"

"It was a very difficult period and people were looking for a savior," explains David Hamilton, a professor of cell biology and neuroanatomy. "Everybody wanted Brody to succeed so much that he was allowed to do things without criticism for a period of time, until it became so obvious he was wrong that people couldn't take it anymore."

Was Brody a rogue operator in the University administration, or the person put out front to deflect heat from U of M President Nils Hasselmo? A compelling argument can be made either way. What is certain, however, is that Hasselmo publicly appeared weak-willed and indecisive, giving off contradictory signals as the tenure issue unfolded. During the process, he announced he was retiring in 1997, and his lame duck status made him even more ineffective. The president eventually pronounced himself vigorously opposed to the regents' proposed changes to the tenure code, yet he helped set in motion the chain of events that allowed such a radical document to see the light of day. Whatever affinity the Wallin search committee had felt for Brody, it was Hasselmo who picked the provost from a field of four finalists, and Hasselmo who continually applauded Brody's re-engineering process at AHS.

When Brody asked the regents for changes in governance and tenure, and the regents adroitly asked Brody and Hasselmo for "advice" in return, Hasselmo's vice president, Jim Infante, established a "Faculty-Administration Tenure Working Group" in October; the group would later be viewed by many faculty as an end-run around the established faculty governance process, heightening tensions and mistrust over the issue.

On Nov. 20, 1995, Hasselmo wrote a letter to regent board chairman Reagan, meant to "structure a meaningful dialogue on issues related to tenure." Among the "specific issues which we [the administration] feel should be addressed," Hasselmo embraced Brody's position that tenure "imposes rigidities and lack of flexibility." He suggested setting tenure quotas, and, since "It is assumed that the proportion of faculty who are tenured must decrease," the creation of non-tenure tracks for faculty employment. "Perhaps tenure should be available only under exceptional circumstances in certain areas," Hasselmo wrote.

Other items the letter put on the table included:

* the prospect of determining tenure codes on a departmental basis rather than university-wide (a divide-and-conquer strategy any union organizer would recognize);

* an examination of the length of time before a faculty member earns tenure (presumably longer, if the desire is to end up with fewer tenured faculty);  

* and a possible diminution of the protections afforded a tenured faculty member who is accused of misconduct.

With friends like Hasselmo, the tenure system hardly needed enemies.

Perhaps the most blatant sign of Hasselmo's weakness--or collusion--on the tenure issue was the extent to which he allowed Brody to lobby against it at the State Legislature, a primary source of University funds. In December, Reagan had told a faculty governance committee that the Legislature and the governor had both been pressuring the regents about tenure. Not coincidentally, Brody had been a frequent presence at the Capitol, lobbying for $50 million for the AHC--half of it designated to go toward re-engineering--and negotiating the particulars of a merger between the University of Minnesota Hospital and the Fairview Health System.

Announced in mid-November, the Fairview merger raised Brody's stature as a can-do administrator, for it eliminated the biggest source of red ink in the AHC's financial ledger and gave the teaching and research specialists access to more patients. Of course, hundreds of hospital workers are in the process of being laid off, and it wasn't (and still isn't) clear how the University's research and teaching programs would be affected by working in a hospital operating under HMO-style management. But Gov. Arne Carlson, most of the legislators, and the medical business community (known collectively as "stakeholders" in CSC Index/QRTC jargon) clearly thought it was a good trade-off.

Brody was a gifted salesman. "He was one of the main people I dealt with," says Rep. Becky Kelso (DFL-Shakopee), then the chair of the House subcommittee dealing with University funding. "Provost Brody made it clear that the tenure code as it applied to the Academic Health Center was a problem. He said [the AHC] was an incredibly important resource, with a hospital that treated people with life-threatening illness and trained physicians to treat the people of this state. He said it was vital beyond higher education, and that it was in crisis. That was the perspective he brought to us... and certainly it is safe to say he was interested in involving the Legislature in those problems. I think he was right. We agreed there was a need for strong changes." Kelso adds that she believed Hasselmo was aware of what Brody was doing: "I didn't get the impression this was a rogue operation."

In a February 1996 House Education Committee hearing, Kelso specifically cited Brody's comments about the University's restrictive tenure code in the course of grilling Hasselmo on the subject. That same month, the Legislature passed an extraordinary appropriations bill that expressly tied some of the University's funding to progress made on changing the tenure code. The amount of money affected was small--just under $9 million--in relation to the total AHC budget, but the message to faculty and regents was obvious. Inexorably, the issue had become not whether the tenure code would be weakened, but by how much.

"Big change fast." That was one of Champy's re-engineering mottos, and Brody was determined to implement it. Even as he was merging the hospital and lobbying at the Legislature, the provost drove the QRTC process faster than it was institutionally capable of moving. When the committee was announced in July 1995, Brody said it would present three things--a case for change, a clear new mission statement outlining vision, values, and goals, and an outline of the next steps for action--all by October. A couple of months later, he extended the deadline to December. When December arrived, Brody announced that "the train is leaving the station," while acknowledging that he didn't know where it was going. As the AHC biweekly publication this thursday put it, "The need for change is so great, [Brody] said, that even though re-engineering plans haven't been completed, decisive actions must be taken."

Those actions included the merger of the hospital with Fairview, a 30 percent reduction in medical school enrollment, creation of a rural health school in Duluth, and a new batch of committees to start "Phase II" of re-engineering. Specifically, this second phase would consist of 10 "design teams" of about seven people a piece to move the AHC through the "implementation" part of the process. Phase III would be the "realization" part. Whether QRTC was ready or not, Brody seemed to be handling Phase I--the "vision" part--pretty thoroughly on his own.

By this point, many AHC faculty members were understandably feeling anxious and confused. For months they'd been promised and threatened with massive, fundamental changes. They'd seen corporate consultants coming and going, and jokingly referred to them as "aliens in Armani suits." They'd read QRTC surveys indicating a strong desire for change among consumers (the re-engineering term for students) and stakeholders alike. Now, change was indeed happening, but nobody really knew what it meant. Nobody could say how the pieces of the University Hospital-Fairview merger would fit together, or what the fallout of a 30 percent drop in enrollment would be, or whether the QRTC vision plan would already be outmoded, overtaken by Phase II, by the time the committee completed its vision plan. In terms of their future, the faculty were still operating with "a blank piece of paper."  

They finally got some answers in the first week of February 1996, when the QRTC presented its restructuring plan. The AHC has been a politically charged environment ever since.

The setting was another AHC town meeting. In accordance with Champy's dictum about decisive action, Brody began by telling the assembled faculty and staff that what they were about to see was the new structure of the AHC, and that none of it was negotiable. There were precious few written materials; most of the information was on slides containing a series of charts and boxes. They showed that, instead of seven individual schools of medical discipline, such as nursing, dentistry, or public health, the new AHC would be divided into two enterprises: one devoted to education, one to research, each headed by a vice provost who would assist the provost in performing many of the vital responsibilities now carried out by the deans of the schools, such as configuring the budget, designing the curriculum, and hiring the faculty.

Brody explained that the purpose of the new structure was to create interdisciplinary and multidisciplinary teams for research and education, as well as cut costs by streamlining the infrastructure. But some of the slides contained many boxes for new administrative positions--a faculty member from the school of public health eventually counted 35 of them--including an expansion of public relations and legal affairs. In any case, the restructuring clearly seemed to concentrate more power in the hands of the provost and the two newly created vice provost positions. Brody acknowledged that the change "results in a great deal of personal anxiety for all of us, especially since there are many details that need to be worked out." (In fact, a third vice provost, this one coordinating clinical affairs, was later added.)

After the slide show, the dean from the school of dentistry rose with a pertinent question: If the AHC did away with the structure of individual schools and colleges, what would the fallout be? How would the University continue to solicit loyalty from alumni, who often contribute specifically to the school of medicine, say, or the school of nursing? (Not mentioned was that the University had to retain the schools as discrete entities to keep their accreditation.)

According to medical school professor Carol Wells, Brody replied that it wasn't exactly true that the schools were being done away with. He urged the dean to think of the schools and colleges like a Visa card, where the name has recognition, but everything behind the card, such as the billing and credit checks and so forth, is contracted out to another place. "When he said we could consider the school of dentistry valuable for its name recognition, like a Visa card--that's when I knew we were in trouble," Wells says.

News of the town meeting spread rapidly and further polarized supporters and opponents of Brody and re-engineering among the AHC faculty. At the school of public health, the faculty exercised their right under the school constitution to call an informational meeting to help quell the secrecy and rumor-mongering. Asked why the faculty couldn't also get handouts of the new plan, if in fact it was going to be the new structure, the dean replied that she was told it was confidential and not to be shared. A formal resolution of nonsupport for re-engineering then passed 61-0 with one abstention, and a letter of protest was sent to the Board of Regents--one of three that were made public in the school newspaper of April 16, right next to a story about Coke machines being installed at the student union.

By then, Brody had already accepted the offer to become president of Johns Hopkins University in Baltimore, one of the top two or three medical research institutions in the country. Obviously, his brief, stormy stint in Minnesota had proven an immediate boon to his career. Reached by phone, he demurred from speaking in anything but general terms about his time at the U of M, saying it was "a page passed; I don't want to be rehashing history or undermining what Frank Cerra [the person who succeeded Brody as provost] is doing." But Brody did opine that the U seemed to be on a downward spiral because "it is not willing to stand up and make the tough changes. That would include tenure and re-engineering." And he went on to defend his re-engineering effort as "a faculty-driven process. Our QRTC team was headed up by a professor--Dr. Leo Furcht. Unlike a business, a university is much more bottom-up than top-down. The faculty are the biggest asset and that's why it is so important to get their involvement."  

Carol Wells doesn't believe what Brody says. When it was announced that the QRTC process would expand into 10 design teams to implement Phase II of the re-engineering beginning in January 1996, Wells says she "tried passionately to volunteer" but her pleas for input were essentially ignored by the QRTC team. Wells and Frank Cerra had done research together in the past; and when the newly appointed Cerra announced that the AHC was considering volunteers for the design teams, Wells quickly approached him and got a verbal assurance she'd be included. To make sure, she went home and e-mailed Cerra a thank you note, sending a copy to the head of the research design team. In this way, she officially secured a spot on the team.

Except that the team never met. Or, more precisely, the five people listed as being on the team never met. Wells says she kept badgering one of the team's two co-chairs about the lack of meetings, which finally earned her a 45-minute conference over coffee, in which he informed her that the team wasn't convening because they hadn't received a clear charge from Cerra on how to proceed. Wells countered that on the AHC Web page there were weekly reports being issued that indicated that the committee was indeed meeting. She suggested that the co-chair at least convene the committee once, so that it could be explained to everyone why they were not meeting and issue that as a report.

"Of course that never went anywhere," she notes, "except that for the next few weeks after our coffee meeting, it said [on the Web page] 'no report at this time,'" Wells says.

Just a few months ago, Wells received a note from Cerra thanking her for her work on the final report of the QRTC research team. More than a little curious, Wells asked for a copy of the report. Sure enough, a report was issued by a team whose meetings she was never invited to join. Wells sent the report to the two other committee members who weren't co-chairs; they too had never met as part of the group. One Dr. Russell Luepker, the chair of the epidemiology department, fired off an angry letter to Cerra.

Pretending to solicit input when it is the last thing on one's mind may not be illegal behavior, but it certainly seems morally dubious. In that sense, maybe the QRTC members learned a thing or two from the high-priced consultants at CSC Index. In August and September 1995, Business Week alleged in a series of articles that CSC Index and some of its consultants had manipulated purchases of a business book in a manner designed to get it on the best-seller lists at the New York Times and other influential publications. The magazine claims that the two authors of the book The Discipline Of Market Leaders, together with other CSC Index employees, spent at least $250,000 buying more than 10,000 copies of the book in a carefully coordinated fashion that closely resembled the method believed to be used by publications to track demand for a book around the country.

In addition to the $20,000-$30,000 speaking fees the authors suddenly were able to command as a result of their book's apparent success, Business Week noted that the practice was tempting because "[b]est-selling books also have become key marketing tools for consulting firms. They build credibility in the marketplace and popularize a firm's proprietary management concepts and trademark buzzwords." Like "re-engineering," perhaps.

Two weeks after its original story on the subject was published, Business Week wrote an article indicating that Champy himself may have engaged in some manipulations of his own to boost the profile of his sequel to Reengineering the Corporation, this one titled Reengineering Management. According to the magazine, CSC Index purchased about 25,000 copies of this second Champy book, including 7,500 that were purchased at retail bookstores, most of them charged to the accounts of CSC employees. A CSC Index spokesman conceded that "a few hundred of the individual sales" did appear to be "inappropriate." And a week after that, Champy admitted "there was truth" to allegations of CSC Index's manipulation of the Discipline book. He did not speak to the magazine's allegations about his own book.

Carolyn Williams, an associate professor in the University's school of public health, presented regent board chairman Reagan with copies of the Business Week articles in April of 1996. If Reagan even bothered to read them, it didn't affect his and the other board members' decision to renew their contract with CSC Index for $1.7 million.  

The regents had larger priorities. With the Legislature in their corner and even Hasselmo apparently willing to make sharp compromises up front in tenure negotiations, board members envisioned an unprecedented (to their experience) degree of flexibility in faculty personnel management, including:

* layoff provisions if the regents decided to close a school or department at the U;

* stronger and faster disciplinary authority over misconduct;

* the ability to evaluate already tenured faculty in terms of productivity and performance;

* the balkanization of the University-wide tenure code into sets of rules that varied by department or school unit.

In other words, the regents saw the possibility of operating the University in almost the same way as a for-profit business.

But after the polarizing events of February 1996--when the Legislature tied appropriations to tenure and the QRTC released its plan for restructuring the Academic Health Center--the faculty's trust level dropped as their resolve stiffened. The working group on tenure that Hasselmo and his vice president Infante had put together in response to the regents' request for advice back in September 1995 had staged a series of public forums on tenure over the winter, and were working with a group of lawyers to put together their own proposed changes in the code.

That one of those lawyers was Martin Michaelson of the Washington law firm of Hogan & Hartson, who had been working on tenure issues and other legal matters for Brody over in the AHC, was just one of the reasons why faculty members revolted against the working group. Rightly or wrongly, the group was perceived by many faculty as being too close to the regents and the University administration. And on purely procedural grounds, the faculty constitution specifically designates three separate committees to work through any faculty consideration of changes in tenure. The working group was seen as an attempt to bulldoze that process.

By a nearly unanimous vote at their April 18 senate meeting, the faculty scrapped the working group and agreed to put together its own tenure proposal by going through the constitutionally appropriate subcommittees. The real task was hammering out a consensus plan and then getting it passed through the committees in two months so that it would be ready for consideration when the regents met in June. Not only did the faculty committees meet their deadline; they came up with proposed changes in the code that were very Minnesotan in their self-effacement. Under their proposal, the U of M would become one of a minority (albeit a growing one) of universities to engage in post-tenure reviews of faculty performance, and even be given the authority to cut faculty salaries in some instances. The faculty also suggested changes in the code that would lengthen the probationary period before tenure was granted.

The regents accepted these generous proposals with enthusiasm, but it still wasn't enough for them. They remained determined to gain layoff authority over tenured faculty when a college or department is re-engineered out of existence. They also held out for a more streamlined judicial appeals process to allow for faster discipline of tenured faculty accused of misconduct. So they did not act on the faculty proposal, further straining relations with faculty leaders who had devoted the past two months to getting their plan in on time. At this point, Hasselmo threw his lot in with the faculty, and more or less denied the regents access to the materials in his office.

As far as the regents were concerned, they weren't getting the information they needed out of Hasselmo anyway. What Keffeler in particular was after was some kind of comparative data that would indicate where the University stood in relation to its peers on tenure issues. To that end, the board hired its own consultant, Dr. Richard Chait of the University of Maryland, a nationally recognized authority on tenure codes. But according to Chait's chief assistant, Kathy Trower, who worked alongside Chait in Minnesota on behalf of the regents, what the board wanted--apples-to-apples comparisons of tenure issues among universities--was much more complex than it might seem. Tenure codes are idiosyncratic; while the basic principles and goals may be the same, the context is different. Each institution structures and phrases its codes in a manner meant to resolve the specific disputes over academic freedom and bureaucratic control that have arisen on that campus. Second, what's written in a code often isn't the same as what is practiced as policy. The harsher aspects of a written tenure code are almost never implemented because most boards of regents intuitively realize that it makes no political or educational sense to pick a fight with your faculty: The less enlightened will resent it and plot against you; the best and the brightest will often simply go somewhere else.  

For some reason, the regents at the U of M did not grasp these simple facts. The chain of events that was allowed to occur between the time when the faculty submitted its tenure proposal in June and the regents unveiled theirs in September seems in retrospect to be equal parts ignorance and arrogance. Chait reported that he was happy to interpret the faculty's proposal for tenure and provide other guidance on the issue, but that he did not feel comfortable writing a legal document like a proposed tenure code. The regents then turned to the University's general counsel, Mark Rotenberg. But out of loyalty to Hasselmo, Rotenberg chose not to get involved with writing the regents' tenure proposal. Of all people, Rotenberg turned to Martin Michaelson from Hogan & Hartson, the lawyer whose involvement in the AHC re-engineering process and Hasselmo's working group already made him something of an iconic foe of the faculty on tenure issues. At a regents' retreat in August, Michaelson solicited the individual views of all the board members present (everyone but Keffeler and Wendell Anderson), researched some of the tenure codes of comparable universities, and sought to reconcile the two, in some cases by incorporating the language of other codes.

Given the importance of the regents' proposed tenure changes, the document received remarkably little prior scrutiny or oversight. Chait, the consultant who seemed to have earned the trust of the regents, said at the August retreat that references in the code to layoff authority would be considered an inflammatory subject by the faculty. Yet the layoff language made it into Michaelson's document; some of the regents say they never even saw a copy of their own proposed tenure code until just hours before it was made public. One of the people who did see it a day or two in advance was Hasselmo, who implored the regents not to release such a divisive document. Based on what she gleaned of the plan from Hasselmo, Virginia Gray of the faculty consultative committee told the regents the morning of the Morris meeting that the faculty would almost certainly unionize if they went through with their proposal.

The regents nonetheless seemed surprised and distraught at the ferocity of opposition it engendered. Keffeler, who resigned from the board just a couple of months later, says one of her biggest regrets was in underestimating the lack of trust and understanding that existed between the board, the administration, and the faculty. But you don't have to be a conspiracy theorist to understand why the faculty felt so beset and suspicious over the past two years, especially those in the Academic Health Center.

A powerful new provost--who soon counted the governor, legislators, and the state's influential business leaders among his allies--had come in and almost immediately laid siege on tenure while working in tandem with a corporate consulting firm that proudly preached the value of scrapping the status quo without any real discussion. The merger with Fairview ensued; all the while, long-range plans were concocted on the fly, leaving sketchy paper trails in their wake. Even Kelso, the legislator primarily responsible for tying legislative appropriations to changes in tenure, says of the regents' plan, "It was extreme by any measure. That you could have layoffs for 'compelling reasons' or discipline for 'a bad attitude'; it doesn't take much imagination to see that it comes real close to just abolishing tenure."

The regents belatedly claim that their proposal was negotiable, but an appalled and frightened faculty never gave them the chance, successfully petitioning for an election on whether to unionize, which by law put a stop to any potential changes in University regulations. Rattled by the national outcry against their proposal as well as the union threat, the regents took their plan off the table. More than six months later, the regents have never again taken up the question of revisions in the tenure code, although they are expected to approve a plan very similar to the one submitted by the faculty last June.

Over at the Academic Health Center, the consultants from CSC Index packed up the charts and briefcases and left ahead of schedule, terminated by Dr. Frank Cerra, who had taken over for Brody. "Re-engineering, in the sense that Champy was using it in his books, I think that was the wrong tool here." Cerra says. "Corporate-style management doesn't work with education and research, and we are not going to do that. Out of the QRTC process came a better understanding of how we are financed and how it all fits together. But the organizational design process, where they didn't even have the schools connected to anything, that is a mistake. The approach of taking a blank sheet of paper and throwing out the baby with the bathwater--that simply doesn't work."  

Cerra does say that the AHC is "making a big investment in process redesign. But we will focus on the customers, which for education and research means the faculty; our infrastructure will support what the faculty does."

How will the AHC administration gain the faculty's trust in the wake of the Brody-spawned re-engineering? "This is a difficult process right now, because what makes things run are interpersonal relationships. They need to be rebuilt and that is something that will take a lot of work. One of the keys is good, open, honest communication. That takes up most of my time right now."

Yet many AHC faculty members claim Cerra's actions speak stronger than his conciliatory words. From the very beginning of the re-engineering process, Cerra was one of Brody's most trusted lieutenants. Back in July 1995, he wrote that Brody's "blank canvas" approach was "a remarkable opportunity to take charge of our own destiny." Cerra was promoted to dean of the medical school under Brody, and, with a dispatch that was remarkable within the University bureaucracy, he was named the new provost the same week Brody announced he was taking the job at Johns Hopkins.

Nearly six months after that announcement, Brody was still on the job as "a special assistant" to Hasselmo: in fact, Brody and Cerra continued to occupy the same offices and support staff. When AHC faculty were openly critical of re-engineering, Brody, who was technically no longer in charge, called them in for a dressing down. It soon became clear to many faculty members that Frank Cerra was the nice guy in a "good cop-bad cop" tandem designed to push re-engineering through despite opposition.

With Cerra officially in charge as provost, reports from Phase II of the QRTC re-engineering process were released in the summer of 1996. Among the more galling parts of the reports for faculty members were a series of pages under the heading "How Our Culture Must Change," which offered numerous examples of "Old AHC" attitudes that needed molding along "New AHC" lines. By the lights of "Old AHC," for instance, "Once one is tenured, they are employed for life." The arrow then pointed to the "New AHC" recommendation for cultural thinking: "We don't guarantee employment for anyone."

Along with the suggested reformation of faculty attitudes, the Phase II reports made specific recommendations as to bureaucratic realignment at the AHC. Not surprisingly, the recommendation of the research design team was that the AHC "appoint a Vice Provost for Research to facilitate the overall process." Brody, Cerra, and many participants in the QRTC process have made no secret of the fact that one of the primary "strategic goals" of the AHC is to partner up with private businesses in order to generate more revenue for the AHC.

"As with any academic health center, most of our research dollars come from the National Institutes of Health. The grant process is enormously competitive and yet some of us are still extraordinarily successful at getting a lot of that money," says Carolyn Williams, a professor in the school of public health. "This re-engineering seems to be taking authority away from the deans and department heads and investing it into administrators. What troubles me is, do I have to first submit my grant proposals to the AHC before I send it to NIH? Because that is a violation of academic freedom. The current project I have now is on preventing adolescent alcohol abuse. Some administrators thought it was a long shot [for funding]; if they had the right to tell me what to do, it wouldn't have gotten done."

According to Cerra, "There are two parts to this. One is, who decides what kind of research is to be done--that is totally up to the faculty. Then there is grants management--that is an infrastructure question. Yes, we want to see how to make it customer-service oriented, so faculty and [a corporate] sponsor can get together. But the control for that resides in the faculty."

But it was "faculty" who put together the QRTC reports, and theoretically drove the re-engineering process in the first place. Those faculty members who don't trust Cerra point out that the structural framework of re-engineering is going forward. The provost has usurped most of the financial authority once held by the deans. And a new vice provost for research has been appointed by Cerra: He is Leo Furcht, the person who headed up the entire QRTC process under Brody. During his brief phone interview, Brody himself said that Cerra was the person who now had to implement the changes that Brody had set in motion. "And I understand that he is moving ahead with that very nicely," Brody said.  

Efforts to change the tenure code and force a restructuring of the Academic Health Center have consistently been defended as tough but proper business decisions to cope with the intractable financial realities facing the University. But an equally compelling argument can be made that these actions have alienated people most responsible for creating and maintaining the University's economic health--quality faculty members.

In the 1994-95 financial year, faculty at the University of Minnesota were paid a total of $271 million, of which $191 million came from state appropriations. In return for this investment, the faculty generated $350 million in external research money. Patents and other products generated by faculty research are responsible for thousands of jobs throughout the state. Student tuition is obviously paid in exchange for the promise of a quality education from a distinguished faculty. Without that top-notch faculty, the University's financial position is in jeopardy.

Re-engineering and the regents' tenure proposal made it increasingly difficult for the University to hold on to its star faculty, let alone recruit other young candidates to replenish an aging work force. The huge amount of negative nationwide publicity after the regents unveiled their proposal in Morris not only gave faculty a reason to consider leaving the U, but encouraged other universities to redouble their efforts to steal them away. The number of tenured faculty who report they have been approached with viable proposals from other schools--registered as "retention" offers--is four times the annual average. "Certainly the perception is that we are all 'raidable'," says David Hamilton, a professor of cell biology. "And many of those people are at the very least thinking about leaving. I just got back from a national meeting where I spent most of my time being cornered by people asking about faculty at Minnesota who have their CVs [resumes] out."

Because of the recent scandals, along with other troubles predating Brody's arrival, the massive turnover in AHC isn't entirely a reflection of the forces he set in motion. But other departments throughout the University report a great deal of concern about departing faculty. According to Ed Fogelman, chair of the political science department, "Last year there were four retention offers out of my college, liberal arts; this year there are 18. And in this situation, the people most likely to get recruited away are the best ones."

Kinley Brauer, who chairs the history department, acknowledges that he has lost two prized faculty members already, one to Harvard and the other to Yale. One specifically cited the tenure issue as a motivation for leaving. "There is no question in my mind that this has hurt the U," says Brauer. "We would be losing more than we are now probably, except that we have a relatively older faculty. And it's not only the faculty. We have had a drop both in the number of graduate students who want to come here and in the quality of our graduate student candidates."

Once faculty members leave, the University's reputation makes it hard to fill their positions with quality personnel. "We have eight searches currently going on," said a faculty member from the College of Nursing back in December. "It has gotten to the point where the people we want aren't going to come here, and in our desperation we'll start to take whatever we can get. Lately we have had to hire very junior people."

Along with tenure and re-engineering, relatively low wages and a higher than average workload are disincentives for recruiting and retaining a high-caliber faculty. Due in large measure to legislative penury, faculty salaries at Minnesota are near the bottom of the nation's 34 major research institutions, averaging $78,000, including benefits, and have either been frozen or raised by minimal amounts (2 or 3 percent) in each of the past three years. By contrast, Hasselmo's salary jumped from $152,300 in 1993 to $178,191 in 1995, while Mario Bognano, the associate to the president, has seen his salary raised by $20,000, to $130,000, over the same two-year period. Brody was paid $290,000; Cerra slightly less. Overall, the number of top administrative positions--president, chancellors, vice presidents, and associate vice presidents--more than doubled. The amount paid by the University to consultants has also risen sharply, averaging more than $55 million annually over the past three years.

How can the University afford these expenditures? One way is by not hiring any new faculty. As was the case at most major universities, enormous numbers of faculty members were hired at Minnesota during the '60s and early '70s, when the money was plentiful. Now those professors are retiring and not being replaced. The U of M has the lowest ratio of faculty per student of any school in the Big Ten.  

"When the regents used to talk about all this 'deadwood' among tenured faculty that we had to get rid of, you just had to laugh," says Paula Rabinowitz, an English professor at the U. "Our peer institutions--Washington, Texas, Michigan, Berkeley--have English departments between 80 and 100 faculty for the level of work we do, which includes about 150 to 200 graduate students and 500 to 1,000 majors. But my department has 38 faculty. That's the size of Kansas State and the University of Nevada at Reno, neither of which have Ph.D. programs.

"And it's not just my department. The physics department is working with 25 percent less faculty than most major physics departments in the country. So is the math department; so is the history department. We are talking about the core fields of any major research university."

Of those faculty members who do remain at Minnesota, fully 50 percent are 55 or older and will be retiring within the next decade. Other universities across the country also face the prospect of massive retirements from faculty hired in the '60s and '70s, creating a very competitive recruiting atmosphere for the best and the brightest teaching minds at the beginning of the 21st century.

Given the baggage of botched tenure reform, flat wages, and a high workload, how will the University of Minnesota compete for these teachers, who will train the majority of our local doctors and accountants and businesspeople? That is a question administrators, legislators, and citizens of this state have to answer, and quickly-- unless we want to start issuing U of M diplomas from those vending machines. CP

News Interns Todd Renschler and Margaret Delehanty contributed research to this story.

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