Increasingly, chief academic and financial officers must make difficult choices as they attempt to balance the demands of maintaining their institution’s financial health with those of fulfilling its mission. In his keynote address at CIC’s Institute for Chief Academic Officers and Chief Financial Officers, Herbert M. Allison, Jr., chairman, president, and chief executive officer of TIAA-CREF since 2002, focused on the economic, financial, and competitive forces driving institutional change, the implications for independent colleges and their operating models, and how institutional leaders might respond most effectively to ensure the vitality of their institutions in the 21st century.

“Small institutions have new opportunities today that are helping to level the academic playing field,” Allison asserted in his opening remarks. “With all the new technologies available, professors at smaller schools have many more resources than in the past, enabling them to focus on mentoring their students and providing access to excellence in teaching. The digitization of books and the wealth of online resources are helping to reduce communication costs, establish or broaden partnerships and collaborative efforts, and provide courses online at low cost. Colleges can now share or outsource administrative functions such as payroll, technology, and maintenance; they are substituting tenure-track positions with adjunct faculty members; and they are building or adopting high schools to expand the number of qualified college students. All these changes were inconceivable a decade ago.”

Allison argued that “small colleges and state universities are becoming the agents of change—they are under greater pressure to change, and they have an advantage over wealthier schools in fashioning the new schools of the future: expanding their capacity to serve more students while reducing costs.” Although Allison noted that higher education is slow to change because institutions have many constituents to please, he predicted that small colleges and universities will be more successful than other institutions in bringing about big changes.

“Smaller colleges can ride the forces [of change] rather than resist them. Your institutions by necessity are becoming more dynamic, more innovative. Other institutions will be more resistant to change—the joint ventures and collaborations and innovations seen on your campuses are simply not happening at Ivy League institutions.”

In describing the efforts by TIAA-CREF four years ago to better meet its clients needs, Allison said they had to “reduce costs to manage the transformation; pare down to essentials; and make massive changes in technology, marketing, and human resources.” They sold a city block of office buildings in Manhattan, moved employees to field offices, opened state-of-the-art offices, replaced top management, built a new systems platform, and outsourced many services, among other changes.

“How can the leadership of a venerable institution such as TIAA-CREF persuade its employees and shareholders to embrace change?” Allison responded, “The only way to bring about sweeping change is to show all constituents that change is necessary and future opportunities will far outpace current benefits.…”

Higher education is changing as well, but the key question, according to Allison, is whether leaders can convince constituents that change is necessary. “Original stakeholders will resist, but it can be done.” He urged CAOs and financial officers to form teams, study markets, and recommend a strategy for going forward. “You must ensure that key constituents understand the forces of change; encourage stakeholders at many levels to examine and grapple with the facts; debate the alternatives; and commit to whatever changes are required to implement the model.”

At the same time, even when institutions are pressured by outside forces to change, Allison cautioned that college and university leaders must strive to preserve the mission and values of their institution.