Tomorrow's Professor Msg.#106 WHY PROFESSORS HAVE TENURE AND BUSINESS PEOPLE DON'T

Folks:

If your experience is anything like mine, almost everyday someone, usually a colleague in industry, askes why faculty still have tenure when this is not the case for anyone in corporate America.

The posting below addresses this issue from an economic perspective. It is by Richard McKenzie, a tenured professor in the Graduate School of Management at the University of California, Irvine. The posting is drawn from a more extensive article on the subject by McKenzie that can be found at:(http://www.gsm.uci.edu/~mckenzie/tenure.html).

Regards,

Rick Reis

UP NEXT: Learning From Teaching

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WHY PROFESSORS HAVE TENURE AND BUSINESS PEOPLE DON'T

Richard B. McKenzie
UC Irvine

Critics of higher education are fervent in their denouncements of the academic tenure professors receive after only a few years on the job. Critics charge that tenure is the cause of much professorial incompetence, given that tenure supposedly affords professors life-time job security. They stress that professors are no more deserving of tenure than their counterparts in business. Doing away with tenure would be a be an unmitigated blessing for students, or so the argument goes.

South Carolina has recently done away with tenure for new faculty hires in that state's universities. Many state legislators in many other states puff away about the virtues of following South Carolina's lead. On the other hand, declaring themselves to be "special," professors typically defend academic tenure on the grounds that they need to be protected from external political forces that would, in the absence of tenure, throttle free thought and speech in the nation's classrooms.

Frankly, both tenure's critics and defenders don't fully appreciate the economic foundations of tenure. Tenure has very little to do with protecting professors from external political force; it has a great deal to do with protecting them from internal political forces. Professors have tenure (which, in reality, is only a limited form of job protection) and business people don't simply because professors have good reason to buy it; business people don't.

To understand tenure, critics must realize that tenure is nothing more than an untaxed fringe benefit, much like health insurance, that is voluntarily sold by most public and private colleges and universities to their faculty members at the price of reduced wages. Tenure is bought by professors at a price that is less than its assessed value.

Admittedly, tenure creates some widely recognized problems for colleges and universities (inattentive faculty members, for example), but so does health insurance (excessive purchases of health care). Tenure is provided by universities for much the same economic reason health insurance is: the acclaimed costs of tenure to universities are less than the unacclaimed lower wage bill (a fact that explains why students have reason to appreciate tenure, given that their tuition payments are lowered by it). If tenure were eliminated, universities' total wage bills would no doubt rise, which is one reason why so many colleges and universities continue to offer it in spite of the attendant problems.

Why is it that professors buy tenure while business people generally don't? Admittedly, the reasons are several, but one of the more important but widely unacknowledged reasons is that tenure is simply not very valuable to business people, and for good reason: The goal of business-profit-is clear, well established, and not subject to radical change by the whim of the people doing business. People in business have a pretty good idea that their long-run well-being in their companies will hinge on just how much they can contribute to profit.

Universities, on the other hand, are worker managed, governed extensively not by profits, but by politics-which can be guided by serious deliberations but also by changing whims. ("Political correctness" is only the latest guiding set of whims for democratic orders in some academies.) People taking positions in universities that are extensively labor managed understand that their future well-beings-promotions and pay raises- will be determined partially by secret votes of their colleagues. In such an environment, employment contracts have limited usefulness. The people doing the voting need not consider why a person is employed or what employment agreement the person had, and the voters (professors) can change the basis for their votes at will (and never let anyone know what they have done). Moreover, the cast of voters is constantly changing with resignations, retirements, and new hires, which means that a person can be hired by one group of voters, using one standard, and judged later by a radically different group using a substantially different criteria.

Few professors would give up much in the way of wages for protection against external political forces-because most professors never say anything controversial in class and precious few ever go public with their views. However, even professors who remain cloistered in their labs or in library corridors seek tenure, and voluntarily give up good money for it. Why? The answer should be transparent: They want to guard against the vagaries of academic democracy. Such a governing system can be, and often is, tame; but it can, and often does, become petty, vicious, and unstable, fraught with changing coalitions of voters.

Business people don't need the same form of protection because of the governing role of profits (and the forces of competitive markets that keep managers and workers' attention focused on company profitability and suppress, but does not eliminate, the role of politics). They aren't willing to forgo enough wages to cover the costs the firm would incur from tenure.

Not all colleges and universities are or need to be worker managed; the goals of some colleges and universities-for example, those heavily weighted toward teaching well-established disciplines-are relatively straightforward and stable. They can be administratively managed, as is common in business, given that administrators can judge what the faculty do. However, some universities-for example, those with a heavy emphasis on creating new, difficult-to-judge knowledge-must rely on delegated decision making, because administrators have little competence to judge faculty output.

Put another way, the more democratic the workplace-whether in business or academe-the more likely that the workers will demand tenure, and the more likely the employers will provide it-at a price, of course. Critics of tenure should realize that if they get their way, the cost of higher education will likely rise, and so will tuition (although tenure couldn't be worth more than a few hundred dollars to any professor worth his or her salt). The critics had better be prepared to accept changes in academic governance systems and their driving goals.

At the same time, the elimination of academic tenure will not be the panacea for the troubles of academia that many critics envision. There are already a hundred and one ways (from pay cuts to lousy teaching schedules) that colleges and universities can use to rid themselves of unwanted faculty members. All they have to do is use them.