Higher Ed Restructuring: Why Universities Aren't Corporations

Understanding the unique challenges of organizational change in academic institutions

The new provost arrived with a mandate: reduce administrative costs by $50 million over three years. He had spent twenty years in private equity, restructuring manufacturing companies and service businesses. He knew how to cut costs.

Six months later, he had achieved approximately $4 million in savings, made enemies across every college, and was already interviewing for his next position. The faculty senate had passed a vote of no confidence. Three deans had resigned. The restructuring was effectively dead.

His failure wasn’t due to lack of competence or will. It was due to applying corporate restructuring logic to an institution that doesn’t operate on corporate logic.

The Governance Difference That Changes Everything

In his private equity experience, decisions flowed from ownership to management to implementation. The board authorized the CEO. The CEO directed the organization. Resistance was addressed through incentives or termination.

Universities have a fundamentally different architecture. Faculty governance isn’t a suggestion box - it’s constitutional. At most institutions, faculty governance bodies have binding authority over curriculum, degree requirements, and academic personnel decisions. Administrative leadership has authority over operations and finance. The boundary between these domains is contested, varies by institution, and is litigated continuously.

The provost learned this when he proposed consolidating three underperforming departments. In corporate terms, this was straightforward: combine redundant units, reduce management overhead, achieve economies of scale.

In academic terms, he was proposing to eliminate tenured faculty positions without their consent, transfer students between degree programs without academic approval, and restructure curriculum without faculty governance review. Each of these actions violated established procedures. All of them together constituted a governance crisis.

The implication for restructuring: Governance processes aren’t bureaucratic obstacles to be overcome. They’re constitutional requirements to be navigated. A restructuring plan that ignores governance will fail regardless of its analytical merit.

The Employment Structure That Limits Options

The provost’s corporate playbook assumed that workforce adjustments were possible within legal constraints. Identify excess capacity, develop separation packages, implement reductions.

He discovered that approximately 40% of the workforce was functionally untouchable:

Tenured faculty - roughly 25% of employees - cannot be eliminated for financial convenience. Tenure is a contractual commitment that survives budget pressure. The only paths to reduction are voluntary separation (expensive) or formal financial exigency declaration (legally complex, reputationally damaging, rarely successful).

Tenure-track faculty have contractual protections during their probationary periods. You can decline to renew at contract end, but you can’t terminate mid-contract without cause.

Unionized staff - in this case, roughly 15% of employees - have negotiated protections that limit layoff flexibility, require defined processes, and often include bumping rights that make targeted reductions impossible.

The provost’s 20% headcount reduction target collided with a reality where perhaps 8% was achievable through layoffs, and another 5-7% through aggressive attrition management over several years.

The implication for restructuring: Plan for multi-year workforce adjustment through attrition, not quarterly cuts through termination. Focus on positions, not people - eliminating positions as they become vacant is far easier than eliminating filled positions.

The Calendar Constraint That Slows Everything

Corporate restructuring operates on fiscal timelines. Announce in Q1, implement in Q2, report savings in Q3.

The provost announced his restructuring in October, expecting implementation by January. He discovered that the spring semester was already staffed, courses were already scheduled, and students were already enrolled. Nothing could change until May.

Summer provided a window, but faculty governance meets infrequently during summer. Any changes requiring academic approval would need to wait for fall semester governance meetings. Major changes might require multiple readings across multiple meetings.

The restructuring that was supposed to take six months would take, at minimum, eighteen months - and that assumed everything went smoothly, which it wasn’t going to.

The implication for restructuring: Build timelines around the academic calendar. Summer is the implementation window. Governance approval takes a full academic year for significant changes. A restructuring announced in Year 1 might not be fully implemented until Year 3.

What Actually Works

Effective higher education restructuring acknowledges these constraints and works within them:

Administrative functions before academic functions. Consolidating IT, HR, finance, and facilities is typically achievable because it doesn’t trigger academic governance. It also generates savings that can protect academic functions and demonstrate progress while longer-term changes develop.

Attrition as the primary lever. Hiring freezes, position elimination upon vacancy, and retirement incentives are slower than layoffs but actually achievable. The provost’s successor targeted 15% administrative reduction over five years through managed attrition and achieved 13%.

Governance partnership, not governance bypass. The successor spent her first six months meeting with every faculty governance committee, understanding their concerns, and building shared understanding of the financial reality. When she eventually proposed changes, faculty governance approved them because they’d been part of developing them.

Realistic timelines with visible milestones. Rather than promising $50 million in three years, she projected $30 million in five years, with clear annual milestones. This matched institutional reality and built credibility through achieved targets rather than missed ones.

The Meta-Lesson

Universities aren’t inefficient corporations. They’re different institutions with different governance structures, different employment relationships, and different operational rhythms.

The provost who failed wasn’t wrong that costs were too high or that restructuring was needed. He was wrong about how institutional change happens in academic settings.

His successor achieved meaningful cost reduction - not as much as he’d targeted, but sustainable and real. She did it by working within institutional constraints rather than against them.

The lesson extends beyond higher education. Every institution has its own logic. Restructuring approaches that work in one context don’t automatically transfer to another. The discipline of understanding institutional architecture before proposing institutional change is what separates successful restructuring from expensive failures.

Restructuring in higher education is possible - but only by working within the institution’s logic rather than against it. The analytical frameworks transfer. The implementation approaches often don’t.