Insights Blog

Human capital, academic values and sustainable governance in higher education

Human capital, academic values and sustainable governance in higher education

28 January 2014, by Dr Stefan Popenici

Dr Stefan Popenici is a senior lecturer in higher education, specialising in teaching and learning development, at the Centre for the Study of Higher Education, the University of Melbourne.

Dr Popenici facilitates our semester one online subject Managing Tertiary Education Teaching and Learning.



Postsecondary education is changed across the world under the impact of technological change, economic factors and globalisation. Recently, OECD revealed that the share of public funding for higher education is in decline across the world. The rhetoric on the importance of higher education in the knowledge economy is contradicted by funding cuts, increasing costs and student debt. There is also a change in the structure and demands of the workforce market with a direct impact on the structure and future of postsecondary education. Technological innovation is replacing fast entire segments of workforce in all sectors of the economy: relatively inexpensive softwares replaced the work of armies of lawyers or accountants, and virtually no jobs will stay unaffected by the new technological revolution. There are new and already visible arguments that graduates need new skills, in-depth knowledge and creative minds to avoid unemployment and underemployment.

The accelerated pace of technological change, the fragility of global economies, and demands of the knowledge economy place institutions of higher education in a new context, which require creative solutions from and for higher education for a sustainable future. Those able to come with imaginative solutions, vision and wisdom in governance, and the courage to replace obsolete ideas and clichés, to reconsider the core values of a university and the role of higher learning in this century can steer universities towards a thriving future.

The persistence to believe that governance models from “the era of market triumphalism” are suitable for higher education lead towards dangerous paths for institutions, democracies and economies. Market oriented governance (and new public management) was promising a greater cost-efficiency and capacity to tackle perceived inefficiencies in higher education. Results are far from promises. For example, the US reached a trillion dollar in student debt, graduate unemployment increased to a rate of 14% and records show that over 280,000 university graduates work at minimum wage. Student debt, graduate unemployment and underemployment are common problems for systems of higher education across the world. New forms of managerialism embraced by institutions (or systems) of higher education are leading to short-sighted business solutions oriented towards immediate results, quick-fixes and dangerous arrangements for faculty and academic labour, which will further undermine the internal architecture of universities as institutions of higher learning. A recent article published by The New York Times succinctly presents the result of current models of governance in higher education in the US: “a society of haves and have-nots”.

For the uncertain future ahead institutions of postsecondary education have to consider with great care all resources, enhance and secure them for a very difficult journey. In the knowledge economy, human capital is one of the most important assets for institutions, economies and societies. For universities, values such as trust, collegiality, tolerance, empathy, compassion, civic responsibility, commitment for the unhindered and courageous search of truth stay as pillars of stability for considerable tests and challenges ahead. Moreover, these values build ‘esprit de corps’, loyalty and the belief of all individuals in the goals and efforts of the organisation. These values determine the future ahead of universities.

Creating educated minds is an extremely difficult task and the morale of the group – especially in times of uncertainty and perilous tests – change the future story for a university. Different in nature and role from any other business, higher education can have a more nuanced look at successful practices in business. A meaningful lesson for governance in postsecondary education resides in the importance placed by successful businesses on people’s skills, values, experience, talents and passions – and the courage to experiment and challenge status quo and widely accepted solutions. In the last decades, the business sector was arguably more perceptive and interested to build on the importance of human capital than higher education. Ironically, corporations learned and implemented in their own management models important lessons on creativity, knowledge generation and sustainability from traditional universities, while institutions of higher education were advised to uproot academic values to secure a fast change of the “ivory towers” into citadels of commercial excellence and vigorous competition. Business sector is different in practice from what many universities think that they follow. From startups to established businesses we see creative efforts to make valuable human capital more loyal, stable and happy in a vibrant and engaging organisational culture. For example, Zappos – a company with over a billion dollars in annual sales – recently adopted a new organisational structure based on “holacracy”, a non-hierarchical structure, with no job titles and no managers. Major corporations, such as Google, are famous for nurturing a flexible culture focused to keep members of their professional community engaged and happy to work together.

Policies adopted by many institutions of postsecondary education for their own human capital stay aligned with mythological promises of ‘market triumphalism”, but too often lead to rigid hierarchies and dysfunctional cultures. It seems that in the ubiquitous discourse about higher education as an institution which is instrumental in the creation of human capital, many academics, analysts and politicians miss the importance of human capital for universities. Across the world, higher education reports unprecedented percentages of academic staff on casual or limited term contracts: for example, in the United States over 75 percent of academic staff is currently on non-permanent contracts (in what is labelled as the "two-tier" employment system) and in Australia “higher education is already the country's second-most casualised industry, after catering” (ABC). The speed and extent of casualisation and glorification of precarious work arrangements for faculty hinders intellectual engagement, loyalty, destroys morale and undermine trust through fear and insecurity.

Some of the most important outcomes for higher education are measurable only in decades. This is a sector where quick fixes and tricks work only on a short term and mistakes come with great costs in time. This makes university governance a very different and nuanced business. Professionals committed to serve academic values, from academic freedom and openness, reason-based arguments and civic engagement, secure all forms of profitability for an institution of higher learning and knowledge generation. They ultimately serve the common good and determine the type of future we build for ourselves and for the future generations.

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January 28th, 2014 at 3:55pm
Bill Patterson
Your article is thorough and well-informed, Stephan.

The general public has no portal through which to see the profoundly dysfunctional administrative forces driving the lion's share of higher education in the direction of Clayton Christensen's recent prediction that "50% of universities will be bankrupt within 15 years."

Having spent the past 15 years in a large university, and after rising through the ranks from a faculty member to an administrator with a staff of 45, I was able to experience, first hand, how upper level grossly overpaid administers talked about a rich learning environment for students and faculty when, in fact, they were simply obfuscating the truth in order to line their very fat pockets/wallets at the taxpayers', students, and teaching faculty's peril.

Sadly, and adding many layers of additional dysfunction, nearly zero percent of these grossly overpaid upper tier administrators have ever had a single bit or byte of true business experience or training. Instead, they are an army of counter cultural exemplars of Laurence Peter's famous "Peter Principle," which essentially states that people rise to the level of their incompetence and there they flourish.

These are the spoilers of the future of higher education and they must be exposed and removed if meaningful change and organic growth is ever to be restored.
January 28th, 2014 at 4:01pm
Correction to my previous comment...
Paragraph 2, line 4 should read "overpaid administrators" not " overpaid administers."


January 29th, 2014 at 1:59pm
Stefan Popenici
Thanks Bill for comment!
Interesting to hear just now Obama's fifth State of the Union speech where he just said "It is time to do away with workplace policies that belong in a 'Mad Men' episode"...
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