Business divisions

If you want to be world class, you need a world-class scholar at the helm." This is the conclusion of University of Warwick research fellow Amanda Goodall's 2007 study into management and success in higher education.

But figures from the past three years appear to show a different reality in UK universities. The number of employees working in management, professional and administration roles who have backgrounds outside education has shot up, rising from just 19 per cent of non-academic professional staff in 2003-04 to 35 per cent in 2005-06. Intake from the private sector has also increased, rising from 9 per cent to 15 per cent of those staff over the same period.

Some of that change is down to the Government, which has pushed for more professionalisation. The Lambert review of 2003, commissioned by Gordon Brown when he was Chancellor, recommends that universities develop a code of governance and demonstrate good management in return for lighter touch regulation.

At the same time, higher education is being driven to become more businesslike in its management in response to student calls for demonstrable value for their tuition fees, the explosion of choice in higher education and the need to meet growing regulatory demands.

The professionalisation agenda has led to structural and, in turn, cultural change in most universities. Key decisions are now being taken at a higher level, by a smaller group of people. The changes have placed a premium on the expertise and skills of professional managers, be it in leadership, marketing or human resources, and this has moved them a few rungs up the status and salary ladders. This is seen by many as a challenge to the traditional position of academics at the top of the university hierarchy.

Helen Beebee, head of the department of philosophy at the University of Birmingham, says tensions between academics and managerial and professional staff are increasing because of a clash of priorities.

"Academics increasingly feel that their institutions' overriding concern is narrowly financial," Beebee says. "Of course, on the one hand, the books need to balance. A lot of the things we as academics want to do cost money, and we need to be sensitive to that. On the other hand, narrow financial concerns often seem to me to get in the way of the kinds of activity that universities should be promoting."

Rajani Naidoo, senior lecturer in the School of Management at the University of Bath, says changes are occurring in higher education. "It's happening very slowly, but it is discernable," she says.

If the experience of US universities is anything to go by, the trend towards a corporate culture in higher education looks set to continue. The average US university already spends roughly 10 per cent of its annual budget on marketing, with Ivy League institutions dedicating 20 per cent to the activity. The equivalent spend for UK universities is about 5 per cent, according to higher education marketing specialists.

Roger Brown, former vice-chancellor of Southampton Solent University and co-director of the Centre for Higher Education Research and Development at Liverpool Hope University, thinks that employment trends at UK institutions will soon reflect similar financial decisions.

"Harvard University is basically a multimillion-dollar business that has education as one of its areas. That is when it's gone too far. You end up with education being a sideshow, and the success is making money. It's a really easy trap to fall into. We have to keep market forces under control," he says.

"Overall, I don't think market pressures are good for higher education, but there is no doubt that in these more specialised areas you need people who have the relevant expertise."

His reservations are shared by many academics, who fear that the business agenda for higher education is squeezing out space for thought and damaging the unique ethos of the university workplace. "I think a lot of academics feel that external funding is increasingly being seen by their institutions as an end in itself, rather than a means for producing high-quality research," Beebee says.

"It creates all kinds of tensions within academic life," says Frank Furedi, professor of sociology at the University of Kent. He believes that academic administrators have lost confidence in themselves. "I'm not against professional administration, but I think that administrative and managerial practices are more useful when they are organic to the academic institution," he says.

"When you're dealing with everything from student progression and the quality of the courses that are being delivered, there is a sense in which outside managers will lack the sensitivity to be able to ensure that these procedures are appropriate."

Keith Ruddle, a fellow in leadership at the University of Oxford's Said Business School, says there are tensions between academe and management but successful institutions will be able to make the most of academic and managerial skills.

"Managerial bad news spreads fast: erosion of intellectual ethos and collegiality; academic staff bullied as piecework labourers subordinate to an expanding middle class of technocrats; gloomy academics withdraw to the common room bemoaning the new professionals and voting against change.

"But successful higher education institutions in the new world will survive, adapt and change by not succumbing to simplistic managerialism. The winners will be where academics and other professionals work together as a coalition of leadership. This means not one leader but many in what are large complex and diverse institutions."

Alan Ryan, warden of New College, Oxford, is less than enthusiastic about the benefits of hiring professionals from outside academe, and business in particular. "I have never understood why anyone thinks that business is likely to help universities. What advice it has to offer I find hard to guess."

Such reactions suggests a deep distrust of corporate-style management on the part of many academics. But is that really what professionalism means for universities?

A paper published by Christopher Hallas, academic registrar at University College London and a member of the Association of University Administrators, argues that "professionalisation" is the process of establishing academic administration as a recognised profession. Evidence that it is already happening comes in the form of the specific qualifications and membership of professional bodies specified in job advertisements. Where extra training is required, universities are supporting their staff to complete their studies.

"Professionalisation is the process whereby an occupation can be observed to have developed and, over time, acquired certain crucial characteristics that mark it as a profession," Hallas says in his report.

Efforts to train insiders rather than recruit outsiders may go some way towards restoring a balance of skills within universities and may allay academics' fears of a business takeover. To that end, the Leadership Foundation for Higher Education is working to improve management training.

Ewart Wooldridge, the foundation's chief executive, says: "We are certainly aware of this trend of increasing influx of professional and support leaders from other sectors. Human resources is a good case in point, and many of these external appointees bring valuable experience that enhances relationships with existing higher education colleagues. But we are concerned at what the new training and development needs might be.

"I think the sector will rightly resist the temptation to mimic private-sector management techniques. A key role of the Leadership Foundation is to help it carve out its own unique style, blending what works from other sectors and higher education."

But other forces are at work to increase the flow of external appointees into higher education management. Consultants are being hired to shake up departments and improve working practices. Often they are brought in by the very staff who, thanks to their private-sector backgrounds, are comfortable with using such services. This creates a vicious or a virtuous circle, depending on one's point of view.

Among these consultants are professional headhunters, who, by their very nature, encourage the employment of staff from outside higher education. Alex Acland, principal at Heidrick & Struggles, says that 75 per cent of the candidates he puts forward come from outside academe. Mr Acland says this is due in part to a lack of ambition from those within higher education.

Other consultants, such as PricewaterhouseCoopers, are working with a number of universities to help them identify their customers' needs and better address them.

Such projects, and the language used to describe them, set academic teeth on edge. But consultants are keen to stress that universities must know how to offer the very best to those they work with, be they staff, students or local businesses.

The professionalisation agenda has certainly done much to forge links between universities and local business communities. Such contacts have in turn helped universities find the skills their staff may be missing.

Gerald Bennett is pro vice-chancellor of the University of Wolverhampton, which has a very close relationship with small and medium-sized businesses in the Black Country. He prefers to think of professionalisation as a sharing of talents between the sectors. "We can't pretend that higher education has a monopoly on skilled and talented people," he says. "Some of (the businesses) can be very valuable to us. In the same way, our academic staff can be valuable to external businesses."

The University of East London is another institution pioneering new ways of working with local businesses. Its Knowledge Dock project provides business support to the local community and to student start-ups. Rob Moss, director of Knowledge Dock, came to the university from the private sector to set it up. His immediate team is comprised almost solely of private-sector management and business experts. He says: "What I brought to the table was an understanding of how to talk to businesses and how to engage with them."

More controversially, Moss believes that formal links with business can help academics become more professional and better teachers. "You can tell those lecturers who are involved in consultancy work because the value you get from the lectures is much higher," he says. And those who aren't? "Their teaching style turns stale, and that shows," he says.

The Association of University Administrators is equivocal. Bruce Nelson, its chairman, says: "It would be wrong to assume that existing staff don't have business expertise or the ability to manage their institutions in a competitive environment.

"I think there are advantages and disadvantages in external appointments. Some of these staff adapt quickly to different cultures in higher education and bring real benefits to the sector, perhaps particularly in new thinking and in adapting systems and processes from the commercial sector.

"Others find it difficult to adapt to the fact that the academic community continues to value consensus in decision-making, including areas where institutions are behaving more like businesses."

Perhaps so, but the figures show that every year higher education institutions move further away from Goodall's ideal of a sector led by academics largely for academics towards a more business-like model run by management professionals. And academic fears continue to grow apace.

Malcolm Keight, head of higher education at the University and College Union, believes that professionalisation risks altering the ethos of the sector. "The role of management in a university is to provide the right environment to encourage academics and ensure that they can undertake their teaching and research. It's not one that says the university has x, y or z objectives, and if you're not doing that you're out. Universities are the sum of the work of academics."

Even so, many - including Keight - are realists and can see the benefits of more staff from the private sector, especially when it comes to harnessing the talents of finance directors and accountants to make the most of the money available for higher education. "That's not a bad development," he concedes.

Rosie Simmons, human resources business partner at City University London, could not agree more. She applauds higher education's openness to new possibilities. She joined City in February 2007, having worked across the private and public sector, most recently with Transport for London.

"We're choosing to move to a more business-like approach," she says. "I think it's something that's really important. There is a lot more competition and more commercial and financial pressures. We are having to look at new markets and new approaches. I think there is a lot more openness to bringing in external experts."

As with any process of change, much depends on the way things are handled, and here the experience of the National Health Service provides valuable lessons for higher education. The NHS is between ten and 15 years ahead of higher education on the professionalisation agenda, and the rapid pace of change has created tensions between managerial and clinical staff.

Sian Thomas, deputy director of NHS Employers (the strategic human resources branch of the heath service), says one of the key issues is to avoid crude management-speak, which she says can "turn people off".

But perhaps the most important point is to make sure that managers understand and buy into the culture of higher education at the outset. When NHS management priorities drifted away from those of the clinical staff, the professionalisation agenda began to unravel, Thomas admits. Financial concerns started to come before patient safety, and clinicians could not understand why changes were being made.

"In healthcare, that's not why people join. They want to do the best they can for patients," she says. "Now when we recruit, one of the things we look for is a commitment to the values of the NHS. You have to make sure that managers completely understand the unique culture of the organisation - especially new and outside appointments - and fit in with that culture."

The professionalisation of higher education management will continue, of that there is little doubt. But it is the way that universities manage the changes that will define the models best suited to the unique environment of higher education and so determine institutional success or failure.

When new blood is needed and the price of failure is high, headhunters come to the fore

The price that universities are willing to pay a headhunting firm to find the right vice-chancellor could cover the annual salaries of two lecturers. It can cost about £60,000 - and that excludes the cost of any advertising - to hire a headhunter to find a vice-chancellor. To find candidates for other executive posts, such as a director of finance, a university could pay a headhunter £20,000 to £40,000.

But despite the expense, universities are increasingly turning to headhunters who will scour not only the pool of talent in academe but also suitable candidates in the public and private sectors.

And it is not only vice-chancellors and senior managers they are hired to find. Search and selection companies report that universities increasingly employ them to find people to fill positions lower down the pecking order, such as deans, heads of department or professors.

In the past two years, the headhunter Odgers Ray & Berndtson has seen a 200 per cent increase in the number of approaches it has had from universities.

The Leadership Foundation for Higher Education says that the headhunters with whom it works tell a similar story.

"They are being asked to recruit for academic posts, which they had not been asked to look at in previous decades," says Robin Middlehurst, the foundation's director of strategy, research and international. She says the attraction of headhunting is that it can open up an institution to new networks, including international staff and those working in other sectors.

Alun Parry, business director of Veredus, has also noted a rapid growth in the number of higher education clients. He says the increasing range of jobs he is asked to fill reflects a change in the way universities are organised and the growth of the sector.

"The important posts have traditionally been in the senior management team, but with a developing university sector you're seeing more and more critical posts being in the faculty," he says.

The pressure on universities to make the right appointments is immense. Getting the wrong vice-chancellor or finance director can have long-term implications for the business strategy and future success of a university.

In short, in an increasingly competitive market the wrong boss can cost a university millions. Against this, say headhunters, fees of £60,000 are comparable to the sums that private-sector companies pay out to recruit senior executives.

Although many universities continue to use academic networks for recruitment, the pressure to secure the right candidate has led to universities casting their nets outside the higher education talent pool to the wider public and the private sector.

Since 2005, a third of the candidates placed in higher education institutions by Veredus have come from outside the sector.

Parry's work has generated anecdotal evidence suggesting that, where a human resources director with a background outside higher education is employed, a university is more likely to be making use of headhunters in its recruitment process. Psychometric testing and other techniques favoured by the private sector are also more likely to be under consideration.

Karen Heaton worked in the private and public sectors before taking up the post of human resources director at the University of Manchester a year ago. The institution still uses traditional networking and face-to-face meetings to recruit academic staff, although it has used headhunters in the past. But because of her career history Heaton favours newer recruitment methods.

"You can't ignore any option open to you if you want to dip into the best pool of talent available," she says. "We hope to employ the best people we possibly can."

Higher education's appetite for search and recruitment services means there is new money to be made.

Alex Acland, principal at Heidrick & Struggles, another agency working closely with universities, says that since higher education began showing an interest in the potential benefits of headhunting there has been a sharp rise in the number of firms becoming active in the sector.

Universities have seen the method deliver results at vice-chancellor level and are eager to try it out further down the ranks.

"We have done a number of senior professorial appointments, usually where a client has failed (to appoint)," Acland says.

He believes headhunters have the potential to play a positive role in shaping universities and driving the diversity agenda in recruitment. "We definitely bring new blood into the system. It shakes the sector up a bit."

The University and College Union is yet to be convinced. Sally Hunt, its general secretary, is sceptical about the value headhunters offer to higher education. She believes their use hides deeper problems within an university.

"Institutions considering calling on the services of headhunters might be better off first looking internally and questioning why the right calibre of applicant is not applying," she says.

"Are the pay and conditions attractive enough? Does the university have a good record of treating its staff well? Are there clear development opportunities for staff?"

But some headhunters think that higher education is still missing a trick and that a more business-like approach to recruitment would benefit the sector by bringing in fresh talent.

Shahidul Miah, who leads on education for the agency Rockpools, says: "This is one of the few areas of the public sector where the old boys' network is still in use. There isn't an open or transparent recruitment practice. They tend to use the very traditional old-style top recruitment agencies.

"I think (universities) don't realise that there is another world out there. It's the same people moving up through the organisations - that's how the sector works. I think they do need some educating on how other parts of the public sector have developed."

Rockpools is undoubtedly keen to take advantage of the emerging market in higher education. It is looking first to work with post-92 universities, which Miah also describes broadly as "more open" to business strategy.

But if headhunters offer universities a chance to inject new blood and talent, why are so many still so hesitant to take up their services? Miah thinks the answer is simple: "Academic snobbery," he says.