Trustees | Trusteeship

Millions paid to find university talent

Critics say trend to pay search firms is expensive, unnecessary.
DAYTON DAILY NEWS   |  January 17, 2016 by Lance Lambert

Miami University paid a search firm more than $130,000 to conduct a nationwide search for a new provost, the second-highest-ranking position on campus.

But about six months after the search began, Miami introduced Phyllis Callahan as its new provost in 2014. She was an internal candidate who was known to the university’s trustees because she served as Dean of the College of Arts and Science. Ohio colleges and universities regularly contract with search firms, paying millions to identify worthy job-seekers — and paying full price even if their own people are promoted. Contracts collected by this newspaper through public records requests showed that 11 of the state’s 14 public universities collectively paid at least $15.5 million to these firms since 2005.

Three universities didn’t turn over public records and a few institutions — including Ohio State University — said they could not provide all data requested, leading one higher education researcher to put the schools’ actual tab in excess of $20 million.

Colleges and universities are increasingly turning to search firms to conduct job hunts for presidents, provosts, deans and vice presidents. Some use them to help hire coaches, although many schools use private money raised through foundations to fill those high-profile positions.Search firms post positions and vet candidates. But some officials said they are skeptical of whether it’s necessary to spend millions while the issues of college affordability and student debt routinely make national headlines.

“Ohio’s large institutions spend a fair amount of money (on these firms) — somebody has to pay that,” said James Finkelstein, a public policy professor at George Mason University who specializes in higher education search firms. “And that somebody is probably the taxpayers and students.”

OSU: Close to $4M

According to this newspaper’s analysis, Ohio State has spent $3,872,993 on search firms since 2005 — the most of any university in Ohio. However, that total likely is much higher, given that OSU provided data for only three years.

Other totals include $2.6 million spent by the University of Cincinnati, $2.5 million by Ohio University, $2.1 million by Miami, and $1.2 million by Wright State University.

The most expensive single search in the state occurred in 2014, when Ohio State paid a firm $488,917 to find its CEO for the OSU Wexner Medical Center. Dr. Sheldon Retchin, who worked in a similar capacity at Virginia Commonwealth University, got the job.

Several institutions have spent more than six figures for dean searches. UC paid two firms $118,834 to find a dean for its law school in 2014.

Finkelstein says he’s troubled that search firms have become customary without any research showing that these firms produce positive results.

Area universities say these firms are crucial.

“In order to recruit the very best leaders, Miami University follows the almost universal higher education practice of using search firms to assist in its nationwide efforts to fill senior leadership positions,” Ted Pickerill, secretary to the Miami University Board of Trustees, wrote in an email to this newspaper.

“Search firms provide resources and contacts nationally (and in some cases even internationally) to recruit the best-qualified individuals. As a nationally ranked university, it has been a long-standing policy of Miami’s Trustees to use a search firm to assist in searches for the president, vice presidents and deans.”

A Miami official who served on the university’s commission that oversaw the search for its provost agrees that hiring a search firm is a necessity. That way, the official said, a committee can do a fair search and discover quality candidates — even if the school ends up opting for an internal candidate.

Search firms say they specialize in finding top talent and bring a vast network that universities can’t match if they were to conduct their own search. Others don’t see it that way.

“I would honestly rather see them (search firms) go away. Contrary to popular belief, a university can do a search without a firm,” said Cathy Wagner, an English professor at Miami who has participated on search committees. “I think Miami is an excellent job, and wouldn’t have any trouble recruiting top candidates.”

Behind the curtain

Typically when a candidate applies at a public institution in Ohio, those applications become a public record. But by using a private search firm, universities are able to keep that information out of the public eye. Higher education experts say that’s by design.

Andraea Douglass, senior vice president for talent, culture and human resources at Ohio State, said search firms help to attract candidates who might not want their current institution to know about their application.

“I can tell you quite frankly that we have had people pull out of searches if they thought their names were going to be released,” she said. “One of the things I appreciate about search firms is that they can target people who aren’t looking for a position. The downside with that is that they go after people who don’t really want to leave but want to talk. Those are the people you want.

“People who are very confident and capable, and so those are the people who typically pull their name off and say, ‘Look, I wasn’t looking, you came to me, I told you I’d talk, and now I don’t want to talk anymore because I don’t want my university to know that I’m interested in leaving, because I’m really not.’ ”

The University of Cincinnati wouldn’t acknowledge whether a private firm’s secrecy helps attract applicants, but it did say that these firms increase the applicant pool.

“Search firms are able to encourage candidates who may not normally apply for a position to do so … via outreach to the best in their respective fields,” Tamie Grunow, UC’s chief human resource officer, wrote in an email. “Oftentimes, a search firm encourages those who may be well qualified but happy in current roles to take a look at a new opportunity and thus, widen the pool.”

Wagner doesn’t buy it. She says in the past Miami had a candidate for a dean position who was publicly open about the search and “didn’t seem worried.”

“It (applying to a public search) lets the university know that you’re a desirable candidate who could go elsewhere,” she added.

Wright State University officials refused to be interviewed for this story. In addition, the university didn’t provide the contracts requested by this newspaper, despite having more than six months to fill the records request.

Inside search firms

Some critics of the practice of hiring search firms reason that universities should conduct their own searches. In 2014, Clara Lovett, former president at Northern Arizona University, wrote a column for the American Council of Trustees and Alumni arguing that trustees were giving up too much power to outside firms.

“Certainly we should ask why searches cost so much, why presidential candidates are predictably recycled, why briefs and job descriptions seldom match the rich diversity of institutions and missions in American higher education,” she wrote.

“The deeper issue we need to examine is why over the past 30 years college and university trustees de facto have delegated to search firms their most important responsibility, the choice of women and men who will lead and manage their institutions.”

The search firm Heidrick & Struggles has been hired by several Ohio universities, including seven searches for UC between 2009 and 2012, resulting in payments of $507,073.

“Higher education institutions increasingly are using search firms, because of the increasing complexities, particularity at the president and chancellor role,” said Ellen Landers, a lawyer at Heidrick & Struggles, one of the five largest higher education search firms.

Landers said because of the importance of university leaders, there is little room for error with these hires. That is why universities are turning to firms, she said.

According to documents reviewed by this newspaper, search firms typically charge a fee equivalent to one-third of the hire’s first-year salary. Additionally, search firms bill universities for other costs, including administrative costs and for reimbursement for purchases such as advertising and travel.

Once an applicant applies, Landers said, the firm looks through their criminal and professional backgrounds. These findings, in addition to the search firm’s thoughts about a candidate, are presented to the university, which ultimately has the final say.

However, not everyone believes search firms always do a thorough job, and sometimes past transgressions are missed.

“It is not unusual for us to discover after a hire has been made (that) something that could have been found through a Google search (was overlooked),” said John McNay, president of the American Association of University Professors’ Ohio Conference.

Driving up costs

Search firm contracts show that universities use varying approaches to do business. Yet for the vast majority, contracts are signed on search firm letterhead — something, Finkelstein says, that might mean universities are agreeing to contracts that favor the search firm’s concern above the institution’s.

Finkelstein says some of these contracts could put universities at risk. For instance, most do not include a “poaching” clause. That would prevent a search firm from re-recruiting a candidate it helped place. Doing so, he says, could be financially beneficial for the firm, because the university might rehire the firm to replace the person it “poached.”

In addition, Finkelstein points out that search firms have an interest in growing the salaries of top administrators, given that their fees are based on the salaries of people they’re trying to recruit.

While looking over some of the Ohio contracts, Finkelstein noted that Ohio State inserted provisions into several of its contracts that would protect the institution and limit certain fees.

“That suggests someone was paying close attention — a good thing,” he said.

In 2012, former Illinois Gov. Pat Quinn signed legislation limiting the use of search firms by the state’s public universities. The law prohibits institutions from hiring search firms, aside from recruiting a president or when the board can demonstrate the need for an outside firm.

Aside from the Illinois bill, search firms haven’t received much scrutiny.

Rep. Mike Duffey, R-Worthington, the chair of the Ohio House Finance Subcommittee on Higher Education, says after seeing some of this newspaper’s research he would like the legislature to look into how search firms are used by public colleges.

“Compared to the universities’ budgets it’s a relatively small amount of money, so it wouldn’t move the needle a lot,” Duffey said. “But if nothing else, we might want to establish a (criteria for) best practices.”


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