Stefano DiDonato, School of Business Peer Advisor, Fall 2014

Hello! My name is Stefano DiDonato. I am currently a senior at USM pursuing a double major in general business management and marketing. I have lived in Maine my entire life and currently live in Gorham, where I graduated high school in 2011. I am also a new peer advisor interested in spreading what knowledge and insights I have learned in my past few years here to fellow students.

College can be tough, and even more so when trying to graduate all on your own. In my first couple years at USM there were countless questions I had about certain things that I just didn’t know where to go to get answered. I knew advisors were a great resource for information, but came to find that in certain situations a peer advisor was great! For instance, if I had a question about a certain class, a peer advisor who had taken the same course could answer that question better because they understand the situation on a more personal level.

Having the ability to give students the option to walk in and get questions answered in my mind would be a great resource for students to use. Some questions that students have might not seem like significant or important questions. Those questions tend to be the ones that go unanswered because people may not feel those questions deserve an entire meeting with their advisor in order to get them answered. Being able to walk in and ask questions on your own accord seems like an easy way to get the answers you’re looking for, no matter the importance.

Looking back on my past few years here, my biggest regret was easily not asking questions because I didn’t feel they were important enough to warrant an advising session or meeting. This is one of the major reasons I decided to become a peer advisor. Had I gotten answers to a lot of my questions I would most likely have gotten more involved on campus, and might have improved my overall experience.


The strategic challenges to mid-range universities

Recently, someone forwarded an email to me from an organization called StraighterLine.  I’d never heard of it, but it turned out to be a company that offers online college courses in two packages:

  • “Freshman Year for $1,299,” where students can take up to ten online courses for $1,299.
  • A “subscription” approach for $99 per month plus $49 for each course.

That a for-profit institution of higher education would offer rock-bottom pricing for online courses was not, in itself, surprising.  What was surprising was that forty institutions of higher education have already signed up to accept StraighterLine courses for credit, and up to 1,800 members of the American Council on Education (ACE), using its credit recommendation service ACE CREDIT, could consider 55 StraighterLine courses for credit.

The “ecosystem” around StraighterLine shows that it’s not just Massively Open Online Courses (MOOCs) that USM (and institutions like it) have to worry about.  It also has to worry about the rock-bottom priced, online course mills.

We could argue the niceties of how valuable those courses are as learning experiences, and many faculty members at mid-range universities have done so.  However, if the “job to be done” (an element of the Customer Value Proposition [CVP] element of business models; see my previous blog) is to get a degree, many people out there won’t bother, and aren’t bothering, with the nuances.

USM and institutions like it have to show that their CVPs are different and rewarding enough to be worth the premium price.  (It’s hard to think of USM as “premium priced,” but compared to the StraighterLines of the world, it is.)  Large public and private universities, and elite liberal arts colleges, have succeeded in showing their value, and they command the admissions rates and tuition rates to prove it.  However, it’ll be tougher for the USM’s of the world to do that.  Moreover, part of the answer may be a larger amount and selection of online courses, but that’s only part of it.  What is the full answer?  Nobody seems to know….


Running a university like a business

Theodora Kalikow, the president of the University of Southern Maine (USM), recently posted what she called a “rant” titled “A Business Model?”  In the rant, she responded to criticisms some USM faculty had voiced about how she “ran the university like a business.”  She said she was trying to “run the university like a university.”  This got me to thinking—does USM really run like a business?  Does it really have a business model?

Any business model needs four components:

1.  Customer Value Proposition. This solves an important problem or fulfills an important need for the target customer.  Clayton Christensen at Harvard Business School says that part of a Customer Value Proposition is the “job to be done” for the customer.

This is where I think USM has begun to fall short, but so have many other mid-range traditional universities.  The elite private colleges and universities and the flagship public institutions still have a clear “job to be done,” which is some combination of education aimed at helping highly able students to mature and of doing high-level research and scholarship.  Such institutions will always have this kind of role to play, and they have suffered little in the way of student applications, admissions and private and public funding.  

However, what is the “job to be done” by mid-range universities like USM?  They tend not to contribute to the maturation of highly able students, and they tend not to have large research portfolios.  So how do they add value?  The answer is far from clear. 

2.  Profit Formula.  I don’t care how “pure” you want your organization to be, if it does not have the cash flow to continue operating, it will close down.  A Profit Formula boils down to having gross profit margins sufficient to maintain, or even grow, operations.

USM is (and institutions like it are) not doing well here, either.  For example, USM’s faculties in various professional fields (education, engineering, business, nursing, social work and public policy, to name a few) hold national or international accreditations, which are expensive to get and to maintain, even though they result in robust enrollments.  However, the University of Maine system has frozen tuition and fees, yet accreditation and other costs are high, and rising.  It’s basic arithmetic—gross margins are insufficient.

3.  Resources needed to deliver the customer value proposition profitably.  These might include people, technology, services, equipment, information, channels, alliances, and brand. 

One distinctive problem universities (including USM) have is “resource rigidity.” This is when resources are too specialized and it’s difficult to deploy them for new purposes.  Tenured faculty members, for all their virtues, are a good example.  They tend to be specialized and difficult to deploy in ways not commensurate with their disciplinary training.  You can’t have an English professor teach Accounting, and the reverse might be even less pretty. 

To make matters worse, rigid resources that are around for 30-40 years (aka tenured) make it difficult to be flexible in response to market trends.  If the market says you need a larger number of Information Systems (IS) faculty and fewer German faculty, and the only way to pay for the IS faculty is to lay off the tenured German faculty, you are probably at an impasse. 

Elite and well-funded private and public institutions get around this problem by adding faculty in new fields, when needed, and losing the less-demanded faculty by attrition.  Those kinds of institutions have enough “slack” that they can live with the resulting inefficiency; even mid-range universities use to be able to do that, but no longer can.

4.  Processes, to coordinate the resources in ways that meet the customer value proposition and bring in the necessary cash flow.  

USM, like many public universities, is very bureaucratic and its processes tend to promote the status quo, not innovation.  The tenure system contributes to this.  So do accreditation, prescribed curricula, and lack of pedagogical adventurousness.

Bureaucracy was not a problem when the education market was robust and consumers of higher education had fewer choices.  It is a problem now.  Most of the new rivals in higher education, the for-profit institutions, have less bureaucratic baggage and less resource rigidity.  They also tend to have lower costs, the savings from which they pour into better customer service along with schedules and pedagogy that are more convenient.

Pres. Kalikow is correct—running a university like a university requires a good business model, even if some people don’t like the term.  The question is, does USM have an acceptable one?  I would say that the answer is unclear, but not encouraging.


Government spending: Cuts vs. Tax Increases? Research shows that cuts stimulate the economy more effectively than tax-and-spend

Former Congressman Barney Frank has a new occasional column in the Maine Sunday Telegram.  In his initial column on March 17, 2013, (“Government spending can create jobs”), Mr. Frank ironically said, “…Persistence by the right in contradiction of the evidence reflects the difficulty of settling policy debates. Outside of a controlled experiment, it is hard to isolate the impact of any one action from the multiple factors affecting outcomes.”

The irony is that economists have been working on the very task of “isolating the impact” of multiple policy approaches.  As Mr. Frank says, we must look at the resulting evidence.  However, the findings are inconveniently counter to his argument.

In “The Design of Fiscal Adjustments,” (Working Paper 18423 of the National Bureau of Economic Research; available on the Bureau’s website), Alberto Alesina and Silvia Ardagna, both of the Economics Department at Harvard, examined over fifty instances of various spending cuts and tax increases in 17 OECD countries between 1978 and 2009.  Their objective was to examine this mix of policies to see what worked.

Their findings?  Cuts in government spending tended to create either economic growth or, at worst, mild recessions.  On the other hand, tax increases tended to create “prolonged and deep recessions.”

Therefore, if Mr. Frank truly believes in using evidence to inform policy decisions, as I do, he’ll have to change his interpretation on the central point of his first column.  in the case of government spending cuts vs. increases in government spending, the findings run counter to his argument.


Grades Gone Wild: Revealing the Relationship Between Grades and Student Evaluations of Teaching

BY Bert Smoluk, Ph.D.

Imagine that you are part of a large sales force and the guy three doors down the hall just won the annual salesmanship award for the third time. Customer satisfaction surveys show that his customers love him, he takes excellent care of their needs, and unit sales are phenomenal. This salesman is due for another hefty raise.

The rest of the sales force, and you, agree that this guy has sales talent and an increase in salary is appropriate. Soon after the award you are having lunch with a customer of the salesman who outperformed everybody. This customer tells you that she gets all her products from this great salesman at little or no cost! After choking on your ham sandwich, you regain your composure and find out from the customer that she is not the only one receiving free goods. Most of the customers of this salesman receive free goods.

Soon after lunch, you investigate this issue with the accounting department of your company. It turns out that the accounting department is antiquated and simply does not have a clear record of the star salesman’s revenue. The only thing the accounting department knows is that the salesman oversaw the shipments to customers for hundreds of units. After an intensive investigation and digging it is revealed that this salesman has almost no sales revenue! He has been giving away the store for years.

Sounds too bizarre to be true? Surely it can’t happen in your organization. As strange as this story sounds, this type of behavior is common place in academia. The goods given away are grades, to be more precise, high grades, and there is no accounting department. It does not exist!

This blog is about why there should be an accounting of the relationship between student evaluation of teachers (SETs) and the grades awarded by instructors. My argument is that without such an accounting instructors will give higher grades in return for higher SETs.  The research supporting my argument is based on the literatures from economics, psychology, ethics, and education. Economists come into the picture because there are financial benefits, with no apparent costs to both parties involved: students can translate higher grades into higher salaries and professors can translate higher SETs into higher salaries. Psychologists are interested in the field because there are some subtle, yet powerful, dynamic interactions going on in the classroom between students and teachers that depends on the situation and the motives of the parties involved. Moral philosophers are interested because there are ethical questions about the possible quid pro quo behavior of teachers inflating grades and students, in return, giving favorable SETs.   Educators are interested because they want to know how to become more effective teachers. They recognize that some faculty may be inflating grades because they are under pressure to demonstrate their teaching skills, see Matos-Diaz and Ragan (2010). Educators are also concerned about the dysfunctional behavior, such as low expectations on the part of the instructor, caused by heavy reliance on SETs as discussed in Crumbley, Flinn, Reichelt (2010). While this entire blog is about education, the following discussion focuses on areas of economics, psychology, and ethics.

Economics

It does not take much imagination to realize that higher grades can translate into higher expected income for the students upon graduation. Many prospective employers require a minimum GPA (grade point average) just to be eligible for the first job interview. A GPA sends signals to prospective employers about an individual’s motivation and potential job performance. Thus, not only are higher wages more likely with inflated GPAs, but job search costs including the opportunity cost of transitional unemployment, are reduced. Many employers expect to find a recent college graduate’s GPA listed high on their resume along with their major and alma mater as it represents crucial information in assessing an individual’s capabilities for many jobs. Employers often request transcripts that list every course taken and grade received by a job applicant.

While it is obvious to any causal observer that higher grades will help open doors and benefit students, the subject gets more interesting fast. According to Babcock (2009), higher grades translate into reduced learning as students spend less time studying. His research shows that the average study time in a course in which the average expected grade is an “A” is approximately 50% lower than a course taught by the same instructor in which the average grade expected was a “C”. Students, often juggling many classes and responsibilities, are pressed for time. As a result they are attempting to balance the marginal cost of time spent studying in a course verses the marginal benefit of the expected course grade. Courses with inflated grades disrupt this balancing act and causes students to focus their efforts on other courses where the marginal benefit gained from studying is higher.

Thus, it is not hard to see from an economic perspective that higher grades can lead to higher SETs as students reward instructors for higher expected future pay, reduced work load, less stress, and more time saved.

Psychology

Even if we ignore the economics of the situation, why would students reward teachers who give higher expected grades? After all, teaching evaluations are supposed to measure the quality of instruction and the ability of the teacher to communicate effectively difficult subject matter. Students’ opinions on teaching are supposed to be unbiased of any quid pro quo relationships. This is where psychologists enter the picture.

The empirical work of Matos-Diaz and Ragan (2010) shows that teachers with lower variances in their grade distributions obtain higher SETs. They reason that grade inflation compresses the grade distribution of the class (towards “A”s) and thereby lowers the uncertainty about a student’s expected grade. Students, like most people, are risk averse, they prefer less uncertainty in their life. In fact, there is a long line of research in behavioral finance that shows individuals prefer early resolution to uncertainty rather than later resolution. In the subject at hand, this means students prefer teachers who are known to give inflated grades. Students find comfort early on in the semester knowing they face less grade risk in an inflated course compared to a course where grades are more normally distributed and the final outcome is less certain. Thus, students reward instructors who make their lives easier and more comfortable.

Ethics

Ethical issues abound in the study of grade inflation and SETs. Crumbley, Flinn, and Reichelt (2010), for example, state that emphasis on SETs by universities has led to unethical behavior on the part of professors who inflate grades and deflate course work to gain favorable teaching evaluations.  Such unethical behavior, they claim, is akin to executives “cooking the books” through inflated earnings. Still others argue that grade inflation unfairly favors students who actually underperform in a course relative to those who exhibited strong perform. In other words, better performing students are devalued with grade inflation and underperforming students are over-valued.

Some Final Thoughts

Educators know that employers look closely at a job candidate’s grades. Grades are supposed to reflect student performance in a course. If the course is taught at a reasonably challenging level, as many employers expect, some resemblance to a bell curve distribution of grades should result. This distribution comes about because students come into the class with varying skill sets, motivations, and interest. Most of all, effort towards the course may vary significantly. Employers rely on the university and its professors for an honest assessment of a student’s performance. Grade inflation undermines the integrity of the institution.

There are several ways to combat grade inflation. One is to adapt a transparency approach that publishes the grade distribution of each course taught at the institution. Examples are readily found on the web, see for instance, The University of Wisconsin and Texas A & M University websites, http://registrar.wisc.edu/course_grade_distributions.htm and http://registrar.tamu.edu/facultystaff/report/default.aspx, respectively. A second approach is to develop targeted grade distributions before a course begins. A third approach is to reduce the emphasis on SETs in evaluating instructor performance. A detailed discussion of these remedies, like nearly all of the issues addressed here, could easily be the focus of another blog.

Empirical studies that compare SETs to grades are notoriously plagued with data problems, making inference about SETs and grades very difficult. Across classes, there are vast differences in student ability and student experiences in past and contemporaneously course work load, and differences in the expected grades in other classes taken in the past and concurrently. SETs are also known to vary depending on class size (Bedard and Kuhn (2008), required verses elective courses, and the quantitative requirements of the course. Controlling for these attributes is difficult.

Nearly all the research I reviewed for this blog recognizes that grade inflation is systemic in the United States. Some authors, Babcock (2009) for instance, recognize that an alternative to the negative interpretation of grade inflation is that students are better prepared. Not surprising, many of these same authors find this alternative explanation lacking substance, since most generally accepted standardized aptitude tests show no such improvement.

References

Babcock, Philip, 2009, “Real Costs of Nominal Grade Inflation? New Evidence from Student Course Evaluations,” Economic Inquiry, Vol. 48, (4), 983-996.

Bedard, Kelly and Peter Kuhn, 2008, “Where Class Size Matters: Class Size and Student ratings of Instructor Effectiveness,” Economics of Education Review, 27 (3), 253-65.

Crumbley, Donald Larry and Ronald E. Finn, 2010, “What is Ethical About Grade Inflation and Coursework Deflation,” Journal of Academic Ethics, 8, 187-197.

Darby, Jenny, 2006, “The Effects of the Elective or Required Status of Courses on Student Evaluations,” Journal of Vocational Education and Training, 58 (1), 19-29.

Matos-Diaz, Horacio, and James F. Ragan, 2010, “Do Student Evaluations of Teaching Depend on the Distribution of Expected Grade?,” Education Economics, 18, (3), 317-330.

Dr. Smoluk is Associate Professor of Finance in the School of Business at the University of Southern Maine.
(NOTE: John Voyer posted this entry on behalf of Prof. Smoluk)


Celebrity Apprentice Week 15: C’est fini!

Well, folks, it’s all over and Arsenio Hall won. I think it could have gone either way — Clay Aiken was a worthy rival. They were also friends on the show, so performing a duet towards the end seemed fitting. I think Arsenio’s ad was better (can you miss with Magic Johnson), and the variety shows I thought were a draw — which do you like more, music or comedy? In the end, Arsenio probably won because he was undefeated as PM.

Take-aways from the whole thing? Acknowledge your peers, play nice, stand your ground when you need to. For the most part, these guys did that. I remember being very impressed with Clay when he had Dayana brainstorming on a project, and how deftly he deflected her ideas — which no one understood, and apparently she didn’t either. Arsenio stood his ground with Aubrey — working with a bulldozer is not easy. Arsenio acknowledged his peers last night, especially in his response to “Is Lisa [Lampanelli] hot?” (Brains are just as important!)

Celebrity Apprentice is slated to run next January. I think I’ll pass…could be a great show if 1) it were just an hour and 2) the Donald decides to become more personally invested in it.If he brings back the original concept of the show with real contestants, I’d be game for that — more real world business projects, anyone?

Have a great summer — Ice Road Truckers starts June 3rd!


Celebrity Apprentice Week 14

This is part one of the two part finale. Clay Aiken and Arsenio Hall are the finalists — good choices! They are tasked with a big fundraising event for their respective charities: the National Inclusion Project for Clay, and the Magi Johnson Foundation for Arsenio. The task includes: filming a commercial for the charity, and a social event featuring a variety show, and of course fundraising. 

Clay and Arsenio first got to choose which former contestants they wanted on their teams. Clay was looking for music talent and Arsenio for comedy. Aubrey O’Day was picked last — Arsenio didn’t pick her because he said he wanted his last task to be more relaxing! 

For these big projects, the  key is delegation and time management. Clay’s team spent WAAYYYY too much time looking for an outdoor location for their commercial. I guess grassy spots in NYC are hard to find? What about Central Park??? Clay also had his hands full with Aubrey (“let’s paint all the walls in our event space”) to Debbie Gibson (“I have a friend who will paint a mural”). I think Clay was well within his bounds to axe the first suggestion and to demand to see a sketch of the mural rather than just “trust” it would get done. Case in point: Arsenio entrusted Adam Carolla to arrange for some footage of Magic Johnson to be shot (Johnson was on the west coast). Seems that Adam’s video crew was not very experienced and the footage they got was of Johnson speaking to the camera — but from the SIDE, so all you see is him in profile. the fundraising part seemed pretty spotty in both camps as well.

Of course this is TV so you have to leave both teams in cliffhanger positions with rime running out! See you next week for the finale recap and any lessons learned!


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