Thursday, March 22, 2012

The Cost of "Top Talent"

 Part III

On March 6 President Kaler told state legislators that the current compensation of senior administrators is necessary "in a highly competitive global market for top talent."  See The Cost of "Top Talent"

Malcolm Gladwell is the author of The Tipping Point, Blink, and The Outliers.  Here are excerpts from his July 22, 2002 essay in The New Yorker entitled: The Talent Myth

This "talent mind-set" is the new orthodoxy of American management.  It is the intellectual justification for why such a high premium is placed on degrees from first-tier business schools and why the compensation packages for top executives have become so lavish.  In the modern corporation the system is considered only as strong as its stars, and in the past few years this message has been preached by consultants and management gurus all over the world.  None, however, have spread the word quite so ardently as McKinsey [consulting company] and, of all its clients, one firm took the talent mind-set closest to heart.  It was a company where McKinsey conducted twenty separate projects, where McKinsey's billings topped $10 million a year, where a McKinsey director regularly attended board meetings, and where the CEO himself was a former McKinsey partner.  The company, of course, was Enron. . . .
The broader failing of McKinsey and its acolytes at Enron is their assumption that an organization's intelligence is simply a function of the intelligence of its employees.  They believe in stars because they don't believe in systems.  In a way that's understandable because our lives are so obviously enriched by individual brilliance.  Groups don't write great novels, and a committee didn't come up with the theory of relativity.  But companies work by different rules.  They don't just create; they execute and compete and coordinate the efforts of many different people, and the organizations that are most successful at that task are the ones where the system is the star. . . .
The talent myth assumes that people make organizations smart.  More often than not, it's the other way around.
The Talent Myth reprinted in What The Dog Saw (New York:  Little, Brown & Co. 2009) (emphasis added).   

Now we have seen the emergence of the modern corporate university.  The leaders of our non-profit institutions of higher education proclaim superior talent as the intellectual justification for lavish compensation.
These senior administrators all pursue the elusive goals of higher rankings and lucrative returns on their multi-billion dollar investments in research to be obtained by "technology transfer."  When state legislatures fail to provide sufficient funds, the leaders finance their grandiose plans with skyrocketing tuition.  Easy credit in the form of student loans sucks students and their parents into the gathering financial storm.
Yet the senior administrators are by now so far removed from the economic lives of students and their parents that they are oblivious to the economic hardship imposed by the skyrocketing tuition.  So they continue to use the financial resources of the university to enrich themselves with extravagant annual compensation, "transitional" compensation, and golden parachutes.  This misuse of the public and private funds entrusted to the university is the reason for the public outrage that is now being expressed.
President Kaler asks to be judged by his actions.  His first act should deal with the immediate issue that served as the spark for the current firestrom.  He can take that act on his own and begin the process of restoring the ideals of public service at the U of M.  See the final paragraphs of The Cost of "Top Talent" Part II.
Michael W. McNabb
University of Minnesota B.A. 1971; J.D. 1974
University of Minnesota Alumni Association life member

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