Page 43 - Crisis in Higher Education

18 • Crisis in Higher Education

For-profit Institutions of
organizations higher learning
Clear and well defined goals for Poorly defined goals with respect to
sales, profits, and return on accreditation, graduation rates, and national
investment rankings
Customers Seller Customers Institution
Pay Earns revenue Students learn Earns revenue
Enjoy product ird-parties pay
Organizations hire
Value added products that buyers
like and generates profits Misunderstood relationship among
institutions, students, third-party payers, and
organizations that hire graduates

FIGURE 1.3
Differences in end goals, and customer and seller relationships between for-profit organi-
zations and institutions of higher learning.

linked, as illustrated by the double-headed arrow, because customers, who
pay for the good or service, extract value from it. The value they receive is
commensurate with the price they pay. The price is more than the sum of
the costs for the good or service, so the company makes a profit and soci-
etal wealth is created. On the other hand, institutions of higher learning
often have disconnected and poorly defined end goals such as gaining or
maintaining accreditation or achieving a national ranking in one subject
or another. There is no well-defined and easily measurable goal such as
market share or return on investment that enables these institutions to
focus actions on improving outcomes. When institutions of higher learn-
ing fail to recognize the trifurcated customer, they are challenged to make
good decisions about product/program develop and resource allocation as
well as understand the important role of the organizations that hire their
graduates.

1.6 HIGHER EDUCATION FACES GOVERNMENT
REGULATION AND A MULTITUDE OF
ACCREDITATION AGENCIES

As suggested by Figure 1.1, institutions of higher learning are regulated
and subject to review by various accreditation organizations. All univer-
sities that accept federal subsidies, including student loans—and nearly