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Mergers in Higher Education Can Result in Financial Savings, Continued Growth, Greater Economies of Scale
New TIAA Institute report helps higher education leaders better understand the possibility of mergers in long-term strategic plans
New York, September 28, 2017 – As financial support for public institutions of higher education declines and the need for greater efficiency for all higher education institutions increases, many institutions have looked at various options to successfully pursue their missions. Once perceived as a last resort, mergers in higher education should be proactively considered as part of an institutions' long-term strategic plan, according to research released today by the TIAA Institute.
“Mergers in Higher Education: A Proactive Strategy to a Better Future?” examines the operational decision-making and implementation details to help make mergers successful. Notably, the report highlights that mergers should be part of a long-term strategic plan and that the desire for cost savings or simply being larger should neither be the only nor the primary drivers of a merger.
Other findings include:
- The decision to consolidate or merge institutions is never an easy one, and the process is nearly always painful and costly.
- Mergers should not be considered only in extremis, when few resources or assets exist, and political goodwill, staff morale and energy are low.
- Mergers provide the opportunity for a number of gains, including financial savings, the leveraging of a greater size and scale, and the re-energizing and re-engaging of the institution’s stakeholders.
- Mergers come with costs – branding, opportunity costs, and expenditure of political capital, to name a few.
- Mergers have discordance in timing between costs (immediate) and gains (delayed).
- Seven critical elements for merger success include a compelling unifying vision; a committed and understanding governing body; the right leadership; an appropriate sense of urgency; a strong project management system; a robust and redundant communication plan; and sufficient dedicated resources.
“This report gives higher education leaders valuable insights to inform decisions about whether and how to pursue a merger,” said Stephanie Bell-Rose, head of the TIAA Institute. “It’s also unique in that the report seeks to change the way that mergers are thought about and approached – not as an option of last resort, but one to proactively evaluate.”
“The decision to consolidate or merge institutions is never easy and at times may be costly; however, it is a critical tactic that many higher education leaders should consider when thinking about their school’s future,” said co-author of the report, Dr. Ricardo Azziz, State University of New York (SUNY). “Today’s mature higher education institutions serve as proof of the positive effects of mergers with the majority of them having gone through this process in their histories.”
To view the report in full, please click here .
About the TIAA Institute
The TIAA Institute helps advance the ways individuals and institutions plan for financial security and organizational effectiveness. The institute conducts in-depth research, provides access to a network of thought leaders, and enables those it serves to anticipate trends, plan future strategies and maximize opportunities for success. For more information about the TIAA Institute, visit www.tiaainstitute.org .
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