presidents

By Oliver Staley April 14 (Bloomberg) — When the Massachusetts Institute of Technology was searching for a new president in 2004, it skipped past college leaders with long resumes and instead turned to Susan Hockfield , a neurobiologist who had been Yale University’s provost — its No. 2 position — for less than two years. In choosing Hockfield, MIT, whose faculty and alumni have won 73 Nobel Prizes , made one of the safest bets in higher education: It picked a protégé of Richard C. Levin , Yale’s longtime president with a knack for cultivating college leaders. Levin, 63, whose 17 years in office make him the Ivy League’s longest-serving president, is reshaping the leadership of higher education in the U.S. and the U.K. more than any other college president. Just as protégés of retired General Electric Chief Executive Officer Jack Welch have run at least four of the largest U.S. companies, so former Yale provosts groomed by Levin head three of the world’s top 10 universities: MIT, the University of Oxford and University of Cambridge. Former Levin administrators also run Wellesley College, Duke University and Carnegie Mellon University. “Rick sees this as part of his role as president of one of the world’s great universities: the development of great academic leaders,” said Jared Cohon , 62, a former Yale dean who in 1997 became president of Carnegie Mellon in Pittsburgh, Pennsylvania. Levin, an industrial economist who received his Ph.D. from Yale in 1974, said observing how successful companies function taught him to think like a chief executive when it comes to hiring and promoting. Identifying Talent Levin identifies professors with the talent to lead, coaches them in the nuances of university finances and shares decision making, all to prepare them for greater responsibilities, he said. Yale holds annual meetings where the university’s officers talk about the talent in the administration and who else could do their jobs, said Provost Peter Salovey , 52, a psychologist who was formerly dean of the Graduate School of Arts & Sciences and of Yale College. When he chooses provosts, Levin considers if they could one day be president. “Given the choice, why not try to select provosts in whom you see growth potential?” Levin said in an interview in his office in New Haven, Connecticut. “Is the person a potential successor for a higher level job is a criterion in almost every case.” Yale’s Success Yale, the second-richest university in the U.S., after Harvard University in Cambridge, Massachusetts, has thrived since Levin took over in 1993 from Benno Schmidt , a former dean of Columbia Law School in New York who left Yale after six years. Under Levin, Yale has doubled the number of undergraduate applications, and its endowment has increased fivefold to $16.3 billion. During the same period, Harvard has had four presidents, including an interim leader. The Ivy League consists of Yale, Harvard, Columbia and five other private universities in the Northeast U.S. Levin’s approach to management, including his success in overseeing the endowment, makes his protégés sought after by other institutions, said John Isaacson , president of Isaacson, Miller , a Boston-based executive search company that works with universities. “It’s the easiest sale to make in front of a search committee,” Isaacson said. “Levin is a very effective president with a spectacularly successful endowment, one of the great reputations in the country and a centralized management team.” Yale “has become a talent hothouse,” he said. Quality Successors Effective leaders think about succession, said Indra Nooyi , chairwoman and chief executive officer of PepsiCo Inc ., based in Purchase, New York, and a member of the Yale Corporation, the university’s governing body. “The success of a leader is judged by the quality of the successors they have developed,” Nooyi said. “All of us should think about whom we have groomed for our succession.” Yale, like PepsiCo and Fairfield, Connecticut-based General Electric Co. , is an organization with a reputation for developing leaders, Nooyi said. At General Electric, Welch groomed Robert Nardelli , who served as chairman and CEO of Atlanta-based Home Depot Inc .; W. James McNerney , chairman and CEO of Chicago-based Boeing Co. ; David Cote , chairman and CEO of Morris Township, New Jersey- based Honeywell International Inc. ; and Jeffrey Immelt , GE’s current chairman and CEO. Former PepsiCo executives include Michael White , CEO of DirecTV , in El Segundo, California, and Gary Rodkin , CEO of ConAgra Foods Inc. , in Omaha, Nebraska. Sacrificing Liquidity Levin’s protégés became desirable during the years of rapid university endowment growth during the last two decades. Future Yale candidates may not be so sought after, since the model of financial management practiced at Yale, Harvard and other endowment-dependent universities is no longer so attractive after 2008’s financial meltdown, Isaacson said. As a result of a $6.5 billion loss in its endowment in the year ended June 30, Yale is cutting $350 million from its annual budget by postponing $2 billion in construction, eliminating at least 600 jobs and reducing the number of new graduate students. “They have been willing to sacrifice things like liquidity and a certain amount of risk aversion in order to try and go after bigger gains in their endowment and more revenue,” said Brian Rosenberg , president of Macalester College in St. Paul, Minnesota. “The result has been they have lost sight of their mission.” Macalester, which invested more conservatively, lost 13 percent of the value of its holdings, Rosenberg said. Yale’s investments fell 25 percent. ‘Living Example’ Once installed as the heads of universities, the Yale administration alumni borrow from Levin’s model by boosting fundraising, hiring general counsels and bringing investment managers in-house. At MIT, in Cambridge, Massachusetts, Hockfield adopted Yale practices, including hiring a fulltime attorney, rather than relying on outside law firms, she said. She hired Seth Alexander , a Yale investment manager, to run the MIT endowment. Levin is “a living example of how to be a good president,” Hockfield, 59, said. “I talked to him frequently when I was at Yale and I talk to him even now.” Hockfield, who was named president of MIT in 2004, first came to Levin’s attention in February 1998. Levin was searching for a dean of the Graduate School of Arts & Sciences. “It would never have occurred to me that I would be a candidate,” Hockfield said. “I didn’t have the standard set of credentials.” ‘Quite Lukewarm’ She received a call from Levin inviting her to a meeting. A search committee had included her on a roster of candidates for the dean position, she said. “He said ‘I’ve a got a list and I know all the other people on the list but I don’t know you,’” Hockfield said. “I probably came across as quite lukewarm. It was not my career objective.” When Levin is recruiting officers to his administration, he sells camaraderie and the opportunity to work with other talented individuals, he said. “I say, ‘We’ve got a great team, come work with us,’” Levin said. “ ‘It will be fun.’ ” As a novice dean, Hockfield said she received de facto tutorials on how to run a university at weekly lunches about the arts and sciences faculty with Levin, the provost and other deans. The meals were held at Mory’s , a campus club founded in 1849. ‘Huge’ Responsibilities “As a faculty member, I knew very little about how a university works,” Hockfield said. “At the time, it was my sense that great universities were great because they were unchanging. Instead, I learned that they are great because they are actually changing quite rapidly, and that the responsibilities of leadership are huge.” When he installs deans and provosts, Levin said he works closely with them to prepare them for the job. “I’m very hands on,” Levin said. “I don’t micromanage; it’s more like coaching. I like to have people who are very strong. I’m there for advice and counsel.” When Hockfield became provost in January 2003, Yale was facing budget cuts because of a slowing in the growth of its endowment. The university was also dealing with labor unrest from graduate teaching assistants who wanted union recognition. While Hockfield had experience with the graduate-student issues, she was new to managing a budget, Levin said. Training Period “There was a fair amount of training to do,” Levin said. He met with her regularly in his office to go over the details of the budget. She also met with Chief Investment Officer David Swensen and took a course in university administration, he said. “She’s a person who is not embarrassed about what she didn’t know,” Levin said. “It was very refreshing. No pride got in the way of her curiosity and she was a quick study. Within a few months she was a master of it and able to make budget presentations to the corporation.” Soon after Hockfield became dean, she was approached “between weekly and monthly” with inquiries from search committees about jobs at other institutions, she said. “This question is forced on you with a frequency that I actually found unnerving,” she said. Levin said he encourages his provosts “at the right time” to think about becoming presidents, and he offers advice about whether to accept or decline job offers. “Since these are highly confidential searches, it’s not like they could consult a lot of people,” Levin said. “I played counselor and friend to all of them, and help them think through the pros and cons.” Carnegie Mellon Cohon, now of Carnegie Mellon, said Levin “was so genuinely happy for me that it was striking” when Cohon became a finalist for a president’s job. “He was extremely generous with his time about how to be president, giving me tips,” Cohon said. Only in the case of Hockfield, who had been provost for 18 months before taking the MIT position, did Levin say he thought she was leaving too early. “I wish she would have stayed longer,” Levin said. “The opportunity was there to be the first woman president of such a great scientific institution; it was too appealing to resist.” Hockfield said the most important management lesson she learned from Levin was the importance of collaboration. Listening Skills “He gave me three pieces of advice when I became provost: ‘Listen, listen and listen,’” Hockfield said. Listening is the “first rule” of managing, Levin said. “In the academic world in particular, if people feel they’ve been heard — even if you make a decision that’s the opposite of their preference — the decision is usually respected,” Levin said. That is especially true now in an atmosphere of shrunken endowments and budget cutting, said Isaacson, the executive recruiter. “The management side of the model makes every bit as much sense now,” Isaacson said. “Universities are places where persuasion is essential to management. That is a particularly appealing style.” Once at Carnegie Mellon, Cohon followed Yale’s example and expanded the staff of the university’s fundraising department, he said. He also increased Carnegie Mellon’s alumni chapters to 52 from 12 and raised $625 million as part of a $1 billion campaign initiated in 2003, said Teresa Thomas, a spokeswoman. “It’s one of the things that I learned the most about when I was at Yale,” Cohon said. “Watching the Yale fundraising operation in action — it’s first rate.” British Admirers Along with Hockfield, Levin’s provosts who now head other universities are Andrew Hamilton , who was installed in October as vice-chancellor — the equivalent of a president — of the University of Oxford in the U.K.; and Alison Richard , who became vice-chancellor of the University of Cambridge in the U.K. in 2003. Richard is stepping down in October. The overseers of the English institutions admired how effectively Yale operates, said Alan Ryan, a professor of politics at Oxford who writes about higher-education issues for the Times Higher Education Supplement , a U.K periodical. Once at Cambridge, Richard started a 1 billion pound ($1.54 billion) capital campaign, then the biggest ever for a U.K. university, and hired the institution’s first internal investment manager to oversee its endowment. Duke President In the U.S., Richard Brodhead , former dean of Yale College, is president of Duke University in Durham, North Carolina, and Kim Bottomly , a former deputy provost, runs Wellesley College in Wellesley, Massachusetts. The University of Cambridge was ranked second in the 2009 Times Higher Education-QS rankings of world universities. Yale was third, Oxford was tied for fifth with Imperial College London, MIT was ninth and Duke was 14th. Harvard placed first. Levin was first exposed to the challenges of university leadership when a number of Yale department heads served on a committee in 1991 to consider eliminating faculty positions because of Yale’s financial struggles, Brodhead said. Committee members included Levin, then the chairman of the economics department; Brodhead, then chairman of English; Richard, director of Yale’s Peabody Museum, and Judith Rodin , then chairwoman of the psychology department. Rodin later became president of the University of Pennsylvania in Philadelphia. “We were all colleagues together,” Brodhead said. “We were a generation of people that had just taken on department leadership positions and going through that process was an immense education about the university.” Administrative Careers The experience helped inspire Levin and the others to pursue careers in administration, Brodhead said. “It gave us a sense of leadership and authority as extremely important and positive roles in a university,” he said. Other institutions besides Yale have a record of producing university presidents. Former Princeton University provosts Amy Gutmann and Neil Rudenstine went on to run Ivy League institutions. Gutmann is president of the University of Pennsylvania, and Rudenstine is a former president of Harvard. Princeton is in Princeton, New Jersey. Executives from the University of Michigan, in Ann Arbor, who have led other schools include Lee Bollinger , president of Columbia University in New York, and Teresa Sullivan, who on Jan. 11 was named president of the University of Virginia in Charlottesville. At Harvard, the provost is a relatively new position, created in 1992, and lacks the influence of the position at Yale, Isaacson said. Salovey, Yale’s provost since 2008, is aware of the expectations that come with his role. He would consider a job offer that made sense, although “Yale is not an easy place to leave,” he said. “An incredible opportunity that is a perfect fit is one to take seriously,” Salovey said. To contact the reporter on this story: Oliver Staley in New York at ostaley@bloomberg.net