Transcript McMaster University President`s Contract Disclosure Case

McMaster University President’s
Contract Disclosure Case
A Submission to the 2009 A.W. Page
Case Study Competition
Introduction
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Multi-faceted case
Public sector example from Canada
Opportunity to explore reputation management
during a controversy
Deepen understanding of university operations
Overview of McMaster University
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Founded in 1887
23,000 current graduate and
undergraduate students
In Top 100 universities in the
world (one of 4 Canadian
schools)
Most research intensive
university in Canada
“McMaster model”
President Peter George
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McMaster’s longest serving
president (15 years)
40 years on faculty at
McMaster
Doubled operating budget
Tripled research budget
Grew endowment from
$100M to $500M
Public Sector Salary Disclosure Act
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Became law in 1996 as an accountability
measure
Public sector organizations must release
names, titles, salaries and taxable benefit
information of all employees who make more
than $100,000 per year
2007/08 McMaster reported 734 employees,
30 of whom made > $200k
President George topped the list as highest
paid university president with $504,792
Freedom of Information and Protection of
Privacy Act
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Changes came into effect June 10, 2006 so
universities no longer exempted
Transparency measure
Province largest revenue source of Ontario
universities
McMaster received 27.7% in 2006/07
University Funding in Ontario
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Limited to 5% tuition increase
Strong growth in endowments – 55%
increase nationally from 2002-2007 (although
many now compromised due to crisis in the
financial markets)
Population growth in the Greater Toronto
Area
Private sector partnerships, ancillary
operations = “corporate agenda”
McMaster’s Financial Performance
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Good News
Debt per full-time
equivalent down 34%
Endowment per fulltime equivalent up 40%
Raised $258M of
$400M fundraising
campaign
Diversified, stable
funding base
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Bad News
Post-retirement benefits
liability total $223.3M
Unfunded pension
liability of $98.8M
Credit rating
downgraded to negative
Total debt to grow by
$100M to $257M
Operational Tightrope
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increased inflationary costs out pace
new revenues
increased provincial funding
uncertainty
increased dependence on onetime
funding
reduced operating net assets
available to re-invest
increases in debt financing to meet
space needs
increased student faculty ratios and
class sizes
increasing cost of future employee
benefits
The Battle Begins
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Initial request in August 2006
McMaster refused on the grounds it was a privacy
issue
The Spectator appealed to the Information and
Privacy Commissioner
Information and Privacy Commissioner decision of
Jan. 31/08 ordered McMaster to release info by Feb.
29/08
McMaster refused again; requested judicial review
of the entire case
McMaster relented and on June 26, 2008, released
President George’s contract
Public Outcry Erupts
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Charges of greed, misuse of
public funds, serious lack of
transparency, betrayal
$99,999 post-retirement benefit
given as an “academic leave”
Statement from McMaster
University Faculty Association
condemning senior
administration of concealment
and misrepresentation
Fallout for the University Sector
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Maclean’s website set up to compare
president’s salaries
Globe & Mail delves into exorbitant salaries
and perks, questions value for money
McMaster student leader supports
President George
University of Guelph’s president – the
exception to the rule
Current Dilemma
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Faculty contract renegotiation year
Reputational damage
Serious financial challenges
Maintaining fundraising momentum
Re-establish credibility, trust with key
stakeholders
Applying Page Principles
Tell the truth
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Failure to do so raised suspicions
Lost opportunity to promote President George’s
value
Prove it with action
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Proactively disclose financial plans
Listen to the customer
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Meet directly with representatives from media
and faculty/staff to discuss best way to move
forward
Applying the Page Principles, cont’d
Manage for tomorrow
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Don’t go to court
Universities must see themselves as part of
larger society
Conduct public relations as if the whole
company depended on it
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Issues management can help foster a culture
where all employees learn to recognize
reputational risks and opportunities
Applying the Page Principles, cont’d
Realize a company’s true character is
expressed by its people
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Communicating a strong, high-integrity leader is
essential for universities
Compare McMaster to Guelph University
Remain calm, patient and good-humoured
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Increase visibility of President George so he can
use his good nature to discuss situation with
engaged publics
Reputation Management Principles
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Visibility: “The more familiar you are to the
public, the better the public rates you”
Authenticity: “To earn the benefit of the
doubt, organizations have to convey absolute
honesty in all their interactions with
stakeholders – otherwise, any discredit by
one stakeholder will instantly be
communicated to all of them, reducing the
degree of support they feel for the
organization”
Reputation Management Principles
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Consistency: “An organization’s reputation platform has
to be consistently enacted across all stakeholder groups
and through all of the organization’s communications
and initiatives”
Distinctiveness: “Distinctiveness builds strength of
association and comes from a company’s success at
building a reputation platform (its customized slogans,
unique trademarks and logos, and personalized
corporate stories) that is strategically aligned and
emotionally appealing”
Transparency: “Research has shown that the more
transparent an organization is, the more likely
stakeholders are to rely on their disclosures and to have
faith in the organization’s prospects”
Discussion Questions: Contract Disclosure
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How could McMaster have pre-empted or reduced the negative
impact of the contract disclosure issue?
If you were in charge of McMaster’s public relations function,
how would you have advised the president when the initial
request for his employment contract came in from the Hamilton
Spectator?
What other approaches could McMaster have taken in handling
this issue?
How could McMaster have better communicated its justification
of the contract terms offered to President George when they
released this information?
Discussion Questions: Next Steps for
McMaster
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How would you evaluate and prioritize the risks to McMaster’s
reputation in the wake of the contract’s release?
What opportunities exist for McMaster to improve its reputation
following the disclosure?
Based on Fombrum and Van Riel’s reputation management
framework, what strategies should McMaster and President
George use to re-establish the conditions of trust in its
relationships with faculty, potential donors and the general
public?
How should McMaster address its relationship with the
Hamilton Spectator now that the president’s contract has been
disclosed?