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Trusteeship Magazine

Who Succeeds in Online Education? The Board's Strategic Role

By Rick Beyer and David Clinefelter
September/October
2014

Boards at all types and sizes of institutions must become truly knowledgeable about online education, as it is a strategic issue shaping the competitive landscape.

To have a successful online learning program, the president and chief academic officer must fully support and actively promote the strategy. The support of the board will also help to overcome any resistance that might emerge.

At institutions with a high level of integration, most programs are offered both online and in the classroom, most students take courses in both formats, and most faculty teach in both formats. These institutions are well positioned to take advantage of new technology and to accommodate the changing preferences of students.

Board members have many responsibilities, from being the guardians of their institution’s mission to acting as fiduciaries of an evolving economic model. The rapid and continuing burgeoning of online education calls for boards to fulfill such responsibilities in new ways. A vast sea of innovation is occurring outside of our campus walls, and growing trends are starting to shape a dramatically different landscape for colleges.

A decade ago, the concept of online learning was new to higher education. Today, more than 1,000 colleges have some type of online programming. For a few colleges, such programs have provided a much-needed economic boost, while others have seen only modest rewards. Why do some institutions flourish with online programming, while others flounder? And what of the third group, that sits on the sidelines?

One of us, Rick Beyer, has an unusual combination of experience in higher education and business; he’s been a college president, board chair, technology CEO, and senior operating executive of a $1 billion public company. The other, David Clinefelter, has been a college president, provost, and chief academic officer at both nonprofit and for-profit colleges and universities. Together, we have learned a lot about online education and how it influences both governance and administrative issues at various types of higher education institutions.

We have explored these issues, in a Q and A format, with Rick interviewing David. We have also shared our individual reflections, covering how board members can support institutions in their quest to implement online learning and looking at questions administrators need to ask (and answer) when considering online programs. Together, these perspectives may provide you with concrete, actionable items that both your board and administration can use to make online learning a success at your institution.

Rick Beyer: Dave, you have vast experience in the field of online learning. Today, for example, you are chief academic officer at Learning House Inc., which partners with more than 100 colleges and universities to offer online degree programs. What are the characteristics of colleges and universities with successful online programs?

David Clinefelter: Institutions with successful online programs have several characteristics in common. First, the president and chief academic officer (CAO) are fully supportive and actively promote the strategy of online learning. It’s very helpful if the other members of the senior leadership team are also champions, but the president and CAO are essential. Developing successful online programs requires a number of changes in processes, procedures, and policies as well as considerable resources, so resistance is inevitable. Almost every department in the institution has to make changes and some will drag their feet. The unified effort of the president and CAO can overcome that resistance. Having the support of the board has also proved to be vital to success.

A second characteristic is high aspirations for the online programs. Institutions with leaders who want to “test the water” or “try it out” typically aren’t successful. Rather than hire new staff, they try to make the change by adding this responsibility to the workload of existing staff members. They take a short-term view, looking for immediate results and focusing on expenses rather than investments. Unless administrative leaders and trustees see high potential and have ambitious goals, they don’t make the commitment necessary to implement this level of change. Board members play an important role in setting ambitious yet realistic goals. Online programs aren’t a panacea that will solve all institutional problems, but they can be a vehicle to grow the institution and make it more responsive to consumers.

A culture of innovation is another characteristic of these institutions. They have tried new programs and services in the past and are open to doing things differently. And when a culture of innovation exists, it can usually be traced back to a supportive board of trustees. Also, innovative institutions often have a track record of serving adult students. Eighty percent of online students are nontraditional, i.e., over the age of 24. Institutions that have already developed programs and schedules for nontraditional students and have experience dealing with them have a much better chance of success when moving online.

Concordia University in St. Paul, Minn., exemplifies these successful characteristics. In 2011, a new president appointed a former faculty member as senior vice president and chief operating officer. Along with the vice president for academic affairs, they developed a six-part strategy to grow the university. One part of the strategy was “Fostering an Entrepreneurial Culture.” Programs in high-demand fields were added for a total of 35 online programs. Many were offered initially as fully online programs, and then moved to a blended format with some on-the-ground classes—the reverse of the process at most universities. Another innovation was to significantly lower tuition and the discount rate simultaneously. The fall 2006 enrollment was 2,046. By spring 2013 it was 3,015, and the (ambitious but realistic) goal for 2018 is 5,000.

Finally, successful institutions are able to execute effectively. Online students are demanding. They comparison shop. They are motivated to earn their degrees as quickly as possible. The majority complete their search and enroll in less than eight weeks. They have a strong preference for academic terms that are eight weeks or less. Most have previous credits, and they won’t enroll until they know how many transfer credits they will receive.

To successfully serve these students, every department needs to operate efficiently and effectively. Enrollment counselors must respond to inquiries within hours, not days. The registrar’s office must request transcripts on behalf of prospective students and complete transfer reviews and degree audits within a few days. The financial-aid office must help students complete FAFSA (Free Application for Federal Student Aid) forms and package them rapidly. Faculty members must participate regularly in discussion forums and grade assignments in a timely manner—days, not weeks. The list goes on and on. Successful online providers develop the procedures and processes to provide this level of service, and then they measure their performance to drive improvement.

RB: What personnel are needed to launch and run successful online programs?

DC: The key individual is an academically qualified leader with business acumen at the level of associate provost or dean. This person needs to work with the senior academic leaders to develop programs and policies. He or she also should know how to analyze markets to develop an appropriate array of programs, as well as how to use metrics to track and improve performance.

The next crucial players are instructional designers. Faculty members need help developing online courses. They typically don’t know the technology or the andragogy that is appropriate for online courses. Instructional designers do. When paired with faculty, they save time and improve course quality. Online and classroom courses may have the same student outcomes, but they are very different in organization, learning activities, and materials.

Along with instructional designers come enrollment counselors. It requires a different skill set to recruit an online student using only the telephone compared to meeting prospective students at college fairs and giving campus tours. In addition to excellent telephone skills, online enrollment counselors also need to be able to use technology to keep track of contacts.

Success coaches or academic advisors are needed to assist students as they progress through their classes. These individuals are the primary point of contact between the student and the institution. They provide much of the information and services needed by students who can’t come to campus. One advisor or coach is needed for approximately every 250 students.

Finally, a marketing expert is needed who can use all forms of media to reach prospective students. The marketing plan for online students differs from marketing that targets traditional students; it requires a dedicated leader. Southeastern University, for example, has used advanced social-media marketing to grow online enrollments. It has developed a robust online campus site that is integrated with the “.edu” site, resulting in more than 20,000 likes on Facebook. A recent social-media advertising campaign generated 1,125 Facebook likes and 23 new leads in nine days.

For the Board’s Consideration

—Rick Beyer

As technology continues to evolve, playing an ever-greater role in adaptive learning, learning outcomes, online enrollment, and retention, consumers are simultaneously demanding its conveniences in more aspects of their educational experience. Online education has shown its ability to meet consumer needs, while providing valuable financial contributions to host institutions.

As a result, any debate regarding the value and success of online programming may ultimately be left to the late adopters and laggards. The most recent IPEDS (Integrated Postsecondary Education Data System) survey in 2012 indicated 26 percent of college students are taking one or more online courses. Online enrollments are substantially higher today and growing faster than overall enrollment. Still, about two thirds of colleges don’t offer online programs. If your institution does not offer these courses, students will seek them elsewhere.

While it is vitally important that institutions respect shared governance, neither the consumer nor technological innovations are willing to slow down. Boards need to stay abreast of important trends shaping higher education and encourage their senior administration to embrace innovation and new approaches to a changing competitive environment. While the board certainly should not dictate those new approaches or their pace, it can encourage and provide support to the administration, including the option for outsourcing to experts with appropriate depth of online core competencies.

During times of change, some institutions may become more rigid, ignoring the trends and hunkering down in survival mode. A look through history in other industries will show this rigidity is a common theme of organizations that have not survived to tell their story.

More Than Checking a Box

A vital part of embracing this innovation is understanding online learning. Boards must become knowledgeable regarding their institution’s online education program, as it is a strategic issue shaping the competitive landscape. The comment, “We have online programming,” is not enough. This is not about checking the box of innovation; it is about achieving the desired outcome for an institution. According to Babson Survey Research Group, more than 7.1 million students take advantage of this delivery method, and the move toward online education is outpacing the demand curve for residential enrollment.

Institutions that do not have online programming should be cautious about artificial, self-imposed barriers that will prevent success in the digital age. Those artificial barriers may include the intuitive belief that the only way to meet institutional mission is through face-to-face delivery of learning. It is possible for an institution to meet or even strengthen its mission using online programming.

Another self-imposed barrier is accepting a heavy-handed approach by a small group of faculty members who have practiced their trade over the decades in an era of analog lecture delivery. Sensitivities are required, but holding back an entire institution to live in an analog world may not be the best path for future success. For an administration, the board can be very helpful in providing its support to overcome artificial barriers.

Strategic Governance

We are starting to see clear evidence that online and classroom learning require different approaches to be successful, most notably with human resources and skill sets. When launching an online initiative, it is not uncommon for institutions to use existing, overstretched resources, investing insufficiently and merely dabbling in the digital world. While many would say that approach is better than nothing and a good way to start in the online environment, it may become the ingrained rhythm of the organization. Years later, the institution could find itself no better off than it was prior to this experiment. From a board perspective, understanding challenges and supporting the administration in seeking alternatives can be very helpful.

In sum, boards must support their institution’s forays into online education. As a board member, the best strategic approach starts with gaining knowledge and embracing opportunity. Strategic governance may include the development of a committee structure to address online education. Plenary sessions regarding online programming, innovation, and higher education trends are important elements for board meetings. Boards must become knowledgeable about the alternatives and collectively choose a road that will take their institution on a successful journey.

RB: What are the financial implications for online programs?

DC: These programs can generate substantial net revenue. For example, a 30-credit master’s degree with tuition of $500 for each credit will generate $15,000 per student. If the program takes two years to complete and 100 people graduate each year, the annual revenue is $1.5 million. Operational expenses may be considerably less, especially if some of the expenses are spread across multiple programs.

That simple formula looks good, but consider what is required to make this happen. The people listed above—an administrator, instructional designers, enrollment counselors, success coaches, and marketing experts—must be hired. It is a good rule of thumb that, in addition to the marketing staff, it will cost $2,000 per enrollee in marketing expenses. In addition to those personnel and marketing expenses, most colleges need to invest in technology upgrades and systems.

A difficulty for many institutions is that a lot of the expenses for personnel, marketing, and technology are incurred before any revenue is generated. Marketing should begin six months before the program launches. Courses have to be developed (a four-month to six-month process), and enrollment counselors must be in place as students begin to enroll. The program will have a healthy margin when an appropriate critical mass of students is graduating each year, but it may take several years of gradual increases to reach that number, and, in those early years, the program will require continued investment. From a board perspective, it is important to understand the total financial investment required to achieve appropriate aspirations.

Considerable capital is necessary to develop, launch, and operate online programs. Institutions can obtain this capital in several ways: by reducing other operations, taking money from reserves, borrowing, or partnering with a vendor.

In addition to capital, a vendor may also provide some of the personnel or expertise listed above. Outsourcing online operations has pros and cons, and the decision requires careful research and thoughtful analysis. A good resource is the best-practice checklist for choosing and working with third-party providers published by the Western Interstate Commission for Higher Education (WICHE) Cooperative for Educational Technologies (WCET).

There are two other financial considerations. First, it is helpful to account for revenue and expenses of the online programs. In a recent survey by the American Association of State Colleges and Universities, 41 percent of public chief academic officers and 32 percent of those at private institutions reported being unable to calculate the revenue from online programs, so it is difficult to know if they are successful. In order to accurately track revenue, the student-information system has to identify students in online classes, and the accounting system has to be set up to segregate those funds. When online enrollment is small, it may not seem worth the effort to take such steps.

A second consideration is how to budget for online programs. A few institutions use an overhead-cost-recovery method in which direct expenses are recovered and then the balance is allocated to the general fund. The majority of institutions, however, deposit all of the revenue in the general fund and then allocate funds through the normal budgeting process.

This latter method can starve the online programs and limit their effectiveness. From a governance perspective, budgeting may require a new board committee structure to address important elements of online programming.

RB: What are the barriers facing institutions?

DC: The two most significant barriers to developing online programs are faculty resistance and inflexible governance systems.

Teaching online differs significantly from classroom teaching. Effective online teaching requires more frequent interactions with students and more feedback from the faculty member. At a minimum, lectures are replaced by online discussion forums, but faculty members who are effective lecturers may not be good at leading discussion forums, and vice versa. Consequently, many faculty members may be uncomfortable teaching online and resist learning the skills or taking the necessary time to design their courses for online delivery.

To overcome this barrier, academic leaders should focus on educating the faculty by providing workshops and classes, as well as assistance in the form of mentors and instructional designers. They also should provide a variety of incentives, encouragement, and recognition. Some may even use online teaching experience as a requirement in the hiring process. For example, Bellevue University, an early adopter, began online programs in 1998. Many programs are offered both online and on the campus in Nevada. At one point, faculty members were required to teach at least one online course each term. The popularity of online classes has grown so much that faculty members now are each required to teach some on-campus classes.

Inflexible governance structures manifest themselves in several ways. Most important is the approval process for opening or closing programs. The online market changes faster than the traditional higher education market, so the leaders of online programs will be more effective if they can make changes in a timely manner. It is advantageous if those responsible for the online programs have the authority to add or close programs and make non-curricular decisions such as term length. Also, from a governance perspective, it is important for the board to set policy and criteria for opening and closing programs so bottlenecks aren’t created and administrators can respond quickly to consumer needs.

For the President’s Consideration

—David Clinefelter

The development of online teaching and learning raises a series of issues that presidents and their senior teams should tackle. As these issues become increasingly complex, they encompass whether the institution is ready to move to the next stage of online learning delivery.

Using a Learning Management System

The vast majority of presidents have made or inherited the decision to provide a learning management system (LMS), the basic technology for delivering online classes that also provides an array of tools that can be used to enhance traditional face-to-face classes. Once an LMS is in place, institutional leaders have to decide whether to encourage or require faculty usage. Some institutions set minimum standards, such as using the LMS to distribute syllabi or submit grades. Other faculty members embrace the technology and begin using it in their classes. A few pioneers will begin to replace class time with online activities, prompting the next key decision: Do classes have to meet for the scheduled time or can online work substitute for classroom time? If the latter, how much time can be reduced and under what circumstances?

Providing Online Classes

Eventually someone will propose offering online classes. This proposal may bubble up from pioneering faculty and staff members, or the proposal may come from the other direction, when provosts or presidents understand the opportunity inherent in online classes. Many institutions begin their foray into the online world by offering a few general-education classes in the summer. That is a safe place to begin, because the logic of helping students continue their studies while home for the summer is powerful. A useful exercise is to have the registrar do an audit of the number of summer credits continuing students transfer into the institution in the fall. Rather than lose these credits to another institution, they can be captured through online courses.

Offering a Full Online Degree

With experience and a measure of success in online classes, the question of whether or not to offer online degrees then confronts the president and his or her team. Offering online programs is much more difficult than offering just online classes. It requires the creation of a new version of the institution. Some units, such as the library, bursar’s office, and bookstore, can service online students with minimal disruption or changes. Other units, beginning with the faculty and including marketing, enrollment management, and student life, have to reinvent themselves and create processes and systems to service a new type of student in a different manner. For example, online students cannot come to campus and meet with student life staff. Consequently, a number of colleges create the position of success coach or online advisor. Each student is assigned to a coach or advisor who maintains regular contact throughout their enrollment. This person is the interface between the student and all campus departments. King University in Tennessee implemented the success coach model and has attained an 83 percent retention rate across all programs, from associate to graduate degrees.

Integrating Online Programs into the Institution

Some presidents make online learning a key element of their strategic plan and commit major resources to building this new version of the institution. They recruit personnel with the expertise needed to operate online programs, and they make the necessary policy decisions so that online programs can flourish. These presidents have one more decision to make. They can segregate the online operation from the campus or integrate the two.

About 5 percent of institutions have achieved a high level of integration in which most programs are offered both online and in the classroom, most students take courses in both formats, and most faculty teach in both formats. These institutions are well positioned to take advantage of new technology and to accommodate the changing preferences of students.

RB: What are the most successful strategies for attracting students?

DC: When selecting a college or university to attend online, studies show that the top concerns for students are reputation and price. A strong majority of online students choose a college or university within 100 miles of where they live because an institution’s reputation tends to be strongest near the campus. Successful institutions promote their reputation using a combination of student and alumni testimonials and by publicizing their accomplishments.

Institutions also need to set competitive prices. As more colleges and universities offer online programs, students have expanded their search area, especially at the graduate level. Students are price-conscious, although the majority report that they don’t select the least-expensive option. Institutions with stronger reputations can charge more, but increasing competition will put pressure on price.

Program availability is also a factor in attracting students. Business is by far the most popular program, and would-be students have many options. More-specialized fields—real estate, agronomy, audiology, or interior design, for example—are offered by only a few institutions that, as a result, may charge higher prices. Leaders of successful online programs will emphasize their reputation, price competitively, and offer a mix of in-demand programs.

Conclusion

Online programming is a great opportunity for those institutions that can plan and execute effectively.

Higher education is now in the digital age. Choosing the right path for this journey is a strategic decision that must involve both the administration and the board. Board members must be aware of the changing environment and become more knowledgeable of the trends shaping the landscape of higher education, but they should not develop the solutions. Rather, they can help shape the conversation as well as provide oversight regarding online-program aspirations.

Prosperity in the digital age requires clear thinking and leadership. Key ingredients for success include elements of policy, governance, human-resource talent, and financial investment. For those institutions with the financial resources and leadership, their pathway to success will be their ability to execute their plans. For boards and administrators, aligning vision and goals is a great start toward prosperity.

How Many Colleges and Universities Have Gone Online?

Through surveys of online students and chief academic officers that The Learning House conducted in partnership with the Council of Independent Colleges (CIC) and the American Association of State Colleges and Universities (AASCU), we have learned that:

  • Approximately 5 to 10 percent of colleges and universities have decided that online degrees are not appropriate for their institution. Those are typically private, residential colleges with high admission standards whose leaders reason that online programs are antithetical to their mission and culture.
  • About half of the presidents of private institutions and 20 percent of comprehensive public institutions are considering or planning to develop online programs but haven’t made the leap yet.
  • Roughly one-third of private and public universities have started down the online path and have one to four online programs.
  • About half of four-year, comprehensive public universities and 15 percent of private, nonprofit colleges offer five or more online programs. These institutions have developed the processes and systems to support online programs and have benefited in turn.
  • Five percent of private colleges and 12 percent of public universities report generating over $5 million annually from their online programs, in addition to numerous other positive outcomes, including increased access, expanded service area, and pedagogical improvements.

Source: Online Learning at Private Colleges and Universities: A Survey of Chief Academic Officers (Council of Independent Colleges, 2013); Online Learning at Public Universities: Building a New Path to a College Degree (American Association of State Colleges and Universities, 2013)

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COLIN HAYES
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