mcmaster university presidents contract disclosure case a submission to the 2009 a.w. page case...
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McMaster University President’s Contract Disclosure Case
A Submission to the 2009 A.W. Page Case Study Competition
Introduction
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 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
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 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 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 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
Good News Debt per full-time
equivalent down 34% Endowment per full-
time equivalent up 40% Raised $258M of
$400M fundraising campaign
Diversified, stable funding base
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 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
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
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 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
Faculty contract renegotiation year Reputational damage Serious financial challenges Maintaining fundraising momentum Re-establish credibility, trust with key
stakeholders
Applying Page Principles
1. Tell the truth Failure to do so raised suspicions Lost opportunity to promote President George’s
value
2. Prove it with action Proactively disclose financial plans
3. Listen to the customer Meet directly with representatives from media
and faculty/staff to discuss best way to move forward
Applying the Page Principles, cont’d4. Manage for tomorrow
Don’t go to court Universities must see themselves as part of
larger society
5. Conduct public relations as if the whole company depended on it
Issues management can help foster a culture where all employees learn to recognize reputational risks and opportunities
Applying the Page Principles, cont’d6. Realize a company’s true character is
expressed by its people Communicating a strong, high-integrity leader is
essential for universities Compare McMaster to Guelph University
7. Remain calm, patient and good-humoured Increase visibility of President George so he can
use his good nature to discuss situation with engaged publics
Reputation Management Principles 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 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 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 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?
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