MnSCU defends contract with consultant amid transparency concerns
ST. PAUL -- Since disclosing a $2 million contract with consultants McKinsey & Co. last month, Minnesota State Colleges and Universities system leaders have tried to show the price was worth it.
They reached out to those who questioned a decision to bypass public discussion and board approval for the contract, and released materials that the New York-based company produced to help the system launch an overhaul this year.
MnSCU officials say the company worked hard and provided guidance, not prescriptions, for a campus-driven process.
But faculty and others remain troubled. The work took place away from public scrutiny, which, they say, makes it harder to assess its value. It didn’t help that MnSCU recently provided a McKinsey proposal for the project that was almost entirely redacted.
Sen. Terri Bonoff, DFL-Minnetonka, head of the state Senate’s higher education committee, told MnSCU and McKinsey officials last week that partnering quietly was “the wrong calculation.”
Still, MnSCU says officials saw the company’s taste for consulting away from the limelight as a benefit rather than a liability.
“McKinsey aims to give clients the tools to succeed, not to be the face of the endeavor,” MnSCU said in written responses.
A global consulting powerhouse, McKinsey has advised dozens of higher education clients, sometimes drawing ire when faculty or students learned of multimillion-dollar contracts.
In Minnesota, the company has provided extensive education guidance for an alliance of corporate executives and public figures, at least some of it free. The Itasca Project alliance consulted for a Minneapolis district overhaul and the state’s preschool initiatives; its recent higher education paper echoes key themes of MnSCU’s Charting the Future initiative, such as campus offerings attuned to workforce needs and collaboration between institutions.
More institutions are undertaking efforts to rethink how they do business. Many are seeking outside guidance. Experts say that input can help ensure change efforts don’t fizzle out as many have. Others are skeptical of corporate world consultants whose advice might not readily translate from the private sector.
Last year, students, faculty and administrators rallied around eight broad recommendations at the heart of Charting the Future. In January, MnSCU trustees approved the initiative. Now teams of students and staffers will help trigger innovations. If the effort is successful, leaders said, it could yield better outcomes for students and millions in savings.
In December, MnSCU sought “change management” proposals from consulting companies. The system received two, which it recently released.
Accenture offered to “make the initial investment” of six weeks of services worth $500,000. Then, the company and MnSCU would agree on payments based in part of results the company delivers over two years, such as securing outside funding for the initiative. The hourly pay for employees was the only redacted part of that proposal.
Accenture, headquartered in Ireland, declined to comment.
In the McKinsey proposal, most of the 133 pages were blacked out as trade secrets, including information about past projects, employee bios and a section that starts, “McKinsey is the best partner for MnSCU because of our …”
Experts on the state Government Data Practices Act such as former state information policy director Don Gemberling said “there’s no way” so much of McKinsey’s proposal fits the state’s narrow definition of a trade secret.
MnSCU said McKinsey redacted its proposal after Accenture requested a copy. MnSCU reviewed and approved the redaction.
McKinsey’s help was indispensable to quickly launch Charting the Future, a massive change effort engaging many of its 31 campuses, MnSCU said.
“They have tremendous experience in coaching complex organizations to genuinely engage people in large-scale change efforts ... in ways that ensure success,” MnSCU said.
Thanks to the company, MnSCU says, implementation teams featuring more than 160 people are ready to tackle the system’s challenges.
Guides to Change
McKinsey created “playbooks” for the Charting the Future teams. They include proposed agendas for the first meeting, data the teams might want to gather early on, key questions to address and experts they could consult.
The playbooks also include research. The team focused on campus collaboration got a 2008 MnSCU tuition and fees study, a McKinsey article called “Motivating People” and a 2011 Wisconsin legislative report on University of Wisconsin tuition, among other documents.
McKinsey also helped pen a “change story”: an open letter to faculty, staff and students urging them to be bold in tackling changes and promising transparency. It created an engagement plan and provided training to administrators.
In addition, MnSCU said, Chancellor Steven Rosenstone spoke repeatedly with both Peter Hutchinson of Accenture and Tim Welsh, the McKinsey project lead, about how best to kick off the initiative. Rosenstone and Welsh serve on the board of Greater MPS, an economic development spinoff of the Itasca Project.
McKinsey said it does not comment on its work with clients. But it said the company has consulted with more than 80 universities around the world the past five years — and delivered results.
There have been critics.
Last year, Columbia University faculty members criticized an unpublicized $1.1 million McKinsey report that had recommended some graduate tuition increases. At the University of North Carolina System, a $2.6 million McKinsey report on eliminating academic program duplication was not discussed by the governing board or a strategic planning committee, according to media reports.
Accenture has also been criticized by students and faculty for its services and price tag.
As student and faculty leaders have learned more about the McKinsey contract, they say concerns persist.
Kevin Lindstrom, head of the college faculty union, said he has many unanswered questions. A Pioneer Press report was “the first inkling we had of McKinsey’s involvement and the magnitude of that involvement” in Charting the Future.
The university faculty union president, Jim Grabowska, sent a letter to Rosenstone decrying the contract and a “disturbing lack of transparency.”
Dean Frost, a professor at Bemidji State University and a former management consultant who reviewed some of the documents McKinsey produced, said the playbooks feature general, common-sense instructions on conducting a task force. He said the supporting research mostly includes publicly available materials rather than reports generated specially for MnSCU.
The documents are helpful, Frost said. But, “It seems incredible to me that such an expensive contract would produce such generic material,” he said.
But Sen. Bonoff said she came out of her meeting with Rosenstone and Welsh convinced McKinsey provided worthwhile support — and MnSCU learned a lesson about transparency.
“I left pretty pleased,” she said. “I felt they were on to something and the chancellor is doing his best to let the change happen from within.”
Bonoff and her counterpart in the state House, Gene Pelowski Jr., DFL-Winona, both say they are interested in tightening oversight of MnSCU contracts.
The Great Recession, the rise in online learning and other factors have led institutions across the country to undertake efforts to change with the times. But, says Daniel Hurley, an associate vice president at the American Association of State Colleges and Universities, of which MnSCU is a member, many of these initiatives have failed to produce much change and have succeeded in antagonizing faculty and staff.
“I would commend Chancellor Rosenstone for undertaking a comprehensive, in-depth look at the system,” he said. “I am glad to see them expend the resources to acquire the valuable insight McKinsey can provide.”
Debra Humphreys, a vice president at the Association of American Colleges and Universities, says many campuses are still wary of turning to corporate consultants like McKinsey rather than one of the nonprofits that specialize in higher education consulting. She said the company “repackages stuff we already know rather than providing viable solutions.”
“They are bringing the perspective of corporate America to higher education,” she said. “Sometimes, that’s a good thing. Sometimes, it means you come in with blinders on.”
About McKinsey & Co.
Headquarters: New York City
Revenue: $7.8 billion
Locations: More than 90 offices in more than 50 countries
Clients: Two-thirds of Fortune 1000 companies
Know more: To learn about the Minnesota State Colleges and Universities system’s Charting the Future, visit www.mnscu.edu/chartingthefuture
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