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Is Higher Education More Like a Business? No, Business Is More Like Higher Ed

08/08/2011 11:46 am ET | Updated Oct 08, 2011

With college costs rising and state budgets at the breaking point, everyone is talking about how to make colleges and universities run more like businesses. Although it isn't widely recognized, colleges are already moving toward privatization. Universities long ago sold off their bookstores to Barnes & Noble, outsourced their IT to Google and Microsoft, and contracted their cafeterias to Aramark and Marriott. My own campus, the University of Michigan, has cut nearly $159 million in annual spending over the past seven years.

But the real trend? Businesses are becoming more like research universities.

Even as sabbaticals have been reduced or eliminated at universities around the country, providing them to high-performing employees is one of the major trends in corporate human resources. General Mills, Goldman Sachs, Timberland, American Express, Hallmark and Procter & Gamble all offer three months or more of fully paid sabbatical leave to some employees. Many more offer one to three months of paid leave. According to a survey by The Families and Work Institute, 38 percent of large- to mid-sized companies allowed some form of paid or unpaid leave to employees in 2008.

If you're looking to implement sabbaticals in your own company, an entire consulting firm, YourSabbatical.com, is more than willing to advise you on best practices. And if you're struggling to design one, they'll offer you 100 Things to Do on Your Sabbatical. As they say, "studies confirm that the best managers and leaders have rich personal lives."

Law firms have long acted like liberal arts colleges. Entering the profession requires passing the bar exam, and the arduous road to making partner is not unlike the life of a tenure-track professor: long hours and intense intellectual effort in pursuit of an elusive goal not under your control. Partners, like tenured professors, generally have the most autonomy, much higher pay, greater control over the company and are very unlikely to be fired.

High-level investment banks and management consulting firms operate similarly. They are notorious for giving pop quizzes during the hiring process ("How many bananas would fit in this room? How many bottles of ketchup were sold in the U.S. last year?") And like elite colleges, they increasingly sort these candidates not just on their academic achievements, but also on their extracurricular activities.

According to Northwestern sociologist Lauren Rivera, hiring committees look to avoid "grinds" and "nerds." Instead, they seek out young people whose extracurricular passions require extroverts with social skills and "interestingness." Committees parse the extracurriculars at some depth, valuing crew and field hockey over more popular sports like baseball or football. Much like an undergraduate admissions committee, they believe that it is these activities that reveal the true capacity for leadership. And they recreate the "work hard, play hard" culture that suits many of these firms -- and reflects the same culture they experienced as students at elite Ivy League schools.

But this isn't just about higher education's dark side -- reproducing status and wealth. It is also about taking on higher education's mission to improve society and disseminate knowledge. Companies like Microsoft, Google and Xerox are organized as campuses rather than as traditional firms. R&D labs have become greatly expanded in the quest for innovation. Rather than traditional interviews, employees are recruited using rigorous technical exams, certifications and auditions. They spend part of their week working on projects of their own interest. The campuses themselves have become total institutions that provide private shuttles, haircuts, massages, gyms and lectures to facilitate personal improvement on a 24/7 work schedule.

A whole new subset of organizations now exists in the space between for-profit firms and nonprofit organizations. These are sometimes called B corporations, for-benefit corporations or low-profit limited liability corporations (L3Cs). In 2006, a group of Stanford graduates formed B Lab, which certifies companies that fulfill a pledge to consider social responsibility beyond simply the needs of shareholders. Each year, 10 percent of B corporations are audited by B Lab to ensure their continued commitment to socially responsible behavior. In early 2011, there were nearly 400 certified B corporations earning almost $2 billion in corporate revenue, and B corporations can now be legally chartered in the State of Maryland.

But perhaps most like elite higher education, there is no divide between those who do good and those that live well. According to his official biography, B Lab co-founder Jay Coen Gilbert has enjoyed two sabbaticals in Australia and Costa Rica.

Michael Bastedo is an associate professor at the University of Michigan.