We are picking up on a trend toward a trifecta of factors that bode ill for independent schools: (1) schools in or bordering on extremis, combined with (2) hair-trigger boards with (3) a severe allergy to any perceived misstep on the part of the head. The net result is unplanned abrupt head turnover, often during the heads first year or two at the school, creating further stress on already strained finances (that’s the extremis part). By our math, even a carefully planned and timely head transition is likely to cost a school $150K-$200K in direct expenses, not including the opportunity costs associated with transition. An unplanned transition can easily cost $450K-$1 million, depending on contract buyout terms, legal fees, and interim placement costs.
To take each factor in turn, following a decade of softening demand due to demographic factors and increasing unfunded financial aid, many schools are near the financial break point. The brutal fact is that many markets (perhaps most outside of a handful of golden areas) have a excess of capacity in independent schools, something we will take up in a future post. The response so far has largely been to marketing harder and faster and discount more heavily. Since the problem in many places is structural–baked into a cyclic decline in the number of school-age children–heavier marketing has paid meager dividends and discounting has evaporated margins, thereby decreasing the head’s and board’s degrees of freedom to operate. One wrong step seems to have disastrous potential.
Some boards have hair-trigger responses in their DNA–they have seemingly always been this way–while others have come by their hyper-vigilance via the stress of governing a school on the ropes. Regardless, we see a sort of PTSD-like tendency to over-react to almost ever provocation, not taking time to discern the important from the trivial or to calibrate the proper level of board involvement. We recently shared a “Goldilocks-and-porridge” graphic below as a way to illustrate that there is a proper level of board involvement in any particular issue: too hot, too cold, and just right. No board should abdicate its responsibility to govern; doing so would be to function in the “too cold: zone. But the solution is not to be “too hot”, for this crosses over into micromanagement or worse. The whole point is that the board discuss before it acts what constitutes the proper range of reaction.
The “ready, fire, aim” tendency we see on the rise is likely a culprit in many recent head dismissals (and, to be fair, “dismissals” actually undercounts the problem, since some heads leave of their own volition after being propelled out by over-functioning boards). It is as if some boards practice a Leo Durocher-type of governance, to bring a baseball metaphor into the discussion. Durocher, a major league baseball manager in the 1930’s through 70’s, was famously intolerant of mistakes by pitchers. A single misplaced pitch could be enough to get Durocher to change pitchers, just as a single unfortunate event in the school can be enough for some boards.
The reality, apart from the expense, is that great heads are hard to find and that the turmoil caused by a premature departure is seldom worth the cost. Not enough independent and international school trustees recognize this very salient fact.