Leading Indicators

The resilience of Nashville's executive education programs bodes well for Tennessee's economic prospects [From the September/October issue of Nashville Post magazine]

At its inception two and a half years ago, the idea for a new School of Executive Education at Lipscomb University probably seemed safe and straightforward. By offering non-degree leadership classes for higher-level corporate employees, Lipscomb would be jumping into lucrative waters long occupied by other American business schools, including those at Vanderbilt and Belmont universities.

But by the time John Lowry arrived at Lipscomb to launch the school as its assistant dean, those waters had become murky, if not downright treacherous. It was January 2009, the United States was in the thick of economic paroxysms, and exec ed programs across the country were taking a big hit. The fact that Lipscomb’s fledgling school is still surviving – and its more established competition thriving – might serve as a bellwether for Tennessee’s economic future.

Executive education seems to have been among the first budget items deemed discretionary when the bottom fell out of the economy and businesses fought to stem the ensuing hemorrhage of red ink. For many exec ed programs, which generally are self-sustaining, the country’s tentative economic recovery has been too little and too late to avoid permanent damage. As recently as April, for example, the exec ed program at the University of Michigan’s highly regarded Ross School of Business laid off 11 of its 26 dedicated employees.

In Nashville, however, the prospects are far brighter – though this hasn’t always been the case. Dave Owens, the faculty director at Vanderbilt’s Executive Development Institute, and Mary Fink, director of leadership program development at Belmont’s Scarlett Leadership Institute, describe parallel, steep drops in their programs’ open-enrollment attendance in late 2008 and early 2009, about the time that Lipscomb launched its School of Executive Education. Since then, however, both Vanderbilt and Belmont have surpassed their pre-recession numbers, and Lowry says Lipscomb’s enrollment has held steady since his school’s launch.

Fink says it was a year before Belmont’s flagship open-enrollment class, its semi-annual Signature Executive Program, was again operating at full capacity.

“We chalked it up to the organizations feeling like they had seen bottom,” she says. “They had figured out what the new normal was going to be, and then they wanted to make sure that their staffs were as developed as possible, so we began to see our numbers go up. We’ve maxed out our last three classes.”

Both Fink and Owens say the economic shakeup forced them to realign their course offerings to meet the new needs of both potential students and their employers. Not surprisingly, “change” is now a recurring theme among Belmont’s more popular classes, Fink says.

“Change management negotiation has really moved up in relevancy,” she says. “It used to not be on the radar screen, in terms of skills bosses are looking for. Now it’s in the top five.”

At Vanderbilt, Owens says he has noticed a trend away from detail-oriented, “learn it now and apply it on Monday morning” classes like process reengineering, and toward “change and strategy and innovation – more conceptual and abstract. I see it as the beginning of a long-term cultural shift.”

What was apparent to Fink and Owens – and what Lowry says he realized as he helped establish Lipscomb’s program – is that custom courses designed for a specific corporate client represent a growing segment of executive education, while open-enrollment courses are less lucrative and more vulnerable to recession.

Custom programs generally are commissioned by long-term clients who believe in the fundamental concept of education as a long-term investment, Owens says, while open-enrollment courses tend to lose students, at least temporarily, when the economy sours and their employers stop sponsoring them. Even as Vanderbilt’s open-enrollment attendance dropped, he says, many of its custom clients considered the downturn an opportunity to “sharpen their saws” through education.

“I’d say one-fourth of our ongoing [custom] customers said, very explicitly, ‘Now’s the time to do it because now is when we can afford to not have our employees here.’ So there was a kind of optimism about it.”

Owens echoes that positivity about his own employment situation. “I’m optimistic, personally, about my job and my organization,” he says. Similarly, having weathered what looks to have been the worst of the recession, Fink says Belmont’s program may need to add to its five-person staff to meet anticipated demand for its services.

The fact that Nashville’s university-affiliated executive education programs have escaped the fate of programs like that at the Ross School of Business may be a result of their smaller size and their regional reach. (The University of Michigan program is global; two of its downsized staff worked in Hong Kong.) But it also speaks to the relative stability of our region’s economy, Lowry says.

“I have noticed that there are schools like Michigan State that offer programs in Memphis and other areas in Tennessee, which I think says something about the statewide economy, and about what other schools see as potential markets here,” he says.

Tennesseans weary of the unwavering national focus on disappointing unemployment, housing starts and retail sales might look to this local economic indicator to boost their own sense of optimism.