Business schools: The reckoning has arrived

Classes are empty, clients missing in action and revenue is shrinking. It may not be quite the apocalypse some claim, but business schools are having to take dramatic action to cope with the ruinous economic and social consequences of Covid-19.

Executive education, the money-spinner for many schools, has taken a huge knock as corporate clients postpone or cancel programmes to cut costs. One report predicts that, globally, up to 55% of customised programmes planned for 2020 could be postponed to next year. At least 10% are likely to be cancelled altogether.

Of those that go ahead, nearly all will move online as Covid health requirements and contagion fears discourage face-to-face teaching, both on school campuses and company premises.

Schools in SA, as elsewhere, have already migrated online. That’s been another drain on school revenue, as many companies have demanded fee reductions as a result.

The government’s Council on Higher Education, which usually frowns on wholly online MBA programmes, has suspended its objection while the pandemic rages.

Foreign MBA students who might have come to SA are steering clear, as are some academics. Hugh Corder, acting director of the University of Cape Town’s Graduate School of Business (GSB), says: "Business schools rely on the internationalisation of staff and students, but inhibitions on cross-border and foreign travel are putting people off. We are losing out."

GSB business development director Rayner Canning adds: "If foreign students think SA is not controlling its Covid-19 infection rate, they’ll continue to stay away."

The overall business school picture is such that, to hear some people tell it, you half expect to see four horsemen riding through the sky, wearing academic robes and clutching lecture notes while raining pestilence and destruction on campuses.

In truth, some schools around the world will die. In SA, where the sector is tightly regulated, casualties are unlikely. Indeed, some say Covid-19 could be the making of them.

New ways of thinking

In the same way the pandemic has forced corporate SA to let employees work from home, so it has given business schools no choice but to reconsider how to operate.

Timothy Hutton, interim director of executive education at Wits Business School (WBS), says: "Two years ago I spoke in Namibia about telecommuting, or remote working, and no-one knew what I was talking about. Now everyone is doing it."

Remote teaching has turned into the same unstoppable force.

Chris van der Hoven, CEO of the executive education division at the University of Stellenbosch Business School (USB), says Covid-19 "has provided a kick in the seat of schools’ collective pants".

"The historical custodians of the ‘right way’ [of business education] have been forced to pilot alternatives."

Letsai Mashishi, acting director of executive education at Unisa’s Graduate School of Business Leadership, says: "Even before the pandemic, many universities were seeing declines in enrolment for face-to-face programmes and parallel increases for online courses. With Covid-19, we are seeing how yesterday’s disruptions can become today’s lifeguards. While some institutions once viewed online education as a threat, it has come to their rescue."

Normally, schools would plan and test this operational refit. Amid the current overwhelming uncertainty, there is no time. Johannesburg Business School (JBS) director Lyal White likens the situation to "building an airplane while it’s flying".

"Covid-19 has compressed all our challenges into a single moment and given us no choice but to confront everything that we have been talking about for a long time," he says.

However, in a sector that routinely advises clients to be ready to change, he says many business schools have failed to follow their own advice. "We don’t practise what we preach."

Now they have no choice. Sharmla Chetty, head of global markets for the US-based Duke Corporate Education Group, says about 20% of programmes offered by Duke’s Joburg school were postponed in the immediate wake of the pandemic. "They say they’ll be back in 2021."

Though she says additional business elsewhere will minimise the impact, other schools are revisiting budgets to manage shortfalls.

Nelson Mandela University (NMU) Business School director Randall Jonas says the executive education division lost "a huge chunk" of revenue when lockdown was first imposed.

"We’ll never get it all back," he says.

Morris Mthombeni, acting dean at the University of Pretoria’s Gordon Institute of Business Science (Gibs), says: "Down the years, we have put aside a lot of money for a rainy day. Right now, it’s pouring."

It’s a struggle playing out across SA. Jannie Rossouw, interim head of WBS, says: "We will lose revenue. We have to look at expenses and where we have to cut costs."

And USB dean Piet Naudé admits that the institution has undertaken an emergency rebudgeting because of reduced income from executive education.

"For the full year, I estimate we will be 8%-10% down on budget."

Some schools, however, claim to be almost unscathed. Regenesys CEO Leoni Grobler says losses have been "marginal".

And while the Covid situation caught everyone off guard, Rhodes Business School director Owen Skae says: "Our clients have been very loyal so far."

Meanwhile, Henley Africa Business School has, according to dean Jon Foster-Pedley, "maintained revenue, employment and salaries and actually increased the number of scholarships we offer to students".

He adds:"Education has changed fundamentally but we will get used to it. We are all having to imagine new business models for the future."

No-one, however, can guarantee income continuity in such uncertain times. Some administrators fear the government, in its quest to recoup huge economic losses, could reduce or even cancel academic subsidies for university business schools, which some consider elitist, profit-based institutions.

One dean says subsidies account for 25% of his budget.

This is also bad news for universities, which take a share of business school income to spend elsewhere. Some have shown willingness to reduce their take this year, but one director explains: "The university says its need is greater than ours and we must continue paying our tithe."

During lockdown, some schools have lopped as much as 60% from contracted fees for executive education programmes that moved online. That’s not sustainable indefinitely, but traditional cost structures clearly need to be reviewed. What schools do expect, though, is that lower fees will attract more students.

The audience at a recent WBS event featuring corporate governance guru Mervyn King would have been limited by classroom space to 200 people. Forced online, it attracted more than 800, many of them overseas.

Grobler says reduced fees are already attracting more students to Regenesys’s online academic programmes, standing it in good stead for the longer term.

With the same budget as before, companies will also be able to register more employees for corporate education programmes. At least, they will if they keep money aside for education and training. In times of distress, these are often among the first things to be pared back.

In fact, says Chetty, this is precisely the time companies should intensify training to be ready for the eventual upturn and to gain a march on competitors.

An uncertain future

The trouble is, no-one knows when the upturn will be or what form it will take. That’s why Zaheer Hamid, director of the Management College of Southern Africa, says companies are asking schools for guidance on what the future business environment will look like.

The blind leading the blind? Former Gibs dean Nicola Kleyn says: "Anyone who thinks they know what the post-Covid environment will be like, doesn’t. It’s utterly unpredictable. The best anyone can do is scenario-plan to provide different alternatives."

Hamid thinks this unpredictability could create a new relationship between schools and the business sector as they try to map a way forward. "We’re all in the same space, not knowing what’s coming," he says. "This could be the time for a more connected partnership. Schools have generally provided the education and information they thought employers wanted. Covid-19 has given us all a reality check."

He says there are already signs of more co-operation between schools and the private sector.

And the public sector? "Many of the entities there are so deep in crisis mode that they haven’t given any thought to the future."

Kobus Jonker, director of the Tshwane School for Business & Society, says all parties will have to look beyond their own interests. Covid-19 has unleashed havoc on society as a whole and highlighted the interdependence of everyone.

"The world has changed in the past four months," he says.

"People realise business can’t just focus on profit. There has to be more social awareness and business schools must make sure it happens. We need to turn our focus more towards social impact."

The digital turn

In the midst of all this unpredictability, only one thing is inevitable: the onset of educational digitalisation.

Brian Armstrong, professor of digital business at WBS, says the Covid-induced mass migration is merely the acceleration of an existing movement.

Foster-Pedley says: "Once we realised we could move across quickly without breaking the bank, it was an easy decision."

Despite resistance from some companies and individuals who argue that online teaching is impersonal, Armstrong says students actually benefit. "Maybe you can’t rub shoulders virtually quite as well but you make up for it in other ways." Technology, he says, allows lecturers to interact more directly with an individual through a computer screen than in a crowded classroom. "As a student, you get at least as much personal involvement with the teacher," he says.

Then there’s the work ethic. "Online, when the teacher tells you to do this exercise and this quiz, there’s nowhere to hide. In class, people spend their time e-mailing under the desk, then revise like hell over the weekend. Online creates more structure for teachers and students."

Beverly Shrand, academic director of GSB’s international management programme, says a virtual classroom forces teachers "to be far more intentional regarding their desired learning outcomes". The often ad lib nature of classroom teaching doesn’t work here. "One needs to think very clearly about the objectives and how to achieve them."

And the downside? She cites screen fatigue and the need to cut content to retain student engagement.

Milpark Business School dean Cobus Oosthuizen says: "You can’t sit people in front of a screen for three hours and expect them to stay interested."

Still, he agrees the "new normal" is here to stay. "Everyone is becoming accustomed to the changes, particularly as we count the savings in time and money."

Well, perhaps not everyone. Many company employees lack ready access to the tools or skills of the digital revolution. This gap is not limited to junior staff. Armstrong says: "I had assumed business people would be well connected digitally. That’s not always the case."

And then there’s SA’s lack of bandwidth, which limits digital connection. "We still have challenges in infrastructure," he says. "Until the country sorts that out, we will find it difficult to achieve what we should."

Simon Tankard, CEO of University of KwaZulu-Natal Extended Learning, says companies and students must accept this is the way the world is going.

"Traditional programme delivery methods are becoming redundant. Long learning lead times are no longer acceptable and employees expect to be able to access content and acquire new knowledge at any time, as it is required. The entire education model is undergoing transformation globally," says Tankard.

"Continuing education will move swiftly along the path towards online and digital teaching and learning methodologies."

This, he says, will encourage a culture of lifelong learning rather than one based on intermittent study.

It’s a culture that should start at the very beginning, from pre-school level, says Canning. "This digital acceleration has been a long time coming. The whole education system has been slow to adapt."

Not everyone is convinced of the need to go digital — particularly those who enjoy networking and personal engagement with classmates. All is not lost, however. As lockdown eases and classrooms become safe again, some face-to-face teaching will resume.

But to what extent? Some academics believe that, having moved exclusively to online in the past four months, there’s no going back — particularly as more people become accustomed to remote working.

Mashishi observes: "Covid-19 is creating new dynamics and needs in remote work, customer engagement and other fields that will play a critical role in organisational recovery and success."

University of the Free State Business School director Helena van Zyl says: "I don’t believe the world will ever return fully to its pre-Covid existence. The virus has taken away the ‘innocence’ and spontaneity of the world. Online platforms like Teams, Zoom and Skype have become the norm and I believe the days of travelling for business meetings are gone."

Skae says onscreen connections have limitations. "They are not a panacea. If you want to conclude a deal or interview someone for a job, you have to meet people in person. Body language is important."

The same holds true of business education, say GSB associate digital professor Mignon Reyneke. "Soft" workplace skills such as social and interpersonal relationships are lost in virtual teaching. She says: "Reading students’ faces, creating a team spirit among classmates, learning to engage with people and so forth … these all get lost online."

Business schools will have to take dramatic action to cope with the economic and social consequences of Covid-19

—  What it means:

They’re not all that could be lost. What is the future of business school and university campuses if classroom teaching becomes endangered? Even if, as most people expect, post-Covid education offers a blend of online and face-to-face engagement, could some grand buildings become redundant?

Jonas says there are discussions about "repurposing" the NMU school’s building, which was opened in 2015. Potential solutions include sharing the building with other university departments.

Naudé says the USB is reconsidering the design of its planned new campus. The school hopes to move from its current Bellville premises to a new, purpose-built Stellenbosch home expected to cost R500m-R600m.

Projected needs have changed since original plans were drafted. "We are looking afresh at how we configure the campus," says Naudé. "It will probably be slightly smaller than originally intended."

The school had hoped to move in 2025. However, this may now be delayed a couple of years.

JBS’s White asks: "Do schools really need these massive, high-cost facilities? It may be what they used to aspire to, but are they still relevant?"

Reyneke, whose own castle-like school occupies prime space on the Cape Town Waterfront, thinks so. "A campus is not just a place of teaching and learning," she says. "It’s also a place for great minds to come together and discuss and debate relevant topics, meet and network and share common interests. Campuses also form a large part of the branding of a university or school and act as the seat of the brand. I believe campuses will still play a big role, though perhaps a different one."