McCombs School of Business
Four-Year Progress Report

Implementing "Leading in the 21st Century"
Strategic Plan

Four-Year Progress Report
George W. Gau
Dean
October 2007


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During the 2002-03 academic year, the McCombs School of Business undertook a comprehensive review of its programs and academic disciplines. External review teams consisting of leading business faculty and deans visited the school and prepared peer reviews of our two major academic programs (BBA and MBA programs) and each of our seven primary academic disciplines. Those reviews were considered in a strategic planning process that included McCombs faculty, students, staff, alumni, business supporters, and the Provost Office and culminated in a new strategic plan for the school, “Leading in the 21st Century” which was adopted in October 2003. That plan establishes the goal of the McCombs School becoming the best public business school in the nation.  It describes the strategy, funding model, and assessment measures essential for the school to meet its goal. The plan is available at www.mccombs.utexas.edu/strategicplan.
 
To fulfill our goal, the plan identified six strategic initiatives that the McCombs School will pursue during the first decade of the 21st century.
 

  1. Strengthen our programs in finance, management, and marketing, which alongside its already strong offerings in accounting and information systems will win the school national recognition in all five of the core business disciplines.
  2. Change the emphasis of the MBA program to better align its focus with the placement market for MBA graduates.
  3. Increase the rigor of our BBA program to match the capabilities of our undergraduate student body.
  4. Enhance the school’s research environment.
  5. Build more strategic partnerships with important firms and industries and strengthen our undergraduate and graduate alumni networks.
  6. Increase the diversity of our student body.
This report describes our accomplishments over the past four years in implementing the strategic initiatives and the action steps in that plan. In summary, the school has completed most of the initiatives identified in the plan. Of the 19 action steps listed, we have totally or substantially completed 18 items including:
The final section of the report discusses questions to be considered in updating the strategic plan and in forming the next steps the McCombs School should undertake under the plan to fulfill its goal of becoming the best public business school.
 
 
 
2003-07 ACCOMPLISHMENTS IN IMPLEMENTING THE STRATEGIC PLAN

Below are the actions steps (in italics) taken directly from the strategic plan followed by a description of the school’s progress in accomplishing the desired improvement.
 
School's Overall Strategy
Recruit 40 Additional Tenure-Track Faculty to the McCombs School
 
Substantially Completed:  Over the past four academic years, the McCombs School recruited 35 new tenure-track faculty. Nineteen of the 35 are replacements of McCombs faculty who left during the period and the other 16 are net additions to school. The additional faculty have helped to reduce the school’s student/faculty ratio from 32:1 in 2002-03 to an estimated 26:1 in 2007-08.
 
Because of the net addition of tenure-track faculty and the reduction in the size of the entering class of our full-time MBA program, we have been able to enhance the rigor of our undergraduate program by adding undergraduate classes taught by our tenure-track faculty. We expect the number of undergraduate class sections taught by the school to increase by 80 (21.5 percent) over the fall and spring semesters of the four academic years (subject to scheduling changes during the spring semester of the 2007-08 academic year). Our undergraduate sections taught by tenure-track faculty have grown by 30 percent over the four years; for 2007-08 we estimate that 32.7 percent of our undergraduate class sections will be taught by tenure-track faculty (compared to 26.6 percent in 2002-03).
 
During the current academic year, the school will seek the necessary institutional funding to hire an additional 21 tenure-track faculty in 2007-08 and 2008-09. With that funding in place, we will have only three faculty to be funded and hired in 2009-10 to complete our objective of recruiting 40 additional tenure-track faculty by the end of this decade.
 
 
Develop Distinctive Initiatives in our Management and Marketing Disciplines
 
Substantially Completed: The Marketing Department has repositioned the Center for Customer Insight and Marketing Solutions (CCIMS) to focus on customer-driven, cross- functional marketing research issues faced in the marketplace. Companies involved with CCIMS are Accenture, AT&T, Dell, Frito-Lay, GE, Miller, Phillip Morris, and Wal-Mart. The Management Department has given a priority to the development of its relationship with consulting firms and the school now offers case interview workshops to better prepare MBA students for interviewing with consulting firms. The department launched this fall a consulting track within the undergraduate management major.
 
Develop a Branding Strategy to Convey the Strategic Distinctions of the McCombs School

Completed:  Under the leadership of the school’s Director of Marketing and Communications, David Wenger, we have developed a new branding strategy for the McCombs School including a new logo. The strategy emphasizes the distinctive leadership characteristics of our faculty, students, and programs that were identified in our market research of recruiters, alumni, and prospective students. We are currently implementing an integrated marketing plan for the school and our programs consistent with that branding strategy.
 
 
Academic Programs
 
Temporarily Reduce the Size of the Full-Time MBA Program While Maintaining Other Full-Time Programs at Current Enrollment Levels
 
Completed:  In the fall of 2004, the school reduced the size of the entering full-time MBA program’s Class of 2006 by one cohort, going from 380 to 320 students. In response to a continued national decline in applications to full-time programs, the school further reduced the Class of 2007 and subsequent classes by another cohort to 260 students.  The University agreed to maintain the instructional resources allocated to the school despite the lower enrollment. These class reductions provided significant relief to the demand pressures for our MBA core and elective courses and enabled us to improve the quality of our full-time program.
 
 
Continue Improving the Delivery of the MBA Program
 
Completed:  The school made major changes in our full-time MBA program since the adoption of the strategic plan:
These changes have significantly improved our full-time program and substantially increased student satisfaction with the program. They also should enhance the national reputation of our MBA program.
 
 
Continuously Improve Teaching Performance in All Programs
 
Completed:  The combination of additional tenure-track faculty and the reduction in the size of the full-time MBA program has allowed us to rely less on part-time lecturers. We have also been able to better match faculty members with the academic program that best fits their teaching skills. In addition, the school has made the following teaching enhancements:
 
Undertake a Comprehensive Review of our BBA Curriculum
 
Completed: During the 2006-07 academic year, the school completed a comprehensive review of our BBA curriculum. Based on discussions with faculty, students, recruiters, and members of the McCombs Advisory Council, the McCombs Undergraduate Program Committee recommended that the school:
 
The school is currently implementing the Committee’s recommendations.
 
 
Build a Stronger Sense of Community Among Students and Faculty in both the MBA and BBA Programs
 
Completed:  We have pursued a variety of initiatives over the past four years to build a greater sense of community in the school:
 
These initiatives have been well received by our faculty and students and they have strengthened the concept of a McCombs community.
 
 
Start an Early Acceptance (“Jump Start”) Program to Increase the Number of Minority Students in our MBA Program
 
Completed: In February 2005 the school created Jump Start, a program in partnership with leading companies to expand the diversity of our MBA student body and the managerial ranks of American businesses. Jump Start targets undergraduate seniors at universities across the country that are academically qualified for a top-ranked MBA but lack the required work experience. The partner companies agree to provide the experience by hiring the students for three years and the McCombs School considers the candidates for deferred admission to our MBA program based on the completion of their job commitment. While the Jump Start program is open to students from any background, the hope is that the program will encourage more high-quality students from under-represented backgrounds to pursue a business career and attend our MBA program. There are currently six companies participating in the program:  AT&T, BMC Software, Deloitte Consulting, Frito-Lay, TXU, and Wells Fargo.
 
 
Research Environment
 
Substantially Increase the Financial Resources Devoted to Research and the Ph.D. Program
 
Completed:  Through greater executive education revenue and earnings on new discretionary endowments over the past four years, the school has been able to improve our research environment, bringing our research support levels closer to those at other leading business schools. All research-active faculty in the school now receive full summer support as well as higher levels of annual academic development funds. The school also has allocated over $1 million in new funds for statistical and editorial research help for faculty and doctoral students and a larger budget for faculty travel and Ph.D. scholarships. These research enhancements put the McCombs School in a significantly better position to compete with other top-tier business schools for new faculty and to retain our current faculty.
 
 
Strengthen our Quantitative Methods Discipline to Better Support our Academic Programs and Our Research
 
Substantially Completed: The school has hired two excellent faculty members in the quantitative methods area from other leading business schools (one from Michigan and the other from New York University). We currently are recruiting a talented senior statistician from the University of Chicago. The McCombs School also is involved in the development of the Division of Statistics and Scientific Computation at the University that will support quantitative education and research across the campus.
 
 
Create a Semester Partial Leave Program to Enable Junior Faculty to Extend the Pre-Tenure Period
 
Outstanding:  In 2003 the school requested permission from the University Provost to start a junior faculty leave program. Under that program assistant professors in the school who have satisfactorily completed their three-year review may apply for a 25 percent leave of absence for one semester. The leave would be funded by the McCombs School of Business Foundation. Faculty approved for this paid leave would have an extra year added to their pre-tenure period. In 2004 the Provost approved the program, but in 2006 he withdrew his approval, forcing the school to stop this very attractive recruiting incentive. The University recently appointed a new Provost and we have sought his permission to restart the program.
 
External Relationships
 
Expect Each Academic Discipline to Build Strong Industry Relationships
 
Substantially Completed: In support of the initiative in our strategic plan to build more partnerships with firms and industries, the school created a new Corporate Relationship Management team. We appointed three professionals to liaise with the approximately 150 companies that are involved with the McCombs School. One of the responsibilities of this team is to look for opportunities to involve our faculty with these companies and create new distinctive academic initiatives in partnership with these firms. Since inception the team has organized visits of company officials with our faculty on campus and scheduled trips for groups of our faculty to visit firms in Texas as well as California, Michigan, New York, Michigan, Virginia, and Washington State.
 
A new interdisciplinary center in supply chain management has been created through approximately $400,000 in seed money provided by the school from its discretionary funds. That center has sponsored conferences and developed and new undergraduate courses in the area. The center is currently supported by 17 companies.  The school also is considering new interdisciplinary centers in corporate governance and in leadership.
 
 
Enhance our Undergraduate and Graduate Alumni Networks
 
Completed:  Over the past four years, the school invested an additional $400,000 in the development of the McCombs MBA Alumni Network. Through this organization we have expanded the scope of our MBA alumni operations, including holding annual alumni conferences and arranging more opportunities for McCombs faculty to speak at meetings of our alumni chapters in the U.S. and other countries. This year the school has started a comparable organization at the undergraduate level and invested about $300,000 in its operation. The McCombs BBA Alumni Network will offer our undergraduates the same opportunity to stay involved with the school and each other as currently enjoyed by our MBA alumni.
 
 
Executive Education
 
Participate Financially in the Development of a Hotel/Conference Facility on Campus
 
Completed:  In May 2006 the University started the construction of an executive education center at the intersection of University Avenue and MLK Boulevard on the edge of campus. When completed in 2008, this project will be the finest residential executive education facility at any business school in the country. It will include 300 hotel rooms and approximately 33,000 square feet of high-quality executive education space. In May 2007 AT&T pledged $25 million to our school to be applied to the construction cost of the facility which will be named the AT&T Executive Education and Conference Center. Through the combination of the AT&T gift, room naming donations, and McCombs funds, the school currently has almost $37 million invested in the project, resulting in a 76 percent equity position in the property.
 
 
Offer an Executive MBA Program in Houston
 
Completed: In August 2005 the McCombs School began offering a weekend MBA program in Houston for working professionals. The program has been very well received by the Houston market and this past August we enrolled our third class of over 100 students. The school has leased a floor in the Federal Reserve Bank building in Houston to provide classroom and office space for the program and enable us to offer non-degree executive education programs at that location. Our Houston MBA program and other executive education offerings are of great value to the school in developing stronger relationships with the companies in Houston.
 
 
School's Organizational Structure
 
Retain the Present Five Department Academic Organization of the McCombs School
 
Reorganize the School’s Management Committees  
 
Move Oversight of the Entrepreneurship Program to the Kelleher Entrepreneurship Center
 
Completed: The school has completed the reorganization of its management committees and the Kelleher Entrepreneurship Center now oversees the school’s entrepreneurship program.
 
 
 
 WHAT’S NEXT?
 
With the completion of most of the action steps devised in “Leading in the 21st Century,” the 2008-09 academic year will be an appropriate time for the McCombs School to update that plan and determine the next steps we should take to implement our strategic initiatives. There are four important questions that the school needs to consider in forming the next set of action steps that will help us fulfill our goal of becoming the best public business school.
 
1.      How should the school further reduce its student/faculty ratio to the level advocated in the Commission of 125 Report?
 
In support of a vision of establishing an environment that promotes excellence at The University of Texas at Austin, the Commission of 125 proposed in its 2004 Report that no UT college or school should have a student/faculty ratio greater than 17:1. As noted on page 22 of the Commission Report, “The quality of education the Commission seeks for UT students can be achieved only if there is a direct and meaningful engagement between students and professors. Such engagement is essential if we are to prepare students for an increasingly complex world. The student-faculty ratio is an important and traditional measure of a quality undergraduate education.” It is crucial for the continued progress of the McCombs School and The University of Texas for us to try to achieve the Committee’s goal and further reduce our student/faculty ratio – a ratio that is currently the highest among all UT schools.
 
Assuming the number of students taught by the McCombs School does not change, our student/faculty ratio will drop to 23:1 when we complete the hiring of the remaining 24 tenure-track faculty sought in our plan. To fulfill the Commission’s goal and lower our student faculty ratio to 17:1, we must either increase the number of faculty in the school by 62 (beyond the 24 new hires currently planned) or reduce the number of students we teach by about 1,000. Either choice presents tough challenges for the school.
 
Based on current academic labor markets and to maintain our high standards in faculty recruiting, the school would likely need six to eight years to hire an additional 62 tenure-track faculty as well as make normal faculty replacements. Adding such a large number of faculty to the school would require a substantial amount of new funding and a significant expansion of our office and classroom space.
 
At the same time, the academic programs in the school are very popular with prospective students and our BBA program has the most demand of any large undergraduate program at the University. Because our undergraduate students have among the highest academic qualifications of any UT undergraduate program, a cut in our enrollment would reduce the overall quality of the University’s student body. An additional problem with trying to constrain further the number of McCombs students is that under our strategic plan we already temporarily reduced the number of students in our full-time MBA program and it may be time for the school to return at least a portion of the earlier size of that program to continue building its national presence.
 
An issue the McCombs School will need to evaluate is the large number of business classes we provide UT students from outside of the business school. No professional school on the campus offers as many educational opportunities for students outside of its school as McCombs. At the MBA level we have nine dual degree programs enrolling students from other UT colleges including the Schools of Communications, Engineering, Law, Liberal Arts, Natural Sciences, Nursing, and Public Affairs. At the undergraduate level we offer the Business Foundations Program that enables non-McCombs UT students to minor in business by taking up to six courses in our school.  About 25 percent of the semester credit hours taught in the McCombs School are to non-business students. Starting next year additional educational demands will be placed on the school as we are expected to provide signature courses for freshmen and sophomores across campus under the new UT undergraduate studies initiative.
 
One of the challenges in offering so many educational services to students outside of the business school is that the University has failed to recognize this type of service in its allocation of institutional funding. The University historically has allocated a disproportionately small share of institutional funds to the McCombs School when compared to other professional and non-professional schools on our campus. The chart below shows the amount of 2005-06 institutional funding (i.e., state appropriations and tuition) allocated to various UT schools per semester credit hour (SCH) produced.
 

In 2005-06 (the most recent academic year when comparative data are available), the McCombs School received only $225 per SCH in University institutional funds compared to $333 for the Cockrell School of Engineering, $404 for the School of Law, and $596 for the LBJ School of Public Affairs. When the funding figures are adjusted for the relative faculty salaries at different UT schools to reflect the comparative cost of producing a SCH, our effective level of institutional support is even less; in fact, it becomes the second lowest on campus with only the College of Liberal Arts receiving slightly less salary-adjusted funding per SCH. If our school is to continue to provide the high level of educational services it currently offers to non-business students while still improving the quality of education we offer McCombs students, the University needs to recognize that service in its allocation of institutional funding.
 
 
2.      How can the school further build the national reputation of its full-time MBA program?
 
The realignment of our full-time MBA program to better focus on the core business disciplines along with the improvements we have made in program delivery have significantly enhanced the national reputation of our MBA program. Our MBA students are now better prepared to take positions with leading companies and we are finding more of the major MBA recruiters at our school interviewing our students. Importantly for the development of our national reputation, more strategic consulting and investment banking firms are interested in our MBA students and we are beginning to be identified as one of their small number of “core schools” for MBA recruitment. Last year we were selected for the first time by JPMorgan Chase as one of its core schools nationwide for their recruiting in investment banking.
 
As the school plans the strategy it should take in continuing to build the national reputation of our full-time MBA program, an issue that should be considered is the role of our part-time MBA programs for working professionals that we offer in Austin (Texas Evening MBA), Dallas, and Houston in that strategy. Those three programs have a combined student enrollment that is approximately the same as our full-time program.  Through these programs we teach a large number of the Texas students seeking an MBA.  Last year about one-half the MBA graduates of our working-professionals programs entered the placement market seeking new positions with Texas firms. If these programs satisfy much of the need of Texas students for MBAs along with the demand of Texas firms for MBA graduates, the school should evaluate whether to have a larger portion of the enrollment in our full-time MBA program consist of non-resident students. Bringing more students from outside of Texas to our full-time MBA could potentially enhance its national reputation.
 
3.      How does the school take advantage of the new AT&T Executive Education and Conference Center to build its presence in executive education while continuing to develop our research reputation?
 
Over the past five years the McCombs School has expanded substantially its executive education operation. The opening of the Houston MBA and the growth of the Dallas MBA and our custom non-degree programs have increased the school’s net revenue from executive education from under $1 million in 2001-02 to more than $6 million in 2006-07. This growth also has expanded the opportunities for McCombs faculty to leverage their research expertise by teaching important concepts to executives and managers and building the faculty’s relationships with business leaders. The opening of the AT&T Executive Education and Conference Center in August 2008 will offer an exciting new opportunity for the McCombs School to establish a broader role in executive education and further build relationships with leading companies through new residential open and custom programs.
 
As the school develops our strategy for taking advantage of the AT&T Center, we will need to ensure that our research and campus teaching responsibilities are not neglected because of the expansion of our executive education – a problem other leading business schools have faced. The expertise that our faculty have developed through their research is a valuable resource in attracting companies to our executive education offerings. If the school fails to support and develop its research strength through too great an emphasis on growing executive education, we will lose our comparative advantage over time when competing with other providers of this type of education. The high quality of our teaching and research are the “crown jewels” of the McCombs School and we should have a strategy for further growth of executive education that is consistent with this heritage.
 
4.      What changes need to be made in our existing business school buildings to support our goal?
 
Though the new AT&T Center will provide the McCombs School with the finest residential executive education facility in the country, the three University buildings currently used by the school for our academic programs on campus – College of Business Administration (CBA) building, Graduate School of Business (GSB) building, and the University Teaching Center (UTC) – are not of similar quality today. Many of our competing peer business schools have built new buildings over the past decade while the youngest of our campus buildings, GSB, is over 30 years old. Our buildings are sound, functional, and are equipped with the latest technology. We have certain spaces within the three-building complex that are very contemporary and state-of-the-art including the MBA cohort classrooms, the Ford Career Center and the AIM Trading Room/EDS Trading Center. Yet, when compared to newer business school buildings on other campuses, the external appearance of our complex looks a bit dated and portions of the our buildings need to be upgraded.
 
The school should assess what changes need to be made in our campus buildings to support our goal of becoming the best public business school. Assuming the new AT&T Center is a profitable real estate investment, the school will have more financial resources in the future that could be applied to making major improvements to our infrastructure.  Last spring the school hired an Austin design firm, fd2s, to study the GSB and CBA and provide ideas of how we could upgrade the buildings and improve their functionality.  Over the summer the firm submitted a report that offered some interesting conceptual designs for enhancing the two buildings. The school can use the report to help determine what changes should be made in our building complex to have the appearance and quality that supports our ambitions.


 
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