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July 12, 2001

Board of Trustees gets new chairperson: Dietrich

In his first interview as chairperson of Pitt's Board of Trustees, William S. Dietrich II:

* Defended next fall's 7.5 percent tuition hike, the highest at Pitt since 1988.

* Gave Chancellor Mark Nordenberg a strong vote of confidence. "I would not have taken this job in the first place had I not been very comfortable with the incumbent" chancellor, Dietrich said.

* Praised his predecessor as board chairperson, J.W. Connolly, but said he disagrees with Connolly on a number of things, including Connolly's preference for corporate-style bonuses for top Pitt officials.

Dietrich said he opposes "corporatization" of colleges and universities. "It's my feeling that sometimes trustees look upon a university more like a business and don't quite appreciate the richness of its intellectual and cultural contributions," he said.

Dietrich, 63, is chairman of Dietrich Industries, Inc., a subsidiary of Worthington Industries, Inc., and president of the Mallard Fund, Inc., a registered investment company. A former U.S. Marine, Dietrich received his master's and Ph.D. degrees in political science from Pitt in 1980 and 1984, respectively, and his undergraduate degree from Princeton in 1960.

He and Chancellor Nordenberg fielded questions during a news conference following the June 28 Board of Trustees meeting. In the give-and-take with reporters, Dietrich's style was urbane yet good-humored and casual.

He tossed around analogies like…well, like a man with a gift for analogies. He compared his role as board chairperson to that of a coach or counselor. He likened universities to supertankers (slow to turn around, but with great momentum once they're headed in a particular direction), and faculties to baseball teams (both need a mix of superstar veterans and young, promising talent to succeed).

Dietrich said that for him to try telling Chancellor Mark Nordenberg how to run Pitt on a day-to-day basis would be like attempting to steer an elephant, something that Dietrich once tried to do in Thailand.

"Most of the time we are going to be together, but you have to remember that the elephant has a very independent mind," he said.

Dietrich said that, as a salesman, he has cooled his heels in corporate lobbies all over the United States, waiting to meet with executives who were in no rush to see him. "Your skin gets thickened in situations like that," Dietrich said, adding that he expects the news media and the public to question actions taken by Pitt's board and by him as its chairperson.

"Certainly, the University is more exposed to public scrutiny than a private corporation, and this is a new experience for me," he said. "But I think that's the way it should be."

Dietrich urged reporters to address him by his first name. "My father was Mr. Dietrich," he said. "I'm Bill."

His and Nordenberg's responses to reporters' questions included the following:

How do you justify next fall's 7.5 percent tuition increase?

"Pitt remains a very good bargain for a quality education," Dietrich said, adding that the increase "is simply reflective of the fact that we're offering a better product, and that better product costs a little more."

Nordenberg said: "We would prefer, year after year, to move forward without tuition increases, but the cost of almost everything does go up. In this case, there is a balance that also needs to be struck between our funding streams, and those principal streams include both the commonwealth appropriation and tuition revenue. This year, clearly, the appropriation was somewhat less than we would have liked, and that too had an influence on the level of tuition."

The chancellor said he doesn't expect applications or enrollment to drop as a result of the tuition increase.

Was low state funding, by itself, the reason for the 7.5 percent increase?

"I would say that it was a major factor," Nordenberg answered. "Clearly, the overall [state funding] increase to our budget, which was 0.6 percent, is considerably lower than almost any measure of rising costs. We are determined to continue making investments in quality.

"That includes making investments in our people. One other alternative might have been to cut back on salary increases, but we've been playing catch-up in that area for a number of years and were determined to do everything that we could in that area this year as well."

Trustees voted to increase Pitt's salary budget by 4 percent for the fiscal year that began on July 1. Nordenberg said he will decide in coming weeks how the salary money will be distributed among cost-of-living, merit, market and equity raises.

Given what happened this year, should Pitt consider weaning itself away from state funding?

"No," Dietrich responded. "I think the state has been tremendously supportive over the years and, conversely, I believe that the University of Pittsburgh has delivered the goods. The state legislature can be very proud of their investments and feel that those dollars were put to very good use here at the University.

"I am optimistic about that. I should tell you, you are dealing with an optimist here. My background is as a commercial man. Arthur Miller summed it up pretty well in 'Death of a Salesman' when he had Willy Loman out there 'riding along on a smile and a shoeshine.' You are not going to get pessimism, you are going to get optimism from Bill Dietrich."

(Dietrich smiled but did not reply when a reporter reminded him that "Death of a Salesman" was a tragedy.) Nordenberg commented: "We already have a more diverse revenue stream than most public universities. That is, in fact, one of the characteristics that has been attractive to the bond-rating agencies — that we are not so heavily dependent on any one stream.

"The percentage of our budget that will come to us in the form of commonwealth support this year will be about 15 percent. But that 15 percent is absolutely critical to us. It's a large amount of money, and it is money that has made a real difference in terms of our ability to move forward. I, too, think that we have good relations with the commonwealth that we want to nurture as effectively as we can."

In a videotaped address to the board, outgoing chairperson J.W. Connolly urged trustees to continue his efforts to establish a compensation system for Pitt senior administrators that is "goal-based and modeled after industry," complete with performance incentives. Does Dietrich favor such a system?

"No. There are some things that J. Connolly and I disagree on," Dietrich said. "That [a bonus system] is something that can always be looked at in the future, but I think it is difficult in an academic environment to have that kind of compensation. To the best of my knowledge, there are virtually no other major universities in the United States that use that kind of compensation system.

"We have an outstanding administration here. We intend to compensate them according to their performance, but we do not need a bonus system to do that."

The Board of Trustees' compensation committee had awarded performance/market bonuses to Chancellor Nor-denberg each year since 1997, and for the last two years trustees gave bonuses to other senior officers, too. But in December, the compensation committee (chaired by Connolly) ruled out further bonuses for the foreseeable future, after folding last year's bonuses into officers' base salaries.

Dietrich was asked to comment on improvements in undergraduate education at Pitt in recent years.

"I think we have made tremendous progress, but I would remind you that undergraduate education is only as good as the faculty," Dietrich said. "It's not about buildings, it's not about a lot of other things. Education is only going to be as good as the world-class researchers who come to this University.

"As we attract world-class scholars, we will get better graduate students, better undergraduate students."

How will Dietrich's style as board chairperson differ from J.W. Connolly's?

"If you'll remember, J. Connolly came in at a time [July 1995] when this University had some problems," Dietrich said. "There was a change in administration at that time. So, I think in those early years there was more hands-on direction [by trustees] which I think was absolutely appropriate during that period of time.

"I don't think it was so appropriate in the last three years, and I think J. Connolly's style changed during that time. I think you would compare my style with what I'll call the later-period Connolly as opposed to the early-period Connolly because we have an institution now where all of the signs are positive.

"One of the things that I have come to understand is that the chancellor reports to the board as a collectivity. He does not report to the chairman. My job is counseling and coaching and doing those sorts of things.

"I was in Thailand once, riding an elephant. The young man who was driving the elephant said, 'Mr. Dietrich, would you like to steer the elephant?' So, I got up on the elephant and tried to steer it, and the elephant pretty much had a mind of its own. Sometimes, if you wanted to get the elephant across a creek and you were in a hurry to get home, he would stop and drink. The more you encouraged him to go, the more he drank. So, often times I liken the chancellor to the elephant. [At this, Nordenberg and reporters burst into laughter.] Most of the time we are going to be together, but you have to remember the elephant has a very independent mind."

In response to a follow-up question about his style as board chairperson, Dietrich said: "I am not an academic, despite the fact that I got a doctorate here at the University of Pittsburgh. But I do sort of understand the academic process, so you will see me focusing a little more on the academic side of the University than J. Connolly, who came from a business background and also addressed a University with some financial problems. Now that we have the University on a very firm financial foundation, we want to start to improve the academic superstructure."

Dietrich said he opposes a private industry model for managing Pitt. "I've run a $350 million business [Dietrich Industries, Inc.], and I can tell you that a university is a much different animal from a business. I don't think there's any question about that….Of course, some of the principals that apply in running a major corporation also apply in running a university. We have budgets, we have outflows and so forth. But this institution is not about making money. It is about creation and dissemination of knowledge."

Was J. Connolly the right board chairperson at the right time?

"Absolutely," Dietrich answered. "If I have done one thing for this University, I was one of the small group of people who encouraged J. Connolly to take that position" in 1995. "We didn't have a lot of people with their hands in the air at that time [volunteering for the chair-person's job]. J. is a take-charge kind of guy, and that's what we needed. In my opinion, J. was almost perfectly cast in the role of chairman for that particular era in the University's history."

Nordenberg added that Connolly "really did energize people" on the board. "I've been blessed in working with a lot of talented people, frequently senior people who contributed to my professional development. Certainly, I've learned a great deal from J., who came at the process from a different prospective and with a different set of experiences. We talked through a lot of things and learned from each other."

Is Dietrich planning to chair Pitt's board for a specific number of years?

"I serve at the pleasure of the board and its nominating committee. It had previously been set up for [the chairperson to serve a maximum of] five one-year terms. That was changed to a maximum of eight. I think, if anybody's concerned, five years are going to be plenty for me," Dietrich said.

What kind of a "Bill Dietrich legacy" would the new board chairperson like to leave behind?

"First of all," Dietrich answered, "it's not going to be a Bill Dietrich legacy, it's going to be a Mark Nordenberg legacy with a few assists and a little help from Bill Dietrich.

"The University of Pittsburgh is not Harvard, it is not Stanford, so we cannot say we will be excellent in every single area. We will try to be as good as we can possibly be in all areas but we have to pick our spots, and we are in the process of doing that.

"Certainly, one of the crown jewels of this University is the Health Sciences, and that's not to detract from a number of other truly outstanding programs. We have the second-best philosophy department in the United States here at Pitt and other great pockets of excellence. We must push them forward while attempting to improve across the board."

Later in the press conference, Dietrich said: "The one thing that we're going to work for very hard is recruiting outstanding faculty, funding programs and so forth.

"But don't look for headlines in five years, 'Pitt surpasses Harvard in nine out of 10 departments.' You can move a private business much faster than you can move a university.

"Let's assume that we were ranked, say, 30th overall in the United States. If we could move that to 25th in a period of five or seven years, that would be very significant. It takes a long time for these rankings to change, to build programs. But once you get momentum, then these things simply keep building."

Dietrich served on the board of Carnegie Mellon University when it voted to extend health benefits to same-sex domestic partners of faculty and staff. Dietrich was asked whether public universities such as Pitt also should provide that benefit.

"We are in litigation on that, so that's something I think would be very inappropriate for me to comment on," Dietrich replied. "I would only say in that regard that actions speak louder than words, and in fact the chancellor has appointed a committee to study this matter.

"I would also point out that this [committee appointment] was not done on my watch. It was done on J. Connolly's watch."

If the committee recommended extending same-sex health benefits, would Dietrich support it?

"Obviously, that would be a board decision made in conjunction with the University [administration]," Dietrich said. "But certainly, the recommendations of that committee should weigh, in my opinion, very heavily. It is a representative group and it is certainly prepared to thoroughly vet this issue."

During Connolly's tenure as chairperson, voting privileges were taken away from faculty, staff and student representatives on trustees committees. Does Dietrich believe non-voting status is appropriate for those representatives?

"I do," he said. "As you know, 12 of our trustees are special trustees who have no vote. I myself have served as a special trustee. I really think that [voting status] does not have a lot of meaning because 99.9 percent of our committee decisions are by consensus. It's not an 8-7 vote on this issue, a 5-4 vote on that one. I remember hardly any split votes, except for the one [in 1993] in favor of same-sex educational benefits, and that was highly unusual.

"I have seen faculty, staff and student members make very good contributions to board committees." Asked if he will advise committee chairpersons to encourage faculty, staff and students to speak up at meetings, Dietrich said: "Yes, they should speak up. We would encourage that, and I will nudge [committee chairpersons] to do that."

Dietrich referred to a trustees meeting during which Nordenberg and Provost James Maher discussed universities and specific schools and departments against which Pitt should consider benchmarking itself. The chancellor was asked to elaborate.

"As I recall, that was not a public meeting," Nordenberg said, refusing to identify possible peer institutions except to say that Pitt strives to rank among the top public universities belonging to the Association of American Universities (AAU).

"Actually, there are a number of good reasons not to name names," the chancellor added. "When you begin serious benchmarking, you look at different universities for different things. There isn't any university, as far as I can tell, that really is quite like the University of Pittsburgh. We're a good-sized operation but we're not nearly as big in terms of student enrollment, for example, as many of the major public universities. Many of them sit in more rural communities, as opposed to in a city, which changes your mission.

"Basically, we probably would be looking at different peer groups for undergraduate education and for graduate education, and then within each of those categories we'd be picking a different set of schools. If you're going to do it seriously, it's an involved process."

How can Pitt compete for star professors against better-funded universities?

"This is where we need to live by our wits a little bit," Dietrich said. "No, we don't have a wallet the size of Duke University's or Yale's. But if we can spot certain up-and-comers who will become academic stars or superstars in the future, then they can attract more people.

"Now, if [Microsoft chairman] Bill Gates would happen to give us $15 billion, then we might have a lot of fun going out and doing a frontal assault" in raiding other schools' faculties. "We can't do a frontal assault. We've got to work on the margin to improve things, and I think that's exactly what is being done right now."

Nordenberg added: "Recruiting can be fun in any event, and academics are driven by things other than money. We do believe that the University of Pittsburgh is an exciting place to be today, that it is a place where people in a range of disciplines have special opportunities to achieve what they want to achieve as academics. That's an important thing to be able to sell.

"We have worked to become stronger financially, not as an end in itself but because that is the foundation from which you can build a better university," Nordenberg added. "If you're competing against institutions that are better-endowed or better-funded in other ways, you do have challenges. But that doesn't mean you can't win."

A reporter pointed out that Nordenberg's tenure as chancellor already exceeds the national average for chief executive officers of colleges and universities, and Pitt changed its chancellor the last time it changed board chairpersons.

In response, Dietrich jokingly placed his left hand on Nordenberg's shoulder and extended his right hand as if to bid him good-bye. "Well, Mark…" he began with mock-sadness, but quickly made his real feelings clear.

"Absolutely," Dietrich said, when asked if he wants Nordenberg to remain as chancellor. "Now, if Mark had been in that position for 35 years and was drooling at board meetings, then I might say it could be time for a change. But he looks healthy to me."

Nordenberg said he has "no firm idea" how long he'd like to stay on as chancellor. "I've been at Pitt now for 24 years, and I have been lucky enough to hold a number of important positions here," he said. "I've liked every one of them: faculty member, dean, chancellor. The job is still a very satisfying one to me, I'm excited about what we're doing now, I'm excited about the prospects. So I'm just working hard and not thinking about the end.

"I will say, too, that I have enjoyed a wonderful relationship with J. Connolly as the chair. We are very different people in certain ways but also had a common core of commitments to the institution, to quality, a belief in hard work."

Of the new chairperson, Nordenberg said: "I have known Bill casually for about 15 years, and we have worked with each other in a range of ways during the last half-dozen years in particular. I'm looking forward to our partnership, in the belief that there are a lot of good things that we can do as a team."

–Bruce Steele

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