Bill Ackman wants more college presidents to be business people. But that's not the way it works.

• Bill Ackman, who called for Harvard's president to step down, has thoughts on her replacement.
• Specifically, he suggested the school consider a business person as its next leader.

Earlier this week, hedge fund manager Bill Ackman scored a victory. After weeks of tweeting about how Harvard's president, Claudine Gay, should step down amid plagiarism accusations and fallout from her controversial testimony at a congressional hearing on college campus antisemitism, she did.

But the billionaire isn't done giving his thoughts on university leadership. Less than 24 hours after Gay's resignation earlier this week, Ackman opined on who should replace her. In a 25,000-character post on X that included criticisms of DEI and claims of reverse racism, he suggested that Harvard and other universities "broaden their searches to include capable business people for the role of president."

Ackman likely won't get his way on this one.

Advancing through academia to the role of president is still the traditional route, with 54% of college presidents in the US taking this path. That's according to the American Council on Education's 2023 American College President Study, which surveyed more than 1,000 presidents. Twenty-eight percent of respondents said they took an administrative pathway to the presidency — and only 4% reported taking a business pathway to their role.

A 2017 Deloitte survey of sitting college presidents found they "overwhelmingly agreed" that campus leaders need academic experience. Only 14% would have seemingly agreed with Ackman that private or business candidates are a good fit.

What does a university president actually do?

Business people aren't a popular choice for the position for several reasons, many of which have to do with a president's responsibilities. Ackman doesn't get entirely get the details right on those. According to the hedge fund manager's lengthy X post:

"The president's job — managing thousands of employees, overseeing a $50 billion endowment, raising money, managing expenses, capital allocation, real estate acquisition, disposition, and construction, and reputation management — are responsibilities that few career academics are capable of executing." He went on to criticize the performance of Harvard's endowment.

In the most recent fiscal year, which ended on June 30, 2023, the endowment returned 2.9%, and the value stood at $50.7 billion. According to Bloomberg data, the S&P 500 returned just under 20% in the same period.

In reality, a number of the responsibilities named by Ackman are delegated — particularly the financial ones. For example, a university president doesn't actually oversee a school's endowment. That job is contracted out to money managers, said Benjamin Ginsberg, a professor at Johns Hopkins University and author of "The Fall of the Faculty," a book about the growing role of administrators on college campuses.

"When the endowment doesn't do well, it's not the fault of the faculty," Ginsberg told Business Insider. "Harvard's endowment is a classic underperformer in recent years, and it's professionally managed."

And while fundraising is an important part of a college president's job, there is no reason a charismatic president — a Nobel prize winner, for example, or a lauded legal scholar — and a well-connected board of trustees can't drum up support.

Ackman also leaves out a key responsibility of university presidents: maintaining a high academic standard by garnering the respect of faculty across disciplines, promoting research, and providing intellectual inspiration.

"More and more presidents of universities don't really have academic values, and they see the university simply as one more business — and it's not exactly," Ginsberg said. "Our product is knowledge, and you have to have real respect for it."

Ackman is aware of this key facet. He and others say Harvard's Gay failed to meet academic standards, and he's accused Gay of plagiarism. Others say the instances Ackman pointed to are inconsequential and amount to inadequate citation practices.

Another challenge for university presidents: Unlike chief executives, whose responsibilities are to shareholders, college leaders have to answer to a wider field of stakeholders, including students, faculty, alumni, and donors — and the board.

"Presidents are not CEOs, their power is more diffused, and they have to get buy-in," one president at a small liberal arts college told Deloitte.

Cautionary tales of presidents with business backgrounds

While it's unfair to write off university leaders from business backgrounds, some recent experiments do provide a cautionary tale.

Tim Wolfe, a former IBM and Novell executive, became the short-lived president of the University of Missouri. He resigned in 2015 after a series of controversies, which some have argued would have been handled better by a career academic focused on more than a bottom line.

Simon Newman, who previously worked in private equity and consultancy, had an even more disastrous run as the president of Mount St. Mary's University. He took his business tactics to academia, suggesting low-performing first-year students be cut before they failed to help the school's standings and firing professors who criticized him. His tenure lasted less than two years, and he stepped down in 2016.

To be sure, a university still does have to function from a financial standpoint. Having a support network of trustees and advisors is, therefore, key for a successful president.

"There's probably no one person that knows everything when they come in," Hironao Okahana, the executive director of the American Council on Education's Education Futures Lab, told BI. "It's very important for governing boards and others to create the environment where whomever they choose has the resources and the support needed to be successful in these roles."

"Regardless of which pathways that they come in, it's a complex job."