Leadership Capacity Follows Institutional Capacity
In tuition-dependent universities, the margin for error is thin. Pricing power is limited, discounting is high, and the operating model is complex. Recent tuition discounting studies put the average discount rate near 60% for first-time, full-time undergraduates —a reality that can make “business as usual” financially impossible for many private institutions.
In that environment, leaders feel pressure to reduce overhead fast. And one of the most tempting moves is also one of the most damaging: hollowing out the middle analytical layer—the directors, analysts, IR staff, budget and FP&A professionals, project managers, and operational excellence roles that translate strategy into executable work. It looks like savings on a spreadsheet. It often becomes a constraint on leadership itself.
Because here’s what I’ve seen repeatedly:
Leadership capacity only follows from institutional capacity.
If the institution can’t produce timely analysis, manage cross-functional execution, and maintain operational discipline, executive leaders end up doing two jobs: setting direction and rebuilding the mechanics that make direction possible.
The hidden function of the “middle layer”
When people say “middle,” they often picture bureaucracy. It might even be referred to as “administrative bloat.”
But the middle analytical layer is not a nice-to-have. It’s the organizational engine that makes decisions real:
Turning board-level goals into budgets, scenarios, and tradeoffs people can understand
Providing the analytics that prevent actions based on anecdote
Managing the work between executive intent and frontline execution
Designing repeatable processes (close, forecasting, procurement, hiring, capital governance) that reduce chaos
Creating dashboards that build trust and shorten decision cycles
Cut that layer, and the institution doesn’t just lose staff. It loses throughput—its ability to convert decisions into outcomes.
Why tuition dependence makes this worse
Tuition-dependent institutions live in a world of constrained flexibility: modest net tuition growth, escalating expenses, and increasing competition for fewer students. Recent sector outlooks from ratings agencies and analysts emphasize those headwinds—shrinking pipelines, rising costs, and continued financial stress that drives efficiency moves like workforce reductions, shared services, and consolidations.
When revenues are unreliable, the instinct is to “protect the front line” by trimming roles that are less visible. That instinct is understandable. It’s also how you accidentally create a system where:
Operators are overwhelmed (because coordination disappears)
Executives get pulled into tactical work (because analysis disappears)
Decisions slow down (because the organization can’t produce decision-ready options)
Risk increases (because controls, documentation, and monitoring get thinner)
In other words, the institution becomes less governable at the exact moment it needs to be more disciplined.
The middle is already under pressure
Even if you don’t cut aggressively, the labor market is signaling strain in the very functions that sustain institutional capacity. CUPA-HR’s 2025 retention findings reported that research and sponsored programs/institutional research was among the departments most at risk for attrition (28% indicating likely/very likely to seek other employment).
At the same time, the broader environment for higher-ed data and benchmarking has been disrupted by staffing reductions at the federal level, creating more uncertainty for institutions that rely on external data for planning and peer comparisons.
Translation: if you hollow out your analytical layer, you may not be able to rebuild it quickly—even if you later realize you cut too deep.
“Flatter” isn’t automatically better
Delayering is often sold as speed: fewer layers, faster decisions, less bureaucracy. But even the organizational design literature notes that delayering is frequently driven by anticipated cost savings and that there is real confusion about what “flatter” means in practice and what support a shorter hierarchy requires. And outside higher ed, we’re seeing the same “hollowing out” trend play out: fewer managers, wider spans of control, and supervisors carrying materially more direct reports than in prior years.
The risk is not that you become flatter. The risk is that you become flatter without replacing the capacity those roles provided—analysis, coaching, coordination, quality control, and execution discipline.
What happens when you hollow out the middle
When the analytical layer thins, the institution often shifts into a familiar pattern:
Everything becomes urgent. Without capacity to plan, the system reacts.
Executive bandwidth collapses. Leaders spend time assembling data and managing projects that should be owned lower in the organization.
Decision quality degrades. Options are under-developed, and tradeoffs are made late.
The organization becomes brittle. Turnover hurts more because knowledge is concentrated.
Morale declines anyway. Not because people weren’t protected, but because they’re asked to do complex work without the tools, analysis, or clarity to succeed.
This is how “saving overhead” turns into a leadership constraint.
The alternative: protect (and redesign) the analytical spine
The answer is not “never cut.” Tuition-dependent institutions don’t have that luxury. The answer is: cut in a way that preserves institutional capacity—and redesign the middle so it delivers visible value.
What I’ve seen work:
Define the minimum viable analytical engine. Budget/FP&A, institutional research/analytics, and at least one strong project/execution function that can run cross-functional work.
Centralize where it reduces duplication, not where it breaks relationships. Shared services can work, but only when paired with clear service levels and escalation paths.
Automate reporting to redeploy humans to thinking. Dashboards should reduce “story time,” not create more of it.
Create a decision cadence. Predictable cycles for forecasting, budget updates, capital governance, and board reporting reduce crisis mode.
Invest selectively in tools that amplify capacity. A good planning system, a disciplined data model, and workflow/ticketing can be force multipliers when staffing is constrained.
The goal is simple: keep leadership focused on leadership—direction, alignment, tradeoffs, accountability—rather than rebuilding analysis and coordination ad hoc.
The point
In tuition-dependent higher education, the temptation to hollow out the middle is real. Tuition discounting pressure is real. The financial stress is unmistakable. But if you remove the layer that turns strategy into execution, you don’t just lose staff lines. You lose the capacity that makes leadership effective.
Leadership capacity follows institutional capacity. Protect the capacity, and your leaders can lead. Remove it, and even the best leaders end up managing around a system that can’t carry the work.
