Commentary: How USC’s President & Board Chair Flunked Their First Leadership Test

USC Interim President Wanda Austin and Board Chair Rick Caruso

On Dec. 12th, the Board of Trustees for the University of Southern California were called together for an unusual and unnecessary decision: To vote on a resolution supporting an already highly controversial decision by the school’s Interim President Wanda Austin.

Her decision, to fire highly popular Dean Jim Ellis of USC’s Marshall School of Business, had created a firestorm of protest. By then, more than 3,000 faculty, staff, students and alumni had signed a petition in support of the dean. Hundreds more had written emails and letters opposing the president’s decision. And protesters rallied on campus. Austin, a retired nonprofit executive who had assumed the temporary presidency only four months earlier, desperately wanted and needed a public show of support.

The outrage that preceded the meeting was understandable. Dean Ellis was being fired, effective June 30th of next year, because he allegedly mishandled racial and gender bias complaints at the business school. But there was no evidence that he, in fact, poorly handled anything. The vast majority of complaints filed with USC’s Office of Equity and Diversity (OED) were unseen by him because they were never forwarded to his office. And no one, not even Austin who sought his head, accused him of inappropriate behavior of any kind.

AN EXTRAORDINARY LITTLE SPEECH BY RICK CARUSO OPENED THE MEETING

A report the university commissioned from a law firm, Cooley LLP, did not recommend his dismissal. Yet, Dean Ellis, despite multiple requests to see the report that was used by the administration to seek his early retirement, was never allowed to see the review that was often cited as the basis for the decision to cut his successful deanship short by three years.

The report, according to a handful of trustees who have actually seen it, said there was no pervasive culture of either gender or racial bias at the Marshall School nor was there any evidence of it by the school’s leadership team. In fact, the lawyers who produced the report merely examined the complaints at the OED, never interviewing any of the complainants, faculty, the dean, or members of his leadership team. Not even the OED director was interviewed for the review.

The trustees meeting began with an extraordinary little speech from USC Board Chair Rick Caruso, according to sources with knowledge of the session.

‘THERE’S NOTHING TO VOTE ON BECAUSE WANDA HAS THE RIGHT TO MAKE THIS DECISION’

“There’s nothing to vote on because Wanda has the right to make this decision, unless you want to vote her or me out of here,” said Caruso, a billionaire real estate developer who had become board chair in late May of this year.

Caruso, who has a reputation for being a know-it-all who breezes into development meetings with a ‘this-is-the-way-it-is-going-to-be’ approach, effectively gave trustees notice that they faced a take-it-or-leave-it Hobson’s Choice. You either give cover to a temporary president’s unfair and wrong-headed decision or risk the chance that the two of them walk.

USC had already been through an unusual amount of turmoil over the past year, headline-producing scandals that led to the arrival of both Caruso as board chair and Austin as Interim President, both plucked from the Board of Trustees. The worst possible outcome would be for either of them to quit in a huff.

TRUSTEES SUPPORTIVE OF DEAN ELLIS WERE CUT SHORT OR IGNORED

Never mind fairness or principle. Or an innocent man’s reputation. A vote was sought to provide cover to an exceptionally bad decision by a president who failed to do the due diligence required of her decision and then lacked the self-confidence to admit she was wrong.

One trustee member, who had already been quoted in the media supporting Dean Ellis, was given all of one minute to speak during the meeting and then escorted from the room before Austin’s tightly-scripted presentation.

Yet, Ming Hsieh, the trustee who had to sit out the presentation and all of the discussion, had served on the board for more than ten years and also donated $85 million to the university. He was also one of the very few trustees who had personally examined the binders that contained the complaints in the OED and read the Cooley report. Hsieh says he found no evidence in those documents to support Ellis’ dismissal as dean.

Other trustees who were supportive of Dean Ellis, according to sources, were either not recognized or were cut short by Caruso. He even ignored a trustee’s suggestion that the meeting go into executive session, without management present. Caruso controlled both the microphone and the meeting until Austin tersely read from a prepared statement, with a PowerPoint presentation that was not visible to most of the trustees, and then sat quiet, refusing to take any questions from board members.

TRUSTEES RECEIVED NO ADVANCE MATERIALS NOR THE REPORT USED TO JUSTIFY TERMINATING ELLIS

Before the meeting, no trustees received any advance materials on what they would ultimately vote on. No one was given either the Cooley report or an executive summary of it at the meeting. Some trustees, in fact, would later concede that they were confused over what in fact they were voting on if the president already had the right to appoint and dismiss the school’s deans.

The inevitable outcome of this governance travesty was a vote in favor of the resolution to support the president’s decision. Henry Martyn Robert, the U.S. Army Officer who created Robert’s Rules of Order of parliamentary procedure, should be turning over in his grave.

When any trustee’s comments left doubt about their support of the president, Caruso did what he has done in his real estate career: Bluff his way through it. Sources tell Poets&Quants that he effectively insisted that the trustees didn’t know the facts and had to trust the few in the room who did—Austin and Caruso.

‘THE DONORS WILL FORGIVE AND FORGET’

USC Marshall Dean James G. Ellis

Two days before the meeting, USC’s Academic Senate, which represents all faculty, condemned the dean’s dismissal for a lack of transparency and shared governance, and the Marshall School’s faculty in a survey just last month gave the dean a 4.5 to 4.8 favorable rating on a scale of 5.0. Marshall’s Faculty Council requested an opportunity to present the survey findings to the Board of Trustees, a request denied by Caruso.

Before the vote, Caruso assured his board members that the current controversy would pass and be quickly forgotten.

“Don’t worry about all of this,” he said, according to sources. “When I was President of the Los Angeles Police Commission, we found out that all you had to do was wait out the protesters and the commotion will die down.  The donors will forgive and forget.”

‘I AM SO PROUD OF MY FELLOW TRUSTEES FOR THEIR COURAGE & THOUGHTFULNESS’

The very next day, a columnist for the L.A. Times would write a misinformed and misandrous op-ed piece congratulating Austin and the board for its decision. Claiming that “patriarchy protects itself,” the newspaper columnist naively wrote that Austin gave “us hope that the boy’s club can be dismantled and replaced with something better.” Somehow, the columnist also neglected to mention that the Marshall School under Dean Ellis’ leadership has more women and under-represented minorities in its MBA class than any other major B-school in the nation, and that his leadership team consists of 71% women.

Caruso was clearly delighted. “Dear Fellow Trustees,” he wrote in an email that included a link to the opinion piece, “As I said at the end of our Board meeting, I am so proud of my fellow Trustees for the courage, thoughtfulness, and clear-eyed action that has been exhibited during this past year. This column in today’s LA Times is well written and on point.”

Courage? Thoughtfulness? Clear-eyed action? When Caruso became board chair, he immediately promised to help lead the university in a way that would be “open, honest and transparent.” He and Austin have badly flunked their first visible test of leadership at USC and brought still further disrepute to the university.

DON’T MISS: USC OUSTS A HIGHLY POPULAR BUSINESS SCHOOL DEAN or THE MBA LEADING THE FIGHT TO SAVE A BUSINESS SCHOOL DEAN

About The Author

John A. Byrne is the founder and editor-in-chief of C-Change Media, publishers of Poets&Quants and four other higher education websites. He has authored or co-authored more than ten books, including two New York Times bestsellers. John is the former executive editor of Businessweek, editor-in-chief of Businessweek. com, editor-in-chief of Fast Company, and the creator of the first regularly published rankings of business schools. As the co-founder of CentreCourt MBA Festivals, he hopes to meet you at the next MBA event in-person or online.