3.4 Competition

A creative institution requires much multi-disciplinary and inter-institutional co-operation, and a little bit of splendid isolation to get somewhere. The introduction of market mechanisms in almost every field: for students, staff, research contracts and public funds is a driving force of hectic competition. Emerging subtypes of higher education like 'Hogeschool', 'Berufsakademie' compete for students. There is an explosion of private institutions in central and eastern Europe. The tele-university and the virtual university are other challenges. Competition simulates quality and diversifies supply; students and society at large will profit from it. It is natural, hut not wise that some will organise a lobby for legal protection of the term 'university', as this would infringe upon the freedom of education.
Managing competition and cooperation at the same time is intrinsically problematic, especially in an individualistic and international environment. An example may illustrate the issue: in the western world, it happens more and more that units are charged for the services of other parts of the same house. As a consequence rich units tend to become richer and/or acquire more influence than they previously had. Whether internal contracting and charging services within institutions advance academic co-operation or improve efficiency remains questionable. An institutional 'tax' on income from contracts to be reallocated by the central level, new techniques of sharing overhead costs en the basis of the principle of bearing-power, and instruments such as 'the rectors' envelope', are useful corrective mechanisms to foster the solidarity that is necessary to keep a higher education institution together and control forces tending toward fragmentation. However, these are pure financial instruments, consequently political in implementation, and thus not without risk. It should not happen that the regulatory frame is incapable to create new balances of competition and co-operation.

3.5 Performance

Performance indicators still have a limited importance, hut it is a widespread belief that they will be applied beyond traditional use (accountability, government use), to more advanced models of control in self-regulatory or cybernetic models and for the development of strategic policy (e.g. McDaniel, 1997). Performance indicators should be used in a fair way. If employers' evaluations of graduates become an accepted criterion, results must be comparable, national and regional preferences must be weighted, undue influence of stakeholders ought to be prevented. Employment rates of graduates are interesting as far as the position and career of graduates can be weighed. Indicators such as completion rates depend on how selective institutions can or want to be. The reputation of academic staff is a qualitative indicator that requires utmost prudence.
New methods of quality assessment are based on processes in which the opinions of peers, but also students (the Netherlands) and employers (Denmark), and more or less explicit performance indicators, are of prime importance. Quality assessment is an extremely important instrument of change. The impact on governance can only be great. Yet, quality assessment finally remains subjective, its comparative value is overestimated, and processes for the selection of peers are underdeveloped.
These developments open a new field for legal cheeks and balances, especially because performance indicators and quality assessment influence the budget: directly as in the Slovak Republic, or indirectly when the assessment influences student enrolment and the number of research contracts. Legitimate interests of staff, students and institutions must be effectively protected by law.

3.6 The human factor

Legislating is psychology. Touching the problems of governance is touching 'the human factor'. Accidents and problems are caused by sub-optimal or irrational human behaviour. A main element of anticipatory governance is to formulate regulations that get the best out of people (this means taking risks) and at the same time reduce mistakes.
For a while the Japanese management style was very influential in business administration. Ohmae (1982), director of McKinsey Japan, wrote that excellent companies are 'human'. He took this narrow view: managers should realise that one of the means production is human beings who are able to do more than assemble industrial products. Human companies have entered, what Ohmae called, the era of activated enterprise: strategy and structure are in harmony, and everything is geared to execution; common characteristics are job-security, tenure-based promotion, and internal development of people instead of global recruiting campaigns, and, this must be added, an apparent, but not real, flat hierarchy. The companies provide endless opportunities for employee participation and regard their people as members, not as employees. They promote a common value system and display a real commitment to the business, instead of pursuing strictly financial objectives. These characteristics belong to the essence of a university.
Universities are remarkably strong institutions if it is true what In 't Veld (1995) maintains: 'all hybrid organisations risk to become perverted' (about institutional decline also Whetton, 1980). For their survival, organisations occasionally need deep-cutting changes: learning from their weakness, drawing on external assessment and advice. On the one hand, managerial structures and management philosophies can be perverted, but if the majority of the staff has high morale, things can still function quite well for a while. However, it is likely that the entire environment will be infected, undermined and frustrated. Then, the efforts to redress the situation require much power, perseverance, time and money, and usually an external intervention, if that helps at all. On the other hand, a solid structure with un-cooperative staff is pearls before swine, but at least the organisation has the possibility of correcting itself and restoring normal functioning.