Academic efficiency drive may put Toyota at the wheel

Universities UK study highlights ways to streamline services and reduce costs. John Morgan reports

September 15, 2011




A report on efficiency in higher education has found "significant potential" for the outsourcing of services to the private sector, looked at how Toyota's production methods could help universities and called for a study on "efficiency in academic practices".

A Universities UK task force was due to publish Efficiency and Effectiveness in Higher Education on 15 September, after calls by the government for institutions to save money on "back office" functions.

Key findings focus on the need for universities to gather better data on their operational costs to allow comparison with best practice across the sector, to consider shared services with other universities or public bodies, and to increase collaboration on procurement in a coordinated, sector-wide strategy.

One of the report's 18 recommendations is on outsourcing. Among the areas in which "strategic relationships" with the private sector may help to deliver services more efficiently are IT provision and student accommodation, it says.

The report adds: "Institutions should ensure that partnership approaches to outsourcing are considered as a normal part of their strategic planning."

Another key recommendation is that "work on efficiency in academic practices and processes should be developed", but there is no more detail given on what this might entail.

The task group was led by Ian Diamond, vice-chancellor of the University of Aberdeen and the former chief executive of the Economic and Social Research Council. Asked whether the report would lead to job cuts among university administrators, he said: "I do not think that is in any way a sine qua non of the report."

Increasing "efficiency and effectiveness...doesn't necessarily mean there will be fewer people in UK higher education", he added.

Professor Diamond said that the report was "absolutely not about simply saving money", but about the need to "maintain the effectiveness and quality of UK higher education". However, unions fear outsourcing will mean lower pay and worse conditions.

The report says that within five years, 30 per cent of the sector's non-pay spending should come through joint procurement.

In terms of "internal process improvement", the report notes that "Lean" - a management philosophy to cut waste and boost value for customers created by Toyota - has "begun to be adopted in parts of the higher education sector in recent years".

A study commissioned by the task group says that the sector needs to "establish and apply proven methodologies, such as Lean, to the process of improving services and reducing costs".

Professor Diamond said it was "absolutely critical" that higher education "learns lessons from both the private sector and other areas of the public sector - but at the same time we do not slavishly follow them. Higher education is different."

He said the report had uncovered plenty of "good news stories" and universities were already making strides on efficiency.

While he could not deny that there was a "political imperative" to the efficiency drive, he said there was "not an awful lot in the report which is disruptive change - it is continuous change".

john.morgan@tsleducation.com

Employment dividend: prized courses will have a job at the end

Universities intending to make big efficiency gains should focus on offering courses that help students get jobs on graduation rather than merely cutting back office costs and sharing services, it has been suggested.

Matt Robb, senior principal at The Parthenon Group, an international consultancy, said although "big prizes" could be won from looking at administration expenses, the "number one task" for universities was to review their course portfolios.

He said employability was already the main concern for most students, but research from other countries showed that an increase in the debts students face would add much more weight to how their degree course would enhance their job prospects on graduation.

Mr Robb, who is due to set out the argument next week at a Universities UK conference in London on Efficiency and Modernisation in Higher Education, said institutions risked losing market share to private providers if they did not address the issue.

"New competitors are offering cost-effective and employment-orientated solutions across the full range of university teaching activities," he said.

"There needs to be strategic modernisation and efficiency - doing the things that customers value, communicating this more robustly and doing everything more slickly and cost-effectively."

He added that most universities in the UK also needed to increase their spending on marketing, but in a way that secured better value for money, citing the fact that the US for-profit Apollo Group spent almost £1 billion on promotional activities in 2009. An analysis by Parthenon earlier this year of university costs concluded that up to half of all courses in Britain could be loss-making, prompting it to recommend that institutions move towards more profitable subjects to stay afloat.

The consultancy has recently carried out work looking at the "value added" by different university courses by comparing the qualifications for entry with the graduate salaries students can expect to achieve.

simon.baker@tsleducation.com.

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