Published on 2014/10/20

Misconceptions Challenge Efficiency in Higher Ed

AUDIO | Misconceptions Challenges Efficiency in Higher Ed
Although there is an expectation that the changes being demanded by policymakers and the public can be achieved through operational savings alone, greater investment is required for institutions to be truly successful.

The following interview is with Dennis Jones, president of the National Center for Higher Education Management Systems (NCHEMS). NCHEMS’s focus is on improving strategic decision making in higher education for colleges, universities and states. In this interview, Jones discusses the importance of operational efficiency for the modern postsecondary institution and shares his thoughts on some of the major misconceptions surrounding efficiency-related change.

1. Why is increasing operational efficiency a top-of-mind priority for higher education leaders today?

There are two or three very obvious answers to that question. First of all, there’s an increasing level of expectation about higher education attainment in the States. So far, about 37 states have identified increased education attainment as a statewide goal or priority. They vary enormously from state to state, but it’s the single goal shared by the states when they established their public agendas and as part of that, there’s an increasing awareness that an individual’s life chances in the absence of some form of postsecondary education are not very good. The premium for higher education keeps getting bigger and the likelihood of ever reaching a middle class without postsecondary education of some sort is increasingly problematic.

The second piece of it is that while we always hope for greater state investment in higher education, there’s not a lot of sentiment that suggests it’s going to return anytime soon, and certainly not in the amounts consistent with the number of students that are going to have to come into the system to meet the attainment expectations.

The final piece of this is a concern among the public and policymakers about prices and student debt. Increasingly, there’s recognition that state money cannot be replaced by tuition funds on a dollar-for-dollar basis without running into price limits that will keep students out of higher education.

All three of those things come together to create the obvious focus on efficiency and how higher education does its business.

2. Do you see higher ed leaders as looking at efficiency as a silver bullet to the problems they have or as a more fundamental part of how they should have been operating the whole time?

They’re coming to understand there is no silver bullet, and efficiency is something that has to be sought across the full range of educational activities.

In some sense we can say, yes, they should have been paying attention to this all the way along, but the availability of resources meant they didn’t have to.

3. What are a few strategies these leaders have put into place to achieve greater operational efficiency?

The first step is always to reduce administrative cost. This often takes the form of reduction in services in things like purchasing, consortia, finding alternative ways to buy energy or technology. Some of this also is outsourcing of a variety of those kinds of activities that are not core to the mission of an institution, such as custodial services, food services, bookstores, all of those kinds of things.

For those institutions that are part of a system, there’s an increasing orientation toward centralization of back-office functions — accounting, information systems, those kinds of things — where a single contract with a vendor [across the system] suffices rather than every institution having to negotiate its own. There are obviously pros and cons, at least from the institutional perspective, on that strategy, but it’s a strategy that’s increasingly found in systems around the country.

Then on the academic side there’s a whole variety of activities, like eliminating low-enrollment, high-cost programs and course redesign. At this point, not nearly enough attention has been placed on the academic side of the enterprise. Most institutions have pushed administrative savings probably about as far as they can and now the time has come for a much more rigorous look at the academic side of higher education.

4. What are a few of the most common misconceptions surrounding efficiency in the postsecondary space?

Among policy makers, there’s a mistaken sense that the attainment goals they’ve espoused can in fact be achieved based almost solely on savings in institutional operations. While improvements in institutional operations and productivity are key to this, at least in most states, there’s absolutely no way to reach those goals without increased investment. On the one hand, there’s a silver-bullet look at what efficiencies can attain relative to state goals, and that’s one issue.

Inside the institution, there’s a sense that efficiency translates directly to losing quality. Associated with that is the sense that low price equals low quality, that the higher the price of an institution, the more quality it’s perceived to have. In the middle of all of that is an age-old sense that the only way to achieve necessary interaction with students is to do business face-to-face in the way that faculty always have. As an offshoot of that, if one talks about changing delivery models, it’s quickly translated into a sense that this is all a plot to get rid of faculty. This is not about getting rid of faculty; it’s about ensuring those faculty work to their greatest advantage and to the greatest advantage of the enterprise.

This interview has been edited for length.

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Key Takeaways

  • While efficiency is a critical element for institutions looking to improve services with reduced resources, it’s not a silver bullet to solve all outcomes issues.
  • On the operations side, finding common back-end services that can be used system-wide can lead to significant savings.
  • Operational changes are not enough; more attention needs to be paid to savings that can be realized on the academic side of house.

Readers Comments

Morgan Hendrie 2014/10/20 at 10:10 am

I see the value in tackling operational issues first so that staff are freed to think about the attainment challenges in higher ed. I agree with Jones that we shouldn’t go as far as to call a few efficiencies a silver bullet, but they do help us highlight areas that need improvement so that we can both improve the student experience and, in so doing, address at least some outcomes concerns.

Tyler Flegg 2014/10/20 at 1:17 pm

Jones makes a good point that operational efficiency is not a silver bullet, but I find senior administration has the tendency to quickly identify scapegoats when things go wrong and silver bullets when they need to fix them. This kind of thinking is detrimental for students and staff, as it tends to lead to hasty decision making at the administrative level that may not translate well for on-the-ground operations.

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