Priorities for Leaders of Revenue-Generating Units: Maintaining Quality and Driving Business
Plummeting operating budgets and declining traditional enrollments are leaving many college and university leaders scrambling for ways to reduce costs or increase revenues. In response to these difficult realities, many senior leaders are looking to their revenue-generating divisions to grow and bring the institutional bottom line into the black. Of course, managing these divisions presents some unique challenges. In this interview, Laura Weidner, a workforce development and community college veteran with over 25 years experience, shares her thoughts on how leaders of these divisions can navigate these challenges.
The EvoLLLution (Evo): How do administrators of revenue-generating divisions balance the need to generate revenue with the expectation of high-quality programming?
LW: A community college lives and dies by its reputation for quality instruction and learning outcomes. If the quality of that learning is compromised in any way, the entire institution is hurt. A poor quality course—whether delivered online, on campus, or onsite at a corporate workplace—can create negative ripples in numerous directions. On the flip side, a high-quality course can create positive reputation and result in increased enrollments. Thus, everyone with a finger in the quality of the instruction and learning has a responsibility to hold the line. As such, managing a revenue-generating division in a not-for-profit or public organization can be very challenging.
Balancing that need for quality with the pressure to generate revenue requires the leader to empower his or her staff to focus on quality first, before profit. Train and prime sales staff to listen and learn from the client, and then build a response and proposal that will meet that employer’s needs. Pricing, while important, comes second to the importance of the quality. Unless a leader encourages staff to take this approach, much of the business becomes one-off training sessions, with little or no return business. The goal is to deliver such a fine product that the employer/customer thinks of the college first for any future needs. This then means a regular customer, a return customer, and increased business. Keeping current clients coming back is much less costly than reaching new ones. The real revenue benefits are in those returning clients.
Evo: What are some common misconceptions leaders of revenue-generating divisions face?
LW: Many of the misconceptions about revenue-generating divisions can be found in other parts of the college. The division is often seen as a profit center and the cash cow for the college. This can lead to resentment, unrealistic expectations and disappointment across the board.
The leadership of the institution knows and understands the need for revenue, but can be guilty of setting expectations to meet budget requirements rather than setting realistic expectations for quality sales and delivery. Too many times, a profit center leader is tasked to net sufficient revenue to pay for the next big thing the institution is planning to do.
Other divisions and departments are often constrained by local and state budget requirements, college limitations, and operating budgets. Often the revenue center is seen as being outside those boundaries, again resulting in resentment and jealousy. When the entire institution is in a budget crisis and all catering and local travel have been stopped, other departments may not appreciate the need to continue those activities in a department competing with other organizations for business.
Competition is another misconception. A local community college rarely has to compete with other community colleges as they serve their local communities. Students come to the community college from high schools in that community and due to out-of-area costs, rarely go outside their community, unless to university. Corporate training and business service units, however, must compete with every training company, consultant, university and even online training groups in order to reach business. Trying to compete in an institution that does not really understand competition for business is difficult.
Others who don’t truly understand the work of the community college can be found in the business community. Comments such as “Why would I hire a community college to train my employees who already have degrees?” or “I didn’t know a community college could do that!” demonstrate the breadth of misconception among employers and community leaders. This gets back to the quality—good sales staff educate the business community about the breadth and depth of what a community college can bring to them, and then delivers the same. One by one, it is possible to break down those misconceptions.
Evo: How would you characterize the relationship between leaders of revenue-generating units and senior institutional leaders, like the provost’s office?
LW: As with almost every department and senior leadership, it is all about the relationships that are built and nurtured by both sides. It behooves both to work to keep each other fully informed, up-to-date and on the same page.
The wise leader brings the unit manager into high level discussions and allows that individual a seat at the table where decisions are made. The profit center manager knows much about the business community and trends in the workplace that can benefit the institution. He or she must be an excellent budget manager and can contribute to overall budget discussions. This also allows the manager to know what the rest of the college is doing, creating and offering, enabling that department to “sell” whatever the college has to offer.
The wise manager builds a very strong relationship with senior leadership. Much of what goes on in a profit center may run counter to the institution’s established processes and procedures and having the leadership recognize and understand this will help the unit manager be more successful. Signature processes may need to be expedited; budgetary limitations may be exceeded; buildings may need to be open when the college is closed. When those kinds of issues arise, senior leadership can smooth the way for the revenue-generating unit.
Evo: What are the biggest challenges of managing units that operate differently than the main campus—running short courses, customized programs and non-credit programs alongside degree programs?
LW: Using some well-worn clichés, the profit center spends a great deal of time swimming against the current while the more operational departments in the college are struggling to see how this polygonal peg is forced into their round holes of procedure.
In an institution with an entrepreneurial approach, the differences in course length, delivery style, location, and the like are not generally major issues. The biggest concern of the instructional departments is that the integrity of the existing courses not be compromised. It is critical that profit center managers work closely with faculty and deans to assure this integrity and ensure that it is carried out in practice.
Perhaps some of the biggest challenges are in the operational and procedural areas of the college. As noted previously, senior leadership can help with overcoming some of these problems. Building a strong working relationship between the business office of the institution and the profit center is essential as well. Oftentimes the challenges can be met with compromise (e.g. college-wide spending is stopped in May, but the profit center can continue through end of the fiscal year). However, it is extremely important for the business office to see that the unit is following all other rules and procedures and respects the role of that office.
Since the profit center operates so differently, another challenge can be staffing. Many times employees move around and switch departments within the same institution. The profit center unit may be very appealing to some with varying hours, attendance at external events and luncheons, time away from campus, and the like. However, hiring the right people is very important for a profit center. Sales and solutions development are skills that are not typically common among college faculty and staff. Some training can help but the entrepreneurial spirit and a willingness to do whatever it takes must be intrinsic to anyone working in a profit center.
Evo: What is the most important piece of advice you would share with leaders of revenue-generating divisions?
LW: I am not one to generally give advice as each institution is unique and operates differently from others, even in same geographic area or similar size. However, I believe four things can make the leader of a revenue-generating unit more successful: leadership, analysis, flexibility, and integrity.
Leadership skills are essential—hire the right people for the job, even if they are external; provide them all the training and tools they need to be successful; turn them loose. A good leader cannot control everything and allowing the professionals you have hired to do their jobs is critical to their success and that of the department as well.
Analysis of the community, the institution and the staff is crucial. Take the time out to do this well. Oftentimes that means bringing in some expertise from the outside. The HR department or the staff development arm of the college most likely do not have the kind of analysis and solutions-development your area needs. I work with community college experts Don Cameron and Associates to go in and help a revenue-generating department really look at the whole picture. We help the department and its leadership grasp what might be working well and what might need more attention. If you can’t bring in external experts, develop a strong system of summative and formative evaluation to help you analyze from within.
Flexibility and integrity are important throughout the college, but are essential in a profit center. Every employee must understand and live the idea that there is a customer whose needs must be met. Period. The sales staff cannot sell something that the delivery staff cannot staff or find resources to bring about. The delivery staff cannot slack off on the quality or it goes back to the beginning of this piece—there is no return client and revenue is lost. As one of our corporate clients taught us: The customer is not always right but the customer is always the customer. In an institution where the word customer is often abhorred, this can be a difficult task to undertake.
This interview has been edited for length.
Author Perspective: Administrator
Author Perspective: Community College