Quality Endeavors Issue No. 131
September 2010

Efficiency and Effectiveness Opportunities
within Higher Education

Strategy leaders for Penn State’s Priorities for Excellence: The Penn State Strategic Plan 2009-10 through 2013-14 are exploring numerous options for increasing efficiency and effectiveness in both academic and academic support areas. Richard Allison, the co-leader of Bain’s Higher Education Practice and the lead for Bain’s work with University of North Carolina – Chapel Hill, and Robert Thomas, Executive Director of the Accenture Institute for High Performance and Visiting Professor at the International Business School, Brandeis University, have worked with many institutions of higher education facing similar challenges in the current economy. In their work they have identified common patterns of issues and opportunities across higher education. They shared their findings at the annual National Consortium for Continuous Improvement in Higher Education (NCCI) conference in July 2010.

Allison shared opportunities for increased efficiencies and cost savings in institutions of higher education in the areas of procurement, administration and facilities, and academic support. Common symptoms of inefficiency in support operations include complexity, fragmentation, redundancy, lack of standardization, lack of automation, and unneeded hierarchy. Underlying drivers of high cost include lack of alignment across units around priorities, lack of trust in central services, lack of accountability, misaligned incentives, and a strong sense of autonomy within organizational units. Actions to reduce costs could be categorized as consolidating operations, improving processes, strengthening controls, and revising governance and performance management. Allison offered some examples of the means to reduce costs in eight areas.

Area

Options

Procurement

  • Consolidate spending and reduce vendors
  • Negotiate strategic contracts
  • Manage demand; mandate compliance
  • E-procurement

Organization Simplification

  • Reduce layers; increase span of control
  • Consolidate units to achieve scale in HR, Finance, IT
  • Establish shared service centers to drive best practices

Information Technology

  • Standardize core IT hardware and software
  • Centralize infrastructure and management
  • Manage demand for application development
  • Outsource

Finance

  • Standardize and streamline processes
  • Revise resource allocation model
  • Consolidate platform and centralize data management
  • Tighten expense reimbursement

Human Resources

  • Standardize and streamline processes
  • Consolidate platform and centralize data management
  • Centralize/outsource benefits management
  • Develop performance management process/system

Academic Support

  • Standardize and streamline processes
  • Add/increase automation/self-service
  • Consolidate resources across the university
  • Rationalize service portfolio to reduce non-core activities

Facilities

  • Consolidate facilities services across the university
  • Streamline processes for maintenance and management
  • Outsource
  • Optimize shift schedules to reduce overtime

Utilities

  • Renegotiate energy sourcing contracts
  • Install smart meters in all buildings
  • Create incentives to reduce utilities usage
  • Use ‘green’ technologies in new construction

Thomas noted that while higher education is a distinct field, it shares characteristics with other fields. Higher education has a strong professional staff like financial services and pharmaceutical organizations; it has an individualized approach to work, like performing arts and medicine; it has a highly diverse and segmented workforce, like global enterprises; and it has an indirect influence on many of its stakeholders, as employment agencies and nursing homes do. Research cited by Thomas found that, when change efforts did not live up to expectations, it was due to:
lack of buy-in that change was needed (64%); lack of skill in change management (44%); lack of a senior management champion (40%); and turf battles (40%). Thomas identified six lessons learned in dealing with change in professional service organizations:

  1. Be confident and honest
  2. Deliver clear, consistent messages; keep them simple and straightforward
  3. Make commitments and make good on them
  4. Cultivate effective followers; engage them as allies
  5. Speak with one voice as a leadership team; start by listening
  6. Leverage difficult times to grow leaders; build experience and learn from challenges

Allison and Thomas agreed that successfully implementing significant change is difficult. They also agreed that effective communication plays a key role in the success.

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