Colleges: improving financial performance and value for money

At the last gathering of Finance professionals at the AoC Winter Finance Conference, we heard Julian Gravatt comment that colleges might expect a relatively quiet year, following the completion of area reviews and a lack of dramatic announcements in the November Budget. The feeling was that colleges would be able to take stock and “get their houses in order”, and this sentiment is certainly one that we have been picking up from all our Benchmarking customers and college leaders who are coming to us to inform a more strategic approach to their college’s financial performance.

A common requirement that is coming out of those discussions is the need for colleges to address the ‘value for money’ question, in addition to the well-worn approach of identifying opportunities for cost savings. Why? Cost is only half the picture; it’s all very well talking about how much something costs... but what about the quality of service that is delivered by college Support Services? The cost-only approach leads to questions and observations such as:

“It’s great that the finances are well controlled, but what about the level of service”;

“I desperately need more money – I can’t do my job without it and the student experience will suffer” or

“Of course my service is worse than benchmark – I have a lower budget than all my peers at other colleges!”

Just looking at the cost side of the equation can often lead to resistance to, and disengagement with initiatives designed to bring about more efficient operating practices. We’ve been working with our customers to produce analysis that provides the quality of service part of the equation to give a more complete picture of what’s going on in the college.

"what about the quality of service that is delivered by college Support Services?"

How are we doing this?

Colleges are wanting to see the value for money each of their departments is delivering, so analysis of the costs of things like student recruitment and admissions; student services; finance; marketing and central administration is being combined with the data we have been collecting via our service quality survey for their levels of service. And then, to add further context we take into account a third dimension which is decided upon by the college – this might be something like strategic importance of that service/department or the relative importance based on student or staff survey results, or simply proportion of college expenditure.

The combined analysis then provides a full picture of college resource allocation, service levels and value for money. In turn, resource allocation decisions are more informed and more easily explained or validated with department leads using these objective and comparable data sets.

"resource allocation decisions are more informed and more easily explained"

Colleges can then use this analysis as part of a benchmarking exercise to not only inform those investment decisions, but also to show distance travelled against their own KPIs as well as sector benchmarks. They can subsequently actively manage the value derived from their services to align operations with the strategic plan.

In terms of colleges ‘taking stock’, what we are seeing is that colleges are using this holistic benchmarking and value for money analysis to inform strategic planning cycles, illustrate to stakeholder and governing bodies the true factors being taken into consideration, and embed in their organisations a culture of continuous quality improvement.

To see just what can be achieved using this approach, join us on our forthcoming webinar, “Measuring Value for Money in colleges and Improving Financial Performance” Thursday 31st May, 2:00 - 2:45pm