Universities as an 'industry'

Thought of simply as a branch of the economy, UK universities have some interesting features. For a start, we employ a lot of people and generate a lot of income - our contribution to the UK's GDP; and we export a great deal, since taking foreign students counts as an 'export of educational services', and winning foreign research contracts (e.g. from the EU) counts as an 'export of research services'. The university 'industry' thinks of itself as operating in an increasingly competitive environment, and in some respects this is correct. On the other hand, it differs from a typical private sector, profit-seeking industry in several important respects:

(a) Although universities are supposed, from a mix of revenue sources, to cover their costs, they are not in business to maximise profits - indeed they enjoy charitable status.

(b) The university 'industry' is remarkably static, in the sense that there is little exit from the sector, very little new entry, and not much merger and acquisition (M&A) activity. Apparently this might all change, as several institutions are reportedly on funding council watch lists due to their precarious financial condition. We shall see how things turn out.

(c) Compared to most commercial businesses, the ownership and governance structures of UK universities are not as clear and transparent as they might be, despite recent improvements. This was brought home to me on a visit to Russia some years back, when I was asked by an official in the Russian HE ministry, who owned UK universities. I replied that we are technically classified to the private sector (unlike many continental European universities whose staff are civil servants), but that we cannot normally buy or sell assets without permission from our funding council, or even from HM Treasury, if public money is involved. So the matter is quite complicated - there wasn't a simple answer.

Despite these huge differences, there is one way in which universities are getting more like business, namely in their internal organisation. Let me explain what I mean.

Traditionally, universities were an amalgam of academic departments, some small, some quite large, plus a centre that provided general services to everyone: e.g. library, computing/IT, HR and finance, plus student-related administration (Registry). In the past, academic departments were not treated as cost centres, and heads were expected to be academic leaders, not managers. But this is all old hat, and hardly to be found any longer. Instead, the past 10-20 years has seen the tentacles of managerial thinking and organisational structures speading across our universities.

Increasingly, departments have been merged into larger Schools which are now normally key cost centres; and in bigger institutions, Schools are grouped into Colleges. Very often, these changes are proposed on the grounds that they will strengthen academic performance and facilitate collaborative teaching and research, but not many people really believe that and the evidence from experience provides little support. Thus such arguments are largely bogus. Rather, establishing Schools is a handy way of strengthening management control over the institution by reducing the number of units with which the institutional centre has to relate. Is this shift towards more managerial universities good or bad for the continuing success of our HE system? I guess only time will tell; and probably more on this theme in later posts.

But the debate is far from over, and the following observation suggests where it might lead us. Back in the 1970s, firms in the old Soviet Union underwent an interesting reorganisation, through the formation of industrial associations of various kinds, essentially merging or grouping firms together into larger units. The new, larger groupings were held to be more efficient, more productive, etc., but few believed that. The practical effect was to make central planning a bit easier by reducing the number of organisations that had to be sent plan targets. And did it work? Well, we all know what happened to the Soviet Union and all that central planning..............

Modernising universities - The new management-speak

Universities are definitely edging into the 21st century, and one of the signs is that they're adopting management-speak of the sort that has been prevalent in the commercial world already for a decade or two. This means both an upsurge of horrible acronyms, and the misuse of key words. For today, I'll just give one example of each of these.

On acronyms, not so long ago my heart sank when I received an e-mail asking me to prepare my FJP as part of the PDR process. I struggled briefly to figure out what I was being asked to do, and eventually realised that it was all part of our wonderful new Performance and Development Review (hence PDR) process under which staff performance in relation to their agreed targets would be reviewed annually. In principle it's not a terrible idea to review periodically what academic (and indeed other) staff are doing and assess how well they are working, and in business this happens all the time - it influences promotion, bonuses, and even whether someone gets to keep their job. But UK universities have traditionally been softer places than business, with poor performance rarely (and then usually very belatedly) penalised, and exceptional performance rarely rewarded much. But perhaps all that is starting to change with this new system. We shall see.

The FJP that we had to prepare, and agree with our line manager (head of section, head of School, or whoever), was our Forward Job Plan, in other words a list of our principal activities over the coming year broken down by teaching, research, administration and other (to pick up anything else we might be doing), and under each heading targets were set. Some targets make good sense, in my view, others less so, but the whole approach suffers from a problem I raised in a previous post, namely that academics often find themselves doing lots of things that don't readily fit into a framework of pre-agreed targets. For example in the last fortnight I've refereed two papers for journals and sent a colleague in another institution comments on the preliminary version of a paper; but none of this would typically appear in our FJP targets. Does that mean we should no longer bother to do such things? Surely not.

I'm not a big fan of detailed target setting for academics anyway, as I rather fear that the PDR/FJP process can easily become a form-filling exercise that merely serves as a substitute for the good management of academic staff. And don't misunderstand me here. I do think that academic (and other) staff sometimes need to be managed to get them to perform at the right level (and to identify any problems preventing them from doing so), but these formalised processes are not necessarily the best way of achieving that end.

Now to words. My chosen misused word is 'excellence'. It is most widely used now in connection with research, where we have - or will have when its contours are fully developed and agreed - the Research Excellence Framework, or REF. Of course, no one can really be against excellence, whether in research or anywhere else in life, but the use of the word to characterise the next round of research assessment (in 2013 or 2014, we suppose) seems to me a dreadful choice. After all, if we're assessing or evaluating something, surely our starting point should be as objective and neutral as possible, whereas the use of the word 'excellence' is heavily value-laden right away. I think we should reserve the word 'excellence' to refer to research that truly belongs in such a category, rather than for the whole evaluation framework.

Actually, the old term we used, the Research Assessment Exercise (RAE), was exactly right. As far as I can judge it was only abandoned because our funding bodies, and relevant govenment ministers concluded that the old-style-RAE had had its day, passed its 'sell-by date', or whatever, and to mark the evolution of a new type of exercise a new name had to be found. Hence the REF. But as the debate on this unfolds, it's less and less clear that it will turn out to be much different from the tried and tested RAE - but much more on that in a later post.

In any event, you can see what I mean. Our universities are definitely getting more modern, with ever more acronyms and management-speak. It's all good fun, I suppose.