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Change management

How can UK universities save costs and still motivate…

  • July 9, 2020September 7, 2020
  • by Nick Dalton

Will universities need a bailout to survive the COVID-19 crisis? – this was the question posed by this week’s briefing paper from The Institute for Fiscal Studies (IFS). The report makes very startling and disturbing reading, giving rise to headlines such as “Coronavirus: 13 UK universities ‘could go bust without bailout'”.

In short, the reports authors believe the UK university sector could be facing financial losses of around £3 billion (7.5% of the sector’s overall income); £11 billion or £19 billion (nearly half of total sector income), depending on whether you buy into an optimistic, central or pessimistic scenario, respectively. Most losses will be from operations (including loss of fees through a reduced intake of international students), increases in deficits of pension schemes and losses from long-term investments.

Two things the report is clear about, perhaps not surprisingly, is that the situation is highly uncertain and secondly, that there will be vast differences in the impact on universities depending on their current financial situation and their operating model.

How far could cost savings meet this shortfall?

What the report also states is that identified cost savings – estimated in the report at £600 million across the sector – are unlikely to claw back enough of these losses to avoid universities having to resort to the self-limiting route of redundancy programmes.

However, this estimate is restricted to only those savings from the use of the government’s furlough scheme and from potential cuts in temporary staff, both teaching and non-teaching. Universities are already well on their way to implementing other sources of savings, such as restrictions on travel (maybe not too difficult in a pandemic), a focus on reducing discretionary spend and even voluntary redundancy schemes.

What the report doesn’t identify is that in many places we look in the HE sector, there are operations, structures, procurement and processes in which there are significant cost savings to be made from the elimination of unnecessary costs and waste.

The root causes of these unnecessary costs are varied but include excessive complexity due to departmental silo-thinking and practice, a focus only on ‘local’ process and limited process ownership and accountability. This results in inefficient university-wide end-to-end processes, duplication of activities and structures, errors, rework and high levels of ‘failure demand’. Ultimately, student experience and staff morale suffer.

How do we solve this?

There are transformational change programmes that consistently deliver benefits – they are participative, creative and empowering, producing both hard financial benefits as well as ‘soft’ cultural change – in which staff are fully engaged to identify and deliver the improvements.

These programmes are scalable, no matter the size and type of university, and involve collaboration across the relevant teams and departments, including students and Students’ Unions if required. The teams are cross-functional and brought together to rapidly find solutions and make decisions.

The approach is most effective as a facilitated programme of targeted improvements, or structured rapid improvement events. Included are learning modules to promote changes in behaviour that engender a sustainable attitude of continuous improvement.

True, even this type of approach will never completely fill the gap in the eye-watering financial losses being faced by the sector, but can contribute significantly to saving costs and will do so through the mobilisation and motivation of staff. More strategically, this approach will help prepare the university to be much leaner and effective in the post-pandemic recovery.

Progressive universities can achieve both cost improvement to meet the current challenge whilst simultaneously developing a culture change to one of continuous improvement.

Nick Dalton
nick.dalton@hedspaceconsulting.co.uk

group of people sitting indoors COVID-19

The COVID-19 crisis – Reflections on relationships between Boards…

  • July 1, 2020August 18, 2020
  • by Anna Verhamme

Most Universities will be finishing the third and final cycle of committee meetings for this academic year. As with everything COVID-19 will challenge the normal cycle of business. I argue in this article that we should pause and consider the nature of Board and Executive team meetings and how both relate to one another.

As Patrick Dunne says in his book “Boards”, governance is all about Purpose, People, Process… So how can COVID-19 impact each?

Purpose

As scenarios describing the financial implications of the COVID-19 crisis on recruitment and University finances are being developed, it is becoming clear that the financial survival of many institutions is more precarious than it has ever been. Boards and Executives will be needing to make some really difficult short-term decisions, mostly driven by financial considerations. And because of the level of uncertainty, it will be important for Boards and Executive teams to be clear on – and honest about – assumptions made; the possible and probable consequences and the actual -not imagined – preparedness of the institution. The latter will need to include an assessment of the institution’s human resilience, not just its financial resilience.

Whilst this will no doubt be the immediate focus of Boards and Executive teams, it will be hugely important to also challenge assumptions about the role of the institution for the future and the implications for “the academic business model”. Universities have a huge impact, locally, nationally and internationally. Many institutional strategies focus on the University being “the best”, “the top” and “world-leading”. At this time Universities also have a role in sustaining life, whether that is through local employment, contribution to healthcare systems or increasing creativity. I envisage tensions between those two roles in the coming months and suspect that in the best institutions, existentialist discussions will take place as Boards and Executive teams consider what their institution is for and what is at stake.

People

All this will require a good thinking environment, exactly at a time when people are starting to wear very thin. Counter-intuitively, at this time Boards and Executive teams need to resist the rush to action, but instead need to slow down, take time to reflect and iterate decisions. 

The best Boards and Executive teams will build a psychologically safe environment. An environment that enables everyone in the institution to bring their best thoughts and share their concerns so that improvements can be made. This will require Executive teams to pay more attention to the operational detail, to ask for bad news, to engage more broadly, to destigmatise failure and sanction clear violation. Boards will need to create a culture of constructive challenge and ask good questions helping the Executive to conceptually clarify and probing assumptions, rationale, reasons and evidence. 

The best Boards and Executive teams will give themselves – in the words of Dr Mark Brackett “Permission to Feel”. Because emotional literacy – being able to recognize, name, and understand our feelings – affects decision making, and creativity, working relationships, health and resilience, and performance.

The best Boards will recognise their own vulnerability, ignorance and blind spots. They will lean into the uncertainty and accept a degree of “muddiness”. They will rely on a wealth of social capital – friends, confidants, partners – to help them navigate what may be an existential crisis for many Universities.

Process

“The supply chain of relationships becomes fragile as we try to do too much, too fast, with precarious processes that simulate but aren’t reality.” Margaret Heffernan

How we organise the Board and Executive teams’ core processes will matter more than ever in the next months… A couple of questions I ask myself:

How can we create a meeting and working atmosphere that allows us to slow down, reflect and take time to make decisions? Rather than changing the planned face-to-face meetings into zoom meetings, can we pause and consider whether it may be more appropriate to break the meeting down in a number of smaller meetings each with a specific focus and an opportunity to go away mull on the decision before coming back for a final discussion?

How can we challenge statements in meetings in a way which supports the a psychologically safe environment whilst encouraging participants to think even harder and better? I have found the Language Compass and related article really helpful. 

How can Board members sharpen their antennas and check in with what is happening in the institution? Many Universities already hold an annual or bi-annual staff survey. As we have gotten more used to online tools, is now the time to ask more frequently and more specific questions? Questions about wellbeing, psychological safety, organisational culture as well as about creativity, innovation and sense of belonging? 

How can Boards members fully understand their institutional contexts? Are Board members aware of the institution’s local dependencies – I am thinking here particularly about what we have come to value as essential services? Are Board members aware of the ramifications of the decisions they will be making – I am thinking specifically about those people whose lives will have been affected disproportionally by COVID?

And finally, how do both Boards and Executive teams go about understanding the subtle, but significant societal changes which have taken place in the last couple of weeks. It is easy to remain in a bubble, to make assumptions about people’s experiences of the lockdown and make grand statements about the new normal. It will be important to give voice to and recognise all experiences and to question who will be involved in determining what the new normal looks like.

Reflecting on and changing how Boards and Executive teams meet and relate to one another can feel like a nice to have. Considering the huge challenges lying in wait for us, it is essential that we pay attention and prioritise this work, as it will support our futures.

Anna Verhamme
anna.verhamme@hedspaceconsulting.co.uk

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