Management of individual institutions

5.16 This section considers those aspects of institutional management which are properly the responsibility of the executive management team. Higher education institutions, and to a lesser extent further education colleges, are complex operations with multi-million pound turnovers. They are in receipt of large sums from the public purse but many also generate significant funds from other sources. Institutions are legally autonomous and we are, therefore, conscious of the need to ensure that a proper balance is struck between accountability for public funds and this autonomy.

Management issues
In implementing their institution's strategic vision, managers of higher education institutions must attend to a vast and diverse range of requirements, from ensuring cost-effectiveness to assuring the highest academic standards. Evidence we have considered suggests that the key determinant in achieving a higher level of performance in further education colleges is the quality of institutional management.92 Further to this, we firmly believe that institutional culture will have to explicitly encourage a pro-active approach to managing change.

5.18 Institutions employ a range of management structures and the Scottish Higher Education Funding Council (SHEFC) states in its written evidence to the Inquiry that the recommendations of the Jarratt Report, in relation to embedding proper management structures at all levels, have not been addressed fully in all institutions'.93 We commend Jarratt's recommendations with respect to this issue and note with disappointment that, ten years on, 'awareness of costs and full cost charging', appears to have progressed slowly in institutions.94 We deal with this latter issue in more detail below.

5.19 The challenge to managers of institutions will be to create institution-wide strategies and business plans for both sustainability and development. Each institution, through its principal and management team, will wish to develop a structure and methodology that best suits this purpose. Just as institutions have diverse missions so institutions will develop diverse management strategies.

Management information
We have commented on the difficulties involved in ascertaining good performance data and suggest that benchmarking to world class standards should be developed by institutions.95 In addition, we are aware that the UK Funding Bodies are currently collaboratively undertaking a collaborative programme of studies into value-for-money in higher education. Reports on energy management and treasury management having been published and work on estates maintenance and management of communications and information technology (C&IT) and computer services is now in progress. All of these studies will comment on the volume, quality and availability of management information in their respective areas. Such work should not be regarded as a criticism of current performance but should be welcomed and used by institutions constructively to drive for more cost-effectiveness. We suggest that the proposed higher education funding council, as outlined below, might usefully re-orient around more work of this sort.

Securing cost-effectiveness
We recognise the role played by institutional management in the considerable achievements of institutions in the face of continuous annual efficiency gain expectations. Nonetheless, we cannot accept institutional survival in the face of constant efficiency gains by itself as proof that value-for-money is being obtained or that further savings cannot be achieved. Value-for-money should be measured by key performance indicators, as for any organisation. We endorse the National Committee's recommendation that institutions should be required to address needs which have been identified by the National Audit Office to achieve improvements in value-for-money.

We have noted that benchmarking to world class standards, has proven a most successful management aid to many UK companies. In particular, the benchmarking process has proven to be successful in newly privatised companies which had considered themselves to be efficient but where, subsequently, significant savings were achieved whilst delivering a higher quality service. We have also heard from the further education sector in Scotland about the useful provision by The Scottish Office Education and Industry Department (SOEID) to each institution of comparative statistics. The principals of further education colleges have confirmed to us the value of such management information. We believe that benchmarking activities should be given a higher profile by the governing bodies and executive management of Scottish higher education institutions.

5.23 There is an urgent need within every institution to determine the total cost of teaching and research. This should include both direct costs and a full allocation of the institution's overheads. A fully-costed system for teaching and research would provide a solid foundation for the benchmarking process and thereby provide meaningful management information for all higher education institutions. Benchmarking should provide useful information both of a financial and non-financial nature. We are aware that the UK Funding Bodies plan imminently to publish a study of costings in institutions. We expect that this information will provide a firm foundation to departments and faculties for costing teaching and research and for the allocation of overheads.96

5.24 Non-financial benchmarking information could include a variety of statistics which could be used to improve efficiency and to provide a better service to students. Information could be included on, for example: provision of computer terminals for students, library services, human resources policies, working practices, numbers employed in various services and so on. The possibilities are clearly extensive and there is a need to focus on the information which could be most useful to governing bodies and executive management. This type of information is readily available and implementation of a benchmarking service could be rapid.

5.25 If benchmarking is to be effective, the exercise has to be undertaken in a professional manner. Information collected must be valid and reliable but has also to be used in a meaningful way whereby comparisons are made between institutions with clearly comparable missions. We believe the most appropriate body to provide such a service in Scotland is the new higher education funding council.

5.26 The higher education funding council and institutions should, therefore, identify groups of institutions with similar missions for comparative purposes. As well as comparing similar institutions in Scotland, it would be desirable to compare Scottish institutions with others in the UK and also internationally. Given, as we discuss later, that the cost per head in Scotland of providing higher education is higher than in the rest of the UK, it is important to find out if this is due to institutional performance or other national cost factors.

5.27 We have noted that the Scottish higher education sector is a good size for sharing staff, facilities and equipment on a regional or national basis and that there is already a great deal of collaboration either at the institutions' own behest or through Scottish Higher Education Funding Council (SHEFC) initiatives such as the Support for Students with Disabilities Equipment Initiative, the Regional Strategic Initiatives Fund and the Strategic Change Grant initiative. Throughout its report, the National Committee has identified a number of areas where further collaboration might take place, ranging from administrative services to research facilities and teaching and learning materials and programmes.

5.28 We note that the Committee of Scottish Higher Education Principals (COSHEP) favours a situation where 'collaboration, co-operation and above all, rationalisation, are best left to the strategic management of institutions themselves with encouragement - and perhaps incentives - from SHEFC'.97 We believe that the 'bottom-up' approach to collaborative activities is highly productive and could be further encouraged. Our review, however, reveals that there are not enough initiatives of this nature which are explicitly concerned with cost-effectiveness in the teaching of programmes and, possibly more easily and readily, in support services. There are also occasions when a stronger central strategic steer could be given in the interests of Scottish higher education as a whole.

5.29 Many commentators have suggested that the current competitive funding system militates against further collaboration and, therefore, reduces potential benefits to the system as a whole. However, we find it difficult to accept that a less competitive funding environment would yield savings through greater collaboration.

5.30 We agree with the National Committee that communications and information technology (C&IT) offers scope for securing greater efficiencies through the computerisation and digitisation of managerial and administrative services. We are convinced of the value of Metropolitan Area Networks (MANs), which make it possible to share electronic libraries, course materials, and, particularly in research, applications, and which enable regional collaboration between academic staff, by enhancing communications and connectivity between institutions.

5.31 We commend the foresight of the Scottish Higher Education Funding Council (SHEFC) in investing in the development of MANs in Scotland through its Use of MANs initiative (UMI). The natural grouping of institutions in Scotland into four regions, each served by a MAN, offers a focus for future institutional collaboration in these functions.

5.32 Early in our work we met Professor Alistair MacFarlane, who chaired the committee which produced the report 'Teaching and Learning in an Expanding Higher Education System'.98 We share the view of that report that there is scope for more collaborative exploitation of networks and of electronic materials in expediting the core business of institutions - that of teaching and learning. Scotland is well-placed to exploit C&IT further by capitalising on the possibilities offered by the existing infrastructure and we believe that, 20 years from now, Professor MacFarlane's 'knowledge economy' might be realised. In the medium term, the collaborative sharing of administrative and support services across institutions might also be achieved. We believe that Scottish higher education institutions have a responsibility to lead on the use of the network infrastructure. We agree with the National Committee that this should be given priority by institutions as part of their C&IT strategies.

5.33 We have considered the report of the Scottish Advisory Group on the Academic Year, chaired by Professor Maxwell Irvine, and noted that efficiencies may be possible in some institutions by making use of the summer period for credit-bearing teaching. Efficiencies may also accrue to society and the economy if the sector offers opportunities for study in the summer, particularly for those who might have to interrupt or miss a semester due to other commitments. Although we are aware of the range of activities currently taking place in institutions in the summer, including, importantly, research activities and access courses, we believe that there may be merit in future in higher education institutions using their premises more extensively for teaching.

5.34 We have noted that there is already existing demand in Scotland for summer semester programmes from part-time students. Some institutions offer substantial programmes of credit-bearing teaching in the summer, largely in the part-time mode. As the distinction between full- and part-time students breaks down, we expect there to be increasing demand for such options from all types of students.

5.35 We expect increasing numbers of bridging and foundation programmes to be offered by institutions as part of the flexible arrangements that meet demands for wider access by a more diverse student body. These courses could facilitate articulation and transfer from Advanced Higher courses in schools, and from higher education programmes in further education colleges, into the second and third year in higher education institutions. We expect that some institutions will wish to specialise in such programmes. Alternatively, institutions might seek to make more intensive use of existing terms or semesters.

5.36 We believe that institutions themselves are best placed to decide how to make use of the summer period. We recommend, however, that the higher education funding council should have regard to the desirability of encouraging such provision in allocating funded places.

5.37 We have agreed that the principal and his or her management team must be visionary and enthusiastic champions of change. Given the challenges likely to be faced by institutions, the management team must be able to establish realistic targets for all aspects of their business, whilst adopting an open and communicative style, to gain commitment and ownership from the entire institution. Awareness by all staff of the institution's strategy will be essential as it is the staff that will make change happen. In short, all staff must be empowered to meet the institution's mission in a cost-effective manner. Ideas for improvement in performance, through better use of facilities, collaboration, more efficient teaching methods and so on, should be encouraged and implemented. Staff who make such a contribution should be rewarded by the institution.

Recommendation 21
We recommend to institutions that they should develop ideas for improvement in performance, through better use of facilities and resources, and that this should be implemented both within and between institutions. Staff who contribute useful ideas should be rewarded.

Recommendation 22
We recommend to institutions that they should develop a culture where each individual member of staff is aligned to the need to assist the organisation in becoming as efficient and effective as possible.

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