As higher education budgets come under pressure around the world, so the spotlight falls on administrative budgets. One account doing the rounds amongst politicians is that universities are bloated bureaucracies and that it would be quite possible to keep the same number of academics “at the front line” if only these bureaucracies were cut back.
It’s an interesting thought. But …
To begin with, much of what is counted in many universities’ budgets as administration is directly student-facing. Think of admissions, the careers service, student welfare, and so on. So cutting these budgets is likely to mean a cut in student services – not what the politicians intend at all. Then there are the various statutory obligations which cannot be gainsaid. Then, a lot of the rest of the administrative budget is made up of basic infrastructure: the library, information technology, security, utilities, and the like. Making cuts in these services is often self-defeating.
In fact when you start looking, very often only a relatively small amount of university administration is what might truly be called central administration, is administration for administration’s sake, so to speak.
So although there may be some room for manuver, the main issue that needs to be tackled is probably efficiency. It is certainly true that a lot of universities around the world are looking at shared services, outsourcing, and the like, as a means of gaining greater efficiencies. Other universities are adopting kaizen techniques of continuous improvement in a bid to reengineer their basic administrative processes from the ground up. It must be the case that all of these solutions have something to offer but the 64,000 dollar question is “how much?”
Take the cases of shared services and outsourcing. The fact of the matter is that shared services probably only bring costs down if network economies cut in, that is you need quite a lot of people in the network to start producing real economies which mean that the charges come down and the economic case becomes compelling. In fact, so far the record on shared services has not been terribly encouraging, though that is no reason not to keep trying.
Equally, outsourcing can only really work if there are a lot of subscribers that can bring the unit cost down and it has to be utterly reliable: quality of service is crucial. For example, you’d have to be a very brave university indeed to outsource a lot of finance or admissions, given the marginal finances of most institutions. Private companies will no doubt make inroads into this arena - after all, most universities already subcontract some payroll functions to the bank – but I suspect that any further progress will be in universities which do a lot of just a few things and can therefore produce something akin to mass production (though our sector will never ever go far down this route, I fervently hope).
I think the real advances will come in another way, through a set of similar universities getting together – as already happens with some functions like high-end computing – and producing corporate administrative arrangements that make genuine sense – and save money. These arrangements might include some private-sector involvement but of a limited kind: control would be vital since universities are about service, not profit. Even such a limited compact as this would no doubt produce all kinds of thorny issues, most particularly of leadership and governance. But it could be a realistic first step towards a model with elements of shared services and outsourcing – and greater efficiency.