Drive Down Administrative Costs to Rev Up Value

In a recent article, I summarized market forces that will require colleges and universities to demonstrate increased operational efficiency.  Significant among them is the intensified public scrutiny and concern – from taxpayers, tuition payers and various sources of funding and financial aid – about the rising cost of higher education.

While my recommendations in that article focused on enrollment management, stakeholders in every department on campus will need to embrace this scrutiny as a clarion call. As students and parents continue their own belt-tightening amidst continuing economic uncertainty, they are increasingly vigilant in weighing the affordability – and value – of the various institutions with which they consider spending their hard-earned and/or heavily borrowed dollars.

What can you do to make sure your institution doesn’t get cast aside for the wrong reason – cost outweighing perceived value, especially when compared to other schools being considered?

First on the list of ways to sidestep the negative perceptions is to cut costs – especially if you plan to pass the savings along to consumers and leverage your efficiency to satisfy external funders. I suggest starting in administrative areas – enrollment management, yes, but also in finance, HR, advancement, grants management and so on. Why there? In the public’s view, these areas make little contribution to the product being purchased – that is, to the actual education (and eventual degree or certificate).

In turning an investigative eye on administrative inefficiency, you’ll quickly land on things to improve by focusing on the two most heinous abusers of resources, time and money:

1)      Any high-volume, repetitive administrative process that is both mundane and manual (e.g., processing  applications, invoices, contracts and the like)
2)      Any high-volume, repetitive process that remains dependent on paper (typically the chief cause for making #1 above mundane and manual)

In a companion article to the one mentioned at the top of this post, I shine a comparative light on two competing institutions – again, focusing on inefficiencies in enrollment management.  The “losing” school is mired in the kinds of cost-creating barriers to efficiency described here.

If similar examples exist at your school in any administrative area, it’s time for a revamp. As I said, the world of higher education consumers and funders is watching.

In the introduction to its recent report on institutional effectiveness, “Leaders & Laggards: A State-by-State Report Card on Public Postsecondary Education,” the Institute for a Competitive Workforce, an affiliate of the U.S. Chamber of Commerce, notes the concern-evoking reality that, while the cost of higher education continues to rise, its productivity in terms of generating graduates continues to fall behind.

While acknowledging various reasons for the rising costs, including cuts in funding, the report states that higher prices “also reflect a model of postsecondary education that is expensive, inefficient, and slow to change. “ In making recommendations for ways to drive down the cost per degree completed, the report’s writers suggest more rigorous analysis and accounting “to better isolate the costs of undergraduate education, research, and institutional support.”

I take “institutional support” to include those administrative areas that I’ve suggested serve as your institution’s starting point for a cost-cutting, value-enhancing approach to squeezing out inefficiency.

Tom von Gunden

Tom von Gunden

Tom von Gunden directs Hyland’s market research, strategy and advisory initiatives in higher education. Tom holds a Ph.D. from The Ohio State University and spent more than a dozen years... read more about: Tom von Gunden