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Attacking Both Sides of the Balance Sheet

Public universities doing more with what they have—and doing it better
University Business, December 2012

Preached by a select few in academe who saw the recession approach like a speeding freight train, the do-more-with-less philosophy—finally—is gaining traction and critical leadership support in higher education both nationally and abroad. Yes, finally.

Sure, you can snark, “It’s about time. What took you so long?” I hear you and share your frustration. Higher education has been a slowpoke, lumbering behind its business and industry counterparts who got the memo early on and took decisive action. The do-more-with-less way of thinking hadn’t been a part of the higher education lexicon.

Finally, doing more with less has become the new normal in our public universities, and if you aren’t there yet, you will be. I guarantee it.

For a long time, the culture of higher education thought doing more with less equated to job cuts and program eliminations. Not at all true. The doing-more-with-less ethos really means doing more with what you have, and doing it better, more efficiently, and with great adeptness. In other words, simplifying processes and streamlining productivity—all to strengthen and empower our faculty and staff, and leverage our limited resources.

Recently, I returned from a week-long Fulbright-sponsored trip to Germany where I, along with CFOs from 14 other U.S. institutions, visited universities to study how the German system has responded to major financial reform pressures over the last decade, and here’s what I observed:

It’s about the little and simple things, a refrain I repeated privately to myself while away and upon returning home to Ohio State.

Identifying Best Practices

The program, “Do More with Less—Implementing Change in Higher Education Management in Germany,” gave us the opportunity to compare lean management at U.S. and German universities and identify best practices in both systems.

Quite simply, higher education isn’t immune to the financial pressures and challenges that affect everyone else—every business, industry, family, and individual. We intuitively know this is true, yet developing strategies to face those harsh economic realities has eluded us. Our solutions tend to involve more people, more processes, more time, and more money, and oftentimes, our solutions have created more problems. More is sometimes just that—more—not better.

“Leaning out” overly bureaucratic, redundant, and complex administrative functions within our universities has evolved from a pithy catchphrase to a call to action: it’s an imperative. To secure our futures, we need to act differently, creatively, and implement innovative—and perhaps initially challenging—financial stewardship strategies. We need to understand how our essential internal administrative processes, from HR and IT to procurement, sourcing, and many others, work so that we can improve the services that we offer our students.

We need to take a cue from our faculty partners and study our systems, actively engage those staff involved at every level of the process, and develop research-based strategies to continuously improve.

In higher education, our solutions tend to involve more people, more processes, more time, and more money.

What does continuous improvement “look” like? How can you quantify it? That’s the easy part. If you’ve eliminated waste, reduced response time, and minimized your costs, you’re well on your way to slimmed-down systems. 

What you can’t as easily measure is cultural change, which is an inevitable byproduct of leaning out the process. Employees feel appreciated and valued; their work has renewed meaning for them. Our students and their families receive excellent customer service at all levels; they feel their tuition dollars are well spent.
Do we also generate new resources through bold and imaginative strategies related to building our endowment, diversifying our revenue streams, growing new revenue sources, and unlocking the financial potential of our inventions?

Absolutely. But coupled in lockstep with these attention-grabbing deals are less-sexy continuous improvement methods that should form part of the overall resource stewardship model that universities should adopt. To secure our futures, we need to attack both sides of the balance sheet.

We must face the facts. The age of growing government support and rising tuition rates is gone—permanently gone—replaced by an ambiguous financial landscape that requires higher ed to develop agile, nimble, and responsive financial models, which must include strategies to reduce our expenses. We must work smarter, leverage our purchasing power, streamline, and standardize processes. That’s what “leaning out” means.

A Continuous Journey

At Ohio State, we’re transforming our operating model so that we run with greater efficiency, and the accumulation of seemingly small gains adds up quickly. For example, in fiscal year 2012, our incremental cost savings from streamlining was $21.8 million. In addition, we’ve successfully reduced the number of suppliers in our vendor database by 20 percent, leveraging the university’s size and collective ability to negotiate for quality goods and services.

Are we at our “goal weight” yet? Of course not. But leaning out processes and systems is a continuous journey akin to weight maintenance. No, it’s not the multimillion-dollar resource generation transaction that captures the headlines, but it’s the day-to-day, routine stuff upon which our culture grows and transforms that compels us to improve for the long haul—to do more with less, and to do it better and better each day. This is transformational. This is cultural change within higher education, and it’s here to stay.