Thursday 22nd May 2014 - Understanding where the money comes from

"Why does it always come down to money?" he growled, picked up his bag and walked out.  "I've got to catch a train" he said.  I saw him 75 minutes later at the station and we re-opened our conversation.

I was speaking at a disciplinary conference at another university, giving an executive board perspective on certain developments across all our institutions. The discipline is immaterial. The same reaction could come from many different audiences.  And I don't blame the individuals involved for their feelings. The fact is that many of the practices involved in delivering key parts of our university activities necessitate cross-subsidisation from another activity. We need constantly to check these cross-subsidies, to see whether there are alternatives (for example changes of practice in the departments where costs are being incurred. But we also need to check that the cross-subsidies are defensible to stakeholders such as students, student sponsors, research funders and others.

I have written about this before, but I am increasingly convinced that as institutions we fail to develop enough understanding in all our staff of the business models on which their areas of activity depend. But is isn't just an understanding of the business model that is important - it is recognising that in today's university a business model is a legitimate tool for strategic thinking and operational management. It all comes down to money because salaries have to be paid, books bought, software licences paid for, equipment renewed and so on. And if the income generated by a particular activity isn't sufficient to cover the costs of delivery of it then decisions have to be made about whether the activity should be continued with in its current form, and if so where the money is to be generated to pay for it. But business models shouldn't be the only basis for decision-making. Universities are and should be value-drive institutions, and many things we do are for a wider good and cannot be solely reduced to an income and expenditure account. We look at our activities in the round, but we can't necessarily support all of them indefinitely if they take up huge costs. And it all comes down to judgement in the end.

So what would I emphasise in all forms of staff training is an understanding of how the university is financed, and how individual departments make their income and incur costs.  I think that would be salutary information for many people.  It should also create a more flexible attitude towards change - with a willingness to alter practices in some areas, drop some aspects of our portfolio, and take new opportunities elsewhere.  All I was asking for at that conference was some rethinking of traditional ways of achieving a particular teaching goal where there might be alternatives that are as effective and require less cross-subsidy from other activities.