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Week 11: Managing Improvement Once built, a value model focusing on improvement, requires an implementation plan. Often, models of effective operation produce elegant documents, much data, but fail to engage the difficult task of implementation. University administrative and budget decision systems, built up over years of incremental change, resist systematic overhaul, and university guilds often undermine most forms of productivity and quality management. External constraints also inhibit change. In most public universities, legislatures and policy boards have rules, regulations, budgetary policies, and accounting and reporting procedures that may conflict with the data elements and goals of an effective management model. In these cases, the process of reconciling such differences often sinks the accountability model with barely a trace and at best adds an additional layer of resistance to change. Private universities, with more clearly defined missions and some history of self-sufficiency often adopt these models more quickly, not only because of their institutional history but also because their goals and governance structures remain aligned. Public universities have multiple versions of institutional goals, they have multiple and crosscutting governance structures, and as a result they find accountable change difficult. In most cases, the public system chooses a method of high visibility, multiple reports, conferences and task forces, all accompanied by minimal action and less change. The successful implementation of a value model that creates incentives for improvement and performance often requires public universities to operate in ways familiar to multinational corporations that must also operate in complex and inconsistent environments. The technique involves the maintenance of separate books. On one side, the university meets all the requirements for reporting and accounting needed by external constituencies, government agencies, governing boards, and the like. On the other side, the university manages its internal operations in accord with its performance-based value budget. Multinationals often do essentially the same thing. They maintain a set of books that demonstrates how they meet local regulations and report data in formats and using data constructs required by local governments, but they also maintain a set of consolidated company books that permit them to drive the corporation's quality and productivity on a consistent worldwide basis. In this computerized age, the maintenance of conversion programs to translate the data from one format into another pose complicated but resolvable technical problems. Any effort in a university to reconcile the external needs of government agencies to the internal drivers of quality and productivity will almost surely derail performance models because the state's interest in the management of higher education is almost never focused on questions of high performance and national competition. Many states also have the traditional resistance of the civil service bureaucracy to incentives and rewards for performance, preferring instead to support across the board and formula based resource distribution systems. The most important element in the implementation of a performance based model such as the value budgeting described here is a commitment to make it work. That means that the president/chancellor and provost must do what the method they have endorsed says they will do. When the model says that the university will reward productivity and quality according to a specific set of measures, then the institution must reward that performance. When the measures demonstrate a lack of productivity or quality, the university cannot then lose its nerve and make an exception by saying, "Oh, my goodness, we didn't expect that it would cause college A to not receive a reward." At the same time, if the university is to be explicit in its allocation of rewards, it must also be prepared to demonstrate to each unit head or dean where the productivity of their college failed to improve and why the quality data do not justify a reward. This permits the dean to challenge the data, although in most cases, in a well run system, the productivity data are quite objective and the quality data come from sources already defined and approved by the college itself. Most academic guild masters have long experience with administrative innovation and they know that strong resistance and various forms of delay can often end such initiatives before they enforce real accountability. Consequently, the institution must execute the model, make money follow performance, and demonstrate that the system works. Some observers think it essential to completely revamp the budgetary operations of the institution to achieve change. This misunderstands the nature of the academic enterprise. Most of what universities do is done well and done right. The great bulk of the institution's business happens as it should. Change and innovation, improvement in quality and productivity, come at the margin of the enterprise as the result of consistent incremental change over time. A successful management model creates a financial margin and then moves that margin to support productivity and quality. However, if the distribution of incentives and rewards follows political, personal networking, or other non-performance criteria, the institution's people will do whatever the institution rewards. The power of the value-based budget that rewards performance according to explicit and visible criteria is that it makes political and personal relationships within the university much less valuable than the measurable academic performance of individuals and units. Most university people, like almost everyone else, tend to do what the micro-systems of which they are a part reward. Over a relatively short period of time, if the university administers the budget plan clearly and effectively, the members of the institutional guilds will modify their behavior to compete for their share of the margin. It is the margin that determines the success of the guild, because the majority of institutional resources sustain the main business of the university. If a college wants to get better, it needs a few more faculty, not an entire new faculty. It needs a particular piece of laboratory equipment, not an entire replacement of all equipment. Spending at the margin changes institutional behavior. Improvement, not dramatic revolutionary change, is the goal. In time, a time measured in years not decades, consistent pursuit of improvement at the margin will, in fact, transform the university. Some guild masters worry that the process of applying the results of the value budgeting process may be either too mechanical or not mechanical enough. Value based budgeting, and every other useful management model, is only a tool for the application of academic judgment. The purpose of the value-based budget structure is to make academic decisions consistent, reliable, explicit, and data based. It provides a demonstration of what the university expects, and it defines explicitly how the university will measure achievement. It does not substitute for academic design, judgment, or values; it simply insists that the money allocated by the budget must match the values articulated by the university in a data driven, consistent, and visible fashion. At the same time, in the real world, the application of these data driven models varies to some extent based on the circumstances, regulatory environment, and university's management authority. In addition to the process of driving rewards on the margin, universities that seek to improve must look at all of their process, systems, and operations to find ways to enhance effectiveness. Take for example the issue of undergraduate student progress towards their degrees. In large complex public universities, students have many choices, they can select among many majors and they can change their majors. The number of choices are so many, however, that only some undergraduates have clear, focused, and continuing advice about how they should navigate through the university's rich but complex system. Colleges and faculty normally take responsibility for students majoring in one of their programs, but many undergraduates do not commit to a major for a year or two while they take general education courses. The results of this system, if badly managed, appear in various places. These symptoms vary, but for the purposes of this discussion we can review a particular case. In this case the symptoms of poor undergraduate management began with student dissatisfaction with the process of undergraduate education. In survey after survey, the students indicated satisfaction with the quality of instruction and dissatisfaction with anything that involved the bureaucracy of instruction (getting classes, understanding prerequisites, or finding good advising for examples). Another symptom of this malaise appeared in the process of reviewing enrollment management. In this area the university discovered a large backlog of demand for beginning laboratory and technical English courses. These courses, required for many students to graduate in various disciplines, appeared in too few sections each semester to fulfill the demand of the students, and many first semester students could not fulfill some basic requirements until their junior or senior year when they earned sufficient priority to enroll in what should have been first year courses. Another symptom appeared in the form of drop-and-add, the process where students after an initial registration decide to drop one course and pick up another. The very high volume of drop and add produced a form of course enrollment churning that caused long lines and much frustration. An additional symptom appeared in the form of excess hours. Excess hours are the credit hours appearing on a student's transcript that contribute nothing towards the requirements for graduation. These excess hours reached as high as an average of 24 credit hours per graduating student, representing two extra semesters of full-time enrollment that contributed nothing towards the final degree. Other symptoms related to these were high drop out rates, low retention rates, and the consequent relatively low graduation rates. In a university with over 30,000 undergraduates, any confusion and lost motion in their activities represents a large cost to the institution as well as to the students. The university recognized that managing this enrollment had become a necessity and proceeded to solve the problem through the introduction of a simple to describe but complicated to implement system called universal tracking. Universal tracking took the classic notion of a collegiate four-year education and implemented it within the complex environment of a major land grant, multi-disciplinary institution. It said to every student: You must do these things.
In exchange, the university promised every student the following things:
This agreement between student and university is not all that different from the experience of students in small private liberal arts colleges, although in those environments the management issues take place at a scale that is personal and individual rather than computer driven. Nonetheless, after a considerable effort by faculty and computer designers, this system went into effect. Enrollment management improved dramatically, excess hours fell, retention and graduation rates rose, drop and add sank to an all-time low level, and student satisfaction with the academic bureaucratic processes rose. The focus on these issues and the commitment to resolve them in a way that was student centered, had the interesting benefit of improving a wide range of other university activities. Colleges and programs found it necessary to specify clearly and carefully what they required for a degree, when they needed students to take specific prerequisites and other courses. Many colleges and programs ended up revising their curricula to be better. With a clear understanding of all the students' presumed majors and the courses needed to get them through, the university could do a much better job of scheduling classes, with the result that fewer over and under enrolled sections appeared. The decline in drop-and-add is instructive. Previously many students participated in drop and add because they could not get required courses in the appropriate semester. If a student needed calculus but the course was full, she would sign up for English literature as a place holder, hoping that during drop-and-add someone would give up their place in calculus and she could get in. She had to enroll in something to maintain her full-time status for financial aid and eligibility for many campus privileges (sports tickets for example). At the same time, of course, another student who needed English literature found it full, and he registered for US history as a place holder. At drop-and-add, if our calculus student went in first, and got her calculus class and dropped the English literature class, then our literature student could pick up the literature class and drop the history class. But if the literature student got in first, he was out of luck. Obviously a frustrating and inefficient system. Tracking eliminated most of this course churning through drop-and-add leaving only legitimate course changes for this function. The obvious utility of this process prompted a number of commercial companies to develop software student management packages with similar purposes so that institutions would not have to devote the resources to developing custom individual systems. Today, almost all collegs and universities have such systems installed. The message here, of course, is that value budgeting at the top level is not enough for improvement. The university must evaluate all of its systems all of the time in search of things that do not work well or that could work better. Multiple incremental improvements create greater productivity, reduce costs, and generate the margin from which the institution can finance academic quality and innovation. As value budgets become more and more part of a university's management structure, many questions arise such as the following:
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