Signs of Health & Weakness: What to Watch for in Your Institution

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As colleges and universities look closely at their operations and administration, they should review several important areas. The first is signs of success that should be energized with resources and effort. These are followed by signs of weakness that point to areas schools need to focus on and improve. Failure to do so could result in deterioration of financial solvency or even a financial crisis.

Signs of Success

Signs your institution is on the right track include:

  1. Innovative revenue production – In a session called “New Economic Models for New Economic Realities” at a recent gathering of private colleges and universities, participants discussed the following ideas that helped them generate additional revenue:
    • Developing your brand to distinguish yourself from the pack
    • Growth in graduate programs
    • Expansion to off-campus locations
    • Expansion to foreign sites
    • Monetizing hard assets and intellectual property
    • Converting nonrevenue-producing property to revenue-producing property through rental, crop and produce production and retail development
  2. Prioritizing academic programs – This is the process of taking a fresh look at what you’re doing and assessing whether the programs consuming resources (dollars, space, management attention) are contributing to the mission and bottom line. Programs that consume resources but don’t have a close and vital link to the institution’s mission may need to be eliminated. This is a major project that needs the board’s support and the engagement of the whole academic community.
  3. Prioritizing services – Many schools are using the following ideas to increase the effectiveness of institutional services:
    • Collaboration within the institution and among institutions that have common needs. This is occurring in the areas of technology, risk management, building maintenance and more.
    • Outsourcing functions that don’t have to be done in-house. These are done by specialists, many times at a fraction of the cost of performing them internally. Common outsourced functions include IT, human resources, mail services, mental health services, conference planning and scheduling, food services and bookstore operation, to name a few.
  4. Online services – Schools also are using technology to make customer (student and family) interactions as painless as possible. Examples include online billing, payment and book ordering and delivery.
  5. Monetizing, repurposing or repositioning assets – We’ve witnessed the sale of radio stations, underperforming campuses, unused nonessential land and underused buildings with high appreciation. We’ve also been involved in discussions about the leverage that can be used to monetize intellectual property (copyrights, patents, etc.) and have seen the repurposing or repositioning of assets such as underused land and buildings.
  6. Building a climate of trust – A climate of trust is the foundation of a high-performing culture and is present where dynamic, positive change is happening. When there are little or no changes taking place, one question to ask is, “Is this a place where a climate of trust exists?” Building a climate of trust takes time and effort—and it won’t happen overnight. It must start with the relationship between the board chair and president and build from there to the academic community and then the administrative community. The job isn’t complete until all areas of the institution are on the same page and can operate in harmony.
  7. Knowing and hitting targets – You should know the targets you’re shooting for, be accountable for hitting them and use good reporting to help spread organizationwide knowledge of key achievements.     
  8. Knowing and managing risk – The most successful schools are beginning to understand, document and manage key risks. These aren’t just insurable risks like the risk of property damage. Some of the risks being understood and managed are strategic risks. Schools are answering questions like, “What’s threatening our mission?”

Signs of Weakness

On the other hand, signs of weakness include:

  1. Falling enrollment over sequential years
  2. Elimination or shortening of programs without regard for the effect on academic quality
  3. Wage stagnation
  4. Leadership turnover (including board members who come and go)
  5. Uncertain or missing financial targets
  6. Little understanding or communication about the life of the school
  7. Lacking or incomplete technologies (including poor reporting modules)
  8. Substandard facilities
  9. An inward viewpoint (no vision or comparison to similar, successful outside entities)
  10. Unused or underused assets

Evaluating Your Institution

Since some schools might have multiple items to work on, identify the top priorities and address them while making sure you’re not losing ground in the other areas. Not sure where to start? A great first step is understanding academic program margins and prioritizing which perform best.

The presence and influence of colleges and universities are vital to our world. Watching for and engaging the success and failure factors outlined above can help institutions continue with successful missions for many years to come.

Need Help Getting Started?

As you consider the viability of your academic programs and seek data to help you make informed decisions, BKD National Higher Education Group can help. BKD’s Interactive Margin Analysis Tool provides a visual analysis of the financial contribution and margin at various levels of detail for your institution—school, department, major, class, faculty member, etc. Request a complimentary demo here or contact your trusted BKD advisor.

Kate & Ben — How can we help you?

How can we help you?