Across the sector, budgets are under significant strain and some institutions are facing very significant financial challenges. Most are looking to make painful savings often badged as ‘efficiency savings’. Typically, a target % saving is set, often across the board with individual services expected to set out their plans for savings and to fight hard to make a case if they feel that those savings will be damaging.
Logic may tell us that a ‘one-size fits all’ cut is unlikely to be the best approach and yet that is often the approach that ends up being taken – ‘everyone is sharing the pain equally’. This is the blitz-spirit approach to saving money; it might feel ‘fair’ and it might feel like the easiest approach but it’s the least strategic approach.
Sometimes benchmarking data is added into the mix – sometimes drawn from commercially provided sector datasets. “Your team is x% more expensive than the average amongst our competitors so your budget will be cut by £y”. Of course, we all know that we often end up comparing apples to pears because every institution is different – often more than they may first appear. You are anchoring your savings strategy to the mass of strategic decisions of others in the sector, not your own. How many of them are getting it right in this complex and changing sector?
So how do we undertake really smart cost savings programmes? The answer must lie in some form of impact and risk-based review of expenditure. Each professional service should be asked to explore how their work is impacting on the university’s priorities and risks, to answer fundamental questions such as:
What strategic plans and KPIs are they contributing to? How?
What risks are they mitigating against? How?
What activities are of the highest strategic importance? And the lowest?
Their plan and budgets should set out:
- The strategic priorities and subsequent KPIs they contribute to,
- What risks they are assisting in mitigating,
- How these link to the activities and deliverables of the team,
- How the team spends time against these deliverables,
- A breakdown of budget against deliverables and strategic priorities,
- How this links to the services risk register,
- Activities ranked by the impact they have on the strategic priorities and risks,
- Savings targets set against lowest impact activities,
- How to drive investment (where possible) towards the highest impact activities.
Professional services heads will need peer support and scrutiny (possibly externally provided) to enable them to undertake this objectively. This peer scrutiny can help each head to appreciate the cases of others and offer insights for the final decision-maker(s). It can help build cross-service consensus on key priorities. Indeed, a smarter form of “blitz spirit” can emerge from this process if it is completed within a team rather than in service silos.
Setting a cross service fixed saving might be quick and ‘easy’, but it’s not smart or strategic. Taking a strategic, impact-focused approach across professional service teams is the right the way forward in these challenging times. It’s not the easy path but it can bring professional service leaders together, lead to a greater shared understanding of strategic priorities, identify new opportunities to break down silos and find smarter ways to spend smaller budgets.
If you need support with your planning and budgetary process, the Halpin team can help advise, guide, support and challenge.
Susie Hills is Joint CEO of Halpin, the home of experts in higher education strategy, governance, fundraising and marketing.