Before the recession of 2008, it was generally assumed that higher education institutions were performing well in most, if not every regard. Since then, the leadership of colleges and universities has been more heavily scrutinized to ensure that they’re operating effectively and efficiently and that students are getting the education they and their parents paid for.
Something that’s made that expectation so challenging is that many colleges and universities are still relying on key performance indicators that rate various parts of the institution’s performance, without regard to the whole. A different approach to key performance indicators in higher education boards is needed to meet the expectations for understanding the overall college or university’s experience and outcomes. Taking a different approach to evaluating higher education institutions requires taking a different approach to metrics to demonstrate progress toward broad goals and prove the kind of accountability and transparency that regulators, legislators, and other stakeholders are looking for.
The change in expectations is something that higher education institutions are still getting used to and it will take some time before we’ll see these kinds of results across the board.
Are Key Performance Indicators of the Past Relevant Today?
Up until recently, higher education institutions have only broadly measured their overall performances. While their reports are based on credible internal system reports, they don’t provide insight into the school’s performance as they relate to operational efficiency in achieving the greater strategic and mission goals. Past methods more heavily rated activity based on achievements in each department.
Boards need a way to rate the performance of the entire institution in achieving its mission. While this can be done through the process of strategically choosing key performance indicators, and developing the right scorecard, it requires a different mindset and a willingness to be innovative.
The traditional key performance indicator and scorecard method haven’t changed. Key performance indicators provide an adequate method for determining information like percentages of funds given by donors and percentages of students that fall within certain ranges of SAT scores. The summary scorecard is an important measurement tool as it provides the context for key performance indicators or higher education boards.
When rating higher education institutions, it’s important to consider the concept of output vs. outcomes. Appropriate metrics should measure the end outcome because they provide a better indicator of how students may or may not be successful in the real world after their college days are over.
It’s essentially a different way of looking at things. In the past, if all the key performance indicators at the department level were strong, it translated into overall institutional success. While that’s not a bad starting point, by making some modifications in the key performance indicator and scorecard summary process, we can glean a better indication of the overall performance of the institution. Specifically, it’s important to track progress as it pertains to the strategic goals of the institution.
To start with, it’s important to review the board’s goals and strategic plan. Key performance indicators should come from the functional disciplines and departments such as an assessment of financial aid opportunities, the market position of the university, etc. Of notable mention is that key performance indicators aren’t goals in their own right. They don’t indicate measurements of risk either; although, they can uncover potential risks.
Most activities will have more than one key performance indicator. The measurements should provide results that compare to the institution’s goals and also measure increases or decreases in costs to achieve those outcomes. In addition, the board should evaluate key performance indicators for risks as part of the overall picture. Multiple key performance indicators in higher education boards will ensure progress in efficiency and effectiveness. Boards should look to various departments within the institution such as finance, risk management, technology, compliance, etc. to contribute tools that will help them set appropriate key performance indicators.
The separate measures should be presented together and weighted to create an institutional measure of enrollment outcome. Departmental indicators can create gaps if they are not accompanied by metrics that measure risk and activity outcomes that are core to the success of the institution as a whole. Scorecards bring context to the key performance indicators and link them together to produce a progress score that relates to a strategic goal.
Putting the Pieces Together
Financial key performance indicators don’t supply enough information on their own accord. They should be part of a scorecard that also weighs additional indicators such as stock performance, academics, reputation and performance measures, facilities, service excellence ratings, risk exposure, etc. By changing the metrics, financial key performance indicators could provide one score that encompasses market position, academic reputation, risk exposure, overall effectiveness, student services, research services, and support.
Other performance indicators linked to strategic goals can be developed from underlying departmental and inter-functional indicators and summarized on a balanced scorecard to reflect institution-wide key performance indicators.
Despite the pressures on higher education to prove their worth to regulators, legislators, donors, students, and their parents, there is another very important reason to substantiate their performance. Higher education institutions manage better the things they measure.
It will take some time before all colleges and universities will take a modern approach to defining and measuring their performances. Ultimately, scorecard summaries should reflect key performance indicators as institutions that will provide a clearer vision of the institution’s success.
This is an evolving process that also allows for flexibility as goals and business models will certainly change over time. The modern approach will not only provide an institution-wide assessment of achievement, but it will also highlight and target areas for continuous improvement.
These changes are merely at the beginning stages of new expectations for rating higher education institutions. With time and experience, institutions will be able to refine the key performance indicators to provide the most objective analysis possible to recoup the many benefits of their efforts for measuring and reporting their performance. In the very near future, key performance indicators and scorecard summaries will become an integral part of every higher education institution’s governance model as valuable tools to guide the institution toward its goals.