It’s Time to Increase the ROI of Your Academic Spend

By Paul Friga, Ph.D. May 3, 2021 May 11th, 2021 Blog Post
Paul N. Friga

Paul Friga, PhD, is the leader of AGB Consulting’s Strategic Transformation of Public Higher Education practice area and the clinical associate professor of strategy at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.

The mission of higher education is primarily education. Of course, many of today’s modern universities also have significant research and service missions. The most significant expense item in an institution is faculty spend and academic support. During challenging times, like today as a result of COVID, more and more institutions are finally examining ways to increase the returns from academic spend.  This may be in terms of programs of high student interest, faculty productivity, and market-demanded new programs. Here is some advice on how to approach this critical but sensitive area strategically.

I suggest three steps to increase your academic ROI at your institution:

  1. Assemble a cross-functional, interdisciplinary task force;
  2. Conduct a data-driven assessment of all academic programs, faculty, and student involvement; and
  3. Identify between 10 and 20 percent of the lowest-fitting programs and between 10 and 20 percent of new programs for the future.

The starting point is for the board and cabinet to prioritize this topic and support the creation of a task force to develop the plan for improvement. This task force should be approximately seven to nine key faculty and staff and include academic, administrative, and financial perspectives. One suggestion for a successful task force leadership would be co-executive sponsorship from the provost and CFO. Select faculty with diverse backgrounds and varying levels of history at the university can supplement and round out the team. Additionally, an advisory committee could be created for larger input process and key milestone check-ins. This advisory board could include cabinet and board members, as well as external key employers and alumni. Very specific guidance should be given to the task force around the key question, scope, operating principles, deliverables, and a timeline.

The real work of increasing academic ROI is an objective and data-driven approach to a full inventory of all courses offered and enrollments, as well as a comprehensive database of all faculty, loads, release times, and financial margin analysis. Third-party consultants and software firms can assist in these projects for project management and benchmarking purposes. The key insights to focus on are programs and courses with drops and enrollments, the lack of employer demand, and high faculty costs.

The final step to increasing academic ROI involves actual recommendations for, and implementation of, changes to personnel and programs. While there may be resistance initially, it is important to inventory the productivity of faculty according to their unique role in the university on teaching research and service. In industry, companies do this kind of employee productivity analyses and product offering on a continuous basis, and a best practice is to let go of lower-performing employees (and even up to 5 to 10 percent) each year while redirecting resources for new strategic hires and new programs to replace reduced areas. For a typical university, program cancelation and employee releases are taboo (the COVID-19 year is an exception), but we should be more open to transforming our organizations to align with the changing marketplace.

Help from AGB

As the AGB Consulting practice area leader for Strategic Transformation of Public Higher Education, I stand ready to review your current strategic plan, identify your market differentiation, and consider ways to invest according to key priorities. I am available to schedule an hour call, at no cost, to review your situation. Additionally,  here is an article I wrote on this topic of academic spend ROI in the Chronicle of Higher Education.

Given the urgency of the times, I am hosting a new, special AGB monthly workshop program on strategic transformation exclusively for board members and presidents.  Our next workshop is directly related to increasing academic ROI and we will be learning how they approach this issue strategically at the University of New Hampshire.  You can register here.

In summary, yes, academic spend is key to a university’s mission but we should still strive for increased return from that investment!

Opinions expressed in AGB blogs are those of the authors and not necessarily those of the institutions that employ them or of AGB.