Will universities rise or fall with reform?

Underneath the surface, we’re seeing a radical shift central to the strategic direction of a university.

Sure, we know the government is going to pay less and the students will pay more, but has the full scale of change been grasped yet? I think not.

I recently caught up with one person in the thick of it; Stephen Weller, Chief Operating Officer & Deputy Vice-Chancellor (Corporate) at the Australian Catholic University. He explained:

“Universities are not yet ready for the whole issue of price competition. If the market is deregulated on price, it’s going to fundamentally change how we work, and I don’t know if we have that expertise yet.

“As a result of a competitive market, universities are much clearer about value proposition, marketing, experience, the use of technology etc, but there’s a lot of work around monetising which we’re yet to do.”

Preparing for the unknown

The change is driven from government paying less, which will be a deficit made up by the student; an area Stephen warns is not currently front of mind:

“From a university perspective, we’ll get the same amount of money, because we’ll pass the cost on. Many students aren’t asking what it’s going to look like in 2016. There’s more concern around HECS.

“We know the price for 2015, because the government’s only changing from 2016, but if you’re a student commencing next year and the government’s changes come through, you’ve only got certainty for year one of a three-year degree.

“When people start to pay more, they will expect more. There’s clearly an issue of expectation management. It’s an area where the sector has significantly improved over the last four years, because it’s moved into a competitive environment. But there’s still a lot of work to be done.”

Increasing expectations

Students have previously based their decisions around questions like: ‘What brand am I getting?’ More recently, they’ve asked: ‘What experience am I getting?’

Change will see the concept of: ‘What price am I paying?’ If the demand-driven system is also extended to private providers, it’s really going to put the emphasis on value.

Another value factor to battle is recruitment ratings. University was effectively a guarantee to get the right job. Declining graduate employment rates (despite many coming from additional macro factors) will put the spotlight on guarantees on return.

“The student experience has come in line with the way learning is delivered, but there’s still a strong desire for the university experience. The focus will be on the end result, looking at how many students got placed in a job after leaving each university. Students will be able to benchmark campus for campus and be much savvier in that regard.

“There’s huge potential for a positive change from all this, making ourselves more nimble and responsive in the same way other industries do. We can really thrive,” Stephen explains.

Becoming a more commercial entity

Terms like commercial entity, ROI and managerialism haven’t been top of the list in terms or describing a university, but Stephen confirmed its language that’ll start to be widely used:

“Universities are either incredibly bureaucratic or incredibly resilient. My view is they’re both. They can be slow to move; they’re traditional institutions. But they don’t have to be. We responded to amalgamations and demand, and as a result our university has grown from 12,000 to 30,000 students.

“The key is going to be to understand cost. What does a Bachelor of Business cost? At the moment we don’t have to work out what it costs, because the price is fixed.

“That whole notion of how you bundle price and meet expectation; that’s new to the sector in Higher Ed. It’s also new to the consumer. The key message I would say is: you have to be student-centric. You can’t just say it. Put the student at the centre of your business and ask yourself: what is the student’s return on investment? What are they going to get that makes us a better proposition than another university?”

Published ahead of Higher Education Revenue Models 2014