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The Rising Cost of Higher Education – Operational Excellence to the Rescue?

November 13th, 2012

Rising cost of higher educationWith a child approaching college age, I’ve taken a great personal interest in the direction of higher education.  As evidenced by the national debate that has even leaked into presidential politics, it is a tremendous issue on the scale of healthcare and job creation.  The greatest point of debate is the sustainability of the rising cost of education which has grown far faster than inflation and disposable income.  And along with the rising cost comes a discussion of how it is being financed as student loans become the greatest category of consumer loans. A discussion about costs and funding naturally leads to trying to gain an understanding of why the costs rise so quickly and if the quality of education is improving along with the level of investment.

With growing awareness and understanding, I recently had an interesting e-mail exchange with a new blog subscriber.  This person had some very interesting views from the inside of higher education as they are a high ranking official in the administration of a regional mid-sized university.  She shared some of those views with me in the following e-mail.  I found them so topical and in concert with the value our profession attempts to bring to our host organizations that I asked and received permission to share them with you.  So below are excerpts of a high ranking administrator’s views of what is driving the cost of higher education and whether it is resulting in better results.

“I’ve been mulling over a response to your last email.

You commented that higher education is more mission driven than the business world. From the outside, it may appear that higher ed is very mission driven, but in day-to-day operations, expectations from many other sources often intrude.

We do have a calling, but we must also answer to our own faculty, campus committees, boards of regents, state legislatures, the federal government, and our accreditors regarding HOW we should fulfill our mission.  It’s both frustrating and challenging to try to navigate the sometimes conflicting and seldom funded expectations of these varying bodies. So, yes, stakeholder expectations have to be managed before forward movement can be sustained. We are a bit like a loaded freight train leaving the station: forward movement is jerky and sustainable momentum comes slowly.

The main customer in higher ed is the student. In the last decade, institutions tried to respond to wishes of the customer in non-academic areas (e.g., climbing walls, bistro dining, private rooms in residence halls). By the time many of these can be implemented, those students are gone and others with different expectations have matriculated.

Institutions are starting to move back to basics that serve customer needs better (e.g., ways to get students to graduation in less time and at a lower cost). Our governor, along with governors from other states, has been pushing to ensure a fixed and affordable cost for a degree. We are implementing that at our organization as are many other colleges in our state.  

So, we have a balancing act when we respond to the customer that a corn flake producer does not (or maybe does not). I do hope corn flake producers think about nutrition while thinking about taste and texture. Higher ed has to think about what happens after the student graduates. Can the student get and keep a desirable job? Do we produce graduates whom firms want to hire? Our secondary customer is anyone who hires our graduates. Sometimes what students want (less homework, say) conflicts with what the student, and ultimately his/her employer, needs. I’m not sure corn flake makers deal with whatever would translate to being a similar issue.

From my viewpoint on the outside of the commercial world, they look a lot more organized and forward thinking than higher ed often seems. I realize I’ve painted higher ed with very broad strokes, and some institutions have found solutions to the major issues and are rolling forward fairly smoothly. Higher ed has made really good progress, but I still think, as a whole, higher ed lags behind the “real world.”

I have been reading a lot about organizational excellence, Six Sigma, Kaizan, 5 whys, Deming, etc. I look forward to reading your pieces on Voice of the Customer.

Good luck with being a parent of almost-grown children. I admire all of you so much. It has to be especially tough right now.”

There are so many places where our knowledge and skills can assist the transitions that are coming.  Healthcare, Innovation (the engine of job creation) and Higher Education are three strong societal needs where the answers to the problems can be enhanced by our operational excellence practices.  There is definitely the opportunity to do well while doing good.  And there are great potential partners inside of the enterprises and organizations that are in these areas who recognize the need for change and want to be agents of change to fulfill personal missions and also do well while doing good.  These observations that are from the inside out in higher ed are just one example.

Download Education Powerpoint

this short .ppt that talks about the sources of excess costs that might be attacked with operational excellence programs …

If you’d like to discuss any of the above, feel free to contact me directly. And, while the author of the e-mail wished to be anonymous, if you’d like to speak to them, contact me and I’ll try to put you in touch.

  1. Mike Clayton
    November 14th, 2012 at 22:47 | #1

    Public education tried too hard to create atmosphere instead of accepting the fact that they are learning factories. But I see college sports as big part of the problem, even thought alumni sports scholarships add to academic scholarships for the poor. Sports contributes to the party atmosphere on campuses. “Townies” ignore that, compared to resident students from afar, and often get better jobs after graduation. The atmosphere simply postpones the important transition from high school peer pressures, to focused learning for future jobs.

    Carnegie Tech de-emphasized sports decades ago (after beating Nortre Dame two years in a row, in the 1920’s) and they today generate brilliant graduates that get great jobs, and at less cost than Ivy League schools.

    The other distraction frankly is research that keeps great teachers from teaching any undergraduate courses…leaving that to unmotivated and unskilled grad students. Would be better to use new online lectures (by those famous brilliant professors) and let the grad students run workshops for working problems assigned by the profs in the online lectures.

    Good luck trying Lean or Six Sigma or BPM methods in academia.
    Might be better to start those in healthcare, where the dollar impact is even higher potentially. Public colleges might just need funding tied to graduates delivered, and bonus for hiring rates one year after graduation.,,,or similar output metric rather than cost plus based on seats. Many states trying that now we hear.

    But the rich will continue to drive up costs at private colleges, creating a bigger divide.
    Just like medical care, where they drive up costs of procedures that insurers cannot support for rest of us. That’s life.

  2. November 30th, 2012 at 17:03 | #2

    Agree on 90% of what you are saying. Lost mission (i.e. education), deteriorating value proposition and too much money. But there is actually a lot of process improvement being applied. I know of at least 20 universities applying concepts and getting results. But like healthcare, you can’t just nibble on admin processes. You have to address the core value streams.

  3. July 2nd, 2013 at 06:58 | #3

    Awesome post !! Good luck with being a parent of almost-grown children. Visit again.Thank you.

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