Choosing a university: a competitive revolution

Note: A much shorter version of tnis article was publised in NUR.KZ as Как оценить эффективность ВУЗа on 07.04.2014.

The global education market is undergoing immense changes, powered by the global economic crisis, changes in political ideas, consumer demand, a shift in the perception of benefits from university study and growing differentiation between public (government funded) and private institutions (tuition based). Yet, we must recall the basic principles of economics: in a crisis, the weak perish, the strong become stronger, spending becomes more analytical, new ideas and technologies are introduced to enhance competitiveness, and ideas that become successful despite the crisis face a bright and optimistic future.

The industry of higher education is subject to those same principles.

The economic crisis has caused major changes in the flow of funds. For universities this means reduced funding from the government, in the form of cutbacks in study grants, research funding, infrastructure and resource development (this process is most visible in Western Europe). Smaller streams of funds also increase the competitiveness for their winning. Much of the funds comes from the non-governmental sector, which itself is now subjects to cutbacks and enhanced analysis of value added from every spent USD, EUR, KZT. Companies will think twice before undertaking unnecessary expenditures and thus force universities to work hard in preparing new programs, increasing quality of education, range of study outcomes (benefits). The crisis also affects consumers who, in the face of job and income uncertainty, will analyse in greater detail their needs and available funds as well as the predicted benefits of educational effort.

To complete the “threat matrix”, we must add five more factors.

Firstly, nearly all nations have experienced a dramatic growth in the number of higher education institutions, both public (as the government opens new centres, some specialised and many not, most without a defined strategy) and private (opened by entrepreneurs seeing higher education as another market for services). The result is an overabundance of institutions compared to the number of potential clients. Excessive competition in a restricted market (size-wise) leads to logical results: lowering of quality (high standards mean low number of clients), price competition (recruitment based solely on low price of degree), competing on indirect benefits (good social life).

Secondly, the number of institutions and the current low entry costs (understood not only as the actual fee cost, but also in terms of low entry requirements) have led to what some call “degree inflation”, with tens of thousands of citizens gaining previously inaccessible degrees and hugely inflating the numbers of bachelors and masters. This forces institutions to continuously search for the next “amazing market offer”, and in many countries the inflation bubble is now entering into PhD-level education. Simultaneously, in global education, the question is now being asked: does quantity mean quality? This dilemma is especially important for countries that are working on improving their competitiveness through the development of human capital.

Thirdly, the division into public institutions, funded by their governments and offering their education for a (relative) “zero fee” when compared to private institutions without governmental support that are forced to charge tuition. In an economic world, many customers will choose a free offer as we all have an instinctive tendency to save money wherever possible. This assures an immediate but unfair advantage to the “free” education providers. In many countries such institutions have privileged access to many other functions that further enhances their monopoly power, yet there are few forces able to motivate any reforms or modernisation or bureaucratic reduction.

We also need to add the fourth issue – a perception that state funded organisations must provide quality or, in economic terms, that the value gained from a “free” education is still greater when compared to (often much higher) value gained from a fee-based institution. Most people do not undertake the necessary analysis of simple concepts related to “monopolies” nor the drawbacks of unquestionable public funding and resulting inefficiencies – when an institution has guaranteed revenues regardless of performance, there is little or none pressure for change. Even in times of reduced funding from cash-strapped governments, such institutions will hunker down to live through the crisis rather than engage in reform and optimisation. Their Rectors will know that, like many international banks, they will be rescued out of a deficit rather than allowed to collapse by governments keen to avoid embarrassment.

And finally, the internationalisation of higher education introduces external competition that challenges all higher education providers within the nation. Foreign institutions provide a triple challenge: they recruit students from across the globe and thus remove them from the local educational market (often for good), they enter the market by acquiring local institutions or establish their own operations, increasing the level of competition.

As a result, the higher education environment in any nation calls for reactions familiar to any businessperson: speedy adaptability to a changing environment, continuous innovation of products and processes, pursuit of optimisation and efficiency and a focus on the customer. In most countries, these behaviours are characteristic of the private sector.

How can we define a private university successful amidst the raging storms? And, what should parents of students look for in prospective institutions, to which they want to send their children?

The first characteristic is optimisation. Private institutions are streamlined affairs, that continuously evaluate their organisational structures for inefficiency and cost, pursuing the ideal balance of appropriate staffing, academic competence and expenditure minimisation. They are not top heavy with endless levels of management, but prefer to seek out the best qualified individuals, competent in academia and business, who can deal with market challenges and bring business rationality to higher education. In fact, many job advertisements in the West talk about candidates for senior posts having extensive industry experience, as they can contribute not only management or financial know-how but also provide guidance in responding to a market crisis, or help in managing change or take the institutions through a re-branding. When forced to earn its own money, any institution will take care in how it spends these funds, so people who come with such a mindset are invaluable. Efficiency also means competency – task completion must be done in a business manner, above and beyond competency levels of most public employees. As in any business, employees know their place, job requirements and have specific performance criteria, for the completion of which (or non-completion) they are rewarded (or punished). Private higher education around the world is a no-nonsense affair – universities prefer to spend on their teaching staff rather than on unnecessary administrative structures since good, well-paid, satisfied teachers are a true asset and will be welcomed by the students.

The second characteristic is modernity. It results from optimisation, as competitive institutions must continuously upgrade themselves, learning from market leaders, implementing new solutions to old problems, changing their perception of reality away from a fixed, static viewpoint (that often favours the past and so-called “traditions”). We are talking about “academic drift”, the tendency of universities to copy the solutions of the most advanced HE leaders (like Harvard, MIT, Cambridge) by learning how to undertake academic activities at a global level, discovering the highest teaching standards and most advanced degree types or teaching methods. But, we also mean university managers reading the “Blue Ocean Strategy”, attending seminars with business leaders, visiting the “Top 50 thinkers” website, monitoring economic trends and continuously thinking “how can apply these ideas to my institution?” Another way is to invite foreigners, who will share their knowledge and experiences, often accelerating institutional development by skilfully transferring international “best practice” into local reality. Parents should look for universities that are changing their organisation, developing new units with previously unseen functions, implementing newest IT systems, institutions that are employing foreign management staff that provide a different, yet valid and time-tested, perspective and who bring solutions to problems that may be new in Kazakhstan, but have been dealt with elsewhere already.

The third characteristic is academic professionalism. As fee-based institutions, private universities know that only superb teaching will give them leadership positions. Private universities around the world seek-out academic talent in the form of gifted, knowledgeable and experienced lecturers with a fascinating mix of teaching skills, research, industry experience (see the emerging science of “talent management”). Why? Students welcome and appreciate lecturers who can say “in my experience” or “I worked in a company that…”. Even stories of failure can be a positive learning experience when placed in the proper academic (theoretical) context. Similarly, there is an expectation that specialisation in academic disciplines will be supported by research efforts, which lead to recognisable achievements further confirming a teacher’s capabilities. Old knowledge, lack of examples, no contact with the real world, lack of effective teaching skills are things unseen in institutions fighting for clients. Good teachers are lured with good salaries (that can be paid due to incoming tuition and are not limited by any government regulations), opportunities for career advancement, good working environments and a positive culture rewarding those creative and ambitious. In exchange institutions expect a positive and professional approach to the customer, implementing modern teaching and assessment techniques, interesting and interactive teaching and continuous self-development – a good example is the current British focus on CPD, Continuous Professional Development, not only in the form of pursuing higher degrees, but also more practical qualifications, work experience, consulting, etc. Staff are evaluated in accordance with a wide range of desirable characteristics that are necessary for the fulfilment of university goals. Parents should look for universities able to show their teachers in accordance with the above criteria and see how the perception of resulting academic quality changes – there is a massive difference between Soviet-styled reading a lecture from a book to an audience that is required to write everything down and Western teaching, where the students have all the necessary information beforehand and the lecturer conducts an interactive class enhancing student knowledge and adding understanding through his own experiences.

The fourth characteristic is focus on the customer. Some readers may equate this with the capitalist saying “the customer is always right”, yet in a university setting this attitude must be modified, as the customer comes to us in order to obtain knowledge, while we must guide him/her away from not knowing, not understanding, not being able. So, it is better to say that “the customer must be properly supported and cared for in the process of knowledge acquisition”. This approach means that institutions must possess advanced systems of teaching and support-for-learning, different from what many of us experienced while students ourselves: modern auditoriums with appropriate technological support, a balanced mixture of theoretical lectures and practical seminars, teachers who come on time and give interesting lectures and then are available for seminars or work/discussions in small groups or individual conversations, libraries and computer systems with access to learning resources. It also means a professional administration, aware that a student is a fee-paying client who requires timely and efficient support, cannot be yelled at and has the right to expect certain activities, information, behaviour. While generations brought up under Communism may be accustomed to the supremacy of the person behind the glass, current times require a correct attitude and approach to the customer, regardless of his/her age. Parents should look for universities where students are treated professionally, where administrative and academic staff follow the highest business and academic standards.

Leaders of the education industry go even further and embrace the fifth characteristic: the stakeholder approach. A student is never “alone” – parents, grandparents, village communities, even classic “sponsors” have an investment in the undertaking that is a higher education. This means not only the securing and provision of funds for the degree, that may range from grandmother’s savings, through a family- or clan-wide collection, to taking out a commercial loan or securing some form of sponsorship. With the exception of finance institutions, that want to remain assured as to the appropriateness of their investment, all other individuals and groups invest much more (time, energy/effort), they tolerate stress and suffer through hardships (emotional investment). A good institution knows this and develops systems of managing the extended relationship with stakeholders such as those described above. It is not a one-way transfer, since often (when done well) it can easily become a two-way exchange. Families and supporters can become institutional contributors themselves: working parents can share their experiences in seminars, take students on work placements or advise good locations for such activities, help in finding sponsors or establish contacts useful in selling other university products. Families also gossip and, when satisfied with the experience, provide an invaluable form of word-of-mouth advertising that is often more trust-inspiring than the stories told by youngsters. Parents – where did you feel well, when inquiring about your child’s education? Or maybe, did you friends mention a university that impressed them?

The sixth characteristic results from senior management’s business focus: continuous innovation. Owners of Apple’s IPhone 4 know this firsthand, as they see people proudly holding the IPhone 5 just 6 months later. In higher education we have very similar processes, even if in a slightly longer perspective. Staying competitive requires a constant analysis of current products (degrees, programs, pathways, courses) not only in the context of current market needs, but also predicting the needs 3-5 years in the future (since this is the average time period needed to “produce” a graduate able to fill the market’s needs). The level of competition today also requires the emotional and intellectual ability to abandon things that are no longer necessary – closing old degrees, removing obsolete subjects, reorganising the educational process. Institutions must also open fresh markets by developing new, previously-unseen products at all levels, a trend especially visible in industry-oriented education (MBA, DBA, trainings/seminars, custom-designed programs). Innovation is also about the speed of response, and here private, lean organisations have a sizeable advantage as they are able to respond to an emerging development in time to benefit from a new (even if temporary) niche, as is the case today with Foundation programs. Parents should look for vibrant universities that keep expanding their offer, are enhancing their internationalisation (degrees, exchange, foreign partners), keep adding professional programs, short courses, etc.

The seventh characteristic is also business-related: outcome orientation. Such universities maintain strong links with the industries or sectors that become the “buyers” of graduates, shaping degrees and subjects in ways that assure a superb outcome – graduates find jobs and companies have a high opinion about them and their Alma Mater. The process calls for continuous scanning of the external environment and the internal systems, removing or modifying or upgrading any components that may be lagging behind. Similarly, offers that are unnecessary, are shut down not to waste resources, allowing the institution to focus on the best and most useful degrees. Focusing on graduate success requires the development of units such as “career centres” that not only arrange contacts between potential employers and students but also successfully monitor the fate of graduates. Alumni relationship management today is seen as a source of funding (sizeable donations, often in the millions of USD), but also a way of learning about the practical applicability of the university’s education process, interaction with industry and development of intellectual resources (inviting graduates as lecturers with real-life experience). Parents should look for universities very active in the sphere of academia-business relationships (employing lecturers from industry, running master classes), with well-developed work placement and graduate monitoring systems. Also, successful graduates, happy with their education, maintain strong links with their Alma Mater when pursuing successful business/industry/government careers.

The eighth characteristic must be defined through a youngster term: “coolness”. A modern university is not just a place where a computerised timetable arranges the simultaneous convergence of teacher, students and classroom. Because institutions are client-focused, they strive to create an open, welcoming environment that is open to all kinds of activities and ideas. Students and staff can interact outside lectures (a good example are competitions requiring teams to be formed from teachers and students), while students are given the freedom to pursue their interests both university-related and not. The science of “cluster development” advises that for amazing things to happen, there must be intellectual and emotional freedom, backed by a democracy-styled freedom of association. A “cool university” is an open space filled with students undertaking various activities across whole days and 7-days-a-week, and it is an institution that students feel proud to associate with. It should also be a “google-styled” organisation with advanced and interesting infrastructure, undertaking interesting projects: water recycling, use of solar panels, cloud computing, advanced IT systems, etc. Parents should look for institutions with a very active student life, many differentiated projects, organisations and events, as students will find there a much better, wider overall experience contributing to the development of social skills alongside knowledge.

All of the above contribute to characteristic nine: strong brand. It explains why private, tuition-charging institutions are able to survive and thrive in a highly competitive environment filled with “no fee” state institutions and “low fee” low quality private providers, while maintaining or increasing recruitment even in the face of tough market changes. Fashions come and go, products and technologies may change, but market leaders stay. Yet, inside, they are in a state of constant change – evolution of organisation, attitudes, products (in our case: degrees and programs), people and approaches. There is always something better, newer, more exciting or offering new opportunities to be implemented. For parents looking at assuring a good future for their children, a strong brand is a good message of overall competence, long presence in the market, confirmed successes in education and a combination of achievements in science, business, consulting and customer support.

Choosing a university is a lengthy process, while the consequences of such decision last for decades, as a bad selection can negatively affect a child’s entire career while a correct choice can assure a profitable, secure and continuously-progressing career across a number of companies and even industries. That is why it is important to acquire and analyse all possible information, so that the investment of money, time, effort, emotions pays off quickly and families can then watch the child blossom.

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