With declining enrollment and rising tuition rates, colleges and universities have had to step outside the box in search of business strategies that help them stay ahead of the market shifts. A new report from Grant Thornton looks into the state of higher education and points out some of the most common trends impacting the industry, as well as strategies institutions have implemented to stand out.
Among the key trends, the report points out that developing the right growth strategies depends on which type of integration approach aligns with the institution's existing business model — whether that's a more top-down horizontal manner of expanding programs or a vertical integration framework of providing new programs from the bottom up.
Additionally, the report authors said that leaders must stay on top of key global trends and market shifts that impact where students decide to enroll, and be aware that decisions institutions make are public facing and can end up in social media conversations.
Education Dive flushed out some of the report's suggested strategies for industry trends as well as insight on how leaders might consider implementing them.
1. Outsourcing via shared consortia
Nutshell: Many institutions looking to expand quality while cutting costs have considered outsourcing certain administrative functions. This allows institutions to focus on "interacting with sponsors, alumni, donors and faculty," while "spending less time and fewer resources on internal functions," the report said.
Implementation: One common strategy involves creating consortia focused on administrative services that are typically governed by a steering committee consisting of leaders from the system's member institutions. Institutions often establish this partnership alongside a managed services provider that can handle back-office functions — the combination of these two can yield "a positive initial experience," allowing for colleges to contract "for assistance with complex functions, such as finance and compliance."
Example of success: The Green Mountain Higher Eduction Consortium is cited as an example of a role model for this strategy. The group was formed to secure contracts for member institutions to allow them save money on purchases. Similarly, the Massachusetts Higher Education Consortium was made to manage service purchases and establish best buying practices for participating schools.
2. Tapping into public-private partnerships, considering mergers
Nutshell: As many institutions find their resources limited, nontraditional agreements between nonprofit and for-profit businesses are becoming more popular, which can free up "capital from construction efforts in core mission activities that cannot be outsourced," and offer speed to completion for implementation of new services with specialized project experts, wrote the report authors. Beyond partnerships, some institutions are considering mergers, which allows larger colleges to expand their opportunities and smaller institutions to benefit from scale and potentially a strong national brand.
Implementation: In buying into this strategy, institutions considering partnerships must recognize that short-term opportunities must be weighed against long-term implications, which can include demographic shifts and decreases in enrollment. Keys to successful implementation require: Each party to identify criteria for collaboration; establishment of a strategic plan and a binding financial arrangement to make sure the entities participate appropriately; strong consideration of location; and seeking support from lawmakers to approve and foster the partnership.
Example of success: Purdue University's purchase of for-profit Kaplan University, which was named Education Dive's 2017 innovation of the year, is one example. The landmark deal brings Kaplan's 32,000 students and 2,500 instructors under Purdue's umbrella and allow it to move into online education in a big way while sidestepping the costs of infrastructural development. The report also cited the University of Georgia System as an example of a successful merger, where 14 institutions were grouped into seven over five years. The Board of Regents used its "Principles for Consolidation" to garner success.
3. Tailor fundraising to generational nuances
Nutshell: Industry leaders know all too well the sector is seeing demographical shifts — but this is not only happening for students, but also donors. The report finds that baby boomers are the most likely to donate and are expected to give $8 trillion over the next 20 years, but they want to know how those funds are going to be used. Half of the workforce made up of millennials — which means institutions, in order to maintain growth, ought to start tailoring donation outreach to younger generations.
Implementation: To target Generation Z, or currently enrolled students and recent alumni, the report suggested tapping into these students' sense of philanthropy and adjusting outreach to include social media and competition for raising funds. For millennials, the report said they are 70% more likely to give via a transparent cause-focused crowdfunding campaign that taps into collaborative online social networks. For those in their 40s to late 60s, the report emphasized bringing these donors into the process and making them feel like they are directing the use of funds.
Example of success: Purdue University is cited as successfully implementing a single-day funding campaign mainly through social media, where the state institution, through 35 challenges, encouraged rivalry and competition among students to compete for cash prizes that could go toward the institution.
4. Use independent verification and validation (IV&V) for cloud implementation success
Nutshell: Institutions are realizing that safely integrating cloud services into IT projects is becoming a necessity, allowing for them to move away from cumbersome hardware onsite to more efficient offsite data storage. Institutions have been utilizing the process of IV&V for years, where an "objective third-party assessment of system development and implementation products and processes" helps create quality IT systems. This same process can allow schools to create IT solutions in a cloud format, where they can be larger and complex.
Implementation: Leaders pointed out in the survey three key aspects of IV&V best practices including that the process be truly independent and objective, focused on overall project health, and that it provide recommendations for improvement rather than just pointing out problems. To accommodate projects in the cloud, IV&V should be updated to accommodate speed, limited capacity for customization of software and contract terms of working with a third-party service provider.
Examples of success: Finding the right third party to handle IV&V depends upon the types of IT projects institutions are trying to implement and what oversight and recommendations they hope to gain. The report suggested colleges and universities enter into contracts based on how they want data to be handled, in order to see success.
5. Preparation for social media reputation risks
Nutshell: Social media is becoming ubiquitous, which means that scandals or controversial issues — particularly if they are not handled well — can end up becoming the main topic of conversation on Twitter or Facebook. Subsequently, social media can be a great venue for maintaining the institutional brand, but it also can hurt the brand if administrators are not prepared for problems.
Implementation: The report suggested that institutions develop proactive strategies around information gathering and dissemination. For example, administrators can actively identify social media users who have the potential to hurt the brand — including the the president, trustees and high-profile alumni using their own social media accounts — and be sure to monitor those.
Moreover, schools can expand their communications policy to describe how employees use social media. Also, schools should publicize the policy throughout the community, while establishing a monitoring function to handle any issues that could come up. Finally, schools should be developing a response plan ahead of time, considering different scenarios of online escalation and figuring out how to appropriately handle those in advance. Of course, any incident should be evaluated afterwards, so that schools can move forward productively.
Example of success: When using social media to handle potential for escalation, effective communication comes down to institutional voice and transparency, Jeff Hunt, author of Brand Under Fire: A New Playbook for Crisis Management in the Digital Age, told Times Higher Education. He said Gregory Fenves, the 29th president of University of Texas at Austin, handled the first 18 months of his service dealing with issues like a student's murder and racial abuse incidents by responding to incidents openly and with a more emotional, relatable tone.
“While it would’ve been easy for the newly appointed president to speak in an institutional voice to explain each of these matters and the university’s actions related to them," Fenves said in the article, "President Fenves expertly conveyed authentic emotions in each case ... it made him trustworthy and believable as a leader, and positioned him to handle future crises with emotional equity in the bank.”