Rising expectations tempered by stalling finances, say COOs

University leaders are being “pulled in all directions” by student demands for improved physical and digital experiences, just as institutional financial projections nosedive.

A survey of more than 80 chief operating officers (COOs) at universities in five countries has found that many have boosted spending over the past year. Forty-four per cent are increasing their expenditure on major capital projects, up from 20 per cent in a similar study last year, while 79 per cent are building their investment in online infrastructure.

The splurge has been fuelled by a sense that asset renewal suspended during the pandemic can no longer wait. But it coincides with mounting fiscal gloom, as COOs at three-quarters of the universities say they are yet to achieve financial sustainability.

The study by the Nous Group management consultancy finds that only 19 per cent of COOs thought their institutional financial performance would improve this year. Forty-six per cent expect it to deteriorate because of debt, deferred maintenance liabilities, static domestic tuition fees and rising “business-as-usual” costs.

Nous’ Melbourne-based head of higher education, Zac Ashkanasy, said universities around the world were reeling from investment downturns, unpredictable undergraduate enrolments and regulated tuition fees that failed to match inflation.

But universities needed to be able to accommodate enrolment growth and changing student preferences requiring them to convert lecture halls into “flat floor” learning spaces while satisfying expectations of “ubiquitous connectivity”.

“What delights a customer today becomes a basic need tomorrow,” Mr Ashkanasy said. “If I have a seamless experience in banking [or] retail…I’ll be [expecting] the same experience with my admissions or student query. That’s creating quite a demand on the technology of a university [around] customer relationship management, help desk service flow and learning management systems.”

There was also pressure on corporate systems, particularly those related to human resources and finance. “It’s really costly to have lots of paper being pushed around large, complex organisations, so technology is key. But universities…struggle with standardising those processes.”

The study quizzed COOs – known in North America as vice-presidents of finance and administration – from Australia, Canada, Ireland, New Zealand and the UK.

Respondents said “initiative overload” was diverting many institutions away from their main strategic objectives as they simultaneously came under pressure to differentiate experiences, reduce students’ financial burdens, meet social and environmental responsibilities and invest in indigenous reconciliation – all while constraining spending.

The survey finds that equity, diversity and inclusion (EDI) commitments now ranked as the fourth top institutional priority for professional leaders, behind student experience and curriculum. By contrast, investments in decarbonisation featured in just 10 per cent of COOs’ top priorities.

The study also uncovers differences in approach between Canadian respondents and their counterparts in Australia, New Zealand and the UK. While universities everywhere were chasing revenue growth, particularly from international education, COOs in the UK and Australia were also cutting costs through rationalisation of courses, space and support services.

Canadian institutions relied on tuition fee increases, with “relatively little appetite” for cost-cutting. Mr Ashkanasy said this reflected the “devolved” nature of universities that often had 20 faculties, compared with half a dozen in other countries.

“It is a bit easier when you’ve got a more consolidated enterprise…versus a large and devolved institution,” he said. “Making sure that COOs and professional staff are working as collaboratively as possible with academics, and vice-versa…is really the key to success.”

john.ross@timeshighereducation.com