Efficiency within the higher education and research sector
Strategies for institutional efficiency
Research and Higher Education policy
Global efficiency trends in higher education
About Higher Education and Research Group (HERG)
We are a consulting and policy advisory organization established to encourage collaboration and advisory services to support ongoing productivity of the higher education sector. The impetus came from applied research that was aimed at learning more about how efficiency operated in higher education sectors in Australia, the US and the UK.
The independent creation of the REEF Index is a key element of HERG’s work. The REEF Index provides a point of reference for policy and strategy that both describes efficiency and compares: institutions with their own efficiency previous position, against other institutions, and against a “frontier” of efficiency in the sector.
Additionally it supports a broader and deeper understanding of the efficiency and productivity of the sector as a whole – possibly described as the higher education ‘ecosystem’.
This innovative tool is agnostic as to any particular mix of Education and Research that each institution chooses and so for the first time allows analysis to be undertaken that takes those variations between institutions into account.
HERG seeks to make a contribution to public discussion about: Efficiency within the higher education sector Research and Education policy Global efficiency trends in higher education.
HERG also works with university executives to create strategies to increase institutional efficiency.
Research Associate in HERG. Dr Rob Jeges holds a bachelor of engineering, an MBA and a PhD in quantitative finance and probability.Read More
Keith HoughtonEmeritus Professor
Keith Houghton is a Principal and Chief Academic Strategist of HERG and Professor Emeritus at the Australian National University (ANU).Read More
Mark ClisbyPrincipal and CEO
Mark Clisby is a Principal and oversees the operations of HERG. Mark holds degrees from the Universities of Adelaide and South Australia.Read More
The REEF Index is an innovative and comprehensive whole of sector approach to measuring efficiency (productivity):
- at a point in time, and
- changes in efficiency over time.
- comparisons with like institutions and the sector ‘efficiency frontier’
The tool is known as the Research and Education Efficiency Frontier Index (REEF Index). As a consequence of the nature of the innovation and its focus on efficiency, we believe that the REEF Index will make a significant and long-term contribution to education policy in Australia and internationally.
One reason is because the index assists in providing an objective “window” on universities that is neither conventional nor readily ‘gamed’. It has the potential to be of use to governments and can support both funding agencies and the sector more broadly for years to come.
WHO THE REEF INDEX SERVES
Government may seek to have efficiency measures that are not just cash flow based using the REEF Index.
For Taxpayers, the REEF Index is a measure that more easily passes “pub test” type questions such as “Which university gives the taxpayer the best value for each dollar invested?”.
Other interested stakeholders, such as philanthropic trusts, state government and private sector partners and other potential partners, may use the REEF Index as a criterion for establishing or continuing a relationship with a university.
Governments and their agencies with responsibilities may be users, including the relevant Government departments together with agencies such as Auditors-General both State and Federal.
Those charged with university management, governance and oversight such as university councils may use the REEF Index to generate efficiency measures as key KPIs.
The Higher Education Research Group undertakes projects and provides services in a range of areas and some of these are listed below:
Analysis, information and advice on efficiency within the higher education sector
HERG has undertaken research on broad higher education efficiency issues. The “Efficiency Frontier” analysis in particular as a “new” analysis has profound implications for how whole sectors are structured, evaluated and funded / rewarded.
Strategies to increase institutional efficiency
HERG has undertaken reviews of institutions to examine and make recommendations about Research and Education related effectiveness and efficiency. In terms of the REEF Index, there is a range of other applications for this methodology.
Research and Education policy
HERG can provide information and analysis to Government, based on overall efficiency, relative to each institution, or groups of institutions, and to others rather than just scale or capacity. Government may seek to have efficiency measures that are not just cash flow based. Seeking genuine underlying efficiency may be seen a better targeted mechanism to give effect to public policy settings.
Global efficiency trends in higher education
HERG has undertaken analysis of three countries, Australia, US (limited data set) and UK and we seek collaborators in these and other countries.
HERG is regularly called upon to provide public commentary. HERG work has been cited in the Australian Parliament (Hansard Senate 6 September 2017 page 26) as a contribution to the understanding of “real productivity opportunities” for Australian higher education. The Minister of Education – Senator Simon Birmingham – has described the work as “ground breaking” (reported in Australian Financial Review August 28th 2017).
AFR Higher Education Summit
- August 2018 keynote speaker
- August 2017 keynote speaker
This efficiency index is a measure of organizational performance new to the higher education sector anywhere in the world. We intend to develop the index both as a domestic and as a global product and we are in the early stages of an alliance with a major international professional services firm to progress this development.
We are actively seeking collaborators and partners to further efficiency related work in higher education and research.
HERG produces independent research into the costing, productivity and efficiency of universities.
HERG provides international comparators and an examination of what has helped successful outliers to strengthen research and productivity.
We have a range of ongoing research questions, some are listed below, and HERG is actively seeking collaborators and partners into these and other research questions.
When reading this material please note that the views expressed in these documents are provided for discussion around important policy issues in research and higher education. They are not necessarily the formal views or policies of HERG.
|The Funding of Higher Education: An Empirical Examination of the Cost of Education in Business Schools
Keith A Houghton
|Productivity analysis of Australian universities
Amir Moradi Motlagh
Christine A Jubb
Keith A Houghton
Models for efficiency
One can model the opportunity for efficiency enhancement. By partitioning the more efficient (defined operationally at 85% of the frontier and not moving away from the frontier) models for improvement can be built. Such targeted efficiency gain is more sustainable than generalized funding cuts. It is also less likely to have fewer and less significant unintended consequences because of its targeted (and more defensible) approach.
Economies of scale
One research question relates to the issue of scale. The size of some universities results in an inability to benefit from significant economies of scale. The scale issue substantially overlaps with the special needs of regional universities.
Funding Models and Mechanisms and Implied ‘Exchange rates’ between Education and Research.
The REEF Index analysis allows multiple ways of partitioning the relative costs of conducting research and education and finds that, the average ‘exchange rate’ between teaching and research across the whole Australian system in 2016 is around 14 students equals 1 unique authored publication. There are a number of research and collaboration questions around this analysis.
The creation of a “Frontier of Efficiency” places the most efficient institutions on or very near that “frontier”. An individual institution that is away from the “frontier” can choose a path that it will seek to follow and fund in moving closer to the “frontier”. Those institutions on or very near the “frontier” demonstrate particular characteristics that can be used by others to determine strategy. Some of the strategy decisions such as deciding funding priorities are relatively well known, others involving modelling possible future directions of an institution if it continues to pursue its current strategy, how to better apportion costs across academic units and the mix of Education and Research investment and cross subsidy are all questions for further exploration.
Academic staff workload models
An emerging factor in efficiency is academic staff workload models. Models vary in approach. Some models appear extraordinarily well structured and, importantly, well calibrated and implemented. Others need strong support, especially in respect of research expectations. On occasion, models appear to be based on managerial intuition. Some workload models run the risk of miss calibrating differential long-run research productivity rates across (granular) Field of Research (FoR) classifications. An alternative is to use real world evidence of research productivity.
Possible further research into efficiency improvement causality includes:
- Industrial frameworks
- Workplace culture
- Single versus multi-site campus
- Extent and rate of casualization
- Infrastructure costs and overheads