Broadbent 2007

This article was downloaded by: [Universite De Paris 1] On: 27 July 2013, At: 21:02 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Public Money & Management Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/rpmm20 If You Can't Measure It, How Can You Manage It? Management and Governance in Higher Educational Institutions a Jane Broadbent a Deputy Vice-Chancellor and Professor of Accounting, University of Roehampton Published online: 15 Mar 2010. To cite this article: Jane Broadbent (2007) If You Can't Measure It, How Can You Manage It? 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This has manifested itself in numerous ways and has intertwined with a host of other concerns and neuroses that affect present-day Downloaded by [Universite De Paris 1] at 21:02 27 July 2013 life. This article brings together the author’s interest in accounting and experience as an academic manager to consider management and governance in higher educational institutions. Everything that can be counted does not necessarily this is not a universally accepted view as the Jane Broadbent is count; everything that counts cannot necessarily dialogue in figure 1 illustrates. Deputy Vice- be counted (Albert Einstein). Chancellor and Performance Measurement and Professor of The Nature of Accounting Performance Management Accounting, Accounting is one of the technologies of Accounting technologies have been extensively University of measurement that is used in management. At a used in the context of performance Roehampton. simple level it provides an account of a series of measurement—for example in budgetary events. It has come to be seen as an account of control systems—but the focus of this article is a series of events recorded in financial terms. It the nature of performance management is a technology in the sense that it provides a set systems (PMS). Performance management has of techniques—a toolbox—for approaching a often been associated with the achievement of particular set of problems or issues for stewardship, decision-making and control. This takes us to the issue of what accounting is not. It is not a neutral reflector of ‘reality’; Figure 1. A dull fellow… instead, it is a social construction that reflects certain taken for granted assumptions Vocational guidance counsellor: I have the results here of your interviews (Broadbent, 1998). It could, therefore, reflect and aptitude tests…and I can say without fear of contradiction that the ideal job for you is chartered accountancy. other things—Marilyn Waring (1988) noted that, for example, national accounts valued Mr Anchovy: But I am a chartered accountant. stocks of arms and missiles, but not the cost of malaria. More than this, because it provides a Counsellor: Jolly good, then back to the office with you! particular account, accounting becomes a Mr Anchovy: No, no, no!…I want a new job—something exciting. creator of reality with a variety of uses. This Counsellor: Well chartered accounting is rather exciting isn’t it? article focuses on the use of accounting in the broad area of decision-making and control. Mr Anchovy: No it’s not: its dull, dull, dull. Even in this limited area, information may be used in a variety of ways, for example either to Counsellor: Well yes Mr Anchovy, but you see our experts describe you as an appallingly dull fellow, unimaginative, timid, lacking in initiative, confirm or legitimize decisions that have already spineless, easily dominated, no sense of humour, tedious company and been taken. Thus there is also a political-economic irrepressibly drab and awful. And, whereas in most professions these sphere in the use of accounting information would be considered drawbacks, in chartered accountancy they are a In my own work, I take it as my starting positive boon. point that accounting is socially and discursively (Adapted, with apologies, from Monty Python’s ‘The vocational guidance constructed. It is therefore ‘interested’ and counsellor’—often known among accountants as ‘The lion-tamer sketch’.) because of that it is also interesting. Of course © 2007 THE AUTHOR JOURNAL COMPILATION © 2007 CIPFA PUBLIC MONEY & MANAGEMENT JUNE 2007  194 particular outcomes that act as targets, but this even misleading approach. is just performance measurement. We need to go beyond measurement because accounting New Public Management and the Public research has clearly shown the resourcefulness Services of humankind in achieving set targets. Notably Over the past 25 years there has been a raft of it has demonstrated the manipulation of changes in the pubic sector that might be seen budgets where their achievement is linked to to introduce ‘managerialism’ at the expense of reward. Evan Davis, the BBC’s economics previous ‘administrative’ approaches. More editor, described it well when he noted in a recently some see the emphasis moving to recent report that ‘targets cease to be useful as governance. This set of practices, which has soon as they are set’. Despite this sentiment, the included a good number of accounting use of targets is well embedded in notions of technologies, has been labelled loosely as ‘New management. As David Otley (1999) seminally Public Management’—a poor label in that it is and cogently argued, performance now no longer new, nor is it a coherent set of measurement is simply one aspect of practices. One significant element of NPM performance management. Not all aspects of (but not the only element) is the use of performance are amenable to simple performance measurement. This has been measurement and hence a PMS must go beyond adopted in the context of reducing the specification and measurement of outputs. autonomy of professionals and making them Downloaded by [Universite De Paris 1] at 21:02 27 July 2013 Otley argued that the context and culture of an accountable for their actions. In the context of organization is also important in understanding seeking to make themselves accountable for how to address the development of performance their own performance to the electorate, management systems. It is this approach that I government has introduced a range of would like to advocate as it accepts that targets—for example waiting lists in the accounting systems and their outputs are more National Health Service; in HE, participation— than neutral technical elements. that they then hold managers of those services In the work I have undertaken with Carolyn accountable for achieving. The target regime Gallop and Richard Laughlin, as well as accepting is led from Treasury who have introduced a this approach, we also suggest there is a need be ‘something-for-something’ approach to clear about the focus of the PMS (Broadbent et resource allocation, providing spending al., 2007). We argue that in the context of higher departments with resources to achieve education institutions (HEIs) and, indeed, this is particular outcomes expressed as public service perhaps the case in the public services more agreements. The use of these regimes at the generally, the financial focus of PMS is significant. aggregate national level (performance The importance of resource issues and financial management of HE) has implications for the flows in HEIs is a significant element given the organizational PMS (performance sector is generally ‘poor’. management within HE). Despite this argument, the prevalent This approach follows the input/process/ technologies of accounting used in output model and there are a number of performance management are currently based implications of using this model, which are on a simple cybernetic model of control in backed by decades of accounting research: which inputs are linked in a linear fashion to processes and then to outputs. The impact of •First, it assumes that outputs can be measured this approach on models of management more and counted. generally has been considerable and it can be •Second, it gives particular visibility to those seen specifically in the development of PMS aspects that can be measured and counted which rely heavily on performance and it gives less visibility to those aspects measurement. Thus the model that underpins that cannot be dealt with in this fashion. many popular management theories is one •Third, it leads to the use of proxies that may that knows what inputs are available; sees it as or may not be helpful in measuring important to be aware of what the desired performance. output and outcome are; seeks to model how •Fourth, it can give rise to opportunistic or they might be achieved; and then measures dysfunctional behaviour to ensure that the ultimate achievement through a set of key targets are achieved. performance indicators. I do not wish to reject this model absolutely I want to add to this list a rather more recent but there are times when it is not easy to claim is that it also provides the basis of implement or when it can be an incomplete or ‘transactional PMS’ (Broadbent et al., 2007). In © 2007 THE AUTHOR PUBLIC MONEY & MANAGEMENT JUNE 2007 JOURNAL COMPILATION © 2007 CIPFA  195 this way the requirements that are placed on reliant on a range of different talents but that organizations and their members are specified one key set of actors is the academic community. directly and specifically (in the input-process- Managing academics has been described as output fashion). Transactional PMS are ‘herding cats’. More formally, it should be associated with the underlying assumption of recognized that academics see themselves as ‘something for something’ and with the use of autonomous professionals. The definition of performance measurement. ‘professionalism’ is, of course, contested, with It need not be so. Instead, it is possible to some seeing it as a means of control of an area use the alternative of relational PMS. Relational of activity rather than a demonstration of PMS recognize the need to achieve particular particular expert knowledge. If we turn instead outputs but enable more autonomy of action in to a definition of ‘professional control’, then we the context of active engagement with key can avoid that problem. Professional control is stakeholders in the definition of both outputs seen by some as an appropriate approach where and the means to achieve them. They are there is little understanding of process and longer term in their remit and consider broader where outputs are difficult to define and this is contextual and cultural aspects, as well as argued to describe academic activity. If we recognizing the need for building accept this argument, we might be reasonably infrastructure, capacity and capability in the comfortable in accepting that academic activity context of delivering a particular set of outputs will need to be regulated through professional Downloaded by [Universite De Paris 1] at 21:02 27 July 2013 and outcomes. They may expect a particular controls and that academics can be seen as form of output or behaviour but will specify professionals. If process and outcomes are ill- rather less specifically what must be achieved defined, then professional cultures, ethics and or how it must be achieved. Relational PMS, trust become important elements of control. with their broader focus, are associated with Thus professional autonomy is located in a web performance management (Broadbent et al., of relationships and expectations. This has 2007). I return to this model in the conclusion. huge implications for the culture of universities which have a key set of constituents who see Higher Education—Why Measurement their activity as autonomous and academic Cannot Always Provide Control freedom as fundamental. A number of aspects of context and culture Third, we have the issue of complexity. need to be considered in order to understand The activity of universities is incredibly complex. the nature of PMS in HE. It is not easy to specify academic process, for First, I see HE as a public service although example how to teach well and inspire students it is provided by a range of HEIs that are (although it may be easier to define what is relatively autonomous. The reason that HEIs poor teaching). Neither is it necessarily easy to are only relatively autonomous is because their measure outcomes—although we try to do so funding (despite the extension of the fee regime) in the UK with the Research Assessment comes substantively from government sources. Exercise (RAE). Not only are process and Given that government resources are not outcomes ill-defined, the nature of academic infinite (although demands on them often seem activity more broadly is also complex. For to be), there is a contemporary concern with example (and this is a crude example) the the effective and efficient use of these resources. student, who is key to the nature of both the Hence, my insistence on the need to understand process and the outcome, is not—as is the case the focus of accountability which I see as often in some businesses—an inert input but becomes associated with financial accountability. What part of the process. Equally, the input of many is important to understand is that the funding professional groups is essential to ensuring flows through the delivery chain of higher student success. Also universities provide people education come with expectations. Funders’ with a range of different important outcomes expectations are diverse and different funders and not just a qualification. Examples include have different desired outcomes as well as a the ability to live independently, the ability to variety of approaches in the PMS they adopt. meet a new range of people and the ability to Thus funding is used as a means of achieving engage in new activities, for example student certain outputs some of which are new (for sports, radio, and theatre. It follows, then, that example participation). These activities have we have a set of activities that are not amenable to be delivered by a community that has a to easy measurement and are not unitary and strong sense of its purpose and hence change is that the delivery of the services of the university not necessarily easy to implement. requires a range of inputs. This does not mean Second, let us be clear that universities are that there are no elements that we should © 2007 THE AUTHOR JOURNAL COMPILATION © 2007 CIPFA PUBLIC MONEY & MANAGEMENT JUNE 2007  196 measure and strive towards, but it means we understood, hence intervening in the process have to be sophisticated in defining and will have poorly understood effects, if any interpreting them. effect at all. Some of the measures that are used This leads to my fourth point. HEIs, like are controlled by a range of people with different many other institutions, are being expected to interests and there are a series of regulatory provide information to help students and their frames that cannot be ignored, but that lead to parents make informed choices about the diverse rewards. This description is not nature of their services. This has led to the comprehensive but it does, hopefully, give a view industry of the creation of league tables—I of the complexity of the environment of HE. read somewhere that 80% of institutions are in The prerequisites for implementing the top 10 of something—and these, in turn, performance measurement systems within create their own reality and like other universities might exist in small pockets of measurement/reward systems lead us to activity, but not in all elements of activity. manipulations as well. These measures are Because they are implemented in a complex developed by a whole range of different people environment sophisticated interpretation of in different parts of the media, as well as by performance measures is required. regulators and sometimes indeed HEIs. Performance management can take on board The fifth point is that the financial this complexity and can provide interpretation sustainability of the sector as a whole is not robust of the meaning of the measures, taking into Downloaded by [Universite De Paris 1] at 21:02 27 July 2013 and the sector generally works on low margins, account the complexity in which they are with many institutions working with a deficit. embedded. Performance measurement alone The final contextual/cultural point that I cannot achieve this. will make is that there has been a growth in the regulatory framework affecting universities and Conceptualizing the Challenge of this is often seen by academic colleagues as Management in HEIs impacting on elements of academic freedom, The cultural and contextual elements in HE albeit in different ways. Two examples are create challenges at two levels: foremost in the mind of colleagues: •Management of the individual university. •We have the Quality Assurance Agency (QAA) •The funding and governance of the sector as frameworks and precepts that frame the a whole. expectations that are the subject of quality audit of learning and teaching. To help to address these issues we can •We have the RAE which does not directly reconceptualize the university in a way that regulate, but which has expectations of what makes the complexity of the required outputs research activity should comprise. As funding and goals visible (this model is applicable to any is allocated in line with the results of the complex organization). The best approach sees RAE, this also brings incentives, both the organization as a coalition of different individual and organizational, to achieve groups and all have their own particular the expected outputs. interests. This means that it is difficult to define organizational goals—the required outputs— It follows, then, that there are huge unambiguously. As different parties have problems in conceiving of PMS within different goals, then the organizational goals universities through the use of an input/process/ must be contained somewhere in the output model. What we have is a sector that is overlapping interests of the groups. relatively autonomous, but driven by a series of One way of sharpening this funding mechanisms that demand particular conceptualization is to see the management outcomes. These sometimes produce task as concerned with inducing different parties contradictory demands and, at this point in to provide the required contributions needed time, are changing and growing—introducing to enable the organization to survive. The widening participation and enterprise activity inducement–contribution model of for example. The sector is populated by a set of organizations built by Chester Barnard (1938) actors who see themselves as autonomous helps us to do this. professionals governed by a culture of academic The general point is that, using this model, freedom, but who are increasingly being asked management is concerned with ensuring that to account for themselves through academic the organization is working within the feasible audit and the RAE. Its processes are complex, set of overlapping goals of the constituencies poorly specified and processes are poorly and that inducements are sufficient to enable © 2007 THE AUTHOR PUBLIC MONEY & MANAGEMENT JUNE 2007 JOURNAL COMPILATION © 2007 CIPFA  197 the contributions necessary to produce a good RAE score are funding flows that even organizational sustainability. autonomous institutions cannot ignore. The implication of this for management Specialized funding flows for introducing new and measurement is that the rational linear and different activities also become attractive model of defining the output or goal of the when they may contribute to moving an organization and ensuring movement towards institution away from deficit or a narrow margin. it is far too simple. Instead, where there is As noted at the outset, universities are disagreement among the different parties as to autonomous bodies but their need for financial what the goal should be, managers may have to stability means they are reliant on funders and move towards a satisfactory goal that can be hence that autonomy is restricted. University accommodated within the feasible set of managers have little room for manoeuvre in alternatives, rather than work to maximize a these types of circumstances and the limiting particular goal. A suitable metaphor for factor of financial resources for institutional management is to see it as the task of the survival is a crucial driver of behaviour. conductor of an orchestra who offers leadership, The internal organizational tensions that but also melds the talents of all the members— this context inevitably produces are mediated all these contributions are needed to produce to some extent by the nature of the funding a good performance. How to measure this in flow and the PMS that is adopted. In this absolute terms is, of course, problematic. respect I would like to give some positive Downloaded by [Universite De Paris 1] at 21:02 27 July 2013 In these circumstances performance recognition to the work of HEFCE which acts measurement using a simple cybernetic model as what Richard Laughlin and I have called a with transactional controls is not always ‘buffer’—an absorbing mechanism between the appropriate. Instead, what should be adopted HEIs and the state. In essence, HEFCE acts to is a more complex model of the system using mediate the simple demands of the state—or, performance management and taking a more indeed, the minister concerned—and place relational approach. This does not mean that them in a more practical framework that is there is no control, but that the control has a workable and acceptable for the HEIs that rather different nuance. have to deliver the policies. Of course, sometimes the state’s demands themselves are Funding, PMS and Performance not negotiable and mediation is impossible, but Measurement: The Role of the Higher the mode of achieving the demands may well Education Funding Council for England be more malleable. In achieving the state’s (HEFCE) required outcomes, HEFCE’s control of funding There is one significant element that impinges flows is crucial. HEFCE clearly asks for on the model that I have put forward that particular outcomes, for example in the context needs to be considered and that is of the power of the contract for funding student numbers, differentials between the various parties but it achieves this by adopting a relational involved in universities. This, of course, means approach. Thus it recognizes the complexity of that the task of balancing interests is not the university system, it understands the necessarily that of mediating a series of equal competing demands on the system, it respects claims in an even-handed way. The ultimate that the HEIs should have some autonomy, goal of survival will rest particularly with and it recognizes that there needs to be some satisfying more powerful parties and this brings resourcing to build broader capacity. HEFCE the argument back to the issue of the resource arguably has a very sophisticated understanding and funding flows. Those who provide the of the sector and the HEIs within it, which funding for institutions have a greater capacity allows it to exercise some control and broad to demand particular goals and where there is governance of the sector within a relational a concentration of funding from one particular frame. This does not mean that there is no source then there is a particularly powerful control; indeed, vice-chancellors would actor. In the case of universities, this is invariably sometimes argue that HEFCE has too much the state. In many ways this means that the influence. I would however argue that this demands of the state are either non-negotiable control is nuanced and provides vice- or difficult to ignore, especially when an chancellors and their senior teams with the institution is under some financial strain and, possibility to start to negotiate some of the as noted earlier, the sector as a whole runs close competing demands on them. to break-even. Hence the requirement to This can be contrasted with the approach undertake QAA audits as a prerequisite for that has been taken by other funding agencies. A receiving state funding. Equally, the return for stark example is the Department of Health (DoH) © 2007 THE AUTHOR JOURNAL COMPILATION © 2007 CIPFA PUBLIC MONEY & MANAGEMENT JUNE 2007  198 which funds universities to provide education on governance in the university sector and their a totally transactional basis. The DoH buys places latest report (CUC, 2006) strongly steers for education using a contract with an incremental towards the use of a system of performance payment for a specified number of places. This is measurement via the use of a chosen set of KPIs manageable when there is a steady state or gentle as a means by which external council members incremental change in demand, but when there might track the progress of the institutions for is steep or aggressive change (as is the current which they have responsibility. Equally, there situation) leading to corresponding changes in is a concern that the new RAE methodology resourcing then it will be difficult to achieve a following the 2007/08 exercise will, in relying satisfactory HEI response. Where there has been more on metrics, become more mechanical. a steep reduction, then HEIs are put in a situation Both of these are examples of more of great difficulty and thus DoH contracts are a performance measurement and transactional significant risk because of their volatility. The approaches. impact on this is that internally this reduces the Finally, I offer a note of caution against potential for mediation different stakeholder trying to tie everything down too closely in a interests. complex environment. Relational PMS allow loose coupling that allows room for manoeuvre Conclusion in a complex environment. Tight coupling The nature of universities is complex and the means if one carriage leaves the track, then so Downloaded by [Universite De Paris 1] at 21:02 27 July 2013 management of such institutions is will the others. Use performance management, correspondingly complicated. To not just measurement, and use the latter with reconceptualize the nature of universities and care and be sure you can still manage. ■ use the metaphor of the conductor of an orchestra provides a richer basis for thinking Acknowledgements about management practice in the sector. This article draws on an ESRC-funded research The management of HEIs takes place in project on Performance Management of and in a context that is defined for them by the Higher Education undertaken with Professor relationships that exist between them and Richard Laughlin and Carolyn Gallop. I must their regulatory and financial framework. To acknowledge that this and most of my work is enable management in HEIs the sector needs a joint project with Richard Laughlin, in which to be controlled through the use of a relational neither of us can see the seams and know where PMS. This does not duck the issue of control or our own work starts and the other finishes. the need to achieve a particular outcome, but This article is based on the author’s public sees it as more than adding together a set of lecture at Roehampton University delivered defined or discrete outcomes. The use of in March 2007. performance measurement alone is too blunt a tool for satisfactory management of HEIs. In References the context of managing institutions with the Barnard, C. (1938), The Functions of the Executive need for the contributions of many different (Harvard University Press, Cambridge, MA). stakeholders, who may well have demands that Broadbent, J. 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(1999), Performance management: a Following various financial scandals, the most framework for management control systems well known being Enron, there is a current research. Management Accounting Research, 10, concern with issue of governance. Thus the 4, pp. 363–382. Committee of University Chairmen has been Waring, M. (1988), If Women Counted: A New very involved in the development of codes of Feminist Economics (Macmillan, London). © 2007 THE AUTHOR PUBLIC MONEY & MANAGEMENT JUNE 2007 JOURNAL COMPILATION © 2007 CIPFA