January 2014 newsletter – University management and performance

While no one doubts that there is such a thing as ‘good’ and ‘bad’ management, it is often thought that management practice makes little difference to the performance of academic institutions, where the nature of the work is so critically dependent on the motivation and skills of individuals. Recent research by John McCormack, Carol Propper and Sarah Smith challenges this view.

It has long been accepted that one can distinguish ‘good’ from ‘bad’ managerial practices and that these practices have an impact on firm’s performance. When it comes to universities, however, this notion has been viewed with some scepticism for a variety of reasons:

• Academics are thought to have a high degree of personal (‘intrinsic’) motivation towards their work;

• When it comes to appraisal of that work, it is the opinion of an external peer group of like-minded specialists that matters, and that appraisal takes place through publication and conferences;1

• Conventional management tools have little relevance.

For all these reasons the ‘management’ of academics has often been seen to have special difficulties, if not to be downright pointless: rather like ‘herding cats’, to use a popular analogy. In recent years this issue has taken on a new importance as institutions of higher education have faced an increasingly competitive environment with declining sources of assured public funding. The need to recruit students, nationally and internationally, the need to achieve a good result in research and teaching evaluations and a high position in popular league tables, matters now as never before. Thus, the quality of management has come under scrutiny as one of many 'inputs' that may influence these outcomes.

Recent research by John McCormack, Carol Propper and Sarah Smith challenges this view by comparing management performance in UK universities with measures of research and teaching quality. They find that universities with better management have better performance. This holds for all types of universities, and the results are not driven by differences in resources. Recruitment, retention, and promotion are the most important aspects of management in universities, but management at the level of academic departments — not human resources departments — is what matters.2

The method
The researchers distinguished four groups of universities. (1) The ‘Russell Group’; (2) ‘Other Old’ universities, founded before 1992; (3) ‘Former Polytechnics’ and (4) ‘Other New’ universities (primarily former further and higher education colleges and specialist colleges). In order to be able to examine the relationship between management and research performance (inter alia) the institutions selected for the study consisted of universities that made a submission to the most recent Research Assessment Exercise (RAE), carried out in 2008. For each university the departments chosen for study were Psychology, Computer Science, Business & Management, English and Human Resources.3 The final sample contained information on management practices in 248 departments within 112 UK universities.

At the centre of the method is a survey of operations-focused management practices developed by Bloom and Van Reenen (2007).This measure is a survey tool which has been applied to over 10,000 organisations in manufacturing, hospitals, schools, and even social care organisations (e.g. Bloom and Van Reenen 2012, Bloom et al. 2010). The survey looks at 17 indicators of management practices, grouped into four subcategories, as shown in the box. Each practice was independently scored by two interviewers on a scale of 1 (weak) to 5 (strong).


The findings
• Firstly, in contrast to multi-plant manufacturing firms or even hospitals, university management is relatively decentralised. Consequently – 
• One department within a university can have good management practices whilst another has poor ones. In addition, there are significant differences across universities in the quality of management practices.
• The management scores of the Russell group were the highest, followed by the other old universities, the former polytechnics, and the other new universities.
• There are differences in resources across the types of universities but these differences do not explain the results.
• The main driver of differences in the overall management score is management differences in the areas of recruitment, retention, and promotion.
• Performance in terms of targets and monitoring are broadly similar and contribute little to the differences in performance.
• Departments which are better managed also have better performance in terms of research, but also in terms of student satisfaction and a wider set of metrics.
• It does not seem to be the case that there is one management style which is appropriate to the highly research-intensive universities and another to universities which focus more on teaching and educating local students. Management matters in the same way at new universities as it does at old universities. Good practice with respect to recruitment, retention, and promotion improves rankings for the new universities (those that were former Further Education and Higher Education colleges) just as much as it does for the old universities and the Russell group.

As public funding for higher education becomes more selective, the question of how best to compete for the available funds clearly becomes more pressing. What this research shows is that success and failure are unlikely to be explained by age, or type of university, or even (beyond a certain point) to the resources available to their managers. This research shows that it is the quality of management itself that matters.

Notes and references:
1. This notion that the primary loyalty of an academic is to scholarship and the development of knowledge in his/her selected field is reflected in the use of the term ‘affiliation’ to describe an academic’s relationship with an institution that in ordinary language would be described as their employer (ed.)

2. ‘Herding Cats: Management and University Performance’ by John McCormack, Carol Propper and Sarah Smith is forthcoming in the ‘Features’ section of the Economic Journal. A summary of the research can be read at http://www.voxeu.org/article/management-and-university-performance, from which parts of this article are drawn. John McCormack is in the management department at the University of Bristol. Carol Propper is at Imperial College Business School and the Centre for Market and Public Organisation (CMPO) at the University of Bristol. Sarah Smith is at CMPO at the University of Bristol. The research was funded by the Economic and Social Research Council.

3. The departments were selected to give a large sample and to spread across the sciences, social sciences and humanities. Unfortunately, had economics been chosen, it would have yielded only 35 departments concentrated in the Russell and ‘older’ groups of universities.

4. A more detailed description of the survey and its use, as well as a list of participating universities/departments can be found in a technical Appendix to the paper at http://www.bristol.ac.uk/cmpo/publications/papers/2013/wp308.pdf

Bloom, N and J Van Reenen (2007), ‘Measuring and Explaining Management Practices Across Firms and Countries’, Quarterly Journal of Economics 122(4): 1351 -1408.

Bloom, N, C Genakos, R Sadun, and J Van Reenen (2012), ‘Management Practices Across Firms and Countries’, Academy of Management Perspectives 26(1): 3-21.

Bloom, N, C Propper, S Seiler, and J Van Reenen (2010), ‘The Impact of Competition on Management Quality: Evidence from Public Hospitals’, NBER Working Paper 16032.