Fitter for the future

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Think human resource efficiency is just about redundancies? Think again. In this post, the Universities and Colleges Employers Association’s Laurence Hopkins explores a range of ways in which Higher Education institutions are increasing organisational efficiency and effectiveness through their human resources policies.

Mention the words ‘efficiency’ and ‘HR’ in the same sentence and many members of staff may start thinking ‘redundancies’. However, UCEA’s 2015 Workforce Survey, carried out in association with HEFCE, shows that efficiency in the employment of people means much more than this.

Investment in staff comprises more than half of the sector’s expenditure. This is why any serious consideration of efficiency and effectiveness must take account of how this money is spent as well as the outcomes for students and others that are achieved through that investment. However, unlike some operational areas, the ‘human’ element of HR must be a factor in improving outcomes. This can often sit uneasily with the reduction of efficiency to a set of metrics. It does not follow that data and metrics on the workforce are unhelpful, but that HEIs will, for example, want to assess the quality of staff brought into the organisation as a result of recruitment and selection, not just the average cost of each hire.

The UCEA Workforce Survey has for some years played an important role in monitoring trends and practices in the management of the HE workforce alongside important metrics and qualitative information on recruitment and retention challenges. The 2013 Workforce Survey was an important reference point for Universities UK’s 2015 report Efficiency, effectiveness, and value for money, particularly the information gathered on managing workforce costs. The 2015 survey is equally helpful as it provides further evidence on practice in HEIs, including the use of outsourced service providers and shared services.

Our latest survey reveals that improving the efficiency of HR processes is the most common activity among HEIs to enhance the effectiveness of HR and reduce associated costs, with 60% of HEIs reporting recent improvements and a further 22% planning on making changes.  This was followed closely by restructuring and redeploying staff to new roles (58%) and increasing the use of direct recruitment methods (49%). By comparison, only 27% of responding HEIs reported that they were currently reducing headcount with even fewer planning to do so in the near future (9%).

Outsourcing of services is common in the HE sector with 55% of HEIs completely outsourcing at least one service and 85% outsourcing at least one service in part. The areas that are most commonly outsourced are cleaning – 30% fully outsourced, 19% partly outsourced, security – 28% and 19% – and catering – 35% and 12%. Outsourcing of legal services and maintenance is also common but is more likely to be done on a part-outsourced basis. Since 2013 there has been little change in the proportion of HEIs outsourcing cleaning and catering, but the proportion of HEIs part-outsourcing security has increased from 11% to 19%, although there has been no change in the fully outsourced percentage. Shared services appear to be less popular with only two or three HEIs reporting such an arrangement in each of the main operational areas.

‘Cross cutting’ initiatives

It seems clear that improving HR processes, restructuring and using direct recruitment methods are important approaches to efficiency alongside outsourcing and shared services, but what are the actual cost/efficiency savings associated with these changes? HEFCE’s analysis of value for money (VfM) reports found that the most common areas for cost/efficiency savings were in estates and through ‘cross-cutting’ initiatives. In the HR function itself, around 20 HEIs reported VfM savings but in terms of the larger efficiency savings regarding workforce, the largest by some margin have been achieved through organisational restructuring, with staff redundancies coming in at a distant second place – see table below.

Cost/Efficiency savings reported in Value for Money Reports, 2013-14 – HR and workforce-related

Approach to savings Total reported savings (£’000) Number of initiatives reporting savings Average reported savings per initiative, £’000
Changes to staff terms and conditions 3,364 3 1,121
Organisational restructuring 17,911 61 294
Shared services 322 9 36
Staff redundancies 8,287 9 921
Total 29,884 82 364

Source: HEFCE, 2015. www.hefce.ac.uk/reg/guidance/vfmon/

It is more difficult to disaggregate the impact of HR process improvements from the HEFCE report as these are aggregated across all functions, as is the use of online/electronic media, which could refer to staff recruitment but could equally refer to marketing or other activities. Staff recruitment costs are clearly being targeted as some reports from previous years that are in the public domain attest. One example of this is a pre-92 university reporting a 64% reduction in job advertising spend over three years from £433,000 to £154,000.

More to be done

Although the Workforce Survey and HEFCE’s analysis of VfM reports provide solid evidence on the approaches to improving efficiency and effectiveness as well as estimating the cost/efficiency savings, there is still more to be done. UUK’s 2015 report concluded that while VfM reports ‘provide a valuable resource for understanding efficiency and cost savings in the sector’, a ‘more robust, accessible and comprehensive mechanism is needed’. To this end the report recommended that a common framework of key information on efficiency should be developed, which institutions can use to inform their own value for money reports.

This work has been taken forward by UUK and HEFCE with a view to publishing a common framework next year. A more consistent approach to reporting in England and an increase in the number of HEIs publishing these reports will improve the sector’s ability to track progress and share good practice as well as better highlighting the contribution made by HR. We hope that alongside these annual reports we can continue to capture development and changes in practice in our 2017 Workforce Survey.

Laurence Hopkins is the head of research at UCEA

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