The further and higher education sector, like most others, is advancing towards the budgetary black hole which has been looming in its path…and once the event horizon has been crossed, there is no going back.
The Government’s long-term goal is that the sector will become less dependent on state funding; income will instead increasingly come from tuition fees. In order to complete its transformation into a pure services sector two things would need to happen: tuition fees have to increase and costs have to be reduced.
As regards fees, the golden goose has been the multi-billion pound market which can be accessed by persuading foreign students to study in the UK rather than elsewhere internationally. One problem has been the much publicised crackdown on immigration in the sector.
The London Metropolitan University situation is a case in point of the problems that immigration laws can present. Attracting foreign students is therefore a top priority for generating fees. HR frequently has to take external advice as regards the ever-changing rules on immigration, and there are difficulties for universities with immigration sponsorship.
The cost challenge
That said, perhaps the bigger issue for HR has been the cost cutting measures. These measures have included changes to terms and conditions, policies, services, and management structures. These measures fall under HR’s remit to help implement, and HR teams face considerable challenges in the short to medium term in managing their implementation.
Ultimately, HR will have a major role to play in shaping the long-term strategic drive towards a pure services based sector.
In the coming years, one of the most difficult issues for HR will be implementing changes to terms and conditions of employment.
The education sector’s managing bodies see that there are savings to be made by reducing pay, streamlining employee benefits and removing what might be viewed by some as archaic disciplinary policies. It falls to HR teams to implement these changes practically.
One key challenge is that many arrangements, benefits and policies are contractual, and the sector is heavily unionised. In order to achieve these changes, collective agreements must be reached with the unions. It is arguable that the sector’s interests are misaligned with those of the unions and their members.
However, in the long term, and despite the rhetoric, most unions appreciate that changes to pay, benefits and policies will be required to protect jobs now and in the future. Institutions will have to adopt a strategic approach in order to maximise the changes they can make, whilst mitigating the risk of industrial action.
There will need to be a sustained effort to maintain positive industrial relations. Therefore, what HR teams require going forward is increased support so that, whilst they can react to short term issues, they have the head room and authority to shape their institutions long term relationship with the unions.
Carry on Teacher
Another issue facing HR as a result of budget changes is the difficulty of performance managing an ageing workforce. As the number of academic posts begins to shrink, talent management becomes increasingly challenging.
Since the abolition of the statutory default retirement age, older academics can now stay in their post far past their pension age. This has resulted in many younger academics becoming unhappy about their career prospects as there is less scope to be promoted and fewer opportunities for them. Institutions no longer have the funds to simply create roles for the benefit of younger stars.
The abolition of the statutory default retirement age has also resulted in HR having to address performance concerns in older employees more robustly. There are many older workers in the education sector who prize their autonomy and academic freedom. As the sector moves headlong into a services based model, autonomy of thought can remain, but accounting for productivity, output, student (customer) satisfaction, and revenue generation will increase.
The approach to performance management across the sector is now an issue which affects the whole age range of the workforce. The requirement for HR to have some strategic oversight in how performance management is handled is obvious. A services sector is all about its employees, and HR are there to deal with employee issues.
Of course, other sectors have similar issues to address as they attempt to balance their budgets. It is arguable that in the education sector, as opposed to parts of the private sector, the impact of cost cutting measures is more likely to have a long-term impact on employee relations.
The private sector is perhaps more flexible over the long-term. Employee relations breakdowns, following redundancies or changes to terms and conditions, tend to heal faster. Staff turnover is higher, so old wounds are able to heal. In the education sector it is more likely that negative sentiment will linger if institutions cut too deep.
If HR in the education sector can be given strategic autonomy to shape their institutions’ approach and methods, rather than only being able to address cost cutting measures on a short or medium term basis, that will give the best value.
David Palmer is a Solicitor with Dundas & Wilson