Staff performance measurement in Australia's universities

According to a story in the Australian Financial Review (Monday 24 August 2009) by Joanne Mather, and I quote:

Vice-chancellors are deploying corporate style tactics to lift employee output and create leaner, more responsive workforces before a new era of performance-base funding agreements with the Commonwealth.

This example of modern corporate-speak took me by surprise. In the same story, Joanne quoted the VC of the University of Canberra, Stephen Porter. Speaking of the introduction of performance based at his university, he said: This wouldn't raise an eyebrow in the corporate sector.

I am sure that Professor Parker is right. My problem is that I am far from sure that the corporate sector is in fact the right model. I thought this before, but since then we have had to global financial crisis caused in part by by the combination of performance measurement and performance based pay.

To extend this argument consider the words used by Joanne Mather in her first paragraph quoted above.

Note, first, the use of the word employee. Of course university staff are "employees", but they are also more than this. I wonder how the focus on "employees" fits with other (perhaps outdated) concepts - community of scholars and academic freedom are two that come to mind.

Still continuing with Joanne's word, the aim of the new approaches is to increase "output". This got me wondering. Just how the universities are to measure this? How might this be related to individual performance?

I tried to think through just how I might measure output. Universities are complex multi-variate institutions. To really develop a working output model, you first have to specify the outputs, then determine the relationships between these outputs and the various elements (inputs) contributing to the outputs. I can see how I might do this in a general sense, but I find it hard to see how to it with the degree of specificity implied by Ms Mather's comment.

The use of the word "lean" in the way that Ms Mather uses it originally came from lean manufacturing, the slimming down of manufacturing systems to gain maximum value in process terms while minimising inventory. Later it became fashionable in corporate restructuring - getting rid of fat to create the lean organisation.

The results of this approach in the corporate sector have in fact been very mixed. A particular problem has arisen in balancing short term gain with long term risks and costs. In Australian electricity distribution, for example, the newly corporatised or privatised entities cut the number of linesmen. This did provide a short term gain that flowed to the bottom line, but later led to severe shortages with added costs in recruitment and training, as well as reduced operational efficiency.

Of course, a more responsive workforce is (in general) a good thing. Here, however, a question has to be asked: responsive to whom? In the university case, responsiveness to corporate demands can conflict with corporate objectives or indeed academic and professional responsibilities.

I actually do think that Australian universities need to be more responsive in meeting student needs and in the development and modification of courses. One project that I worked on involved the development and introduction of a new vocational course. This should have been relatively simple. The project failed because the university, a major metropolitan institution, simply could not get its act together.

The point about this example, however, is that the delay linked to the interaction between people and systems. This was the core reason for delay and final abandonment.

Apart from my own concerns about what I see as a decline in the real standards of Australia's universities, my experience as a consultant makes me very cautious. Speaking as someone who argued strongly for the adoption of corporate approaches into the public and not-for-profit sectors, I no longer see the gains I used to.       

China and the US - savings and investment

Interesting discussion at dinner last night with a member of the board of a major Australian retailer who argued that the Australian economy was far more fragile then people realised. I am not sure that he is right, but I found the conversation interesting.

There has been a fair bit of discussion since the global financial crisis began about over saving in Asia especially China, over consumption in the west, especially the USA. You will find a sophisticated version of the argument here on Michael Pettis's blog.

This argument confuses me. In this post I want to explain why.

If you look at China, you see a country whose average standard of living is still quite low. You also see a country where there are significant imbalances in wealth across the country. China needs to increase the standard of living for its people, while also ensuring a more even spread.

To do this, China needs to fund investment. This has to come from local savings or from overseas capital. A high local savings rate is not a bad thing in these circumstances.

Leaving aside export subsidies or an artificially low exchange rate, these are different issues, China's semi-centrally controlled economy has been investing in export related activities. This has generated a major balance on current account surplus, mirror imaged by deficits in other countries. To my mind, this is not a savings problem but an investment one.  

I left aside export subsidies and an artificially low exchange rate. To the degree that these things have occurred exports may increase, but China is also effectively subsidising consumers in other countries. I do not think that this is a sensible longer term strategy.

The suggestion that China should increase consumption for the sake of increasing consumption does not make a great deal of sense to me. Looking at the Chinese position through Australian eyes, the fact that China has been accumulating such large trade surpluses provides an opportunity for the Government to do new things.

This is a bit like what happened here, but on a much grander scale. Australia came through the global downturn so well because and only because our net trade position suddenly improved. This was a necessary but not sufficient condition.

In China's case, the challenges are far greater, but so are the opportunities. If I were an adviser in China, my focus would be on the best ways for China to benefit. Here I am worried by some of Michael Pettis's posts because he points to areas where some of the policy responses do not appear to be very sensible.

In all this, I would not be worried by the US except to the degree that it affected China.

In a post last November, Scoping the global downturn - a few numbers, I looked at relative shares of global GDP. The US has shrunk to a bit over 25%. China is a long way behind at a bit over 6%. My point then was that relativities meant that China could not be the type of universal  cure-all as often presented. This makes me very cautious reading some of the savings/consumption arguments.  

Dreamliner woes

I have been following the story of Boeing's Dreamliner with considerable interest, in part because I used to do consulting work within the aerospace sector, in part because it has clearly become a commercial and management nightmare.

In the most recent development, Boeing has apparently instructed the Italian company Alenia Aeronautica to stop making fuselage components after quality control problems were discovered. For those who are interested in reading back into the saga, Ben Sandiland's has been following it on his Plane Talking blog.

The slowly unravelling story is interesting because it combines so many elements. The Dreamliner is a large, complex project with plenty of scope for things to go wrong. However, Boeing has plenty of experience with this type of project.

I have a strong impression, I may be wrong, that Boeing's difficulties are due in part to the way the company has pushed the technical envelope to try to deliver specific benefits, more to the way in which marketing considerations in general have driven project dynamics.

The relationships between marketing people and engineering and production teams has always been complicated. Let the technical people have their heads and you may get an over-specified product that doesn't meet customer need. Let the marketing people have their way and you end with promises that cannot be met.

The problem for Boeing now is that the project has become a potential company breaker. I suspect that I am not alone in wondering whether the plane will ever enter commercial production.