Thursday, July 12, 2007

Why are College Costs to High?

The Demise of American Management continues when it comes to Public University/College spending. Colleges continue to follow the losing business plans from the 1970s & 1980s.

So what does that mean? It means that Public Universities put the student last just like many companies did with their customers in the 70s & 80s and some still do that (different post).

The worst part of all this is College Officials and State Political Officials use the student as the bait to get more money to fund their fat departments. There is no accountability because that would take time and effort and the state has none of that!

Let me first relate a real event from within a business organization. A few years back I worked for one of the smaller telecommunications company we were very successful in getting orders through our processes in a very timely manner.

Over time we began to grow so fast that more people and sales orders were flooding our system and it could not keep up with demand. Along with the growth came additional hierarchical layers and costs that began to lower expectations of both customers and employees.

It was no longer easy to cut through layers of management, the new layers demanded to earn their pay so every order had to go through shop regardless if it should or not. Tracking the order and costs were now impossible since our system was not re-designed to handle growth and approval levels.

The finance people had no idea if we were cost effective it just kept raising prices to pay for the additional layers of management that invades an organization like Zebra Mussels are attacking the Great Lakes.

So how does this compare to the never-ending rise of college costs? It’s easily explained when you look at a college or university as a business. Today the business side of colleges comes first (making money) and education comes second. With making money and not knowing what to do with it except divvy it out to all your departments is the kiss of death. With more money comes the need (not really) for more people to handle more checking the checker processes and internal systems that do not communicate with one another.

I used to say that government, hospitals and universities were still living in the dark ages when it came to controlling cost and putting the customer first. Now it is just the institutions of higher learning and of course the state and federal government.

And, don’t give me the crap that you are trying to serve the needs of the students within your state, if you could you would only have out of state students and foreign students because you can charge a higher costs.

Now back to the business example (a made up small phone company that works within the grasps of AT&T). What follows is a reverse customer triangle. Just put student where it says customer and look how many layers it would take for information and work to get done if the triangle were right side-up.

When I showed this once at a meeting one of the departmental VP’s complained his processes were down at the bottom. That is correct “Stupid” you support the customer processes, it’s no longer the other way around, and guess what the cutting starts at the bottom of this hierarchy baby. Bonuses and Awards are given to the process workers who interface with the customer/student.

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