Chapter 6 - University's governance: implications of change for administration

I: Introduction

6.1 The changes to governance discussed in Chapter 5 will have substantial implications for the University's administrative service. As well as playing a major part in the implementation of the changes we propose, the administrative service - and above all the central administration - will be fundamental to ensuring that the new structures work effectively once they have been established. Professional administrative support and sophisticated management information will be essential to enable the new Council and its committees, and the academic boards and their committees, to operate effectively. Good management information will be particularly important to support the planning and resource allocation cycle which we have proposed, and to underpin the monitoring of the work of the academic boards on behalf of the Council, which we believe to be an essential counterpart of a greater degree of delegation of responsibility under the new system. It is also likely that bodies beneath the academic boards, such as faculty boards, will need a higher level of administrative support than they receive at present.

6.2 We have noted that the University is currently in the process of appointing a new Registrar, responsible for the management and development of the University's administrative service, who can be expected to take up office in the first half of 1998. The new appointee will have a key role to play in considering the implications of our proposals for the University's administration, and in ensuring that effective support is provided to the new bodies. We have noted that this point is reflected in the further particulars for the post which have been approved by Council, which state that a new Registrar will be required to review the operation and structure of the University's administration.

6.3 We have not ourselves considered in detail the issues which a new Registrar will need to address in the light of our report. However, we wish to comment on three matters which will be relevant to the review which the new appointee will be asked to undertake: the first is the need for a unitary administration; the second concerns the role to be expected of the Registrar and his or her senior administrative colleagues; and the third is the implications of our proposed changes for requirements for financial and other types of management information.

II: The need for a unitary central administration

6.4 The present arrangements for Oxford's administrative services were put in place following the Franks Report, which made various recommendations for change. In particular, the Registrar became the head of a unitary administration, with the heads of the main divisions in the central administration (the Chest or Finance Division, the Academic Division, the General Administrative Division, and the Surveyor's Office) henceforth all reporting directly to the Registrar. These arrangements have worked well in fostering a common approach in all branches of the administrative service, and in encouraging communication between different sections and an overall coherence. We also note in passing that the University of Cambridge has recently implemented a similar structure for its administrative services, following recommendations made in the Wass Report.[90]

6.5 We believe that it is very important that Oxford should continue to enjoy the benefits of a unitary administrative service. We note that the committee established by Council in 1997 to review the post of Registrar prior to the appointment of a successor to Dr Dorey reached the same conclusion and that its views were endorsed by Council.[91] We would add that we believe that it would be vital, under the new structures which we have proposed in the previous chapter, for the Registrar and his or her colleagues to be responsible for providing administrative support both to the new Council and its committees, and to the three academic boards and their committees. The alternative -whereby each of the three boards employed their own administrators to support them - would in our view create serious problems. It would undermine coherence in the administration of the University, and would make it much more difficult to achieve consistency of approach between the three boards where this was required. In many areas each board would need to take account of a university-wide policy, and it would be the job of the administration to advise on this and to foster a common approach.

6.6 One example of where a common approach is essential would be that of personnel policy, and another the administration of outside grants. In this latter case, for instance, whilst we have argued that the proposed three new Deputy Vice-Chancellors chairing academic boards should have responsibility for strategic liaison with external funders of research, this responsibility would need to be underpinned by the work of that section of the University's administration responsible for handling research grants and for providing liaison with external funding bodies sponsoring research. It would be the role of the central administration to offer advice and support to the Deputy Vice-Chancellors in their execution of their responsibilities, to ensure a consistent approach to matters such as the recovery of overheads on external research grants and contracts, intellectual property policy, and contractual issues arising from research contract negotiations. We also believe that communication and cooperation between the three boards would be greatly facilitated if they were provided with administrative support by a single administrative service; and that the provision of consistent and coherent management information requires a unitary administration.

6.7 It is for these reasons that we made our recommendation in Chapter 5 that the academic boards should be supported by the University's central administration.

III: The role of administrators

6.8 Our second point concerns the role which should be expected of administrators under the new structure. We believe that university bodies and academic officers should encourage administrators to play a much more active part in the conduct of business than has sometimes been the case in Oxford in the past. Professional administrators have a key role in offering advice to committees and their chairmen and, if necessary, in arguing for a particular line which they believe to be consistent with other aspects of university policy. Their arguments may not win the day, but they should be heard. Administrators should also be expected to take the initiative in bringing forward to university bodies matters which they believe ought to be considered. They should initiate discussion of policy choices where these need to be faced, rather than waiting for others to raise them, and they should be expected to take a lead in anticipating problems and issues which university bodies will need to address.

6.9 We also believe that administrators should be given responsibility for taking certain decisions themselves, provided these fall within a clearly established policy framework which has been developed by appropriate university bodies. This would mean that, within such a framework, more routine matters could be delegated to officials rather than be considered by committees. Such delegation would help to free time for university committees to discuss more substantial matters, and also reduce the extent to which academic staff have to involve themselves in detailed and routine business. It should be the responsibility of the new Registrar to implement these proposals.

6.10 We note that these recommendations about the role of administrators echo similar arguments advanced by the Franks Commission. The Franks Report commented: 'Officials ... should be expected to inform and to advise in the course of the meetings they attend. But they should not vote: nor is the responsibility for decision theirs. We are also certain that some of the business which at present goes for decision to committees should not go there at all. We would think it proper for committees to decide what rules they want to have, for instance, for sabbatical leave or for the payment of non-academic staff; but we think that the decision of where a particular case fits under such schemes should not go to a committee but should be decided by officials. In the case of doubt the official would be expected to consult the chairman of his [or her] committee, who, unless the case falls outside the rules, should decide, reporting his [or her] decision, if of sufficient importance, at the next meeting of the committee. The secretary of a committee, supported by his [or her] chairman, can usually deal with most of the detail, thereby saving academics from acting as clerks; they waste less time because at their meetings they can address themselves to important points.'[92] We strongly endorse these views.

Recommendation 30
We recommend that the Registrar should consider the implications for the central administration of the proposals on governance in Chapter 5 and make recommendations to the Council. In so doing, he or she should bear in mind the importance of maintaining a unitary structure for the central administration, whereby a single integrated administrative service is responsible for providing support both to the Council and to the academic boards, as well as to their committees, and of the value of administrators exercising a greater degree of initiative and responsibility in their work.

6.11 Our discussion hitherto has focused on the work of the central administration, and its role in supporting the Council, the academic boards, and the various bodies which would be responsible to them. We also believe that there is a case for examining whether the Registrar should become responsible for the management and professional development of all administrative staff within the University - including departmental administrators and faculty administrators. We believe that fostering greater mobility of administrators between the central administration and departments would both enhance the effectiveness of the administrative service, and contribute to the improved professional development of administrators.

Recommendation 31
We recommend that the Council should consider making the Registrar formally responsible for the management and professional development of departmental administrative staff, as well as of those within the central administration; and that both groups of staff should be regarded as belonging to a single administrative service.

IV: Management information in Oxford

Introduction

6.12 We wish to comment on the need for improvements in the scope of management information available in Oxford. Such improvements, whilst important in their own right, would be fundamental to the effective operation of the new structure of governance which we have proposed in Chapter 5. They would underpin the proposed planning and resource allocation cycle which we advocate, which would operate on the basis of costed proposals which sought to integrate all aspects of income and expenditure with other management information.

A proposed review of management information in Oxford

6.13 There will always be aspects of Oxford's structure which mean that producing consistent management information will be less straightforward than in many other organisations. Methods of working have developed at different times in different parts of the University in response to quite different needs. Oxford's collegiate structure, and the financial autonomy of colleges, also substantially complicate the position. But the complexity and diversity of Oxford's structures make it all the more important that its management information systems should be effective. Faculties and departments need clear information upon which to base their actions, while central bodies must be properly informed about the implications - financial and otherwise - of particular policy decisions. Good information will also help to ensure that Oxford uses scarce resources as efficiently and effectively as possible. This is all the more important given the demands now increasingly made on Oxford by external funding bodies to account clearly for the way in which resources are used.

6.14 We have already suggested some ways in which present arrangements could be improved. As we noted in Chapter 4, the University rarely takes an integrated view of all its income and expenditure, such as would enable an overall picture of its finances to be built up. At present, this only happens after the end of the financial year, when the University's annual financial statements are being prepared for submission to HEFCE and for consideration by the external auditors. As a result, it is usually difficult to gain a comprehensive picture of the costs of a particular activity or proposed development and of the income it will generate. An example of where better information would be helpful might be in the development of a new course or a new research project, which is to be funded in part from 'new' income generated specifically by the activities associated with the proposal, and partly by the use of existing resources. At present it is usually relatively easy to identify the former source of income, but much less easy to be specific about the latter.

6.15 We also believe that there would be advantages in considering the overall activity of Oxford - i.e. the University and the colleges - as a whole. At present there are no systems or procedures which provide an integrated picture of income and expenditure across the collegiate University in general. (It is understood that some attempts to do this over the years have been made by the Chest, but the results have never been disseminated.) This makes it difficult to gain an overall picture of, for example, the total resources being devoted to a particular academic subject within Oxford, or to a particular type of activity. Inability to answer such questions in turn makes it difficult to assess whether the distribution of responsibilities between different departments and faculties, or between, say, the University and colleges, is matched to the distribution of resources. Current negotiations with HEFCE and the government over the future public support for college fees have illustrated the desirability of being able to deal more effectively with such questions.

6.16 Inability to cost proposals accurately can put Oxford at a disadvantage in dealing with external funders, for example when trying to negotiate a particular level of overhead cost recovery. Such negotiations need to be backed up by firm data to demonstrate how estimates of indirect or overhead costs were arrived at. Although in the case of commercially sponsored research the emphasis may be shifting from the concept of covering costs to that of charging a price, the setting of a price needs to be based on a full knowledge of the costs, and knowledge of costs will remain of fundamental importance to the University.

6.17 As in most universities, financial and management information systems have developed gradually within Oxford. At present many systems are not integrated. For example, student databases are not integrated with financial systems for collecting and analysing fee income. The use of separate independent financial and management information systems and databases makes it more difficult to achieve consistency and reliability, and the cost of using such varied systems in terms of time and lost efficiency is significant. Nor are departmental and college information systems sufficiently well integrated with or compatible with those used by much of the central administration: we do not think that the latter's needs should simply be imposed on the former, but it is in the interests of all users that compatibility be achieved.

6.18 As we have emphasised, improved information systems covering both financial and other matters are all the more important given the recommendations we make in Chapter 5 for greater devolution in decision-making and management. Our general approach has been to argue that, wherever possible, responsibility for decisions and their implementation should be delegated. However, the more this is done, the more those with delegated responsibility require effective and consistent information systems, and the more important it becomes for those at the centre of the University, and ultimately for the Council itself, to have access to good and timely information about how delegated responsibility is being exercised. The 'centre' must be able to monitor effectively if it is to fulfil its proper responsibilities.

6.19 The need for improvements of the sort outlined above has already been recognised within the University and attempts to deal with these points form a major part of the work of the Administrative Information Systems Committee and its officers. Sustained attempts to deal with many of the points noted above have however sometimes been undermined by lack of resources in the central administration in Wellington Square, which has in turn undermined the confidence of departments that the centre will be able to provide the services required.

6.20 In part in recognition of such difficulties, Council recently agreed to a recommendation from the Curators of the Chest that the University should institute a thorough-going review of its financial systems and procedures. This proposal originated from discussions with the University's external auditors, and can be expected to lead to improvements in the contribution made by Oxford's financial information systems to the effective administration of the University. We believe that the institution of this review is an immensely valuable step, but that more needs to be done. In particular, financial systems have to be considered alongside other management information needs, including staff records and student records; and the needs of the colleges as well as of the University need to be taken into account. It is also important that Oxford should develop the capacity to consider financial and other management information questions at the level of the institution as a whole - i.e. covering both the University and the colleges. This raises much broader questions than those being addressed by the current review of the University's financial systems and procedures, and, as far as we know, has not hitherto been considered within Oxford.

6.21 We therefore propose that there should be a thorough-going review of Oxford's administrative information requirements. This would need to be initiated at the highest level, by the Council; and commitment to the objectives of a review by the Vice-Chancellor and Registrar, as well as by the University's central bodies, would be essential. It would also be important from the first to obtain the active involvement of colleges in addition to that of the University in the narrow sense. In some of the discussions which have led to this recommendation, we have benefitted from the advice and co-operation of members of the Estates Bursars' Committee, and we would hope that cooperation of this sort could be built into the review which we propose. Such a review would need to go wider than purely financial management systems, and would need to take into account the current development of the University's payroll and personnel management system, and of the proposed development of a new student records system.

6.22 As a starting point the review would need to make an assessment of the nature of Oxford's needs for management information, including determining the kinds of questions which university and college bodies wish to ask, and the uses to which they wish to put such information. This would require the active involvement of all users of management information. Only when such fundamental objectives have been addressed would it be possible to ascertain how far existing systems could be adapted to meet them, and how far the development of new systems would be necessary. We recognise the breadth and scope of the task involved here, but believe it to be fundamental to the future prosperity of Oxford, as well as to the openness and clarity of its policy-making and decision-taking systems.

Recommendation 32
We recommend that the Council, in consultation with the Conference of Colleges, should initiate a wide ranging review of all aspects of Oxford's requirements for management information.

KPMG work on financial modelling

6.23 As a contribution to the work which would be required as part of this review, and in order to illustrate some of the issues which it would need to cover, in more detail, we engaged the consultants KPMG (who also act as the University's external auditors), in co-operation with Clark Whitehill (a company with experience of college accounts), to develop a financial model which could be used as a tool to illustrate the likely impact of a range of different policy options. We have already referred to this model in Chapter 3, where we included examples of the uses to which such a model can be put.

6.24 The model has been especially helpful to us in two respects. First, it has provided an analysis of income and expenditure by activity (e.g. undergraduate teaching, graduate teaching, sponsored research, etc.), as well as by subject area (department, faculty, etc). Secondly, the model takes Oxford as a whole, i.e. the University and the colleges together, in order to provide information about the total sum of activity in each of the areas identified.

6.25 As with all models of this sort, the quality of the results it produces depends to a considerable extent on the quality of the data which has been used to construct it, and the assumptions which have necessarily been made in doing so. It became clear during our work with KPMG that severe limitations on the creation of a sound model are imposed by the data currently available, and that for the University to develop this approach considerable further work would be required. In part, this stems from the fact that analysis by activity requires information on the way in which staff time is spent. The model developed for us derives its information on this point from the responses to the questionnaire which we distributed during Hilary Term 1996 to staff engaged in teaching and research.[93] The questionnaire was not however specifically designed for the purpose of constructing the model. As a result, some of the data on this point may not be entirely robust, and it would be necessary, if the University agreed to develop further the approach being outlined here, to consider mounting a specific diary exercise which would provide more reliable data. Other institutions have taken this course, and we believe that the University should give consideration to doing so.

6.26 On the college side, historical financial data was taken from the statement IV of the published college accounts[94] (education and research account), but again this material was not originally compiled with the construction of a model of this sort in mind, and would need to be revisited to improve its reliability. The data in the college accounts was supplemented by the results of a survey of college bursars undertaken during 1996, which provided valuable information on the attribution of costs for subject areas.

6.27 We believe that the model which was devised for us provides a good illustration of the value of this sort of approach to financial planning. It helps to clarify the implications of various policy options, and provides a framework within which policy discussions can take place. As well as the further references to it in Chapter 3, we have also provided further details of the model and of some of the outcomes it illustrates in the report prepared by KPMG, which is contained in the supplementary volume to this main report. For the future we propose that the model should be developed further, and the data and assumptions within it reviewed and refined, by the University's central administration.

Recommendation 33
We recommend that the financial model developed for the Commission by KPMG should be reviewed and further refined by the University's administration, with a view to its future use in supporting discussion of policy development.