Collaborating for Survival or Death by Debt? Merging Higher Education

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The landscape of higher education is on the precipice of major transformation whether it likes it or not. Mounting financial pressures with the looming threat of bankruptcy haven’t just become key priorities but are setting a backdrop for a catastrophe. And so, it seems desperate times are calling for desperate measures as the latest insights from The Times UK indicate that potential mergers and the formation of ‘higher-education chains’ are gaining momentum across the sector. 

Given the state of the sector, any idea is worth consideration. However, question marks remain (at least from our point of view) on whether this latest thinking has been properly thought through. While exploring various consolidation options like mergers, shared services models, and academic collaborations are innovative and ambitious, actual achievement is questionable.  

Why? Because merging alone won’t work, and experience tells us most mergers fail due to the lack of integration of different organisational culture. Couple the cultural challenges within any of the reasons below, and the sector problems cannot and will not be resolved:  

The Financial Model is Outdated 

The freeze on tuition fees over the last decade coupled with our spiraling inflation, has left 40 percent of universities in deficit (that’s just over 100!). Over reliance on higher-paying foreign students to subsidise British places has also compounded the issue, with 80 percent of institutions estimated to be further hit. Unless a new financial model is considered – one that looks at multiple revenue streams and not wholly reliant on student fees – then merging won’t work.  

Consolidation Models Require Investment   

While universities are exploring a range of consolidation models, without robust technology, systems (including budget to invest) and a desire to adopt standardised, repeatable processes – the success of shared services model will be limited, if not redundant.  Equally, hub-and-spoke models may require academic staff to pivot or upskill, both in teaching methods and curriculums which again requires investment (time and money) and a completely different way of working 

Educational Quality Is Already an Issue  

Attraction and retention of students is already a challenge – and one we often see due to the lack of strategic organisational goals that support modern teaching and relevant curriculums for future skills that is demanded by students. Despite seemingly good intent around ensuring educational quality is maintained as demonstrated through REF, TEF and KEF, this goal will remain far-fetched.  

Higher Education Business Models Are Outdated 

For things to change, the current business and operating model must change. This is a perpetual challenge that institutions face – one we see ongoing.  Merging simply to save money is unlikely to be a solution, which is why looking to other options such as expanding research opportunities and truly applying commercial principles to innovation, would result in the creation of more sustainable institutions.  

More than a Marriage is Needed  

As universities grapple with financial pressures and seek solutions through collaboration, the higher-education sector stands at a crossroads. And, as each institution shows up with their own set of challenges, we wonder if these new concepts may be more of a pipedream than a reality. And while for some, a bad marriage might be better than no marriage at all – with the inheritance of debt and double the issues, complexity, and efforts to make it work – one thing if for sure: the ongoing challenges require innovative thinking, strategic partnerships, and a collective effort.   

If mergers are needed, then so be it, but we predict that more thinking will come.   

In the meantime, at Caja, we’ll continue to focus energy on supporting our clients.  We are soon to launch our new UNIAssess tool that will help institutions understand where to focus organisationally to drive overall performance….keep a look out for launch news through our media channels.