The Pursuit of Revenue in Higher Education

Higher education now exists within a neoliberal market, with the optimisation of market share being a key strategic management goal. Enrolment is one of the main revenue streams of higher education institutions; as such there is ever-increasing competition which gives rise to changes to marketing, pricing and benchmarking strategies (Kerr & Hosie, 2013).

Marginson (2013), although conceding that there has been widespread adoption of profit driven agendas, argues that the higher education sector can never completely parallel other capitalist sectors because “education is a public good” (p. 354). Contrary to this, Giroux (2011) recognises the erosion of university education as a public good, and vehemently condemns neoliberalism, believing that it has destroyed positive learning culture. Certainly, the operational and strategic objectives of universities has shifted to some degree, as a response to neoliberalism.

In uncertain times, it is logical to harness knowledge to inform decision making. Universities experience both market uncertainty and technological uncertainty (Kerr & Hosie, 2013). Ernst and Young (2011) suggest that market uncertainty has arisen as a result of government deregulation and globalisation.  Grant (2008) proposes that in order to respond to this uncertainty, universities should be aware and reactive to trends, and should practice strategic avoidance. To succeed in being aware and reactive to trends, universities must invest in gathering knowledge. Kerr and Hosie (2013) believe that across-sector benchmarking offers rich information which can be harnessed and used as a powerful tool for decision making. The practices which led to failings in other sectors may provide insight which could help universities in navigating uncertainty.

If universities understand the role of neoliberalism and acknowledge ethical threats associated with teaching and learning, then practicing strategic avoidance can be invaluable. Since higher education institutions are now operating in a similar way to businesses in other sectors, it is prudent to analyse the mistakes of others in order to learn lessons for the future (Kerr & Hosie, 2013). The financial industry demonstrated a lack of responsible lending which led to the global financial crisis of 2008. This failing was fuelled by a commission based model for lending; the same model is used by universities to recruit students (Wildavsky, 2010). In both the context of finance and education, this model can lead to institutions liberally interpreting rules and conventions when considering applications, whether they be for loans or university program entry, so that revenue is maximised (Kerr & Hosie, 2013). When the pursuit of greater market share is a key strategic goal, the concept of education as a public good can diminish.

Moreover, if students are ill equipped with academic prowess and skills for learning upon entry to an institution, this could result in decreased retention rate. Short term revenue increase could therefore lead to disproportionally greater long term revenue decrease. Ultimately, the loss of reputational capital may prove to be a greater financial cost than the cost associated with forfeited course fees.

 

 

 

 

 

 

 

Ernst & Young. (2011). Higher Education and the Power of Choice. Melbourne.

 

Giroux, H. A. (2011). Once more, with conviction: defending higher education as a public good. Qui Parle: Critical Humanities and Social Sciences, 20(1), 117-135.

 

Grant, R. (2008). Contemporary Strategy Analysis. Blackwell Publishing, Oxford.

 

Kerr, G., & Hosie, P. (2013). Strategic avoidance: can universities learn from other sectors? Australian Universities’ Review, The, 55(1), 59-65.

 

Marginson, S. (2013). The impossibility of capitalist markets in higher education. Journal of Education Policy, 28(3), 353-370.

 

Wildavsky, B. (2010). The Great Brain Race. Princeton University Press, New Jersey.

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