In recent decades higher education has become a major economic force around the globe. But have university managers correspondingly become sufficiently business-like? Well, there may be room for improvement according to one opinion this week.

But first, the scale – it’s big. According to a Deloitte Access Economics report for Universities Australia, the sector directly employs more than 120,000 staff and educates over one million students. In 2013 it contributed around $25 billion to the Australian economy, accounting for over 1.5% of Australia’s GDP. In 2014–15, education related exports (with higher education being the single biggest contributor) accounted for 5.7% of Australia’s total – the largest service export and the third largest export category overall. These figures relate to Australia, but similar growth has taken place in nations around the globe.

In The Australian higher education section this week John H. Howard, adjunct professor at UTS Business School and managing director of Howard Partners, notes that with increasing revenues and the emergence of multiple objectives and accountabilities

“… the university business model has evolved from the feudal community of scholars, through the idea of social contract between science and society, to an innovation systems view of universities as drivers and enablers of industrial innovation. More recently, a view has emerged of universities as knowledge businesses, heavily committed to the creation and transfer of knowledge for economic and social benefit.”

Growth in revenues plus asset portfolios has seen public universities increasingly being run on a businesslike basis, he writes, bringing with it fundamental changes in the way universities are administered and managed.

This does not mean universities are being run with a profit motive; but they are having to plan, budget and account for a substantial growth in their activities.”

University management has become more complex and sophisticated, with larger executive teams and greater professionalisation and individual specialisation, he says, and power and influence is moving from faculties and schools to the chancellery.

Despite such developments, Howard writes, for a variety of reasons businesses still complain they find it difficult to work with university academic staff and faculties.

Short-term and transactional research consultancy projects are not encouraged, as they tend to be difficult to manage and divert resources from research commitments. They can also get caught up in highly bureaucratic university research and financial management processes.”

Few universities have embraced innovation in their businesses systems, processes and policies internally and externally, including working with industry, he argues.

Increasing the scope for industry to work with universities must move from a transactions based approach to one conducted on the basis of partnerships, alliances and trust in a business-to-business context. University research managers must move from a mindset of generating research income to one of value creation.”

But it’s not all about what universities ought to be doing – Howard says businesses must ensure their research ideas fit with university research and engagement strategies, and that they deliver benefit to the university as well as to their own enterprises.

Senior executives should take the time to get to know key decision-makers in universities, including vice-chancellors, and the fields of research excellence that their university is committed to (or could be with a substantial investment).”

Universities certainly are becoming more business-like and will need to continue to improve their engagement strategies with businesses and corporations while not forgetting that their bottom line is commitment to education and research.

You can read the article in full here.

DM