University leaders under pressure to invest despite increasing financial uncertainty

New research from international management consultancy Nous Group shows university leaders are under pressure to make big investments to embed hybrid learning despite subdued confidence in their financial outlook and sustainability.

The findings come from Nous Group’s second annual Study of Higher Education Professional Services Leaders which brings together insights from more than 80 leaders at universities around the world to examine the changing landscape of university administration.

The top three strategic priorities identified by professional services leaders in the study are: improvements to the on-campus experience, innovation around the academic programme offer and improving online student experience. Yet all these efforts require significant investment at time when financial projections are weakening.

The research shows the proportion of leaders increasing major capital investments has more than doubled from 20 per cent in 2022 to 44 per cent in 2023. Similarly, the proportion of leaders who are increasing their digital investments in 2023 rose to 79 per cent from 59 per cent in 2022.

Nous Group Principal and Global Head of Higher Education Zac Ashkanasy said: “Hybrid learning – combining on campus and online – is here to stay and professional services leaders are pursuing a more effective approach to asset management to free up capital for reinvestment in the hybrid-enabled campus vision.

“There is growing awareness of the importance of balancing the management of existing campus infrastructure with the need to adapt in response to changing student needs and expectations, particularly in the face of greater financial uncertainty and a weaker outlook.”

The study found that 46 per cent of professional services leaders project worse or significantly worse financial performance this year, compared to 25 per cent who forecasted the same for 2022.

Financial pressure is coming from regulated domestic undergraduate fees, rising salary costs, deferred maintenance liabilities, and digital and technical debt as well as broader forces and the majority (75 per cent) of university professional services leaders said their institution is not yet financial sustainable.

Ashkanasy continued: “For many universities, financial sustainability is a way off.

“Leaders are acutely aware of the risk of over-reliance on international students and the need to shift towards better cost management, better asset utilisation, improved service efficiency and a more focused agenda to achieve financial health sooner.

“The research shows that leaders who are making gains towards financial sustainability are taking a whole of institution approach to assessing opportunities, developing strategies and to scenario planning.

“Leaders of professional services within universities are central to institutional sustainability but there is a clear opportunity for them to better align with academic teams in achieving both financial sustainability and academic mission.”

This is the second annual Nous Group Study of Higher Education Services Leaders.

For the 2023 study, Nous Group engaged more than 80 university professional services leaders from across Australia, Canada, Ireland, New Zealand and the United Kingdom to understand their concerns and ambitions within the changing landscape of university administration.

The survey of professional services leaders was conducted between December 2022 and February 2023. It was then complemented by 24 in-depth interviews. Additional insight was provided by higher education leaders from Nous and NousCubane.

Results from the study are available in a new report, Closing the Divide: Professional services and academic leaders must unite to drive change on campus. Data is drawn from the surveys and interviews conducted for our 2022 study and this 2023 study.

Nous Group is an international management consultancy with over 750 people working across Australia, Canada, Ireland, New Zealand and the United Kingdom.

Nous’ broad consulting capability spans strategy, organisational performance, leadership and capability, transformation and implementation, economics, public policy, data and analytics, digital and design.

Together with our specialist benchmarking team at NousCubane Consulting, we are committed to partnering with higher education institutions to solve strategic challenges, drive performance and build capability.

Founded in Australia, Nous Group has been delivering positive influence that significantly improves people’s lives since 1999.