7 Things that school leaders should be doing now to ensure long term stability
The beginning of each school year is usually the busiest time in the academic calendar. On top of the usual activities, the start of this school year is complicated by changes in operational procedures and uncertainty with regards to enrollment numbers and faculty availability. School leadership will be heavily involved in ensuring that their school can meet the additional requirements resulting from the Covid-19 pandemic. This article is written to help school leaders to keep thinking strategically to maintain their school's stability.
Review your priorities. All of the normal start up and new Covid-19 issues will take up time from each member of staff and add stress for school leadership. It is however important for leadership to separate the work and issues raised by the Covid-19 pandemic and maintain the ability to deliver the few high impact school wide changes that they will lead this academic year. Schools have to balance the issues created by Covid to avoid change overload.
Do not neglect your campus. Despite the current economic environment, where there may be pressure to reduce spending on facilities, there needs to be continuing reinvestment in the physical assets and equipment to future proof the school's competitive position. There will be some opportunities to defer some spending, but deciding where to spend or save will be driven by a review of your asset management plan. A school should strive to have a 20 year asset management plan, some schools compromise on a 10 or 5 year plan and if you do not have one at all then you need to at least be planning out the next three years now!
Start early on determining next years fees. School fees are usually set as part of the budget development process which typically begins sometime in October. In setting fees for the 2021-22 school year and developing a general fee strategy, school leadership should take into account the costs structures they expect and how their competitive market has changed and will continue to change. It would be unwise not to start now in evaluating other local and regional competitor schools, your position in the market and your reputation as you assess your value proposition to current and potential parents.
Plan, communicate and manage HR work. If your school is experiencing declining student numbers and the possibility that they will continue to decline further next year, there are leadership and HR matters that need to be tackled now. Employment contract language needs to be reviewed to ensure that staff can be let go if needed. Leadership needs to be proactive in communicating with staff (as well as union representatives) if retrenchment steps are anticipated. The need for staff reductions may be understood by everyone, but if managed and communicated badly, it will affect the reputation of the school, the credibility of the Administration and could result in legal action. Staff reductions may be managed by natural international school attrition, but currently faculty may be inclined to wait another year before moving to another school. Offering an early resignation/notification bonus may help you with natural staff reductions.
Refocus on your Enterprise Risk Management (ERM) activities. ERM addresses key areas of risk on an enterprise-wide basis thereby helping to ensure the viability of the organization and stability of the school. Without an ERM review, school leaders may be aware of risks but will not not recognize the interrelationships and threats posed to the entire organization, and having weathered the covid storm will be unprepared for the next threat to the school's success. A school with a continuously reviewed ERM program addresses these concerns and will enhance management effectiveness, create resiliency and sustainability and improve governance and decision making. Do not lose sight of this work and if there is no formal risk management program at your school, consider beginning the work now.
Remember that cash is critical. If enrollment has fallen, so has your income and income will not be realized until it is turned into cash on the school's bank account. Parents and organizations may be struggling to pay tuition and there will be increased requests for extended fee payments. Finance leaders will have to step up to support their accounts receivable staff in the business office. As parents request delays in paying fees and financial aid, finance leaders should arrange to meet them. This will help assess the likelihood of bad debts and the offer of support will create community and understanding. Finance leaders need to have a rolling 12 month cash flow forecast, with enough flexibility and simplicity to help easily identify any liquidity issues.
Update your strategic and operating plans for the new Covid-19 environment. The new safety measures and costs that schools are now faced with, should mean they are updating budgets and plans for this school year and beyond. As part of the financial planning revisions, schools should conduct sensitivity analysis on assumptions that are not within the control of the school. This work will help to frame the school year in context of the last few years and the next five years.
At Sage, we offer consultancy services to schools and educational establishments. We can help from matters as small as creating cash flow forecasts to larger projects on fee structures, school fee surveys and ERM implementation.