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The changing face of FE finance

With the funding challenge facing all FE colleges across the country only set to increase over the next few years, it is interesting how some colleges are now changing their approach to financial management. A great deal of this focus is about driving greater levels of efficiency, better understanding the cost base, and more accurately determining how profit is generated. Furthermore, there is a need to rationalise estates and invest in IT infrastructure, whilst planning more effectively a strategy that will ensure financial sustainability.

Good financial management is the oxygen that feeds the life of any organisation, be it in the public or private sector. The main difference is that the public sector tends to use the finance function to advise and to monitor, whereas the private sector typically uses the finance function to help make critical decisions (an enabling role). More and more organisations across the entire public sector environment are now seeking to challenge convention and take on a more commercial financial management mindset. We have seen this over the past twelve months, having managed over fifteen senior finance (VP, CFO, FD) posts, with thirteen such professionals making the step change into the FE sector with strong private sector backgrounds. This does not mean you should hire the next private sector FD you come across, but it does suggest that a new way of thinking is required as more colleges switch on to the need to be more commercial in their approach.

To illustrate this we have listed below some of the real challenges faced by colleges today, and the benefits to be gained from more progressive financial thinking.

Greater financial awareness - The need to embed financial understanding at operational and board levels is a strategic imperative for all colleges. This will lead to more robust financial planning, decision making and financial accountability, resulting in improved services and a consistency of operational delivery through clearer understanding of where profit lies.

Strategic financial management - There is a need for the senior management team and board to develop long term strategies that provide increased dexterity for managing shifts in Government funding. The ability to do so in a clear, concise and timely fashion will directly correlate with the long term viability of many colleges.

Funding - With increased opportunities comes the challenge of how to fund growth. Knowledge of how to leverage funding and manage financial institutions will be key skills for the future of progressive colleges.

Analysis of opportunities - Identify new markets for growth whilst understanding the need for a return on investment and ensuring that new ventures are properly costed - these will be essential skills for a sustainable business model. Equally the need to invest in IT infrastructure to remain competitive is a priority that must be funded in a sustainable fashion. It will be essential to support the commercial development of the college through due diligence on investments, business case reviews and the development of business partnerships to further enhance the college proposition.

Effective MI and driving change - Ability to ensure resources are focused on priorities for the customer (student, employer) set against realistic work programmes. Reliable information that better informs and supports operational management is an essential tool.

Ensure best practice - Seek to constantly identify new working practices and use the best ideas from a multitude of sectors to address key commercial initiatives and issues. Furthermore the best ideas rarely sit with the senior management team and more colleges need to reach out to stars across their business to continue to drive innovation.

Managing the deficit - In some institutions there is a real need to cut deficits to drive a more sustainable model. This will mean delivering more with less. This commercial way of thinking, not constrained by emotion or tradition, may be needed in certain circumstances.

Rationalisation of estate - As estates become increasingly under-utilised the ability to find alternative solutions e.g. rental incomes is becoming a real imperative and therefore the value of candidates with such previous experience will increase.

Resourcing - Many colleges are moving to a VP Resourcing or Chief Operations Officer model which will see the roles of finance, planning, HR, IT, estates and funding rolled into one. Whilst this approach is not new it is important to ensure candidates have the breadth of knowledge, experience and expertise to take on such roles and this combination of skills can be found in abundance across the private sector.

Through our experience of recruiting finance professionals across the private and public sector for over thirty five years, it is clear that the very best organisations understand the need to embed financial management skills throughout, so that every decision is underpinned by its financial implications. However, such change does not come easily and requires commitment at the highest level.  Neither does it come quickly, but the benefits are potentially game-changing for many colleges.

Whilst colleges are experiencing many financial challenges that are not to be under-estimated, they provide an environment of change, challenge, high levels of complexity and a thoroughly engaged operational base that is attractive to potential candidates. FE is an exciting, vibrant sector, and many private sector executives who have made the transition have discovered a fresh and exhilerating sense of vocation.

At Wickland Westcott we are fully committed to supporting the FE sector by introducing talent and by assisting the development of high performing finance teams.

If you want to hear more about how we can help your organisation please call John Dodd on 01625 508100.

 

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