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The question of how best to optimise the performance of the higher education sector has generated much debate both at the level of governments which have the legal and financial responsibilities for this sector and at the level of the individual institutions themselves. In part, the debate has been fuelled by the steep growth in higher education participation rates and the pressures on higher education institutions to find increasing proportions of their operating grants from sources other than the public purse. Concerns regarding the relevance of higher education to the labour market and to economic growth and prosperity have also focused attention on this sector. A common theme in the performance debate has been the adequacy of existing institutional governance and management structures and processes to meet stakeholder expectations.

There have been a number of public criticisms about the management and governance of higher education concerning perceived inefficiencies of higher education structures, apparent slow and cumbersome decision making processes, and the lack of managerial competencies. However, evidence to support these claims has tended to be primarily anecdotal. Also, of the many studies investigating higher education management the emphasis has often tended to be towards a system level analysis rather than towards examining changes in management practices at the institutional level.

In Australia the opinions, attitudes and orientations of academic staff regarding their work environment have been the subject of a number of studies. These include for example those reported by Everett and Entrekin 1987; Harman and Wood 1990; Moses and Ramsden 1993; Boyer, Altbach and Whitelaw 1994; and Ramsden 1996. There have also been several recent investigations regarding management positions such as that of head of department (Moses and Roe 1990) and that of the Vice-Chancellorship (Sloper 1994). But there has been little research aimed specifically at investigating how academic managers as a group view the management practices within their institutions.

The primary aims of this report are:

• to provide a comprehensive overview of key factors affecting the organisation and management of higher education;

• to identify trends and issues in higher education policy debates internationally and nationally through an analysis of government policy as well as the scholarly literature;

• through the presentation of the results of a national survey of Australian institutional managers, generate information and improve understanding of both internal and system wide management structures and processes; and

• to identify issues and tensions requiring further inquiry to better anticipate policy consequences.

Debate regarding how best to govern and manage higher education is not new. Indeed, the issue in the early 1960s, for example, concerned the democratisation of departmental management, limiting the power of the so-called 'god professor', and increasing the involvement of junior staff and students in decision making. Also, throughout the 1970s and into the 1980s, policy makers and institutional leaders alike became increasingly concerned about effective and efficient management practices, culminating in the Commonwealth Tertiary Education Commission's (CTEC) 1986 Review of Efficiency and Effectiveness in Higher Education. Questions of efficiency and effectiveness have remained on the higher education reform agenda, but with the publication of the 1987 Green Paper (Higher Education: A Policy Discussion Paper) and the 1988 White Paper (Higher Education: A Policy Statement) they became subsumed in a broader push to make higher education more relevant to national economic needs and priorities. The White Paper initiated a dramatic transformation of Australian higher education which, amongst other things, led to the abolition of the 'binary' distinction between universities and colleges of advanced education (CAEs) and the creation of the Unified National System (UNS) in which there is now a much smaller number of significantly larger institutions, all called universities.

The White Paper made specific reference to the need to strengthen management practices at the institutional level and proposed a reduction in the size of institutional governing bodies (councils or senates). Some states took up the recommendation concerning the size of governing bodies while others did not. Nonetheless, government reforms have had a direct and powerful impact on institutional management, as was intended. The White Paper stated, for example, that 'Effective management at the institutional level will be the key to achieving many of the Government's objectives for the unified national system: growth in areas of national need; an effective partnership with other parties to the education and training process, including employers; improvements to equity and access to higher education; and efficiency of operation'. According to a 1993 DEET report (National Report on Australia's Higher Education Sector), government should assist institutions to achieve:

• strong managerial modes of operation, removing barriers to delegation of policy implementation while maintaining a variety of inputs to policy determination;

• adequate levels of consultation with and accountability to government, employers, employees, students and the community;

• streamlined decision-making processes; and

• maximum flexibility in institutional capacity to implement new policies, with minimal time lag between making and implementing decisions.

Within the changed policy context, many responsibilities have been devolved to individual universities. But at the same time, institutions are held more directly accountable for the effective and efficient use of the funding and other freedoms they enjoy. Moreover, institutions are now placed in a much more highly competitive environment, and considerable pressure has been placed on universities to strengthen management, to become more entrepreneurial and corporate like. The large universities with more than 30 000 students and annual budgets that run to hundreds of millions of dollars, rival in size and complexity many private corporations. Institutions must respond quickly and decisively in order to take advantage of market opportunities.

Some of the more noticeable changes in management practice within universities include the considerable strengthening and expansion of the office of Vice-Chancellor. Some institutions have enhanced both the number and roles of the Deputy or Pro Vice-Chancellor positions, with several institutions employing six or more staff at this level. In marked contrast to universities in the pre-UNS period, there is far greater turnover and mobility between institutions regarding individuals holding these senior management positions.

Also, within many institutions, there has been devolution of financial and administrative responsibility to faculties, with each faculty treated as a separate cost centre. This has resulted in considerable expansion of the management responsibilities of deans of faculty and heads of department. Deans of faculty in particular are now considered very much a part of management and are usually appointed rather than elected. For heads of department, the administrative burden has substantially increased in such areas as: staff supervision, budgeting and increasing outside earnings, student recruitment, quality assurance in both teaching and research, publicity, and in implementing a medley of university policies.

The transition of Australian higher education from a binary system consisting of medium to small institutions differentiated by purpose, and to some degree outcomes, to one made up of a smaller number of large conglomerate institutions has by no means been smooth. Many institutions are still trying to establish a sense of organisational unity while nevertheless adapting to an increasingly commercial environment and adopting the latest technological developments for teaching, research and administrative purposes. It would be fair to say that the higher education sector would now appreciate some time in which to consolidate and stabilise. In the past such a luxury may have been possible, but higher education is no longer granted the special privileges that once protected it from social, economic and political pressures.

One of the most recent developments in policy reform and system review with implications for higher education governance and management was the appointment in June 1995 by the then Minister of Employment, Education and Training of the Higher Education Management Review Committee. The review was led not by an educationalist, but by the Bankers Trust Australia Chairman, Mr David Hoare. The review was commissioned to 'examine and advise on the management and accountability requirements for ensuring Australia has a high quality, efficient and effective higher education sector'. More specifically, it looked at:

accountability and financial reporting; organisational structures in universities; governance structures, including governing bodies and councils; employment and personnel practices, including tenure; and financial management, including use of institutional assets.

(Higher Education Management Review 1995)

The announcement of the Management Review generated widespread concern throughout the sector. The Hoare Committee reported in December 1995 and made a number of recommendations designed to strengthen institutional management practices. However, the way in which these recommendations are to be implemented by individual institutions still remains unclear. Also, the new federal government which came into power following the March 1996 elections has yet to declare its position on the Committee's recommendations. In any case, it is doubtful that the Management Review per sé will have a profound impact on the sector. Rather, the Review needs to be considered as just one more element of a broader public sector reform agenda of which higher education has been a part for a number of years.

Australia's experience regarding higher education, as with industrialised countries elsewhere, has been one of profound change and the sector has been the subject of an array of policy initiatives taken by the federal government (despite the fact that the vast majority of institutions operate under State statutes). Federal concern with higher education is quite understandable given that since the early 1970s the federal government has provided most of the funding for higher education (this commitment initially being coupled with the abolition of tuition fees). Such funds are transferred to the states under the terms of Section 96 of the Constitution¹.

96. During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

Commonwealth financial assistance to universities was initially provided on an ad hoc basis from the mid 1940s until the late 1950s. However, as a result of an inquiry into university finances in 1956 (the Murray Report), the Commonwealth agreed to share responsibility with the states for financing the university sector. Until 1973, the federal government matched State funding of higher education by providing grants based on the formula of dollar for dollar for capital expenditure; one Commonwealth dollar for every 1.85 dollars provided by the states; and from fee revenue in the case of recurrent expenditure. However, the states did not always take up the full Commonwealth allocation and a considerable proportion of each state's fee revenue came from the Commonwealth government through its provision of Commonwealth undergraduate and postgraduate scholarships. Other income for universities included fees, endowments, donations and special grants. Similar provisions existed for the Colleges of Advanced Education. From January 1974 the funding of universities and Colleges of Advanced Education became a federal responsibility. However, the funds for universities and Colleges of Advanced Education still came to the institutions via State treasuries, albeit as Section 96 transfers from the federal government. Now federal grants are paid directly to the institutions.

Many higher education systems, including Australia's, are largely dependent on government funding thus making them vulnerable to the 'power of the purse'. While various Australian federal governments have been able to influence substantially the shape and nature of the higher education system over the past four decades through Section 96 transfers, recent examples have been quite explicit. These included the requirement for institutions to join the unified national system (in order to be eligible to receive triennial funding), the criterion for which was size. Within the unified national system, funding arrangements with individual institutions are in part developed on the basis of output, quality and performance measures.

Australian higher education began the 1990s with:

• new program advisory and delivery arrangements;
• a unified national system of higher education institutions;
• an identification of system and institutional management and governance as a priority area;
• new funding and administrative arrangements for research; and
• a user contribution approach to funding higher education (the Higher Education Contribution Scheme-HECS).

Such policy changes reflect a determination on the part of the Commonwealth that the higher education sector be more accountable for the funding it receives under Section 96 of the Constitution.

With the introduction of the Unified National System, the CTEC, the 'buffer' between the higher education institutions and government was disestablished and replaced by a new advisory body-the National Board of Employment, Education and Training (NBEET). The Department of Education became the Department of Employment, Education and Training (DEET-incorporating the employment and training components of the former Department of Employment and Industrial Relations), reflecting a commitment to a coordinated, integrated approach to policy development and articulation in these areas. However, it should be noted that the newly elected coalition federal government has indicated that it will restructure NBEET and its Councils although the details are yet to be finalised.

Australia's particular approach to higher education reform has created its own peculiar pressures, which are quite evident with respect to the large, complex multi-campus institutions created through amalgamations. As mentioned above, in order for institutions to join the UNS, they had to meet a minimum size criterion - 2 000 EFTSU or more. This resulted in the 19 'older' universities and some 44 Colleges of Advanced Education being reduced to 36 institutions (1994 figures), mostly through amalgamation. The size criterion was not the only factor that drove the amalgamation process; institutional ambition and a perceived need to grow as large as possible also contributed (Goedegebuure and Meek 1994). Nonetheless, the result achieved in terms of the number of amalgamations was spectacular and probably far exceeded government expectations.

Institutional amalgamation was not new to Australian higher education. Under the previous binary system, there were numerous amalgamations, particularly amongst CAEs. But the amalgamations that were part of the creation of the UNS changed the higher education landscape more profoundly than any previous attempts at merger, and introduced the phenomenon of the multi-campus system on a nation wide basis. A classification of Australian universities by campus configuration is provided in Appendix A where it is apparent more than two-thirds of Australia's universities are multi-campus in one form or another. Some of the multi-campus universities, like Monash and La Trobe, are quite large and spread over vast geographical distances, while others are more self-contained. One pressing issue facing the academic managers of large and geographically dispersed universities is how to best resolve the tension between the need to create a university wide corporate identity and the desire for individual campus autonomy. At one university, the University of New England Network University, this tension became so great that the amalgamation was dissolved in 1994 (see Harman and Robertson-Cunningham 1995).

But running the multi-campus operation is only one of many factors complicating the tasks of higher education managers. Size is another important factor. Presently, only about one-quarter of Australia's universities have a student population of less than 10 000. A further quarter of the universities have a student population of between 10 000 and 15 000, 14 per cent of the universities have a student population of between 15 000 and 20 000, nearly 20 per cent have a student population of between 20 000 and 25 000, and five universities or about 14 per cent of the 36 institutions have a student population in excess of 25 000 (see Appendix A). Some of the largest institutions have over 35 000 students, well over 2 000 academic staff and more than another 3 000 administrative and support staff, and a total annual income approaching $0.5b.

It is apparent from the above discussion that the higher education sector in Australia presents a number of complex challenges for those responsible for its performance. However, there is little information regarding whether or not the current management structures are appropriate to the policy expectations for this sector. This report attempts to contribute to a better understanding of the Australian higher education management context through an examination of broad trends and issues regarding this topic and exploring how Australian university managers perceive themselves to be handling changes in this sector.

An important assumption of the report is that the academic manager (defined here as heads of department, deans of faculties or executive officers) sets the overall direction of the institution. For the purposes of the report, management is defined as the process of interpreting and carrying out the goals and tasks of the organisation in line with established policies and procedures. However, management is much more than administration, since it involves leadership and a substantial measure of discretion in decision-making and the dividing line between policy development and management is by no means clear cut. In many organisations, management contributes substantially to policy development at the most senior levels, while the task of management often includes a major policy development and policy choice role.

Another assumption on which the report is based is that academic management cannot be adequately understood outside the context in which it occurs. This includes not only intra-institutional dynamics (each somewhat unique), but also the relationship between higher education institutions and the broader social environment. Many of the pressures with which academic managers must cope are not created by themselves, but originate from a number of external social, economic and political demands, often reflected in government policy. While some of the pressures placed on the management of higher education institutions are idiosyncratic to specific countries, many others are far more universal. Thus Chapter 2 of the report is concerned with providing a broad description and analysis of the international trends that appear to be shaping higher education institutions and systems and their implications for management practices. Nearly everywhere, higher education is being asked to be more accountable and responsive, efficient and effective, and at the same time, more entrepreneurial and self-managing. Underpinning much of the push for reform in higher education is the transition from elite to mass systems of higher education. The key objectives of mass systems of higher education are discussed in Chapter 2, with particular attention directed to identifying the various government policies directed at achieving these objectives.

Chapter 3 shifts the discussion more specifically to the Australian scene. Here, the broad trends identified in Chapter 2 are applied to an analysis of the changes and tensions in the governance and management of Australian higher education. Of particular interest are changes in the policy context and their affects on funding and accountability, demands for change to Australian university governance structures, the creation of the so-called 'new managerialism' in Australian higher education, and issues associated with institutional autonomy.

With Chapters 2 and 3 providing the contextual background, the report presents in Chapter 4 an analysis of the results of a major national survey of higher education governance and management at the institutional level. Here, the opinions, attitudes and experiences of higher education managers themselves on how they and their colleagues are performing are provided. The chapter presents data on a variety of issues, ranging from the perceived adequacy of decision making structures to the relationship between higher education institutions and government. While some of the results merely confirm what is intuitively known about higher education management, others question a few popular myths, such as the assumption that there is entrenched opposition in Australian universities to appraisal of staff performance. On the basis of the national survey results and major issues and tensions identified elsewhere in the report, the discussion in Chapter 5 lays the basis for further systematic investigation of governance and management issues.

Endnote

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