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Business Officer Magazine

Resources Spare? Time to Share

Collaborative models can supply efficient, cost-effective services, and you don't have to join a large consortium to benefit. Here's a sampling of joint efforts on a smaller scale.

By Sandra R. Sabo

*Next spring, representatives of Emory University and Children's Healthcare of Atlanta (CHOA) will cut the ribbon on a new health sciences research building. The $80 million, 200,000-square-foot facility will be the newest, most visible manifestation of the Emory-Children's Pediatric Research Center, a long-time partnership between the private university and the nonprofit health system.

Sharing a facility is simply a new level of the partnership that began about 15 years ago, decades after the pediatric hospital was built adjacent to the Emory campus, explains Michael J. Mandl, Emory's executive vice president for finance and administration. Half of the new building—constructed on Emory's land, with each partner sharing in the cost—will be dedicated to pediatrics research, with the other half devoted to other medically related research.

"Emory had outgrown its pediatrics research space, and CHOA wanted to enhance its research portfolio. For the new building, we'll be recruiting together for faculty physicians and principal investigators who meet both of our goals," Mandl says. "The most cost-effective way to advance both institutions was to work together. It was just natural to fundraise and construct the building jointly."

Seeing the Potential

A partnership that appears logical, natural, and cost-effective on paper, however, may not be easily achievable-or even advisable. Just ask Robert "Bob" Walton, chief executive officer of California's Claremont University Consortium (CUC)—the granddaddy of collaborations within higher education, founded in 1925.

"Even though people like to think of collaboration just like mom and apple pie, it's really an unnatural act because you have to give up some degree of control," says Walton. "Just because two institutions are collaborating doesn't mean the effort has value. In fact, sometimes collaboration will yield poor financial results and poor quality."

Several years ago, for example, the board of trustees of the Mississippi Institutions of Higher Learning directed the Mississippi University for Women (MUW), Columbus, to explore ways to share services with the much larger Mississippi State University (MSU). The board anticipated significant savings by putting the two campuses on the same software platform and having MSU personnel run all the processes.

Successful collaborations primarily depend on the people involved, emphasize Neal Abraham of Five Colleges Inc. and Bob Walton of the Claremont University Consortium.

The idea made sense, especially with state appropriations dwindling and both schools looking to more creatively employ the dollars still available to them. But a joint MUW-MSU team determined the idea's promise didn't stand up to reality.

"Although both schools use the same software, MUW has a plain-vanilla version and MSU has highly customized its version. Replicating MSU's platform would have required a $1.3 million investment by MUW, with an increase in annual maintenance costs of approximately $150,000," reports Nora Miller, MUW's vice president for finance and administration.

On the other hand, the two universities—located about 25 miles apart—found it feasible to share internal audit services. MUW, which didn't have enough work to keep a full-time auditor busy, currently relies on MSU's staff to perform internal audits. This not only saves MUW about $65,000 annually, estimates Miller, but also enabled the smaller school to piggyback on MSU's contract with a governance, risk, and compliance vendor.

Other teams—each having representation from MUW and MSU—looked at potentially sharing processes (accounts payable, HR, purchasing) as well as services (facilities management, security). "Although I was salivating over the possibilities for process improvements, the goal was to maximize cost savings—and that wasn't the case in areas other than internal audit," Miller says. Even so, based on what they learned doing the team reviews, MUW staff did tweak some business practices to conform to MSU's model, such as issuing paycards in place of some paper checks.

A Framework for Sharing

While the two Mississippi universities had the concept imposed upon them, sharing services typically grows out of informal conversations with peers at other institutions.

"Most collaborations happen when people know each other well enough to talk about the problems they're facing or a need they have," observes Neal Abraham, executive director of Five Colleges Inc., a 47-year-old consortium of one public and four private institutions in Massachusetts. That's one reason the presidents of the four colleges and the chancellor of the university meet monthly, as do the chief business officers. (The chief academic officers meet even more often.)

Be a Good Partner

Steps toward collaboration include the following:

  • Start small.
  • Talk candidly with employees.
  • Formalize the arrangement.
  • Remain flexible.
  • Play to one another's strengths.
  • Be honest.
  • Pay attention to the details.
  • Think long term.

"If you focus only on your institution and its pressures, it may initially seem like a waste of your time to go to professional meetings, communicate with peers over the Internet, or meet your neighbors at other institutions—but that's how entrepreneurial conversations start," Abraham continues. "You have to invest in making the social contacts that help to enlarge your set of possibilities."

Knowing your peers well enough to have a candid conversation will lead to rapport—the first stage in collaboration, according to CUC's Bob Walton. Once you have established rapport, trust will eventually develop; at that second stage, your discussions might reveal opportunities for potential partnerships. Finally, says Walton, "The third stage is the sweet spot—taking risks together."

Abraham offers the example of representatives from Smith College, Northampton, Massachusetts, and Mount Holyoke College, South Hadley, Massachuetts, sharing the mutual frustration of not always attracting certain companies to career fairs. They soon realized that combining their student populations would provide corporations with a larger pool of prospective interviewees. The two women's colleges currently share a director of employer relations, who organizes career fairs and oversees the campuses' combined recruiting programs.

Jointly determine which partner is in the best position to maintain the collaboration's institutional memory.

Similarly, Mount Holyoke and Amherst College, Amherst, Massachusetts, share a grant accountant, who works with faculty on applications and with administrators on grant reporting. And Amherst and Hampshire College, also in Amherst, both depend upon the University of Massachusetts Amherst to provide their student health services. The five colleges, in various configurations, also share positions and services related to mailing and distribution, rental property management, environmental health and safety, religious life, and local food purchasing.

Abraham and Walton emphasize that successful collaborations primarily depend on the people involved. Change just one of those people—which happens frequently in higher education—and the collaborative dynamic changes as well.

Say a new president or chief business officer arrives on the scene at a partnering institution, full of questions or concerns about a collaboration that had been working well. At that point, cautions Walton, rather than assume that life should simply go on as before, "You have to go back and reestablish rapport and then trust with that individual. If you don't reset the collaborative relationship to 'rapport,' you'll get frustrated—and that's when factions develop."

Deal or No Deal

Another barrier to sharing services is what Walton calls the "think-tank approach"—assembling a group of business officers around a table until they figure out how to solve a problem.

"In higher ed, we love the word 'equity,' so we expect all the institutions at that table to conceptually agree on something, on the front end," he continues. "But that's not a winning strategy because it assumes everyone in the room shares the same degree of trust and risk"—which is rarely the case.

Instead of waiting for unanimity, Walton recommends partnering with one institution that has the same problem and a similar appetite for risk. Later, once a shared service is up and running, it may attract additional partners.

Several years ago, for example, the University of Akron, Akron, Ohio, wanted to upgrade its enterprise resource planning (ERP) system and suggested sharing services with two universities having the same need. When the potential partners couldn't agree on terms, Akron changed course: It approached Lorain County Community College (LCCC), Elyria, Ohio, with which it had already initiated discussions about sharing academic programs.

After a thorough analysis, LCCC eventually purchased a license for Akron's ERP system; Akron hosts the system and provides IT support for the community college, which is located about one hour away. "Left to its own devices, Lorain probably would have purchased a less-
sophisticated system, but it received aggressive pricing and gained a lot of functionality by partnering with Akron," says David Cummins, vice president for finance and administration and chief financial officer at the University of Akron.

"From the start, the ERP system was seen as the first step toward other opportunities to share some services," adds Cummins, who previously was LCCC's chief financial officer. "We're now gathering data on the possibility of sharing back-office functions, such as payroll or HR services, and another university is involved in that conversation as well."

Potential Trip-Ups

Although Akron has nearly twice the enrollment of LCCC's 14,000 students, the joint committee overseeing shared services has equal representation from both schools. Beyond that largely symbolic gesture, believes Cummins, equality must extend to implementation. And that means change—for everyone involved. It means institutions with disparate policies, procedures, practices, and cultures must set aside their differences to create something new.

"To truly gain economies of scale, processes have to change for both schools. If one partner comes in with the idea that it has all the answers and the other partner simply has to change to match, that shared service probably won't work," Cummins observes.

"Just be aware that you're operating in a political environment, and sometimes you will run into a 'collaboration assassin,'" adds Bob Walton. "Recognize that colleges and universities are organic beings that exhibit self-interest and competitiveness and, in some cases, pettiness."

To defuse those tendencies, Walton recommends developing a methodology for collaboration that includes guiding principles for any shared service. The Claremont University Consortium, for example, focuses its efforts in five key result areas. One goal is building market competitiveness, while another is building financial value.

"We believe you have to develop a thoughtful, rational business case that examines the quality of the service apart from its financial value," Walton explains. "In our case, the collaboration has to be a winner on either competitiveness or value—or you shouldn't do it. If you can achieve both, that's a home run."

On Common Ground

Mike Mandl says having a shared vision helped Emory University and Children's Healthcare of Atlanta build their joint research building without bureaucratic wrangling and red tape. Motivated in part by major donors—and the urgent need for additional research space—the two organizations agreed in advance on the programmatic objectives and governance principles. After that, fundraising and construction moved quickly.

"Having that philosophical agreement in place gives you a framework for dealing with all the nitty-gritty decisions that come along, especially if you want one thing and your partner wants another. Remembering the joint objectives or vision you agreed upon up front will help guide decisions and keep you moving forward," Mandl says.

Construction on Arizona's Black Mountain Campus—a partnership among Paradise Valley Community College and the Desert Foothills YMCA, Phoenix; and the Foothills Community Foundation (FCF), Scottsdale, Arizona—was already well under way before the three partners realized they should be sharing more than a building. Factions could easily have developed, says Jacalyn Askin, who was the college's vice president of administrative services at the time; fortunately, the partners took time out to find common ground.

"Just sharing a building wasn't anyone's intention, yet we hadn't been deliberate in asking, 'Why are we doing this together?'" recalls Askin, now vice president of administrative services at Chandler-Gilbert Community College, Chandler, Arizona. "When we realized our planning needed to be more intentional-that we all wanted to really be partners, not just neighbors-we identified common values to guide the rest of our decisions." They developed a shared vision: to bring together local communities by providing education options, meeting spaces, and recreational opportunities.

When competitive issues arose, that vision proved an important touchstone. All three partners, for example, had previously competed in other locations in the area of children's summer programming. "The expectation was that each of us would do the same summer camps we had before—but that didn't make sense in a shared facility," says Askin. Instead, to avoid overlapping times and topics, the three organizations collaboratively arranged a schedule of summer programs.

Making It Work

Assuming you and another institution have identified a similar need and objectives, here are suggested next steps:

Start small. Pick a project with relatively little cost and a modest return. "If you have multiple options, choose the simplest one with the clearest objectives and the least disruption or cost," advises Neal Abraham of Five Colleges Inc. "If you start with something complicated and expensive, you'll be facing a lot of management issues at the same time."

Talk candidly with employees. Collaboration always brings change, notes Abraham, including what he calls "the heartache of transition"-having to revise processes, learn to work with someone at another campus, or say goodbye to a colleague or even one's own position. So expect rumors to start swirling the moment word gets out that your institution is exploring shared services-but don't run for cover. Acknowledge and address the fears and trepidation, not only in group meetings but also in one-on-one conversations.

The Mississippi University for Women certainly took the direct approach, confirming to employees that they had to take a serious look at a shared service that might result in the elimination of their own jobs. "It was a little uncomfortable," acknowledges Nora Miller, "but we had to be honest about why we were moving in a new direction."

Similarly, before officially launching their shared ERP effort, the University of Akron and Lorain County Community College each hosted an informational session for employees. In addition to explaining the schools' interest in improving service, David Cummins always emphasized the potential for personal growth.

Cummins observes, "People working in smaller institutions, in particular, have a limited ability to grow professionally. Creating a shared service may provide them with more upward mobility and responsibilities than maintaining the status quo." At the same time, the new opportunity may enable your institution  to retain talent that might otherwise have walked out the door.

Formalize the arrangement. In a short memorandum of understanding, cover the shared objectives and basic details of your collaboration—and what happens if all doesn't go as planned. For example, spell out how you'll divide resources if one partner isn't satisfied and how much notice is needed before withdrawing from the agreement.

Also prepare for the possibility of attracting additional participants; the founding partners, for instance, may require a buy-in from institutions that did not initially invest dollars or "sweat equity" in the collaboration.

Rather than leaving the agreement to languish in a file drawer, review it periodically: Are the partners doing what they agreed to? What are they doing differently? To try to avoid issues in the future, revise the document to correspond to reality.

"Practice often diverges from promise," says Abraham, "but the agreement may not reflect that. Yet the tough things—the contract terminations or threats of lawsuits—will always send the lawyers back to your written documents."

Remain flexible. Nearly five years ago, Armstrong Atlantic State University, Savannah, Georgia, initiated a shared services model to provide VoIP phone service for its own campus in Savannah and four other schools in southeast Georgia. Armstrong purchased all the equipment, hired a full-time employee, and hosted the system; it bundled its costs, then calculated a monthly per-line payment plan for each partner. But one school preferred to bear all the equipment costs up front, rather than pay for phones monthly, and several others wanted quarterly or annual billing.

Armstrong accommodated these requests instead of letting them become deal breakers. "If you want to be collaborative, find ways to fit everyone's needs," says David Carson, vice president for business and finance at Armstrong. "We really wanted to make this collaboration work. Otherwise, VoIP would have been too expensive for a school our size."

Thanks to Armstrong's billing flexibility, the shared service arrangement has worked well: Phone rates have remained unchanged over the years, and cost savings will enable the partnership to build reserves for funding equipment upgrades.

Play to one another's strengths. When designing a schedule for summer programs at the Black Mountain Campus, the facility's three partners focused on how best to serve children between the ages of 3 and 17. As it sorted out, the YMCA had the best facilities for offering child care and water activities for all ages; the community college had expertise in dealing with teenagers, thanks to its dual-enrollment programs; and the community foundation was a natural for running a lunch program because it operated a small cafe in its 10,000-square-foot portion of the shared facility.

"Each of us had something different to offer—and we used that to our advantage," says Jacalyn Askin. The YMCA's professional marketing staff designed the facility's logo, for example, and the college provided safety and security services. In addition, the community college's partners could do things that it couldn't as a public institution, such as selecting suppliers or vendors without a public bidding process.

Be honest. "While we all wanted success for the Black Mountain Campus, each partner had somewhat different incentives. We needed to put those on the table," Askin notes. Candidly discussing their institutional goals—the community college wanted to increase credit-student enrollment, the YMCA desired more dues-paying members, and the community foundation primarily wanted headquarters and meeting space-helped the partners identify and sort out potentially competitive situations.

Armstrong Atlantic made a large capital investment and hired an employee to manage a 2,206-line VoIP system, but it still has the same number of votes as its partners: one per school. Carson says, "Just because the equipment is here, doesn't mean we're running the show. In fact, we often remind the group that we need their input, that Armstrong doesn't make operational decisions on its own." Nor does Armstrong charge for indirect costs or administrative fees, as shown by the annual financial statement it prepares for its partners in the phone service.

Pay attention to the details. As long as you're being honest, jointly determine which partner is in the best position to maintain the collaboration's institutional memory: Who will keep meeting minutes and summaries of decisions? Who has responsibility for paying the bills, scheduling the annual meeting, or remembering to review the shared services agreement?

"Collaboration takes patience; you need to get to know your counterparts and their cultural proclivities," says Neal Abraham. "Those who attend to the details, both personal and formal, tend to do better at collaboration than those who just want to get the project done and move on to something else."

Think long term. Why are we doing this? In Askin's opinion, you must ask that question repeatedly, every time the partners meet, make a decision, and engage in planning. "That simple question will help you develop relationships and an ability to work together that will last beyond individuals and become part of the routine of your campus," she says.

David Cummins puts it more bluntly: "Collaboration is a lot of hard work. Doing something on your own will always be easier," he says. "So, if you're thinking short term, don't collaborate. But if you—and your leadership—are comfortable with a long-term vision for the collaboration, the payoff will be there."

SANDRA R. SABO, Mendota Heights, Minnesota, covers higher education business issues for Business Officer.

One Employee, Multiple Bosses

Sharing services often means sharing personnel. Three colleges in Minnesota, for example, have a joint contract with a consulting firm that designed a software solution for processing need-based grants for Minnesota residents attending schools within the state.

"Due to its unique parameters, the Minnesota Grant is complicated to manage and report, which is why going in with the other schools was a huge benefit for us," says Karen Lee, associate director of financial aid at Concordia College in Moorhead, Minnesota. "The annual maintenance fee is split equally among the three schools, and we all have equal access to the programmer."

But suppose a shared service demands an on-site presence or justifies a part- or full-time employee? You and your partners might form a separate entity to serve as the employer. The Emory-Children's Pediatric Research Center, a joint venture of Emory University and Children's Healthcare of Atlanta, has its own governance structure and produces its own financial results. The partners jointly appoint the center's CEO, who reports to the highest levels of both organizations.

Another option is to designate one institution as the employer of record. Then, partnering institutions agree to share the cost of and services provided by that employee.

"That's better than offering part-time employment at more than one institution, which may save on benefits costs but may not attract the caliber of person desired," says Neal Abraham of Five Colleges Inc. "Making the person an official employee of one campus will fix benefits, pay procedures, and HR policies in one institutional setting."

If you are contemplating a shared position, here are additional suggestions from Abraham:

  • Jointly recruit and select the employee. If the shared position is a pilot program or has short-term funding, reveal that information to applicants.
  • Clarify your expectations. Explain, for example, that while officially employed by one school, the person will work at other locations and therefore must abide by those institutions' employment rules as well.
  • Schedule frequent meetings of the shared supervisors. Use these get-togethers to review schedules and ensure that no partner is loading unanticipated extra work on the employee. "Talk about how things are going, and keep stitching the holes closed as you discover them," says Abraham. "If you allow resentment to build, the partnership is more likely to get cancelled."
  • Hold a joint performance review. Separate reviews mean separate messages, which can confuse the employee and muddy the objectives of the shared position.
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