In this series of articles we consider the challenge for school Leadership and the Business Manager of balancing competing priorities and preparing for the impact of a crisis.
School crises and the financial impact
Though a hot topic presently, crisis management is not just applicable in the current pandemic. There are a range of issues that schools face that are a time of intense difficulty and, when applicable, decision making is critical. For any school, a broad range of factors and stakeholders influence the business element of the school and each have their own unique financial impact.
A typical range of spinning plates that need to be managed are: finance; strategy, facilities, IT, human resources, administration, marketing, WHS, compliance etc.
A school Business Manager has many competing priorities and tasks, the consequences of any or all of those spinning plates falling can be catastrophic.
With such a risk every school needs to start preparing before the crisis strikes. Planning for a school emergency and how to react is an essential leadership role.
Consider some of the crisis threats a school faces and consequential enormous impact: natural disasters, bush fires, pandemic, intruder threat, terrorism, bomb scare…the list goes on!
Recently global emergencies have highlighted the need for school active crisis management plans to be in place…and well-rehearsed, reviewed and not just left in the Principal’s drawer.
Each crisis also has a particular impact on each of the stakeholder groups of the school: students, staff, parents, emergency services, local residences, neighbouring schools, transport services & media. Similarly, each impact on each stakeholder has a financial factor for the school too.
Making opportunity of a crisis
So how do schools turn a critical problem into an opportunity?
A man who was extremely familiar with crisis and how to manage them, Winston Churchill, famously said “Never let a good crisis go to waste”. So too can schools convert a crisis, challenge, problem into an opportunity. The key is being planned and prepared, therefore being ready and then being able to apply a positive approach to the issue. Remember, the difference between the words “unprepared” and “prepared” is 2 not needed, extra, negative characters! In any business or school, it too is often the extra, unneeded, inefficient processes, resources and personnel that are creating an ineffective response to a problem. Let us look to remove the waste and inefficiencies from the school’s business operations so that our “unpreparation” is not highlighted.
To do this we all need to think outside the box. Indeed, school leaders and especially Business Managers need to be ‘Thinking outside the school’. The objective of doing this and the very achievable outcome, is both stability and efficient achievement of the strategic opportunity presented to the school in the time of crisis.
Now as humans and therefore, organisations made up of collective humans, we don’t naturally like change. Frequently the response to any suggested change in schools is “but we have always done it that way”. The reality is that the past does not mean we are going to get the best result or be the most adaptive to a crisis. School leadership and personnel need to ask “Why has it always been done it that way?” because the reason ‘then’ probably will not be the best reason ‘today’. Discover “What is the objective now?” What is the strategic objective, process objective today? How has it changed from, yesterday, a year ago, under the previous business manager and how has the current crisis impacted it?
Also, understand who the stakeholders are now? How have the stakeholder’s objectives changed? Are our processes dynamic enough to adapt to the change in stakeholder’s needs?
Consider which current legislation requires compliance. So often compliance feels like a bundle of red tape that’s always changing and these changes can be understandably missed during a crisis. But there may be some changes in response to the crisis that apply immediately, what new reporting requirements now exist, are there new funding opportunities available, is different data required by the school’s information systems? Making sure your school systems have adaptive processes and remain compliant is very important.
One of the most important questions for school leaders to ask is “are we following best practice?” Unfortunately, it is very easy amongst the busyness of daily life specific to your campus to become isolated in your school. It is extremely beneficial to take time to look outside and consider what is best practice in other schools or in other industries. Interact with those of equivalent roles in similar schools, network within faith-based groups, refer to outside resources, like the Somerset Education benchmarking surveys. Discovering and following best practice will have a beneficial financial impact on your school.
John Somerset (Somerset Education) wrote about the ‘attributes of a financially sustainable school’ and referred to some very familiar ‘pillars’: ratios and benchmarks; cash flow; cash reserves; debt and debt servicing; enrolments; service quality.
Perhaps a more unexpected one was school culture and the ability of a school to adapt to changed circumstances. This non-fiscal aspect being highlighted as a factor of financial sustainability may be surprising but when considered in the context of crisis management its inclusion is obvious and one which Leadership must focus on.
Another observation made by John Somerset relative to this topic was around material financial impact. He commented that “for a school of 500 enrolments with fee income of $5.5 million, if debtors increased from 5% of fees to 33% of fees this could take $1.6 million out of cashflow.”
We may initially think that a jump of 28% in debtors is extreme, but there have been many schools that have experienced spikes similar or in excess of this during the COVID-19 pandemic. Would we have predicted such massive changes before the crisis hit?!
The impact of a crisis can have a massive financial effect on both the micro-environment of the school and the more macro-environment. The ripple effects that we have witnessed in recent times from major crises are major: economic recession and hibernation; viability of schools at risk; changing recruitment trends; employee pay cuts and working hours cuts; increase in families seeking fee relief.
Conversely, there have been many positive stories too of how schools have adapted to crises to ensure operational and financial success. We all benefit from these case studies and can learn from past emergencies for future crises. To keep the plates spinning schools need to plan and prepare…
…which we will consider in the next part!