The world of independent schools is justifiably proud of its commitment to gathering and providing detailed comparative operating and financial benchmarking information to help guide their operations. Fulfilling this commitment takes a great deal of time and effort to ensure accuracy and apples-to-apples comparisons. In much the way a practiced martial artist might build on skills, schools that use data to build on lessons learned are more successful.
The leading providers of benchmarking systems, including NBOA, NAIS, Cal-ISBOA, PAISBOA and INDEX, enable varying degrees of data quality review, peer analysis, report generation, colorful graphs, and written reports. (Full Disclosure: Measuring Success is the developer and manager of benchmarking databases and tools for NBOA and Cal-ISBOA and PAISBOA.)
However, a closer look at the actual use to which the benchmarking information is put by school leaders indicates a significant missed opportunity for all too many independent schools. Many schools make the most rudimentary use of benchmarking as a source of annual reports to school heads and boards.
These reports are generally designed to indicate, “we are okay and in line with our peers.” Alternatively, selective benchmarking factoids are used to respond to challenging questions from inquisitive finance committee members about any number of issues including tuition assistance levels, staffing levels, or compensation. This pattern of utilization of benchmarking information is what I would call Level 1 or “What” level use of benchmarking.
Level 1 benchmarking involves asking the following question: “What is our relative level of performance in contrast to that of our peers?” Certainly, this is important work, but it only scratches the surface of benchmarking’s utility. Level 1 benchmarking is frequently used to justify a current level performance as if to say: “We’re okay. See, we are in the pack!”
Level 2 benchmarking, or ”Why” level, involves a concerted effort by school leaders to answer some of the following questions: “Why is our relative benchmarking performance what it is? If we are at median, why are we (only) at median? Why isn’t our performance top quartile? What would cause it to be improved?” This structured use of benchmarking to ask and answer the “why” questions about the key per student or per full-time employee (FTE) ratios and trends can catapult benchmarking to its rightful place as a reflective and transformational tool. Schools operating at Level 2 are conversant with the top “moves” their school could make to significantly enhance its value proposition, enrollment and sustainability. They have advanced, through reflection and intensified analysis, from data to genuine knowledge.
In Measuring Success’ recent work with Greenhill School in Dallas we worked with scores of school professionals including finance personnel, enrollment management staff, advancement staff, facilities staff, and faculty members to explore the “why” of dozens of benchmarking “opportunities.” We used the scientific method of hypothesis>>>analysis>>>improvement diagnosis to probe why the school’s relative performance was what it was in dozens of areas and used deep analysis and surveys where needed to identify the enabling operational parameters to improve it. In the process, we developed a roadmap to $5 million in incremental “margin” over five years that could be used to ensure more moderate tuition increases. Such is the utility of Level 2 benchmarking.
Level 3 benchmarking is the ‘How” level. Level 3 benchmarking schools are the black belts of the benchmarking universe. They recognize that it is great to have knowledge about the levers that can be pulled to increase the sustainability of their schools. But, it is even better to have insights into how to move from the current level of performance to an improved level of performance. Level 3 entails action research and seeking out mentoring help from experts who have “walked the walk” from one level of benchmarking to another. This could entail, for example, soliciting RFPs from organizations that provide outsourcing services or, in reverse, speaking to schools that moved from outsourcing to insourcing or from one staffing pattern to another in a continuing quest to achieve a greater return on school human or physical assets or expenditures.
Black belt benchmarking schools actually have a strategic mindset. They start with a stretch goal to be achieved over several years that will fundamentally enhance their school’s sustainability. For example, in the aftermath of the Great Recession of 2008/9, I worked with Solomon Schechter Day School of Metropolitan Chicago. They were facing huge post-recession pressures on enrollment and demand for financial assistance.
They decided to utilize benchmarking over a three-year period to significantly enhance revenues and reduce expenses, using benchmarking Level 1 analysis to discover what their comparative opportunities were, Level 2 benchmarking to probe why their relative performance in the “opportunity” areas was what it was, and Level 3 benchmarking via the use of expert consultants to plan and execute how they would plan and implement improvements.
Over three years of our work together, they achieved improved margin in the millions of dollars though from different areas of focus. There were enhancements in the utilization of faculty, increases in annual and endowment fundraising and recruitment gains.
During a recent discussion at an ISACS Head of School conference with Head of School Linda Foster, she attributed a significant share of credit for her school’s enhanced sustainability to the programmatic use of the three levels of benchmarking and indicated her continued commitment to the mastery of the process.
A parting wish: Here’s hoping that your school will make the effort to build on its already considerable investment in benchmarking and reap the available rewards. Measuring Success would be delighted to be your guide and share our experience.
See you at the dojo!
Dr. Harry Bloom is the Senior Vice President for Client Solutions at Measuring Success.