Performance Metrics, Performance Funding. What’s a state to do?

Outcomes-based funding (OBF) policies can be a powerful tool for supporting increased postsecondary student attainment. Research suggests this form of financial incentive can be a catalyst for institutions to help students successfully complete degree programs.

To date, 32 states have a funding formula in place that allocates some amount of funding based on performance indicators such as course completion, time to degree, transfer rates, degrees awarded, or the number of low-income and minority graduates. Several states are now exploring next-generation funding models that also support innovation that increases equitable student access and attainment.

Yet investment in innovation in a world of declining or stagnant state fiscal investment coupled with greater expectation and evaluation of return on investment is no small feat. And the increasing need to address time and distance as barriers to educational opportunities and attainment while also delivering more personalized and flexible student pathways and services can not be shouldered by any one individual (and often disconnected) institution within a public higher education system. All tolled, this suggests that next-generation funding models should consider an additional set of outcomes and performance metrics focused on cross-institutional collaboration. But how do you measure that?

Perhaps we can look across the great divide to our colleagues in the business world where an alternative set of performance metrics is emerging. The premise is simple: Many corporations are grappling to achieve aggressive business goals in an environment where the nature of work and the drivers of employee performance are shifting dramatically. It’s a similar conundrum public higher education systems are struggling with vis-a-vis achieving aggressive attainment goals in an environment where the nature of academic delivery is changing and the drivers of student performance are shifting.

To overcome these challenges in the business world, many corporations are orienting themselves around collective action towards intended outcomes. And by collective, I mean working with people, processes and technologies that quite often reside outside the boundaries of their institutions or business units. Companies like Bosch, BASF, Bayer, Michelen are now measuring how network effects can be triggered to provide the scale and exponential ability to drive change.

Sounds good, you say. But how do you measure collective action?  One way to do it is to consider performance metrics that do not hinge simply on reaching individual outcome goals but also network outcome goals – i.e. how effective was the institution, business unit or employee at improving others’ performance? And, how effective were you at using others’ contributions to improve your own performance? This performance measure is known as “enterprise contribution” and it’s something powerful in concept as it relates to next-generation funding of public higher education.

As states struggle with tensions between institutional mission and student-centeredness, consideration of a new set of performance measures that value interdependence, cross-organizational collaboration and networked innovation might just be the ticket to supporting equity and attainment goals in new and novel ways.

Extra Credit Reading

For more information on enterprise contribution and the implications for both leadership and workforce development, check out Rise of the Network Leader from think tank CEB.

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