In Brief
- Building resilience requires a deep understanding of current realities - tracking non-labor costs, engaging in scenario planning, and reevaluating budget models for agility are key to sustainable adaptation.
- Strategic resilience depends on inclusive leadership and transparent communication: involving the campus community, optimizing talent through career development, and balancing tough choices with clarity builds trust and long-term commitment.
- Embracing innovation and community strength, via streamlined services through AI and tech, and activating alumni networks for support, positions institutions to thrive despite policy shifts and financial uncertainty.
When faced with disruption and change, it is tempting for colleges and universities to rely on familiar approaches and strategies. But to adapt and remain agile when new challenges emerge, such as the significant and potentially long-term shift in federal support, it is critical for institutional leaders to gain a deep understanding of their environment, so they can build more resilient, forward-thinking strategies that will better equip them to navigate future disruptions.
These key steps outline actions that have proven effective during times of unprecedented change, providing higher education institutions with guidance for proactive planning:
- Track the money: While labor makes up the majority of costs for most institutions, a good starting point for identifying quick sources of liquidity is assessing non-labor expenses to understand current allocations and uncover potential reductions. Knowing where these costs sit and how they are being used can help identify areas for cost savings, including renegotiating contracts, reassessing large construction projects, stopping unnecessary services, consolidating contracts, or leveraging expiring contracts. This process helps manage short-term financial pressures and lays the groundwork for long-term sustainability by ensuring that every dollar is spent with purpose and precision.
- Conduct comprehensive scenario planning: Even if institutions are not immediately affected by emerging changes, it is still crucial to conduct an analysis of the potential impacts of federal directives and state actions, along with the various scenarios that could arise. For example, while colleges and universities that do not conduct research may not feel the squeeze from reductions in federal research funding, they should consider other variables of financial flexibility, including shifts in student enrollment patterns, such as changes in international student numbers or a decline in Pell-eligible students.
- Engage the campus community: While leadership will ultimately make final decisions, engaging the broader community fosters stronger buy-in and ensures solutions are grounded in campus realities. During times of transformation, personal conversations from leaders are also critical to building trust. These interactions provide space for individuals to process change, ask questions, and feel heard. Together, this collaborative and empathetic approach reinforces shared purpose, resilience, and long-term success.
- Optimize your talent: To retain and develop top performers, colleges and universities must foster a culture that values their contributions and provides opportunities for growth aligned with their career goals. Robust workforce planning focused on skills development ensures that employees have defined career paths, progression opportunities, and growth capabilities that allow them to contribute more effectively to the institution's goals.
- Revaluate service delivery: By leveraging technology and AI to streamline processes and consolidate decentralized functions, institutions can eliminate redundancies and improve coordination. Leading institutions balance AI’s integration with the broader strategic vision. While tough decisions may arise, like whether to prioritize research or administration, transparent communication from leadership helps ensure faculty and staff understand the rationale behind each directional move.
- Activate the alumni network: Strengthening an alumni network can help institutions navigate financial challenges, expand their reach, and increase engagement. The benefits are clear. Strategically focusing on your institution’s alumni network can unlock new funding sources and build a robust support system for long-term growth.
- Examine the budget model for agility: Institutions can evaluate their current budget models to determine if they align with the realities of the "new normal." A model that was effective in the past may no longer support current priorities, leading to inefficiencies or misaligned incentives. By reassessing and potentially redesigning the budget, institutions can ensure that financial resources are allocated effectively to support long-term success. An effective budget model must be nimble and flexible, allowing institutions to adapt to changes in resource allocations, cost variables, and other financial drivers amid ongoing challenges.