Academic programs are the backbone of any higher education institution. However, not all programs are created equal. To be successful, an academic program must possess three key qualities: mission-centered, market-smart, and margin-conscious.
The first step in program assessment is to deconstruct your mission. Generally speaking, mission statements are broad and intended to be enduring, and as a result, they don’t have the specificity you may need to make program decisions. It’s a good idea to “unpack” your mission, identify the key dimensions for your institution, and examine a program’s outcomes in light of those dimensions.
The first question is your institution’s academic focus. Are you an engineering college or a liberal arts college? Second, what kinds of students do you want to serve? Is a particular program going to attract and sustain a diverse student body, or does it only appeal to a specific demographic group? Third, what outcomes do you want for your students: to go out and get high-paying jobs or go out and serve society?
Additional questions include, which communities will this program serve? Will it serve local employers or others in outside communities? How will it satisfy other constituencies you need to consider as an institution, such as trustees and donors? And you may find different dimensions that determine the overall institutional fit of the program with your mission.
To support your mission, you’ll need to assess academic standards centered on student learning outcomes: what will the students learn in this program, and is the curriculum directly or generally preparing them for jobs? Are your faculty evaluated regularly, and what is specifically expected of them for this program (or how do you weigh research, teaching, and service)? What is the composition of faculty that’s required for this program? Is that a good fit for the institution?
Markets are typically one of the less well-explored dimensions of program evaluation. We believe there are four critical components of market analysis for academic programs. The first is student demand. Do students want to take this program? Second is employment. Will employers likely hire the students when they get out? Will they earn a living wage? Will they be able to pay back their student loans? One important point here is that just because this program has high placement rates doesn’t mean your students will be interested in it. We’ve had programs in the United States, like engineering, that have had relatively low interest for decades, despite a job market where we had a shortage of engineers for that same period. Just because there are jobs doesn’t mean your students will be interested in those jobs or those programs.
It would help if you also looked at how many other schools offer this program in your market. Finally, there’s degree fit. What is the appropriate level for this program? Furthermore, is it a level that’s appropriate for your institution? All these factors feed into program decisions. They’re important because markets drive margins, and margins fund mission.
Program margins are the direct revenue and costs of the courses taken by students in a major – regardless of the department in which the courses are housed. Too often, we see people focusing on one or more dimensions of program economics but not all of them.
Sometimes, people look at instructional cost in isolation, and they’re very concerned if a program is expensive. However, we’ve seen many expensive programs have very high margins. Others look at program size and think it must be losing money if it’s small. That is not true in most cases. The vast majority of small programs make money. Suppose you cut them without understanding what their actual economics are. In that case, chances are you’re going to make the financial challenges at your institution worse, not better, because revenue will decline faster than cost.
To fully understand program economics, you should track net revenue (gross revenue minus your discounts and institutionally-funded scholarships) for the courses taken by each student in the major. Then calculate direct instructional cost – the cost (compensation and benefits) for the time faculty spend teaching (not including release time or overhead). Subtracting direct instructional cost from net revenue for all the students’ courses will determine the program contribution.
People and Process
Moreover, another piece is understanding people and process, you need to include academics and administrators in decision-making. One of the challenges in program management is that it tends to be opaque, slow, and may only involve some of the right people, which leads to lost opportunities and suspicion that the process is biased and political (which it often is). Instead, it’s important to ensure it’s intensive, transparent, collaborative, and data-informed.
Overall, winning academic programs are widely supported and balance mission, market demands, and economic realities to best serve its students, the institution, and the community.