It’s Going to Cost HOW Much? – The True Cost of Your Strategic Plan

When we sit down and calculate the cost of our strategic plans, we have to be realistic or we can quickly get into trouble. We need to consider the true costs of full implementation, where our resources will come from, and what our institutional priorities really are. In other words, even our strategic plans require a plan. The next time you consider your institution’s costs, keep in mind these four key approaches:

Business Plan Approach

The for-profit world has a knack for business plans: its people like to make decisions by the numbers.

But higher education is often more about building consensus and having an inclusive process—one that, at times, strains to say “no,” even when the numbers suggest otherwise.

Remember that most colleges and universities are nonprofit organizations, but the realities of positive cash flows and self-sustaining programming are universal. Sometimes we need to take a step back and see decisions from another perspective: a balanced approach that combines business planning to support and inform the consensus building processes will go a long way to improve decision making.

Planning in Higher Education

College administrators are constantly revamping their strategic plans. All too often, though, these plans become nothing more than a list of grand aspirations. In point of fact, the planning process is a chance to assess the realities of mission and resources—reinforcing what works, abandoning what doesn’t, and embarking in new directions.

At the core of any organization is the mission, which the strategic plan has to grow out of and support. Additionally, the plan should be the foundation for the budget process, which reflects the management’s priorities and how it intends to achieve its mission.

There is an annual measuring stick in the form of financial statements to assess progress in realizing your mission, and linking the strategic plan to these financial results is a key step. From there, monitoring procedures can be put in place to measure performance against the plan and, ultimately, performance in achieving your institution’s mission.

Mind the Gap: The Strategic Funding Shortfall

Many college and university plans focus solely on growth in student headcount, research funding, study abroad programs and other programmatic directives. In other words, they focus on top line revenue impact, without accurately projecting the true costs of pursuing initiatives.

Failing to project this cost can result in not only a budget shortfall, but also a more meaningful strategic shortfall.

When your institution needs to change because of external forces, this strategic shortfall may cause you to miss opportunities to transform, or it may put you at a disadvantage due to the misalignment of priorities.

To avoid this, make sure your planning process includes requirements to completely estimate the cost of implementing each objective of the plan.  Using a business plan format will help you focus on the key cost drivers. Also, consider how progress will be measured and monitored; these steps usually take the form of metrics and benchmarks.

Monitoring Progress

Once you begin managing your plan—not only goals and outcomes, but also dollars and cents—you have to develop proper metrics to monitor progress. The challenge is making sure your plan doesn’t overwhelm your governing board’s overall monitoring responsibility.

To start, try a set of metrics that includes five-to-seven crucial items. That should be sufficient to allow your leaders to effectively manage your organization’s execution of objectives.

The metrics can be financial and non-financial in nature, but the shortfall that could result from mismanaging your strategic plan would argue in favor of the financial kind.