In September last year, Advance HE published a report entitled Let’s Talk Value, which marked the culmination of a project supported by UK funding agencies on ‘Integrated Thinking and Reporting’. One of the common issues that participants sought to address was how to communicate the value their institutions created through education and research.
The focus of the project gravitated towards a review of annual reports and financial statements, which provided a natural home for explaining how resources were used to achieve organisational objectives. A significant number of universities have as a result invested time and effort in developing their annual reports into documents that might appeal to a wider audience. Many of the principles of integrated reporting have thus been adopted by universities when explaining the value created for students, for society and for providers of financial capital.
Much of this, of course, is common sense. At a time when ‘value for money’ is being hotly debated, the onus has been on universities to ensure that stakeholders have access to the information that matters to them in assessing value for money. But what the participants found as part of the Advance HE project was that the principles of integrated reporting do not start and end with a review of the annual report and financial statements. Integrated reporting also implied a significant change in the ways that organisations think and act:
Effective integrated reporting has a number of benefits, the foremost of which is that it creates integrated thinking across the organisation; through a firm focus on strategy, business model and value creation it helps to break down silos, reduce duplication and create greater cohesion and efficiency.
– CGMA Integrated Thinking briefing
But did a change in (financial) reporting really stimulate wider changes in organisational behaviour? And is it possible, or even desirable, for universities with their large and diverse communities to achieve greater integration across multiple and disparate views of institutional purpose?
The view amongst many of the participants in the Advance HE project was that integrated thinking was the real prize, but that it needed a deliberate and coordinated effort to connect the university’s strategy, performance reporting and governance. It was the cycle of integrated thinking and reporting that resulted in more effective and joined-up discussions on resource allocation, financial stability and sustainability.
This was most apparent when it came to the professional service areas responsible for significant university assets and resources, including the physical (e.g. estates, library and IT) and the less tangible (e.g. brand and external partnerships). The project showed that active consideration of the relationship between the various functional units, and the resources available, could lead to more integrated decision-making that considers value creation over the short, medium and long term.
In practice, this required a strategic planning process that cut across organisational silos to connect the resources available to the university (financial and non-financial) with the wider organisational purpose. At Newcastle, we’ve started to do this by developing a single overview of the resources and relationships that will help us to achieve our Vision and Strategy and used this to align our operational plans. While the primary focus has been the professional services, the approach has recently been extended to faculty plans in a way that has stimulated more joined-up conversations, decision-making and reporting.
The Advance HE project gave participants a deeper understanding of the tools and techniques that can be used to report on value creation. This in itself was hugely beneficial. But the project also opened-up the potential for much wider benefits associated with integrated thinking. It encouraged participants to review their business models in new ways and to develop a better understanding of the trade-offs between different courses of action and resource allocation. It stimulated thinking around the development of non-financial performance measures and encouraged more holistic thinking around strategic risk and stakeholder engagement.
On 18 September, Advance HE will be hosting its second Let’s Talk Value conference and expects to invite a second cohort of institutions to participate in a collaborative project on Integrated Thinking and reporting later this year. For further information, please contact Kim Ansell at kim.ansell@advance-he.ac.uk.