Posted: May 16th, 2016 3:03pm +00:00

Risk management in education

The risky business of education

In 1901, philanthropist and industrialist Andrew Carnegie said: “A college education unfits rather than fits men to affairs.” At the time, only a small percentage of people went to university and Mr Carnegie’s opinion on higher education stemmed from the belief that successful people were self-made – the product of hard work, self-discipline and experience.

While there’s no arguing that it takes a lot of work and discipline to be successful, it’s probably for the best that, in this case, Mr Carnegie’s musings weren’t taken too seriously. After all, study after study has shown that higher education benefits individuals, communities and society as a whole – especially the economy.

It has been more than a century since Carnegie spoke those words, and over the years higher education has become increasingly popular. But, where university was a life experience for primarily well-off young men, it is now perceived as a must-have for anyone who wants to succeed – and that has led to new challenges for the institutions that provide the education.

Modern motivations and the job market

Ask any university student today, and they’re likely to tell you that going to university is a means to an end, rather than an end in itself.

Research from the National Union of Students (NUS) shows that the main reasons students choose higher education are to gain qualifications (68 per cent), improve chances of getting a job (53 per cent) and improve earning potential (44 per cent). Only 29 per cent of those questioned said they were going to uni for the experience.

Simply put, students are going to university to learn how to do a job. But, according to The Foundation for Young Australians (FYA), many of the jobs students are preparing for won’t even be around by the time they graduate. Their research found that 70 per cent of young people currently enter the workforce in jobs that will be radically affected by automation. What’s more, entry level jobs for young people are disappearing at an alarming rate.

Can universities be faulted for not preparing students for the future job market? Jack Delosa, founder of a private education institution for entrepreneurs says that educational establishments around the world need to focus less on research and more on improving the standard of teaching. He also believes they need to do more to plug the skills gap between education and market needs. On his vlog, he says that universities aren’t doing enough to turn students into people who are adaptable to change and able to develop new ideas.

Law lecturers sometimes joke that they are providing students with tools and knowledge that can be used against them – and this might be a growing risk for universities. Earlier this year, a law student in America sued her university because she hadn’t been able to find a job as a lawyer in the eight years since she graduated – despite being in the top of her class and spending $150,000 on tuition fees.

Her argument was that the university had inflated employment data for its alumni as a way to encourage potential students to enroll.

According to CNBC, another 15 similar cases have been brought by disgruntled students in recent years. None of those cases have yet been successful – but may simply be a matter of time before a judge does find a university to be at fault.

Education as a consumer good

Here in the UK, it’s hard to believe that it’s been less than 20 years since tuition fees were first introduced. These days, a year of university can cost as much as £9,000, and that means higher education has become a consumer good.

The transaction between the higher education provider is now a business deal and, as consumers, students have very high expectations for the quality of their education, as well as the facilities and the lecturers.

They’re also anxious to see a return on investment – good grades and a job after graduation. The university will need to meet these expectations if they are to avoid compensation claims.

In a survey of 1000 academics by The Times Higher Education magazine, 40 per cent of lecturers felt under pressure to inflate results and increase the number of top degrees awarded. Handing out more firsts means a university can slide up the rankings, and increase fees further as it goes. Of course, as fees rise, so do expectations.

Students are looking for value for money and assurance that their investment/education will be the best route for their career. If any part of university life does not live up to expectations, the university can expect to receive a claim for compensation. The Office of the Independent Adjudicator (OIA) reported that payouts rose by two-thirds in 2013 compared with 2012.

These aren’t just claims for slips, trips and falls (although those happen too). In 2010, a student at Queen’s University Belfast brought a judicial review to overturn his 2:2 in electrical engineering. He claimed that if teaching standards had been higher, he would have received a 2:1.

The judge in the case decided that the court did not have a say in such matters, explaining that university assessments of students’ work were “plainly a matter of academic specialised judgement”. However, the lesson that universities need to take from this example is that internal procedural standards must be effective and observed. If they aren’t, academia could find itself on the losing end of legal action in the future.

There’s also the opposite problem: universities giving students whatever they want. This is a case where the customer is definitely not always right. If an establishment starts pandering to its students – basically handing out degrees for a fee and four years’ attendance – then its reputation is going to suffer, possibly rendering its degrees useless pieces of paper.

Professor Farthing, vice chancellor of Sussex University, explained in a speech: “We cannot fall into the trap of reducing higher education to a set of simple transactions. Universities are so much more than warehouses that sell off-the-shelf qualifications, and students are far more than consumers purchasing degree certificates.”

He suggested that more needs to be done to bring back the student experience: “Universities are communities where people come together to create and share knowledge,” he said.

Increased student numbers

With the cap on student numbers being lifted, more students than ever before will be able to attend university in the UK. It’s believed that this will help to boost the economy, as there will be more numbers of graduates in the workforce, and increased productivity.

However, more students also means greater risk of overcrowding, dissatisfaction with the quality of teaching, increased workloads for lecturers and the overall quality of education being compromised.

When Australia lifted the cap on student numbers in 2012, universities there found that the costs were higher than expected and the number of low-performing applicants increased.

Again, if the level of students is not managed to ensure the expected level of service is delivered, then universities can expect to see an increase in claims for compensation from their unhappy student-customers.

Claims on the rise

It’s not surprising that the number of compensation claims against universities and other higher education providers is on the rise. Motivators have changed, increased fees have increased the level of expectation and the job market is still extremely difficult for new graduates.

Today’s higher education institutes need to be run as businesses with financial targets, and they also need to pay close attention to their rankings. While these establishments may not like to think of students as customers, they must take steps to find a balance between mitigating risk, providing a sound education and keeping their customers happy.

JCAD claims handling and risk management solutions

JCAD offers a claims handling solution that offers a great deal of efficiency to higher education institutes.

It is currently being used with great success at Newcastle University, allowing the university’s claims department to run a paperless office, with all documentation centrally stored allowing for the claims to be dealt with in a timely manner. Please click to read the Case Study.

In addition to this, JCAD offers risk management software that allows you to identify the risks facing your organisation, monitor them and put controls put in place to mitigate them. It can also assist with compliance. With a greater understanding of the potential risks, the number of claims and the amount of compensation may be reduced.

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