Schools lose 80 per cent of their budgets to salaries, but they could be more creative with the remaining 20 per cent and drive down costs

The education sector has grappled with efficiency for a number of years now and various initiatives have gone some way to improving operational effectiveness and a commitment to value for money.

National benchmarking – looking at prices paid for goods across the country – lets schools know spend trends. However, forensic and contextual local benchmarking may prove significantly more valuable.schoo

If we consider that the majority of school expenditure goes on salary costs (about 80 per cent of a budget), the opportunity to make significant savings with the remaining 20 per cent is limited.

But we should not be complacent about driving down costs within that 20 per cent through careful energy procurement, effective contract management, robust life-cycle maintenance and strategic financing of hardware and technology. However, to make large-scale savings, we need to think slightly differently.

The National Association of School Business Management (NASBM) has developed and piloted a local benchmarking tool that invites clusters of schools to discuss their spend variations. It was used as part of the induction kit for participants in a school business manager primary cluster.

To make large-scale savings, we need to think slightly differently

We are also keen to explore improved workflow processes, deployment of management, or economies of scale and efficiencies through collaboration. We can do this by leveraging industry best practice. The education sector continues to administer operations in a manual, paper-based fashion. Unnecessary levels of bureaucracy and multiple layers of sign-off are adding no tangible control value. NASBM is keen to ensure that control and accountability is proportionate with actual levels of risk.

So, towards the end of 2015, we will dive deep into the operational effectiveness and efficiency of a sample of schools and will share our findings in Schools Week in December.

We will ask searching questions of existing leadership structures. As an anecdote, if we take a theoretical school with a budget of about £10 million, it is not uncommon to see a leadership team with a cost to the school of about £1 million; that is, 10 per cent.

The question we need to ask is what proportion of that leadership team is focused on pedagogy and what notional effort is applied to the overall strategic direction of the institution. We then need to unpick and identify the specific contribution strategic leaders are making towards the effectiveness of the school, and whether that strategic leadership could be executed centrally across a group of local schools.

NASBM is also interested in the concepts promoted through “Lean”. Over the past 15 years, first the private sector and now public-sector organisations have made efficiency savings by developing knowledge of Lean and Operations Excellence techniques.

Lean operations maximise the effectiveness of organisations by focusing them on their core purpose and eliminating all costs and activities (“waste”) that don’t add value. Lean encourages a relentless war on waste and the continual improvement of processes and practices by engaging everyone in the organisation. In an era of constraints budgets cannot be wasted.

Alongside Lean, the concept of Operations Excellence focuses on the capability of teachers and managers to carry out their day-to-day duties. It introduces simple but effective tools and techniques to prevent errors and to make better use of resources. It uses regular coaching as the most effective way of improving performance and changing behaviours in the workplace.

Together, Lean and Operations Excellence provide a platform not only for business improvement and cost efficiency but also cultural change. By its very nature it is collaborative and engaging, providing an opportunity for staff members to turn frustration into creativity in solving day-to-day problems.

The upcoming financial environment is tough for everyone but we look forward to sharing our results in December about the ways schools are becoming more efficient.