Continuing Vocational Education in UK Higher Education Institutions: Organisation and Management

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Continuing Vocational Educationin UK Higher EducationInstitutions: Organisation andmanagementH. R. Thomas , C. R. Belfield , A. L. Marr & G. R.RikowskiPublished online: 03 Aug 2010.

To cite this article: H. R. Thomas , C. R. Belfield , A. L. Marr & G. R. Rikowski (2000)Continuing Vocational Education in UK Higher Education Institutions: Organisationand management, Journal of Further and Higher Education, 24:1, 85-106, DOI:10.1080/030987700112345

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Journal of Further and Higher Education, Vol. 24, No. 1, 2000

Continuing Vocational Education inUK Higher Education Institutions:organisation and managementH. R. THOMAS, C. R. BELFIELD, A. L. MARR &G. R. RIKOWSKISchool of Education, University of Birmingham, Birmingham B15 2TT, UK

ABSTRACT This article reports on Continuing Vocational Education (CVE) in higher

education in England. The findings described here were collected from interviews, documen-

tary evidence and observations of activity. The evidence suggests the importance of a

`supply-side’ model to chart the development of CVE. First, HEIs must audit and then use

the resources they have to best effect. Second, HEIs must have effective managerial systems

in place. Third, the organisation of the HEI will determine the development of CVE.

Complementary to these stages is the capacity and willingness of HEIs to undertake

economic evaluation of their provision. Internal and external efficiency must be considered.

This model is, we argue, particularly important when set within the current policy context

for HE.

Introduction

Policy priorities and resource privation are leading Higher Education Institutions(HEIs) to review their missions and the activities represented by them. Post-Dearing, HEIs are increasingly expected to contribute to the wider needs of theeconomy, with activities designed to foster the development of employment-relatedknowledge, skills and understandings beyond their undergraduate and postgraduatemainstream provision. Although these activities are often done through a range ofshort and long training programmes, they are distinguished by their diversity; inpart, this reflects regional labour market variations, different institutional missionsand the past history of involvement in such work. These changes are all within acontext of declining per-unit resource. Consequently, we argue, these new activitiesdepend, and will increasingly do so, on efficient resource utilisation and availability,on the competency of HE management and on the organisational structures ofHEIs. In this article we review this new environment, consider the implications forthe organisation and management of HEIs and then review some evidence of theirresponse in practice. In doing so, we draw upon a study undertaken for the HEFunding Council for England (HEFCE).

In 1994 the HEFCE announced a Continuing Vocational Education (CVE)

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0309-877X/00/010085-22 Ó 2000 NATFHE

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86 H. R. Thomas et al.

Development Funding initiative which earmarked £60 million for the period 1995/96 to 1998/99 (HEFCE, 1994). With the objective of encouraging HEIs to makeCVE an integral part of their overall strategy, institutions were invited to seekfunding toward: (i) meeting the lifetime learning needs of people at work;(ii) expanding the availability of flexible teaching, learning and accreditation forpeople at work; and (iii) encouraging an active role for HEIs in wealth creation andin regional and local development. After competitive tendering, 97 HEIs werefunded (20 were not).

This article reports from this initiative (for the full report, see Belfield et al., 1998)and is in seven parts. First, we outline the methodology used to collect the researchfindings. Second, we summarise the wider policy context, post-Dearing, and itsimplications for CVE in HE. The third section describes the range of CVE activityand the resources used by HE. The next section presents criteria for the effectivemanagement of these resources; organisational models are then derived from thesecriteria. The sixth section reviews the economic impact of the initiative, withparticular attention to what is presently known about the viability of CVE. Specu-lation on the future of CVE is offered in the conclusion, including strategies formore effective management, organisation and economic analysis by HEIs.

Design of the Study

Our investigation into CVE activity was organised into four phases. In Phase 1, CVEactivity was mapped from an analysis of the (funded and unfunded) bids fordevelopment funding submitted by the HEIs; from the first two years of monitoringstatements; and from HESA returns [1]. The principal outcome of Phase 1 was asystematic descriptive analysis of the distinctive forms of provision in a diversity ofinstitutional contexts.

Phase 2 involved field research at 20 HEIs, which were selected to represent adiversity of activity across a range of institutional types. HEIs were stratified intoGovernment Office regions; from each of four regions, 4± 6 HEIs were selected toobtain a balance: of type (former Polytechnic and Colleges Funding Council(PCFC)-funded, former Universities Funding Council (UFC)-funded, monotech-nic); of courses (subject, mode of delivery, accreditation level); of level of funding(full, partial and none). Where possible, but recognising the diversity of HEIs’ CVEprovision, interview data and documentary evidence were collected using a set ofstandard instruments created for: participants (students); the director of the CVEunit; the finance officer of the HEI; and course providers (lecturers).

In Phase 3, further visits were made to nine of the 20 HEIs to investigate morefully CVE provision and examine the managerial and organisational factors associ-ated with `best practice’ . Phase 3 data included: (i) further interviews on processesof decision making within institutions; (ii) interviews with representatives of externalagencies; and (iii) group meetings with students. Interview schedules were tailoredto the specific circumstances of the institutions and, therefore, varied in content.This phase enabled evaluation of factors contributing to effectiveness and cost-effec-tiveness of CVE through case study evidence on: (i) the rationale under-pinning

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Continuing Vocational Education in HEIs 87

development; (ii) management and organisational processes; and (iii) the economicanalysis of CVE.

In summary, the research methodology incorporated partial data on the range ofactivity at all HEIs; used semi-structured data collection instruments at a largesample of HEIs; and included in-depth study of a select group of HEIs. The finalphase involved research to provide recommendations for strategies and priorities forthe future of CVE. Before a discussion of our findings, however, we offer a synopsisof the current policy context in which HE developments occur.

The Policy Context

While HE has long been seen as having an economic function, the nature of thatrelationship has been progressively tightened and made more explicit. In part thishas been achieved through discrete initiatives such as the Enterprise in HigherEducation Initiative (EHEI) and the Professional, Industrial and Commercial Up-dating Programme (PICKUP) [2]. These initiatives were appropriate forerunners tothe Development Funding Initiative, which inter alia defined CVE (HEFCE, 1994)to include short or long training programmes and consultancy and research. Howthis definition and set of activities resonates with an emerging policy consensus onthe role of HE is the main theme of this section. We draw selectively on the mainpolicy documentsÐ the Dearing Report of the National Committee of Inquiry intoHE (NCIHE, 1997); responses to that by the DfEE (1998a); the Fryer Report(1997); and the DfEE consultation paper (1998b). In doing so, we find that theemerging agenda has a wider interpretation of the relationship between HE and theeconomy than embodied in a concept of CVE as `courses and consultancy’ . Hence,the policy agenda markedly expands the debate about the future of HE provisionbeyond the commentaries of Ashworth (1996), Johnes (1997) or Keep and Mayhew(1996), which focus on mainstream teaching. The consensus of this policy agendais described below.

Regarding the educational aims of HE, support for CVE can readily be inferred.NCIHE (1997, p. 73) proposed the purposes of HE should, inter alia, be to:(i) inspire and enable individuals to develop their capabilities to the highest potentiallevels throughout life; (ii) foster the application of knowledge and understanding tothe benefit of the economy and society; and (iii) serve the needs of an adaptable,sustainable, knowledge-based economy. In response, the DfEE (1998a) gives prior-ity to increasing participation and widening access (R1± R7, R67, R76); where theseapply to mature students, CVE provision is given implicit support. Similarly,Fryer (Fryer Report, 1997, p. 8) proposes a strategy for HE which has a clearunderstanding of diverse needs of potential new learners.

The role of CVE in meeting economic and labour market needs is obvious.Increasing numbers of professional employees are forecast, along with greater usageof qualifications in employment selection; growth in cross-functional, skilled workteams; more portfolio careers; and a rise in individuals `managing the learning whichwill support their careers’ (NCIHE, 1997, pp. 56± 57). New industries will draw onthe highly skilled and rely on a high rate of technological development. CVE, at the

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interface of HE research and industry’ s technological needs, therefore hasthe potential to add value to businesses, promote competitive strength and helpgenerate ideas, research and innovation across the entire workforce (DfEE, 1998b).Individuals can influence economic and industrial change as well as respond to it(Fryer Report, 1997, pp. 8, 21).

Emphasis on HEIs as key resources to their region is increasing. Fryer (FryerReport, 1997, pp. 52, 53) proposes greater collaboration and understanding ofneeds within a region, with closer ties with Government Offices. HEIs shouldengage with their surrounding communities via development strategies for theregional economy and for human resources (NCIHE, 1997). Again, the method ofengagement is not prescribed and may include a wide variety of trade, exchange ornetworking strategies.

The above three elements outline a set of purposes and goals for HE. The nextthree elements suggest how such goals can be attained.

Several elements support the case for HE to have strong employer links. NCIHE(1997, Appendix 4) gives evidence of a growing demand for CPD, spurred on byeconomic changes and more rigorous requirements from professional bodies(NCIHE, 1997, p. 63). The actual scale of growth, however, will depend on theflexibility and diversity of provision HE can offer. Closer links with HE may serveto ensure greater convergence between the specifications business use for trainingand those described or applied by HE and to provide an integrated and coherentaccumulation of learning and skills by the individual. The Appendix concludes thatit would be difficult to prescribe centrally what HE should do to meet the needs fora highly skilled workforce (NCIHE, 1997, p. 29), a perspective consistent with abroad definition of CVE.

A recurrent theme of NCIHE (1997, p. 62) is the need for HE to make greateruse of information technology (IT) and to adopt alternative pedagogies. These arelikely to improve access for employees. In the view of the NCIHE, suchdevelopments may change the organisation of HEIs with wide ramifications forteaching programmes, research, quality assurance and for interaction with externalorganisations. This is a view which our investigation below strongly supports.

It is generally agreed that those who benefit from the experience of HE shouldshare in the cost of provision (NCIHE, 1997, Ch. 18; DfEE, 1998a, Ch. 10). Thisapplies both to students and employers, with the latter being exhorted to contributemore toward investment in training and HE infrastructure, as well as support workexperience for future graduates. Firms may also find it easier to borrow thanindividuals. Fryer (Fryer Report, 1997, pp. 9, 31) advocates more spending on HEby the entire economy, emphasising public funding for stimulating learning at themargin. Although the public sector is not expected to contribute much additionalfunding, public sector funds may be sought to increase participation by (previously)underrepresented groups and to induce a greater interface between HE and thewider economy.

Finally, some concerns about HE’s role and performance are pertinent to CVE.First, there is a relatively low level of expenditure on R&D in the UK (NCIHE,1997, pp. 39± 40) and a general perception that the UK is weaker in applying the

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results of its research than its competitors. Second, with a changing studentpopulation (towards mature and part-time students), the facilities of HEIs needmodifyingÐ HE, it is perceived, remains geared to the needs of school-leavers(NCIHE, 1997, pp. 2, 10).

The above shows a positive resonance between emerging policy themes in HE andCVE. Tight (1998) notes this consonance, but without much enthusiasm. Ourapproach, taking the policy themes as a fait accompli that necessitates response, is toconsider optimal strategies for the future. Moreover, the kind of CVE which isdesired is much wider than simply courses and consultancies, and in fact some of thegood and innovative practice we examined falls within this broader conception. It isa finding which has implications for strategic development.

The Range of CVE Activity

A number of approaches for representing CVE activity in HE may be adopted (foran entirely quantitative description, see Howells et al., 1998) [3]. For example, ahistorical approach reveals differences in CVE provision across HEI types. Gener-ally, monotechnic and specialist HEIs offer a smaller, more targeted range ofprovision (although proportionally CVE is more important). With their greaterinvolvement in PICKUP, former PCFC-funded HEIs are in the vanguard of CVEprovision, as reflected in the variety of: pedagogical changes; sub-degree level HE;stronger management infrastructure; and in greater changes to mainstream pro-vision. In contrast, CVE is an emerging enterprise for former UFC-funded HEIs, anextension of their mainstream courses (perhaps toward international markets).Although useful, these stylisations represent positions in 1998 and have neithermuch analytical nor much predictive content. Instead we argue that a more informa-tive approach is to catalogue CVE activity in relation to the resources available inHEIs.

New programmes were seen as a primary way to develop CVE. Undergraduatecourses may be rendered more vocational in focus, perhaps with adjunct courses inkey skills or for mature entrants in non-traditional subjects. Postgraduate vocationalcourses may be linked to industry, perhaps with ties to professional qualifications.This activity might either be at a different level (sub-degree or higher degree) or toa different target group (post-experience) than past provision. The emphasis onmodularisation, on part-time and short course provision may assist such curriculumdevelopment, in particular by ensuring staff commitment and by reducing riskshould demand be insufficient. Similarly, open access courses were growing, as were(to a lesser extent) distance, open and customised modes of learning. At present,provision appears to be developing in a cluster of subjects: engineering, IT andcomputing, and business studies. These trends reflect the fact that there are aplethora of ways in which course provision can be developed or up-dated (CURDS,1994, p. 29). However, these standard educational activities have spawned numer-ous related activities, reflecting the wide range of input resources available in HEIs.It is worth describing these other activities in more detail.

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Understanding CVE Resources in HE

Much of the change is taking place on the periphery of provision itself, which weterm educational services. For example, many institutions have made headway withthe accreditation of prior (experiential) learning, along with developments in termsof pre-course guidance, registration and induction (Lueddeke, 1997), placing themwithin a wider, progressive framework of credit accumulation. CVE assessmenttakes an inclusive approach, with roles for professional bodies, employers and otherclient groups, leading toward student progression through modularisation and creditaccumulation schemes. Inevitably, IT and open and distance learning draw HEaway from lecturer-based courses. For many, IT-based pedagogic development is ashift in HE `business’ (Daniel, 1996), requiring video-conferencing suites, satellitelinks, extensive computer-aided learning (CAL) applications and a high investmentin IT-based learning systems; all these reflect the greater ability of HE to utilisephysical capital and technology. As such, CVE may include work-based learningservices analogous to a `virtual chamber of commerce’ . This reflects the greaterproduction by HE of learning materials, such as journals, videos and web sites forindependent use outside the classroom. Innovations in curriculum, pedagogy, moni-toring, assessment and learning materials all lead to a variety of educational servicesand exchanges. These are new end products in themselves, rather than supportingmainstream provision or even involving pedagogy.

One resource which HEIs are turning to a more vocational purpose is theirembodied knowledge, and its technological patents, inventions and innovations. The`Cambridge phenomenon’ is well documented (Segal Quince, 1985) but there isalso in-house activity at the stage before the formation of spin-off companies. HEIsare involved in joint research and technology trades. These opportunities arestimulated through use of the HEI’s physical resources. These may include equip-ment sharing, joint ownership or leasing between HE and the private sector. Butthey may also include land resources: HEIs are relatively well endowed with meetingrooms, marketplaces, fora and laboratories. These physical spaces are fundamentalto a market economy.

Available human as well as physical resources play an important role in thedevelopment of CVE. Almost all HEIs developed their CVE through an examin-ation of their existing staff resources and skills portfolio. Deployment of staff wasvaried: lecturing to new client groups was a common move, as was greater consul-tancy activity. However, the embodied knowledge of staff could also be tradedthrough staff placement, mentoring systems or work-based tutoring.

Business advice is an emerging market and may include mapping NVQ key skillcompetencies for individuals, who can then relate these to future education opportu-nities. Markets have also developed in guidance and training for individuals estab-lishing businesses and providing professional services in the region. In smoothingover and clarifying the demands of businesses and workers, more productiveeducation can be provided and sustained over the longer term. Career profiling andneeds analysis services are emerging. CVE therefore draws in a much more directway on the Careers Centre resources of HEIs. As well, conferences and workshops

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are all part of the business advice and information exchange which HEIs engage in.These activities span beyond the typical notion of `consultancy’ : CVE here isreducing the information costs for individuals wishing to study, for those wishing tofind work and for those developing their business.

HEIs have used development funding to create and strengthen their links with anumber of other agencies and groups, in part to serve wider social goals. First, linkswith TECs included data sharing; joint representation; co-funding; as well as linkedstrategies for local and regional needs. Second, collaboration between HEIs and FEmay help educational `progression’ . One available strategy is to open up access tonon-traditional students through partnership arrangements; such non-traditionalstudents may have the potential, commitment and desire to progress to higher-levelskills. Third, cooperation with professional bodies may be fruitful, predicated on themacro-role which such bodies play in determining career paths; specifying trainingneeds; establishing occupational competencies; and accrediting professionals. Fi-nally, HEIs are developing effective partnerships and compacts with local govern-ment and other public sector agencies, generating a variety of educational services.As well as serving wider government goals, HE can use these agencies to assuremarkets for CVE.

HEIs may also see CVE as a marketing device to encourage enrolments across allprogrammes or to exploit the development of research centre activities. A credibleprofile in one area of education provision may help in the branding of the HEI andso secure other markets.

Aggregate CVE

It is perhaps natural that the growth of CVE in HE should be driven by educationalprovision. Yet engagement in CVE has prompted a fundamental expansion of HE’ sclient base, perhaps set within a more general restructuring of provision based onlifelong learning and the imperatives and values of competitiveness. In turn, access-ing new groups of individuals requires an understanding of their circumstances andneeds, particularly in the workplace. Often this redefinition and new emphasis isunderpinned by market analysis which identifies competitors and collaborators;examines existing products (to ascertain if they could be adapted for a morevocational purpose); and explores new markets. Consequently, our enquiry showsthat CVE is not synonymous with course provision and should be broadly defined,drawing on the range of resources available to HE, to include: (i) educationalservices; (ii) research and technology trades; (iii) human resource or consultancyexchange; (iv) `business-advice’ trades; (v) market collaboration to achieve broadersocial goals. Finally, under the broad umbrella of CVE may also come (vi) profileraising, with synergies in activity serving a marketing function. The resources of HEare held in many formsÐ in the knowledge of individual academic staff; in thecollective knowledge of academic centres, departments and research units; in thephysical resources of equipment and libraries; and in ownership of physical market-places.

This list of activitiesÐ which represents in business resource terms `what HE has

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to offer’ Ð is expansive and suggests that there is (incipient) vitality in the market forHE’ s services (as found by Howells et al., 1998). These are the resources which HEcan supply for CVE. It also suggests that cost function models (Johnes, 1997;Koshal & Koshal, 1999) should increasingly emphasise that HEIs are multi-productenterprises.

Management of CVE Resources

These resources for CVE need to be effectively managed. Drawing upon some of thecriteria prepared by Brennan (1997), we identify two domains in which managementfor CVE needs to be effective and establish some criteria against which the perform-ance of HEIs can be articulated in this respect.

Institutional Support for CVE

Given the range of exchange goods which HEIs may exploit, institutional support isimportant to ensure that particular exchanges can take place without compromisingthe status of other HEI services. Five aspects of institutional support are important.

First, institutional leadership may be needed as CVE is still an activity which ismarginal to the traditional core mission (teaching first- and higher-degree studentsand undertaking research). In this environment, strong institutional leadership mayallow CVE to develop into a more central activity and one where individualsunderstand the wider mission of the HEI. This may include an explicit commitmentto CVE in key HEI strategy documents; clarity on targets for development; a strongcentral committee as an institutional focus; or (nominated) champions of CVE atsenior levels.

Second, academic innovation should be addressed. If CVE is to be a keycomponent of developments in lifelong learning, it needs an environment which isadaptable to new modalities of teaching, learning, assessment and accreditation.Innovative forms of assessment may be needed and these require flexibility notsimply in the lecture room but also in the internal management of the HEI (toensure, for instance, credit accumulation for award-bearing programmes). Inno-vation may also include negotiated, discrete initiatives with client groups, beyondthe standardised product.

Third, client infrastructure is essential, as it is for any business. For CVE, thiswould include clear points of contact for general enquiries; effective follow-up ofcontacts; student data systems which can accommodate non-standard registrations;and quality assurance procedures which can be tailored to different modalities.Physical resources should be of an adequate quality (reflecting the consensus thatHE is locked into undergraduate provision).

Fourth, provider infrastructure, a set of factors illustrating the capacity of theinstitution to support those engaged in CVE, should be evaluated. The internalmanagement of the system should include financial administration to assist inpreparing budgets, costing programmes and invoicing clients.

Finally, external relations, with outside bodies and potential clients, need to be

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managed effectively. Senior HEI staff may be represented on relevant externalbodies with a readiness to collaborate with others inside and outside the HE sector.Market needs should also be understood, perhaps through the development andmaintenance of client databases; central coordination and guidance on publicity; orsupport for market research.

From our evidence, the comparatively poor client and provider infrastructuresreflect the fact that CVE remains a relatively small-scale, marginal activity and thatearly growth in CVE would first show in institutional mission statements andstrategic plans. Innovation in academic management and better external relationswould flow from these.

Incentives and Reward Systems

If CVE moves toward a more central place in the work of HEIs, change in theinternal incentive and reward systems are necessary so that individuals and depart-ments are encouraged to engage with the activity. Establishing this as a key domainfor management recognises that self-interest plays an important element in howindividuals and groups respond to situations. Three aspects are important here.

First, recruitment, retention and promotion of staff needs to be managed andneeds frequent review. In many HEIs, recruitment and promotion emphasiseresearch potential and although this is understandable (when research income is oneof the areas of potential growth) it does not necessarily assist in the development ofCVE. HEIs need to develop sufficient and suitable policies to provide long-termincentives for staff to become professionally committed to CVE. So individuals ’CVE potential may be considered as a criterion in recruitment and, beyond that,CVE development and teaching should be recognised in promotions up the aca-demic scale. At the least, an individual ’ s CVE activity should be accepted as part oftheir general teaching.

Second, explicit financial benefits should be considered for generating CVEactivity. These may include direct payment to individuals or retained revenueallocations to departments. One way of doing this is through `profit’ sharingschemes, notably for overseas work where it is often difficult to distinguish betweenprivate consultancy and employment-related activity. Where the marginal cost ofCVE activity is lower, university top-slicing should reflect this. This is an area whereHEIs need to review their policies to assure explicit rewards for CVE work.

Third, CVE development often requires supportive, initial investment from cen-tral management. The HEFCE development funding has, therefore, played a crucialrole in providing support for individuals and departments to develop new or extendexisting CVE activity. But internal funds may support new developments, encourageinnovation and facilitate research and development bids on CVE. In order for fundsto be allocated toward new markets, there needs to be a start-up, financial commit-ment by the HEI. This commitment would indicate HEIs’ appreciation thatHEFCE development funding is essentially `one-off’ and sustained CVE cannot bereliant on spasmodic, exogenous pump-priming.

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Successful Management

These criteria for articulating successful management of CVE across the twodomains are not exhaustive and their fulfilment in totality is not necessary for CVEto flourish. They represent a guide within which current achievements may bemeasured. Moreover, these criteria flow from the supply resources HEIs have and soare useful for understanding `how the institution manages what it has to offer’ . Inturn, such management occurs within an organisational environment and context;below we model organisational forms which capture this.

Organisational Frameworks for CVE

CVE in HEIs has been the subject of inquiry and comment in a number of reports(UACE, 1992a, 1992b; PICKUP, 1993a, 1993b) and we build on this work in thelight of policy drivers outlined above. Brennan (1997) summarises CVE provisionthrough four principal `models’ of organisation. These models have CVE delivered:(A) centrally by a `unit’ , which promotes courses on a commercial basis, with orwithout expertise `bought in’ from subject departments; (B) by a range of subjectdepartments, with a number of central functions (such as development, monitoring,or promotion) in a unit; (C) entirely devolved to departmental level, but with strongcentral support; and (D) devolved to departments, with little or no central support,coordination or monitoring.

While these are abstractions of existing forms of organisation Ð and ones which wehave encountered in our own enquiry Ð they may not be entirely appropriate if CVEis likely to be part of the core mission of most HEIs. For example, model A canclearly be a successful part of an HEI but, as Brennan observes, such units may`become relatively detached from the rest of the organisation’ and, by implication,less appropriate for an institution committed to lifelong learning. He also recognisesthat HEIs organised according to model D can be successful. Noted as t̀he mostobviously deficient model of organisation’ for promoting CVE, this does not implysmall-scale CVE: HEIs `may have strong pockets of provision without a centralsupport framework’ and these pockets might embody substantial expertise. Alterna-tive organisational forms may compensate for the absence of a CVE unit.

At least two issues and one question are raised by this observation. First, theempirical recognition that CVE may be successful where its organisational form doesnot predict success must lead to some caution about the general applicability of themodels as a guide to institutional practice. Second, we must be cautious in distin-guishing the l̀anguage of CVE’ in an institution from its practice. Some HEIs maydo a lot of CVE but not describe it as such, and it would clearly be inappropriateto offer a critical account of organisation and provision in HEIs which may not useCVE as a descriptor of activity. Moreover, might there be aspects of the detailedorganisation of CVE in these `successful’ model D institutions which can assist usin understanding and defining good practice?

These issues and questions lead us to suggest that organisational forms are

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FIG. 1. Ideal types of organisational form for CVE.

important, being `the organisation within which the institution manages what it hasto offer’ . Four organisational forms are outlined below (see Mackay et al., 1995).

Organisational Forms

If CVE is well supported within an HEI, we would expect strong institutionalleadership, an administration which has systems for responding to non-standardactivity, and client-responsive external relations. But if CVE is to develop and besustained, there must be an adequate reward or incentive system to encourageactivity. Thus, we would expect CVE to be stronger in those institutions wherefinancial and non-financial incentives are organised to support such activity. InFigure 1 we present these two key principles as dimensions and identify four idealtypes of organisational form. These ideal types therefore build on the evaluativecriteria outlined in the section above.

First, the ènabling’ institution is high both on rewards and incentives for thoseindividuals and departments who engage in CVE and high on the extent ofinstitutional support for what is traditionally a non-standard form of provision. ACVE ùnit’ need not be presumed: in an HEI where CVE is already well established,a decentralised system of management relying on incentives, supported by a cus-tomer-responsive central administration, may not require a specialist ùnit’ . Relianceon institutional guidance through processes of strategic planning may be sufficientÐmuch as some HEIs support mainstream teaching and research. For those HEIsseeking to make CVE part of their core mission, this may be an incentive andorganisational structure to which they might aspire.

Second, in the èntrepreneurial’ institution, there will be an emphasis on rewardsand incentives for individuals and departments, although these may be generalised

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in their application and not geared specifically to CVE. This could occur in HEIswith highly devolved management systems which allow local èntrepreneurs’ toengage in income generation activity and retain revenue earned. In such HEIs, theculture will be neutral about CVE development and it will not be prominent instrategic planning; `champions’ may be needed (perhaps even having to strugglewith administrative systems poorly equipped to deal with non-standard provision).It can lead, however, to Brennan’ s model D organisations which are significantproviders of CVE Ð often in niche marketsÐ but where there is no specific centralsupport and where the activity may not even be described as CVE.

Third, `structured’ organisation of CVE emphasises high institutional support butwith limited incentives for individuals and departments. In these cases, institutionalleaders may have a high declared commitment to CVE and a flexible centraladministration. Such institutional infrastructure is relied on with little attention torewards and incentives. This approach can coexist with strong central ùnits’ or evendevolved systems (Brennan’s models B and C) but with traditional models ofreward, so that departments are subject to a high top-slice for overheads orindividuals discover that `traditional’ research and teaching remain the necessaryconditions for career advancement.

Finally, in the àutonomous’ model, reliance is exclusively on CVE `champions’ .In these HEIs, central support is not geared to non-standard provision and is notsympathetic to its needs, and t̀raditional’ norms of research and teaching are the keyto career advancement. It may not be too implausible to suggest that in some HEIsthe provision of continuing education in the recent past may have been on this basis.

As Brennan does, we recognise that these ideal types are abstractions which tosimplify complex information. They serve, nonetheless, as a frame within which wecan place the criteria which HEIs need to consider in designing an organisationalframework which not only provides institutional support for CVE but also givesincentives for individuals . Moreover, it illustrates how special funding (such asHEFCE’s development funding) need not be a critical factor leading to significantCVE activity and that success is not dependent on clear institutional commitment(as is evidenced in our case studies; Belfield et al., 1998, Ch. 9). Development acrossan institution does need a broader-based commitment, so that HEIs can adopt amore inclusive strategy. It will also assist in the development of networks of peoplecommitted to CVE, through which CVE may in turn become sustainable in future.Critically, this sustainability depends on the economic benefits of CVE, as thesebecome the necessary incentives and rewards. It is to the identification of thesebenefits that we now turn.

Assessing Performance

We have identified above a supply model of CVE in HE, with three components:available resources, managerial practices and organisational forms. However, itneeds to be established that resources are being used efficiently, particularly for sucha wide range of newly developed activities. The main effect of CVE should bethrough improved skills levels, reductions in unemployment, improved productivity,

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higher earnings and higher profits (see Elias, 1995; Greenhalgh & Mavromatas,1995; Blundell et al., 1996). These then motivate individuals and firms to contractfor CVE and so provide the rewards for staff. The HE industry is growing(DEETYA, 1997; Howells et al., 1998) but it is also becoming more competitive,with mega, virtual and corporate universities (Dearing, 1998; Sperling, 1998). Thereare both incentives to develop new markets and pressures from other providers.

Yet critical to any autonomous enterprise is an ability to evaluate its ownperformance in all its `product markets’ both in the general and the particular: itremains to be established that a given technology transfer, for example, is asustainable cost-recovery endeavour from the perspective of the individual HEI.Towards establishing this, we draw on three types of economic analysis Ð internalefficiency measures; investment appraisal or external efficiency; and, generally,business strategies.

Internal Efficiency Measures

Cost-effectiveness analysis, cost-benefit analysis or value-for-money studies rep-resent internal efficiency measures of CVE and involve a comparison between costsand outcomes. As well as accountability gains, tracking cost flows should improveunderstanding of what resources are required and how substitutable human andphysical resources are. These information gains are particularly important whenHEIs are expanding their services in many diverse (and perhaps not equally cost-ef-fective) areas and outcomes may differ significantly. HEIs should ensure that thegains across different modes of CVE are maximised and cost-effectiveness achieved.

Although broadly recognised that evaluation of internal efficiency is important, inpractice it is rarely undertaken in a formal sense by HEIs. As a result, economicanalysis is infrequently fed back, except in a very informal manner, into thedecision-making and resource allocation processes. We offer some evidence aboutrevenues and costs here.

Table 1 presents data as reported by 32 HEIs (in their monitoring statements toHEFCE) for over 74 CVE courses between the years 1995± 97. A variety of costsmeasures are given, reflecting the different reporting conventions across HEIs.Column 1 gives the ratio of investment income from the development funding to thenumber of full-time equivalent students (FTEs) generated, i.e. the average amountspent to secure an FTE. This figure of £2,100 (inter-quartile range: £600± £2,800)compares approximately with the undergraduate FTE cost figures used by HEFCEof £1,900± £3,600 (1996± 97 figures). Fee income per FTE, column 2, is signifi-cantly higher than the cost and compares favourably with the standard HEFCE unitof resource. There is certainly no evidence here that CVE provision could not be atleast cost-recoverable for HEIs; indeed, activity supported by the DevelopmentFunding Initiative might be expected to be profitable. Two other measures of CVErevenues are also given: fee income per hour and per enrolee (both these ratios havevery wide spreads and a high number of outlier values). These measures may beuseful for the cost management of courses, as well as indicate the average priceenrolees will bear [4].

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TABLE I. Costs ratios (£)

Development fundinginvestment Fee income Fee income Fee incomeper FTE per FTE per hour per student

Upper quartile 2800 4600 17 480Average 2100 4140 16 365Lower quartile 600 1600 6 110n 33 47 22 74

These data are drawn from a range of HEIs, yet within most HEIs, internalefficiency was measured to only a very limited extent. It is worth outlining thereasons for this.

First, CVE is characterised by its diversity and change: across academic yearsmany courses `disappear’ or mutate (perhaps changing their level of assessment).There is little to be gained from feeding ex post cost-effectiveness analysis into aplanning cycle of improvement where the courses are not repeated.

Second, it was argued that there is no comparator group against which to measureCVE activity. Perhaps the internal efficiency of CVE courses and mainstreamundergraduate or postgraduate provision may be compared. However, the differ-ences in the modes of instruction, the demands of the students and group sizesmilitate against a straightforward comparison. Non-standardised informationexchange and technology transfer is even harder to compare.

Third, the cost function itself is hard to model. New courses may be moreexpensive to run in the short run as they require new administration and accesssystems. With high fixed costs and low variable costs, it is not easy to infer optimalinternal efficiency. Moreover, if there is substantial spare capacity within HE forprovision which is flexible to organise, the marginal costs of CVE may also be low.

Fourth, it should be recognised that benefits from training are particularly difficultto identify. On the positive side, a high skills effect may result for those currentlyemployed (and so can directly apply their skills); are already interested in education;and are in occupations of influence (Blundell et al., 1996). As much CVE is for thehighly skilled, these positive effects may indeed occur. Conversely, training pro-grammes usually have the greatest impact on at-risk groups in the labour market (theunemployed, the young, ethnic minorities or the low-skilled); CVE is rarely targetedto these groups. Also, if CVE is being subsidised, displacement effects are alsopossible: firms may be accepting subsidies for training which would have occurredanyway or subsidised trainees may increase their training at the expense of otherworkers (Dolton, 1993; Makepeace, 1996). The danger of this is particularly highwhen HE collaborates with other agencies.

Fifth, internal efficiency is about generating outcomes from inputs, and oneargument is that individual elements of CVE contribute to outcomes which are`greater than the sum of their parts’ . Put simply, it is hard to capture synergies fromvarious diverse activitiesÐ from conferences to staff placement Ð in a cost-effective-

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ness or cost± benefit ratio. As well, improved links between agencies may reducetransactions and information costs, with gains for both the private and public sector(cf. Benson, 1997). This diffused synergy effect improves local economic develop-ment, enhances the built environment and cultivates social and community develop-ment (CURDS, 1994, p. 7). From the micro-perspective of the CVE manager,however, these claims are neither easily testable nor readily evidence based. It maybe that what can be measured accurately, which is typically the costs data, sub-merges the hard-to-quantify, typically the outcomes data. Alternatively, a nihilisticposition may develop, with little evaluation but government subsidy which reducesthe need to justify resource management.

Nevertheless, HEIs may find it useful to devise standardised measures of internalefficiency for CVE and, certainly, HEIs’ accounting systems do allow for an ex post

assessment of value for money. Yet, this was not undertaken in the majority ofinstitutions we visited (as noted in an earlier study, Chivers & Nixon, 1995). In atypical HEI, then, despite several years of PICKUP funding and over two years ofCVE development funding, it had not been concluded whether or not particularCVE activities had been cost-effective in any formal, comparable sense. Moreover,there was little commitment to devising a set of stylised facts and practical rules toameliorate this incomparability problem. Notwithstanding the difficulties of enu-meration, these stylised facts would assist in future assessments of value for moneyin provision and contribute to better allocation of resources.

Investment Appraisal

As development funding has been utilised as an initial investment in CVE togenerate wider economic activity in the regions, accurate investment appraisal isimportant. McNicoll et al. (1997) argue that HE has a high impact factor on thelocal economy, with few imported inputs and a sizeable proportion of exportincome, and, being labour intensive, it has high direct, indirect and inducedemployment multiplier effects (see also CURDS, 1994, Appendix II). Such ap-praisal may complement assessments of cost effectiveness. Yet it too is problematicin practice.

First, new activities are often more risky: demand for an educational service maynot materialise at a reasonable price, particularly if the market aimed at is a nicheone. For education, this is most easily identified by low enrolments and this was theexperience of a number of CVE activities (particularly in attempts to penetrate theSME market). The uncertainty of demand, partly because of economic conditions(demand for training is cyclical) and high price elasticities, means that rate of returnestimates are less informative. Often courses are either very successful or veryunsuccessful and, ex post, the rate of return `stares one in the face’ . Nevertheless, itis important to understand why this is the case, and investment appraisal wouldassist.

Second, the unique nature of these investments militated against a system ofinvestment appraisal: the success of activities depended crucially on specific individ-

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uals (for good or bad) or on particular funding initiatives. As these elements aresui generis, formal evaluation is less useful, particularly for short courses.

Third, a rate of return for an investment depends on assumptions about thedepreciation of fixed assets and apportionment of overheads. As CVE is a marginalactivity, such assumptions are sometimes borrowed from mainstream provision andother times a much reduced or zero top-slice percentage is applied. The accuracy ofthese figures to the actual cost remains undetermined.

Fourth, although there are likely to be economies of scale in many forms ofeducation provision Ð a curriculum does not need to be recreated for each year’ sstudent group, for example Ð there may also be capacity constraints. It is importantfor HEIs to estimate these as they limit the expansion of CVE and have implicationsfor resource allocation. Currently, there may be surplus capacity (based on thenumber of requests for funds within institutions), although many departmentswithin HEIs remain uninvestigated. Capacity constraints may exist on staff (withCVE not appropriate to their skills); on equipment or infrastructure (particularly ifthis is specialised); and on pedagogy (full lecture halls). Not much is known abouteconomies of scale. Some courses have low fixed costs but high variable costs andso total costs may rise rapidly with increases in student numbers (Rumble, 1997,p. 119). Alternatively, some courses which have high fixed costs and increasingstudent numbers will create fewer constraints and reduce average cost (Wagner,1982). It is this latter cost function which, we surmise, most HEIs face, althoughevidence was again thin.

Finally, exchanges of information are expected to generate gains in terms oflearning about the labour market, identification of potential client groups andgreater understanding of the training needs of target groups. Inevitably, successfulrelationships between HEIs and external agencies tend to be organic, emerging anddeveloping through mutual opportunism and a common strategic vision (CURDS,1994, p. 9). However, a caveat must be made: these linkages are diverse, multivari-ous and with uncertain outcomes over the long term. The long-term economicimpact is thus hard to quantify and HEIs neither robustly evaluated the optimalamount of information exchange nor directly related it forward to future enrolments.

Business Strategies

As well as applying formal economic analysis to CVE activity, it is also informativeto consider HEIs’ business strategies. Indirectly, these may yield insights into theinternal efficiency of HEIs.

First, pricing CVE is particularly important given the relative inexperience ofHEIs in selling educational services, the heterogeneity of the `product’ and themotivations of both suppliers and demanders. As well, the price of non-formaleducation is more easily and so more frequently assessed by enrolees than itseducational content (Coopers & Lybrand, 1990, p. 151). However, HEIs in themain used a simple cost-plus pricing method for their courses: market pricing wasnot the rule with cost-recovery the default practice (pricing was sometimes seen asa way in which institutions signalled the quality of their provision). Some providers

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expressed unwillingness to become crude profit-maximisers; some believed that HEshould not be a profit-making enterprise and that a form of social welfare should beoptimised, perhaps congruent with broader public sector goals. For others, cost-recovery was a good test of whether or not the market would sustain such a course.The phrase `what the market will bear’ was often a shorthand for a pricing policy toensure sufficient enrolments, rather than any attempt to extract surpluses. Moreattention also needs to be paid to the competition. However, the incomparability ofcourses and their low substitutability limited the application of such pricing models.In some HEIs a bolder pricing strategy was used for sunrise courses. In order tobuild up demand the course would be run at less than cost-recovery with theintention that the course become self-sustaining after a couple of years. There islimited information on the success of this approach.

Second, there was only limited evidence of price discrimination or productdifferentiation for different markets. It is possible to group the client base for CVEinto public sector employees, individuals, SMEs, and large private sector companies.Each group will express different preferences for courses and the price charged toeach may reflect this. Public sector employees, for instance, may make no monetarytransaction but merely an exchange of credits between government agencies; thesame is often the case for individuals who may receive training rebates or subsidies(from TECs) and who are also likely to face borrowing constraints. SMEs oftenclaim limited training budgets and express demand for a more basic form of CVE.In contrast, private sector companies may have much larger training budgets and,when comparing HEI provision with other private sector provision, may be willingto pay more for CVE. There remain doubts that HEIs properly tap the morelucrative private sector, perhaps underselling their resources.

Third, forecasting and projections of activity were very hard to make. The growthof CVE was estimated using very broad target ranges and forecasting was often anextrapolation of past achievements. Break-even points for investments also need tobe imposed more frequently.

At present, the efficacy of investment appraisal varies across HEIs, with somefund managers undertaking detailed exchanges with departments to ensure accuratecostings. Some HEIs reallocate funds away from underperforming initiatives; othersinvest for cultural change. Elsewhere, the arbitrary capping of bids or reduction ofbids suggested that cost accountability is inadequate. Yet the general absence ofinvestment appraisal means that some specific initiatives will fail: under-enrolment,misjudgement of client needs and collapsed partnerships were all encountered in ourstudy.

Monitoring and Evaluation

The evidence on internal and external efficiency highlight the difficulties HEIs havein making assessments of the economic consequences of their activity. There is,nonetheless, a need for an appropriate evaluation framework by which CVE pro-vision can be assessed.

Our supply model is apposite here. HEIs need to ensure that their resources are

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valued appropriately: costs data can provide greater information on resource utilis-ation. As well, managers need to consider the marginal productivity of institutionalleadership or client infrastructure, with a concern for different resource usage andredistribution or cross-subsidy. These practices need to be set within supportive butincentive-driven organisational structures to improve cost-effectiveness. HEIs may`nest’ responsibility for CVE within cost centres with tight accountability mecha-nisms: this would be a rigid, even if narrow, test of the cost-effectiveness of CVE.

HE, particularly when in competition with business, cannot resist thinking aboutresources, for what purposes they are being used and whether the outcomesachieved are consistent with those intended. If the aim is to develop a cross-institu-tional approach, then wider mission-led leadership and development is necessary;but a readiness to be critical in appraising efficiency still remains. Robust economicanalysis is a necessary basis for future development.

Strategies for Development of CVE

If existing experience is to provide some of the basis for future policy, however, itneeds to be placed in the emergent policy context. We argued that there is a positiveresonance between policy and CVE in terms of: (i) the lifelong nature of education;(ii) the role of education in the local, regional and national economy; (iii) employerviews that HE research and students’ learning needs to be closer to the world ofwork; (iv) the place of HE in networking strategies supporting economic develop-ment; (v) the potential of IT in alternative modes of pedagogy; and (vi) the need forgreater cost sharing in provision. If CVE is to be managed so as to strengthen thelink between it and national policy for higher education, several strands of thinkingneed to inform policy development. A broad conception of CVE needs to beencouraged, with affinity to lifelong learning, and one which protects individualaccess to CVE. Partnerships must also be encouraged, however. More importantly,we argue that our `supply model’ should be considered: resources for CVE need tobe marshalled and managed within an effective organisational setting and achieve-ments need to be assessed using efficiency criteria.

Applying this broader concept of CVE, the question asked about the role of theHEI was: what are the needs of our clients and how can the capacity of the HEI beharnessed to meet those needs? It is an approach which leads to an integratedapproach to responding to client needs, where the research base of an HEI is asrelevant in responding to needs as its capacity to offer courses. This will broaden thebase of CVE within an institution, making its activity less marginal and morerelevant to the everyday work of a greater number of academic staff. Certainly, thebest CVE provision went well beyond the provision of courses and sought tointegrate an HEI’ s capacity to meet the needs of the local economy.

Lifelong learning is being placed central to the future role of HE and almost bydefinition this should substantiate CVE. Within that, it is the roles of individuals aseconomic agents that need recognition, all the more in an economy where SMEs arekey agencies of growth and innovation. Our inquiry identifies SMEs as key clientsof CVE but also recognises the difficulties of supplying the CVE which SMEs need.

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Some of the most effective CVE providers in our inquiry see SMEs as their principaltarget but believe that their individual employees are the route by which they willparticipate in CVE for they are better at recognising their CVE requirements. If so,CVE provision must retain the focus on individuals-as-clients .

Complementary to this, partnerships between HEIs and others can ensure thatstudents’ learning needs are close to the world of work. Cost sharing will requirenegotiations between prospective partners so that `deals’ can be struck. While thereare opportunities for HEIs to `go it alone’ , these partnerships do signal a significantway forward whereby HEI developments can be integrated more securely with theneeds of clients.

It is within this context that HEIs must shape their own strategies so as to reap therewards of a growing but increasingly competitive market. We recognise that this isimportant, but also that it is a challenge. Our description of CVE makes clear theexpansive scale of activity in this field and the wealth of resources on which HEIscan draw. Appreciating this is the first step. Next is the need to effectively managesuch resources, and we identify criteria against which such management can beevaluated. Concomitant with this is the need for an appropriate organisationalstructure to support development and an incentive structure which rewards success.In the terms of our typology, HEIs should be moving from being structured orautonomous organisations to being ones which are enabling or entrepreneurial. IfHEIs are satisfied with the more limited objective of developing CVE only in fertileparts of its institution, they will still need to provide appropriate incentive systemsto reward success. It would appear from our evidence and within the policy contextdetailed above, that most HEIs will need to consider the option of an institution-wide response. Few HEIs are in a position to insulate themselves from thesechanges; to do so will require considerable strength in research performance andmaintained flows of traditional undergraduate students, perhaps boosted by top-upfees.

The final step is to critically reflect on the economic impact of CVE; beyondaccountability, in order for HEIs to persuade clients and for project champions topersuade senior staff, the obvious challenge is to collect data that can provide apersuasive account of the economic consequences of CVE activity.

The future direction of CVE appears to be toward activity which is broad in scopeand which relates to an institutional strategy with an integrated response to theneeds of clients in the wider economy. In this way, HEIs can better meet theexpectations and requirements of lifelong learning. The success of such activity foreach HEI will depend on how resources are managed and organised and achieve-ment assessed in the post-Dearing environment.

Acknowledgements

The research project on which this article is based was funded by the HigherEducation Funding Council for England. We are grateful to Paul Hubbard, KateNickols and the Steering Group for their critical comments. We also thank two

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colleagues here at the School of Education for their assistance: Drs Alison Bullockand Sue Butterfield. The views within the article are our own.

Notes

[1] In funding proposals submitted to HEFCE, each institution’ s proposal set out its plans andstrategies for CVE, in the light of existing provision. The funding proposals give a concisebut comprehensive description of CVE activity within these HEIs and indicate the inten-tions of CVE providers and how CVE is conceived of within HEIs. Institutions whichreceived development funding had to submit an annual monitoring statement to HEFCE,which had guidelines but was generally free-format. These statements also allow us to derivea map of the types of CVE activity which are being undertaken with development funding.

[2] The EHEI, begun in 1987, funded HEIs to `develop competencies and aptitudes relevantto enterprise’ . By 1991, Enterprise Schemes existed in 50 HEIs, with an expectation thatthe culture of enterprise informs courses for all students. A variety of approaches wereapplied, such as work placements and student-assessed learning (Ainley, 1990; Wright,1990; Bennett et al., 1994). By comparison, PICKUP was for Continuing ProfessionalDevelopment (CPD) short courses. It was mainly provided by the former PCFC-fundedHEIs or technology-based former UFC-funded HEIs and had a relatively low profile(Ainley, 1990), perhaps because of its resourcing level (Bennett et al., 1994). Its emphasiswas on provision, rather than development or strategic culture change.

[3] Alternatively, the range of CVE activity can be estimated from the expenditure codes usedby HEIs for allocating their development funding. New course activity was the primaryexpenditure (around 65± 85% of total funding) but a sizeable number of HEIs (aroundone-sixth) allocated less than half their funding to this. The next most significant activitywas collaboration and then administration and infrastructure for managing CVE invest-ments (expenditure on this varied, but was typically less than 15%). The remaining fundingwas allocated to marketing; research and technology transfer; and other activities (for agiven HEI, typically only one of these represented a sizeable activity). Again, the resultingpicture from such analysis is one of significant heterogeneity in CVE activity.

[4] Koshal and Koshal (1999, p. 276) and Hashimoto and Cohn (1997) estimate that, for theUS and Japan, the marginal cost of graduate education is significantly higher than forundergraduate education.

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Continuing Vocational Education in UK Higher Education Institutions: Organisation and Management

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