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FE Inc.—business orientation in furthereducation and the introduction ofhuman resource managementGeoffrey Elliott a & Valerie Hall aa School of Education , University of Bristol , 35 Berkeley Square,Bristol BS8 1JA, UKPublished online: 10 Jul 2006.

To cite this article: Geoffrey Elliott & Valerie Hall (1994) FE Inc.—business orientation in furthereducation and the introduction of human resource management, School Organisation: FormerlySchool Organisation, 14:1, 3-10, DOI: 10.1080/0260136940140101

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School Organisation, Vol. 14, No. 1, 1994 3

FE Inc.—business orientation infurther education and theintroduction of human resourcemanagementGEOFFREY ELLIOTT & VALERIE HALLSchool of Education, University of Bristol, 35 Berkeley Square, Bristol BS8 1JA, UK

ABSTRACT A major consequence of the increasing business orientation of the British furthereducation (FE) system has been the introduction of human resource management (HRM)strategies. HRM is a concept formerly used almost exclusively in a business context. FE, of alleducational sectors, has always been closely tied in, strategically and operationally, to the needsof business and industry. Incorporation can be seen both as a consequence and a developmentof this increasingly close relationship, and it is argued that whilst HRM strategies help collegemanagers meet the system demands of incorporation, they at the same time underline and helpto bring about the marginalisation of pedagogic orientations at both strategic and operationallevels.

A major consequence of the increasing business orientation of the British furthereducation (FE) system has been the introduction of human resource management(HRM) strategies. There is a continuing debate about the extent to which HRMdiffers from personnel management, both normatively and in its practices. For thepurposes of this discussion we take it to describe an approach that integrates humanresources policies with strategic business plans, in order to enhance competitiveadvantage. 'Human resource policies' and 'strategic business plans' are both rela-tively new concepts in education, including FE, in spite of the sector having beenclosely tied in, strategically and operationally, to the needs of business and industry.It is argued in this paper that FE is increasingly being forced by external pressuresfrom a service to a business orientation, which is having an impact both uponmanagement strategies and styles and a potential impact on educational outcomes.Incorporation can be seen both as a consequence and a development of this trend,and it is suggested that one significant response by college managers to the newlyincorporated status of their colleges has been the introduction of HRM strategies.While these may help them meet the system demands of incorporation, they mayalso help to bring about the marginalisation of educational values at both strategicand operational levels. Business values come to rule both managers and teachingstaff alike, with managers more willing adopters of the new ethic than lecturers.

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4 G. Elliott & V. Hall

Unlike other public sectors which Storey (1992) describes as less receptive tostrategic HRM, the incorporated FE sector appears easily seduced by the controlover starring that its 'hard' variant represents. The distinction that Storey (1987)draws between 'hard' and 'soft' variants of HRM is particularly pertinent toeducation. Government policies which force colleges and schools to adopt quantitat-ive, calculative approaches to resource management (what Storey would describe asthe 'hard' variant) fit uneasily into educational cultures that have traditionally valuedhuman beings as people, not assets and prefer "communication, motivation andleadership" (Storey's 'soft' variant). Our interest in this paper is in the way in whichFE is providing a fertile seed bed for this 'hard' variant of HRM. imported frombusiness and industry and the danger that represents to the educational purpose thatis at the heart of its activity.

The apparent ease with which FE has adopted a business orientation can beexplained largely by the change in funding sources that Drucker (1989) argues arethe key determinant of the differing orientations of public services and businesses.Public services are typically paid out of a budget allocation, whereas businesses arepaid for satisfying the customer. He argues that this distinguishing characteristicaccounts for the underperformance of public services, which are thus characterisedas having a lack of internal cost controls, monopoly powers, lack of attention to costsavings, confusion of goals, inattention to performance and results. He concludes:"The basic problem of the service institution is that it is paid for promises ratherthan for performance. It is paid out of a budget rather than for (and out of) results"(1989, p. 31).

It is a conclusion that the present Government appears also to endorse throughthe proposals of the Further Education Funding Council for England (FEFCE) foroutcome funding. This ensures that colleges will not be resourced that do notproduce qualifying students within the National Council for VocationalQualifications (NCVQ) framework. The incorporation of all colleges in the sectorhas made them private limited companies, liable for their debts, and subject to thesame market forces and legal obligation to cease to trade, once insolvent, as all othercompanies. Squire (1989) has shown that "the marketing of education in theindependent and further education sectors is often very clearly analogous to non-educational modes" (1989, p. 13). There will be no local authority safety net aspreviously, and certainly no monopoly powers, as other agencies and industry itselftake on the major part of NCVQ assessment and recommendation for awards.

Thus as FE Inc. becomes a reality, it potentially loses not only many of thecharacteristics of service institutions specified by Drucker but also the educationalvalues and professional status that informed its activities as an educational provider.Its traditional responsiveness to its client groups is no longer balanced by localauthority interests and controls, through representation on governing bodies, FEofficers appointed by local authorities and, crucially, responsibility for allocation offunding from central government. Now, by centralising the basis of funding of theFE sector to the new funding council, government is assured of keeping a tight reinon the nature and extent of provision. At the same time it has created theopportunity to exercise direct influence on sector-wide working conditions, as was

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Business Orientation in Further Education 5

the case in the polytechnic sector when the Polytechnic and Colleges FundingCouncil (PCFC) held back 1% of funding until new contracts had been issued toacademic staff. At the time of writing the FEFCE is expected to announce a similarclawback of funding from any college which does not implement the new CollegeEmployers' Forum contracts.

These radical changes in the resourcing and core activities of FE signal nothingshort of a metamorphosis of the sector itself, from a service to a business orientation.It is the logical consequence of policy shifts developed during the second part of the1980s, "all of which were pushing public sector FE to adopt the ideology of themarket place" (Cook & Crook, 1991, p. 162). In common with other public sectorinstitutions, FE is now engaged on a large scale with satisfying externally generatedperformance indicators, setting up quality assurance systems, and strategic planningto meet centrally determined and funded growth targets.

Adopting a strategic HRM approach to staffing appears a logical consequenceof all these changes. Additionally, unlike schools, there have been sufficient similar-ities between FE colleges and businesses for the transfer of structures, processes,systems and job descriptions from business to FE to have taken place at anastonishingly fast rate. The problem for those managing the service is the potentialclash between the values underpinning these practices and the orientation of thoseresponsible for meeting the educational and vocational needs of FE's main clientgroup.

FE traditionally has shown little regard for one of its major human resources:part-time staff. As it moves into implementing human resource strategies thatrecognise people as a key resource to be manipulated for financial purposes,part-timers are doomed to suffer still more. The suspending of higher graded workpending further negotiations between unions and employers, which previouslyattracted a higher hourly rate of pay, has had the effect of cutting the pay of themajority of part-time FE lecturers. Now part-time hourly paid teaching staff in mostcolleges are remunerated on a common hourly rate, which is broadly equivalent tothe former lowest Grade V rate. Part-time staff are typically on 3 weeks' notice.Their courses may not run at all if enrolment targets (which are rapidly gettinghigher) are not met, or if class sizes fall during a session. They are not paid forcourse or department meetings; they usually do not qualify for staff development;they are not paid for holidays; they are the first to be targeted in a budget crisis, sincea common resource strategy in such a situation is to withdraw unilaterally part-timehours from courses.

Yet hourly paid part-time teaching staff are a crucial human resource for manycolleges. Some 70% or more of the staffing of some specialist courses can be byhourly paid lecturers. In many colleges, where incorporation has brought about areduction in the proportion of budget allocated to full-time staffing, the manage-ment response has been to increase the proportion of work undertaken by part-timestaff. There are fewer on-costs, and the hourly rate is low in comparison with salariespaid to full-time lecturers.

The conditions of service of full-time staff have also been gradually eroded, andare under close examination currently in the light of new proposed contracts.

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6 G. Elliott & V. Hall

Full-time staff no longer enjoy security of tenure. Many appointments now are madefor a fixed term of 1-5 years. The new contracts, replacing those in the Silver Book(National Association of Teachers in Further and Higher Education [NATFHE],1991) are in the pipeline for 1993, and will include new working conditions,individual and variable contracts with the employer, and performance-related pay(Stubbs, 1992). Heads of departments and divisional directors have already beenreassigned to a common management spine, with reduced holiday entitlement,increased management expectations about 'normal' working hours, and a level ofremuneration no longer enhanced by increases in the numbers of students in theirdepartment/division.

What we can see happening is the outcome of a reinterpretation of the value ofstaff as 'resourceful humans' (Bottery, 1992, p. 6) within a business ethic which seesthem as economic assets or liabilities. It is a response to the financial pressures whichare aggregating as a result of the transformation to corporate institutions and whichare bringing about a rapid and focused market awareness amongst colleges. In thelead up to incorporation, smaller colleges were being advised by the managementconsultants Coopers and Lybrand, retained by the Department for Education, thattheir survival was in jeopardy. There have been in consequence a spate of amalgama-tions and takeovers involving small colleges. Long-term strategic planning has givenway, in an environment which is heterogeneous and shifting, to "temporary solu-tions and only intermediate outcomes" (Parkes, 1986). The use of outsidemanagement consultants in FE, to assess its needs and its preparedness for incorpo-ration, as well as within individual colleges has proliferated (Times Higher EducationSupplement, 1993).

There has been an acceleration in the appointment of senior personnel from thebusiness sector to the senior management teams of colleges, leading to a disaggrega-tion of management functions. These include senior accountants as financedirectors, controlling a unit employing accountants and other financially qualifiedstaff, e.g. payroll, commitment accounting, invoice; premises managers who maythemselves have surveying/architectural qualifications, or have experience in enlist-ing external consultants; personnel managers, many of whom have been recruitedfrom the business sector; marketing managers, tasked with leading sometimes highprofile marketing units. Larger colleges have additionally employed managementinformation services managers, providing the statistical data on which fundingdepends. Advertisements in the education press for appointments at principal andvice-principal level are increasingly specifying a generic management qualificationsuch as the Master of Business Administration (MBA), and the Staff Collegerecently launched its own such qualification. Recently, advertisements for theprincipal of two of the country's largest FE colleges specified that the successfulcandidates would not necessarily have an educational or FE background.

Clearly the management team of the incorporated college is going to be verydifferent in character to that which preceded it. Those who have progressed to seniormanagement via departmental management will be joined by staff qualified inaccountancy, personnel, computing and marketing. It is likely that those withgeneric management skills (some perhaps drawn from local authorities) will join

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Business Orientation in Further Education 7

such teams. Whilst salaries in the sector do not compare favourably with industry,favourable comparisons can be drawn in terms of other conditions of service andgeographical mobility.

Thus is the rift between managers and managed deepened and the professionalstatus and unique characteristics of teaching staff unrecognised. The increasinglybusiness orientations of the managers clash with the 'pedagogic' orientations ofteaching staff, diverse though these are. It has been noted above that many part-timestaff can be regarded as specialists in their field of expertise, rather than in pedagogy.Some full-time teaching staff may be oriented towards a tradition of liberal educa-tional values in FE, dominant up to the mid-1980s, which attached emphasis to thecollege as an institution responsive to its clients (Theodossin, 1989), committed tocurriculum entitlement, equal opportunities, access, continuing education, creativityand education for special needs (Further Education Unit [FEU], 1989). Otherfull-time staff may be oriented towards a subject specialism where collegiality can bemaintained through shared technical knowledge grounded upon a common subjectdiscipline, reinforced by a strong departmental structure, commitment to curricu-lum development, and links with related industries. Specialist FE institutions like artcolleges and horticultural colleges are likely to contain a large number of subject-oriented staff, since many of them will be practitioners and consultants in their ownfield. Specialist colleges tend to make more use of part-time staff than do general FEcolleges, where what might be termed a 'pedagogic' orientation is likely to be shared,particularly where the cultural attachment to notions of student support, equalopportunities and awareness of students with special needs, are strong. The use ofwhat Noble & Pym (1970) call 'system-relevant' knowledge sustains and legitimisesthe varying attachments of lecturing staff to their area of expertise and sphere ofinstitutional influence. It is against the background of differing work orientations ofboth managers and lecturers that the implementation of strategic HRM in FE needsto be assessed.

What are emerging in the new FE sector are colleges which are in all respectsrunning as businesses in their own right. They resemble holding companies, whichintegrate diverse specialist staff, set internal priorities against external marketrequirements, and engage in state-approved education and training activity.Conceived in this way HRM in its hard variant becomes a significant managementstrategy, since it underpins a view of the labour force as an allocatable resource. Itmatches how senior managers are being encouraged to think about lecturing staffsince 'hard' decisions will be required about 'growth' and 'shrinkage' of vocationalareas, and thus groups of specialist lecturers, within the sector. Government hascentralised vocational educational policy and the funding of FE provision to theTraining and Enterprise Councils (TECs) and the regional bases of the FundingCouncil. Senior college managers will thus need to be able to respond quickly tosignalled changes in policy, and anticipated changes in occupational category alloca-tions between competitor colleges. A strategic approach to human resource planningand development makes it easier to manipulate the allocation of staff to particularvocational areas, and has the potential for changing existing allocations to meetpolicy and funding demands. Comparative staffing levels become a key institutional

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8 G. Elliott & V. Hall

resource. Staff development is likely to be highlighted to greater prominence, butas a means of widening staff competence in order better to meet institutional needs.It is further likely that multiskilling will be privileged in order to maximise 'output'.Retraining and redeploying staff provides one alternative to declaring staffredundant.

Key elements of the personnel function will thus become the broader concernof the management team rather than the single concern of the personnel manager(cp. Storey, 1992, p. 49), since staffing level is the primary financially significantvariable. Through controlling personnel and allocation between units, senior collegemanagers have direct control over a major element of college budgets, typicallybetween 70 and 80% of expenditure. They can thus retain to themselves theflexibility to redirect activity and to control variable costs. Full-time staff whoseduties do not directly support the business plan of the college will be particularlysubject to scrutiny. As colleges are put under external pressure to increase thestaff-student ratio, and the FEFCE drives down the unit of resource per full-timestudent equivalent, so the management grip on the staffing budget will tighten. Staffwhose main activities are indirectly supportive of, rather than visibly central to,vocationally relevant provision are likely to be especially vulnerable. So too are staffdevelopment officers, learning resource unit managers, senior staff with a curriculumoverview, staff whose main teaching is in non-vocational subjects, and part-time staffin all curriculum areas, since their terms and conditions of service do not protectthem from dismissal at short notice. Whole colleges may become vulnerable due tothe necessity of bringing about economies of scale forced by the squeeze in the unitof resource.

A further pressure towards rationalisation of staffing levels is provided bycurrent moves towards the common course systems being set in place by the NCVQframework. Modularisation and standardisation of the vocational curriculum frame-work through National Vocational Qualifications (NVQs) and General NationalVocational Qualifications (GNVQs) has presaged the amalgamation of curriculumareas into larger faculties or schools, thereby increasing the size of units and thusreducing the number of middle managers required to run them. Of course, suchdisplaced staff do retain their salary conditions, but the new conditions of servicewould allow senior managers to increase the teaching load of senior lecturerssubstantially, and it could be argued that there would be no reason not to replacesuch staff who leave with main grade lecturers at the bottom of the scale.

The irony of this model for managing human resources is that it potentiallythreatens the quality of educational provision it is seeking to enhance. Eventhe brand of quality assurance that is being advocated for FE, while stressing'customer' satisfaction, uses quantitative performance indicators as measures ofeffectiveness and efficiency (Elliott, 1993). There is little room in this transform-ation from service to business for dialogue about what constitutes quality learning inFE and the contribution of a 'quality' working environment for staff to achievingquality learning.

This leads us to dispute, where FE is concerned, Storey's claim that there areconstraints to the implementation of HRM in the public sector, which arise from

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Business Orientation in Further Education 9

differences in influence, ethos and structure. His claims may be true for localgovernment and the health service, but it is at best an open question how farincorporated FE colleges any longer fall under the influence of the same kind ofpolitical control that permeates other public sector bodies. The governance ofcolleges is now independent of local education authorities (LEAs) and it is only inthe area of central government policy, mediated through the FEFCE, that collegescan be said to be under direct political control with regard to HRM. There is greatemphasis in incorporated colleges upon marketing and finding new markets for theirproducts. They are required to have formal quality systems in place as a conditionof future FEFCE funding, and as a requirement to deal with the TECs. The fundingmechanism itself (FEFCE, 1993) now tracks individual students through the variousstages of college provision—entry, on-course, exit—underlining the need for collegesto 'sell' their product to the student in relation to each of these stages, and to make'customer satisfaction' a priority of their corporate strategy.

Even the unions in FE do not appear to constitute the barrier to implemen-tation of HRM that Storey identifies in other public sector institutions. There arenow several unions catering for FE lecturers. New individual contracts are likely tobe introduced in the face of union opposition, as they were in the PCFC sector, andas they were for those on the management spine in the FE sector. Colleges areincreasingly using large numbers of part-time staff, the majority of whom are notunion members. In the longer term, the shift from college-based assessment to workplace assessment further undermines the impact of college lecturer unions onworking practices and the working conditions of its members.

This paper has presented a view of FE as a sector becoming infusedwith business values, a managerial orientation, and run by staff increasinglydrawn from the private sector for the specialisms they offer. A strategic approachto managing human resources in the sector looks attractive to those responsiblenot only for delivering the goods (however these are defined) but also for assistingthe cultural transformation from education to business. Senior managers facingup to the independence which incorporation has brought, have been temptedto import business models which promise a rational basis upon which collegescan reset their foundations. Our fear, however, is that while such foundationsmay prove adequate for the survival of colleges as financially viable institutions,they are inadequate for their survival as providers of high quality post-school educational experiences. Staff may be successful in the short term in erectingbarriers to change which protect existing good practice from the threats posedby underresourcing. It is an open question how long such strategies can success-fully last. The danger is an obvious one. Starved of adequate staffing, coursesare reduced to minimum contact time, staff become overworked, overstressedand overtired, conflict between teaching and management staff becomes systemic,morale falls, staff goodwill is withdrawn. Notwithstanding the resilience andcommitment of lecturers within the FE sector, it must be a cause forconcern whether the ambitious National Education and Training Targets can beachieved without some rethinking by senior college managers of the consequences ofimplementing HRM in FE.

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10 G. Elliott & V. Hall

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