Colleges as social enterprises

It is no coincidence that the Department for Business & Skills released their recent College Governance: A Guide (CGG) document at the same time as the release of the consultation on Outcomes Based Success Measures (OBSM), which we wrote about here. Although the consultation only applies to post-19 education, whereas the CGG applies to all ages of Further Education, the two documents are very much two sides of the same coin.

With OBSM, the government signalled its intention to move away from measuring college success by the number of graduates and the level of qualifications. With CGG, they are very much focusing on how colleges should react to their proposals, and how they should be planning for the future.

A key phrase that occurs several times in the CGG document is that of colleges as “social enterprises”. In many ways this defines what the government is looking to colleges to become. For instance, in their description of what colleges are, the report states that:

“FE Colleges are first and foremost social enterprises operating independently at the heart of their community…”

And again:

“…colleges should be seen, and see themselves, as social enterprises: enterprising in the ways that they attract funding from a wide range of sources and interact directly with business, but with social purpose and responsiveness to their communities at the heart of what they do.”

It is clear from this phrase that the government sees the FE sector as vital cog in the local economy, and that they want colleges to see themselves in the same way. In fact, part of the point of CGG seems to be to get colleges to more clearly recognise the unique position they have in their community as hubs of innovation and economic drivers, as the following makes clear:

“As set out in Baroness Sharp’s report A dynamic nucleus: Colleges at the heart of local communities it is expected that colleges sit at the heart of a system of local relationships with employers, local authorities and other parts of the public and private sector from schools to the police; LEPs to voluntary groups.”

So in general terms, a successful college, according to the Government’s criteria, is essentially one that recognises their role as a social enterprise, acting in entrepreneurial and innovative ways to play out this role effectively by both serving and responding to the needs of the local community.

In more specific terms, the criteria used to judge just how well they are performing this function is the same as that in the OBSM consultation, namely:

• Education and training that provides the skills that employers and higher education institutions need and value
• Education and training that provides the knowledge and skills individuals need to: gain employment; change employment; progress in work; and progress to higher levels of education and training
• Training that provides the strategically important skills the nation needs
• Value for money for: businesses; individuals; the state
• Positive community and social outcomes

The theme of “social enterprise” runs strongly through these criteria, and it is also implicit in the sections of the document which speak of accountability. According to CGG, although colleges are accountable to the government, regulatory bodies, funding bodies and the taxpayer, their primary accountability is to those they immediately serve:

“As customer-facing organisation they are primarily accountable to their end-users: learners and employer… As social enterprises they are accountable to their local communities and wider society.”

This is all rather noble sounding, but it begs the question “how exactly are learners, employers, local communities and wider society to hold colleges to account?” The answer given in CGG is as follows:

“In order for learners and employers to hold colleges to account effectively in this way they need access to high quality, timely information about the quality of provision and the likely outcomes for learners including their destinations (into employment or further learning), progression and future earnings.”

In other words, performance measured by outcomes.

In terms of how a college’s governance can set about ensuring their college is measuring up to what the government is proposing, both in terms of being a social enterprise, and in terms of being accountable as a social enterprise, there are of course a number of issues that college leaders will need to consider. However, I would suggest that three of the most crucial areas that cannot be ignored in this new environment are as follows:

• Meeting the needs of employers must begin with understanding the needs of employers. This means that a college’s senior management team will need to take steps to ensure the college really understands the industry needs in their area, using local Labour Market Intelligence.
• Achieving good outcomes for learners means channelling them into sustainable careers. This means that senior managers will need to take steps to ensure they have the relevant local occupation information to pass on to their learners and to prospective learners.
• As far as accountability to those the college serves is concerned, one important way of achieving this is to objectively quantify and demonstrate the economic and social value that the college provides for learners, employers and taxpayers.

The government is clearly attempting to drive the FE sector into thinking differently about themselves and their relationship with learners, employers and the local community. Implementing measures such as those mentioned above are essential for any college that is serious about fulfilling the government’s vision for the sector as:

“…a dynamic market of FE provision, where high quality providers which respond to a particular demand and can demonstrably meet the needs of learners, employers and those of their local economic environment are able to enter the market, and grow within it.”

Andy Durman is VP of UK operations for the labour market information firm Economic Modelling Specialists International