Defining Higher Education Market Position and Being Real in the Space

So this post is a little wonky, or in my lingo – a little nerdy. Guilty as charged.

As part of my dissertation work, I developed a metric for institutional market position in higher education that changes longitudinally. I based this metric on a rubric developed by my friends and mentors Brian Zucker and David Kalsbeek. The metric was based on two primary measures. First, from a financial perspective – endowment per full time enrolled (FTE) or more comprehensively – total financial resources per FTE – which is the sum or endowment per FTE and instructional expenditures per FTE. The second measure is based on institutional market demand which is the sum of several measures and is also influenced by the availability of data longitudinally. The first measure, that also carries the most weight, is 5-year graduation rate. The measure carrying the next highest weight ties to an institution’s standardized testing percentiles. Next, the percent share of enrolled students with aid not discounted followed by the applicant to matriculated student ratio and reject rate percentiles were used as measures of market demand. Taken together, this market demand index when graphed against an institution’s financial resources per FTE provides a meaningful understanding of comprehensive institutional market position.

So who cares? What do you do with that information? My higher education experience has been that boards of trustees and senior administration are always wondering about institutional performance relative to peer or aspirant institutions. Full disclosure – I have also heard some people use the term “peer aspirant” which does not exist – an institution is either a peer or an aspirant – not both. There is also another category – competitor institution – which may not be a peer or an aspirant because of the institution’s classification – public/private, research/liberal arts – but is still a competitor.

Knowing institutional market position allows you to develop a true peer and aspirant list of institutions providing opportunities for true performance comparison. My experience has also been identifying true peers is many times sobering for a board of trustees. The board may believe aspirants are peers out of pure desire or lack of knowledge of market demand or financial resources per FTE metrics. This is an opportunity to educate the board of trustees and senior leadership lending to some reality level setting. Not an easy or fun conversation – but an important and real conversation.

Educating and level setting the board of trustees and senior administration on market position allows the institution to begin thinking strategically about investments that need to be made to enhance institutional value proposition and market demand. It also allows for a level of prioritization about what investments and where that will have an influence on market position. Ultimately, investing in programs or new initiatives that enhance persistence to graduation rates will have the most meaningful impact on market position. In addition, those investments tend to relate to the institutional mission and can galvanize a community around a common goal.

None of this is easy. To a meaningful degree, being able to take this work on involves a willingness to accept where an institution performs in the market, from a reality perspective. It also takes an institutional culture that is willing to look at itself in the mirror and make hard decisions on what changes need to be made to move forward. Some of these decisions will be political or unpopular. This is where leadership matters. This is where an institution’s senior administration needs to be on the same page such that they can work together to mobilize and galvanize the community while also setting priorities where investments need to be made that will have meaningful market position impacts. I guess if it were easy, everyone would do it. 😊