October 09

I would like to begin by posing a couple of related questions: Has our education sector adapted to the changing needs of employers and potential students? And is our education system fit for purpose in the New Economy?
The last two words of that paragraph were chosen deliberately, as they indicate that nothing short of a transformation is taking place in the world where further education institutions have to operate on increasingly commercial lines and their students will eventually have to earn their livings.
Yet, I’m convinced the further education system and the organisations comprising the sector still have far to go in realising the extent of the changes and adapting their practices to reflect them.
So what changes am I talking about and how did they arise? Well, as we know, from 2000 to 2007 the western world surfed a wave of cheap credit, goods and labour. At the same time, UK property values climbed year after year and investment in bricks and mortar was therefore one of the highest growth sectors. Life was good, our economy prospered and it seemed everyone could benefit.
But, of course, our dream has turned into a nightmare. The world we now live in is one of scarce and expensive credit, rising unemployment (a problem I expect to continue for some time), a tax burden that’s likely to climb significantly and stagnant or falling property values.
At the same time, we’re presented with some significant and growing worldwide and social issues, including global warming, overburdened healthcare systems, a demographic pension time-bomb and food, water and energy challenges. And then, of course, the shutters might well come down on public sector spending in the next few years. So, regardless of your particular view of life and society, few would dispute that things are already very interesting and challenging, and will only get more so in the future.
These developments are bringing significant changes and challenges for employers across all market sectors and industries. Many customers and suppliers are simply not there anymore and demand for products and services is down significantly in most cases.
But, on top of that, even where there is demand, the buying patterns of consumers and businesses have changed. Customers now know that they have real choice and power. They are aware of how and when to buy, and where to find the best solution. The changes in our economy have actually given consumers more influence.
Some businesses have failed to react to these shifts, and have either ceased to exist or are struggling. But others have made significant strategic changes and are either surviving or prospering in this New Economy.
At Vistage, we work with groups of chief executives or managing directors – over 600 in the UK alone – and see very clearly that if businesses adapt their offer, focus and methods, they generally have a much stronger future. This process means changes in the types of skill employers need and the ways in which they develop or source these aptitudes. It also requires revisions in how businesses acquire their workforces. Adaptability and flexibility are the new keywords. Of course, companies still need specialist skills in certain key jobs, but these abilities to adapt, change and develop are now equally important.
Speed is also vital. For decades in the twentieth century, our working lives ran a fairly set course. We went to school, some of us attended college for two or three years, and then we settled into a job – and most of us pretty much stayed there for decades. Our New Economy presents very different demands and options. Employers must be able to react quickly. They need fast access to suitably qualified or skilled labour. And they want those employees to be flexible and adaptable.
But there’s even more to it than all that. Our potential workforce – school leavers, undergraduates, degree holders, mature workers, and even those in retirement – have, of course, also seen the world change and their needs and wants have thus altered too. It’s clearly no longer the case that a degree always leads to a good job and a career. Many occupations previously thought safe are no longer secure. The days of a guaranteed place at college are gone, even if you get the right grades.
And, of course, most of the YouTube generation know this better and faster than the rest of us, because they don’t learn in the way we do. They’re used to instant gratification, multi-tasking, always-on, and information from anywhere.
But, guess what? We still ask them to go sit in classrooms for two or three years and be part of a fairly rigid system focused on issuing certificates, diplomas or degrees. We even tell them to switch off their phones and wireless connections while they’re in those classrooms. In other words, we insist they conform to a model that hasn’t really changed in over 100 years.
Of course, there are some colleges and universities that – to their credit - have made great efforts to get closer to the skills needs of their local business community. And there are now lots of flexible study options within many courses. But basically the model remains unchanged.
In the business world, when your customers’ needs alter significantly, the effect is pretty immediate and remarkable. If your sources of raw materials or suppliers cease to exist or change the rules of the game, you’re forced to re-evaluate your entire business model.
I’d suggest the further education sector is now in the same position and needs to make similar decisions with equal speed. So here are a few more questions to help in this process:
• Who is your customer? When was the last time you defined your target market?
• What’s your strategic plan to survive and prosper in the new economy?
• How are you adapting your model to the needs of employers and students?
• Who do you see as your competition, now and in the next five years?
• What are your Key Performance Indicators (KPIs), and how to you measure success?
• Who are your stakeholders – those who will benefit if you succeed and lose if you fail?
The importance to the wider economy of professionals addressing these fundamental shifts is indicated in figures from the Higher Education Statistics Agency, showing the picture across the UK during 2007-08. These reveal the sector had an income of £23.4bn, taught almost 2.5 million students, and that nearly 700,000 people obtained its qualifications. They also indicate there were almost 460,000 HE staff – 175,000 of them academics – and nearly 600,000 UCAS applications for 2008 entry, nearly 460,000 of them successful.
It is, of course, a basic human inclination to resist change, to think that because something is long-established and daily life seems to be continuing pretty much as before for most people, the uncertainty which comes with alteration is an unnecessary – and possibly even dangerous – risk. “Yes, a large number of people are now unemployed”, the argument may run, “but most of us still get up and go to work, run our businesses or attend learning institutions each day. We continue to go on holiday, follow our sports and hobbies, and visit restaurants and pubs”.
All of this is true. But, as UK chief executive of the largest organisation of its type in the world, who’s in touch daily with managing directors and other senior people at the cutting edge of commerce in a vast range of sectors, I can tell you that very profound and long-term changes are taking place in our economy, and their nature and impact is only just starting to become clear.
Further education professionals who fail to appreciate this and act accordingly will be placing the future of their organisations at risk and failing in their responsibilities to wider society.

by Steve Gilroy

Steve Gilroy is UK chief executive of Vistage International, the largest chief executives’ development organisation in the world, boasting more than 16,000 members, with combined turnovers in excess of £200bn. Vistage International (UK) can be contacted on 01962 841188 or via chiefexecutive@vistage.co.uk.
On average, Vistage member organisations outperform their competitors by growing nearly three times as fast after joining. One of the organisation’s key features is local, confidential, peer group sessions of non-competing leaders, to develop business and personal skills, held on an ongoing, monthly basis.