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Strategic Management in Higher Education Institutions – Approaches,

Processes and Tools

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 D 2-1
Strategic Management in Higher Education
Institutions – Approaches, Processes and Tools

Sigrun Nickel

The article highlights strategic management as a core competence for every higher education insti-
tution which understands itself as an autonomous actor. It gives managers ideas and tools for stra-
tegic planning, implementation and control which are suitable for the specific organizational condi-
tions in higher education institutions. Themes addressed are, amongst other: SWOT analysis, stra-
tegic decision making, agreements on objectives, Strategy Map and Academic Scorecard. These
methods are not only described but also critically reflected upon and illustrated with practical ex-
amples.

Content Page

1. Strategic management as a substantial condition for

institutional autonomy 2
2. Main approaches 4
2.1 Evolutionary approach 4
2.2 New public management approach 6
2.3 The challenge to find an adequate individual way of strategic management 8
3. Processes and tools 9
3.1 Basic model of the strategic management process 9
3.2 SWOT analysis 11
3.2.1 Environment analysis 11
3.2.2 Organization analysis 12
3.3 Strategic options 15
3.4 Strategic decisions 16
3.5 Operationalization and implementation 18
3.5.1 Agreements on objectives as an instrument for the implementation
of strategic measures and projects 19
3.5.2 Human resources management by agreements on objectives 21
3.5.3 Academic Scorecard 23
3.6 Strategic controlling 24
4. Conclusion 25

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1. Strategic management as a substantial

condition for institutional autonomy
The governance of higher education institutions (HEIs) has fundamen-
tally changed since the 1980s “from a classical form of regulation
dominated by a single actor, the state, to forms in which various actors
at various system levels coordinate the system” (De Boer et al. 2010,
p. 20). Law, governmental guidelines and budgeting are still of high
relevance for most HEIs, but there has also been an increase in the
number of buffer institutions, such as quality assurance agencies, or
research funding organizations, which influence the actions of HEIs.
Their impact is complemented with that of independent ranking or
rating institutes, private investors providing capital (foundations,
commercial enterprises etc.), as well as scientific and other civil soci-
ety associations like employer associations, trade unions, chambers of
commerce etc.

What is a strategy? In order to be able to act successfully in a complex environment with

a large number of heterogeneous demands, a majority of HEIs have
begun to implement strategic management. A ‘strategy’ is defined as a
set of objectives that focuses the activities of an institution tending to
reach medium- or long-term success. A strategic plan helps leaders to
choose between important and unimportant demands and to give
members and stakeholders of their organization an orientation by for-
mulating an explicit direction. In general, strategies of HEIs should
address the following four questions:

1. On which core competences could we base our activities in the

next 5 – 10 years?

2. How do we meet competitive demands compared to other institu-

tions?

3. In which established or new fields do we want to operate in the

next 5 – 10 years to ensure institutional success?

4. How do we fulfil our social responsibility in those fields?

Questions 1-3 refer to the profile and the conceptual direction a HEI
plans to take in order to save or to reach an optimal level of reputa-
tion, funding and staffing. Question 4 refers to the public tasks (teach-
ing, research, third mission) that the institution – being largely pub-
licly financed – should fulfil.

Institutional autonomy Strategic management is of utmost importance for every HEI which
and responsibility understands itself as an autonomous actor, making independent deci-
sions regarding goals, successes and failures while maintaining ac-
countability regarding those outcomes. Institutional autonomy is a
concept pursued by HEIs as well as higher education politics in many

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countries all over the world: “It refers to the managerial flexibility of
institutions to construct their own identity, to determine their own
profile and to set their own goals and priorities without interference”
(ibid., p. 31).

At present, in the higher education sector, four dimensions of institu-

tional autonomy can be distinguished, which imply a wide-ranging
responsibility for structures, finances and decisions:

Autonomy dimension Areas of Responsibility in Higher Educa-

tion Institutions
Organizational • Determining internal governance structure
autonomy
Policy autonomy • Staff appointment and staff salaries
• Selection of students
• Determining of the number of study places
• Development of teaching and research
programs
Interventional • Definition of strategy and profile
autonomy
• Reporting
• Administration of quality assurance systems
for teaching and research
Financial autonomy • Decision on the internal allocation of public
and private funds
• Lending funds on the capital market
• Building up reserves and/or carrying over
unspent financial resources from one year
to the next
• Determining how to spend the public op-
erational grant

Table D 2-1-1 Dimensions of institutional autonomy of

higher education institutions in Europe
according to De Boer et al. 2010

The extent of institutional autonomy varies by country. Nevertheless,

some general trends can be discerned. So for example, in a lot of Eu-
ropean higher education systems the institutional autonomy notably
increased between 1995 and 2008. This includes possibilities for stra-
tegic management in HEIs. Development, planning, and implementa-
tion of adequate strategies can be approached in multiple ways. Two
of them are of particular significance in the higher education sector,
and will therefore be described in the following section.

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2. Main approaches

2.1 Evolutionary approach

Anarchic organizational Traditional academic thinking and actions largely follow the principle
behaviour of evolutionary self-organization. It seems that for a long time HEIs
developed predominantly by chance, in line with the specific compe-
tences and interests of their scientists. In many European higher edu-
cation systems faculties and institutes held a distinct decentralized
autonomy. By contrast, executives like rectors/presidents, deans as
well as heads of administration were provided with limited decision-
making powers. They mainly fulfilled coordinating and moderating
roles within the institution, including a strong representative function.
Organization strategies were rare, but if they existed, they were mostly
created bottom-up, with the main objective being to maintain scien-
tific freedom.

Contrary to this anarchic organizational behaviour which is seen as

typical for HEIs and especially universities (cf. Cohen/March/Olsen
1972), an evolutionary-oriented strategic management approach as-
sumes that an organization, though open to spontaneous and random
developments, must exhibit strategies that are binding and link their
implementation to personal responsibility. The aim is not to serve
primarily personal success, but to serve the success of the entire insti-
tution. Strategies are created by the top managers in a highly participa-
tory and communicative process: “Top management acts on middle
management policy suggestions, verifies and bundles them.” (Nagel/
Wimmer 2002, pp. 59 – 60; own translation).

From an evolutionary point of view strategic development is not a

linear, machine-like process with fixed goals, straight implementation
and desired results. Instead the quality of a strategy is evident from its
capacity to react immediately to opportunities once they present them-
selves and to create room for new ideas. On this note, strategic plan-
ning is not a rigid automatism like a socialist five-year plan subjected
to bureaucratic and detail-oriented thinking, but a flexible and adapt-
able plan: “Such a corporate environment encourages controlled risk-
taking. Failed initiatives are evaluated and considered part of the
overall learning process” (ibid., p. 61).

Different kinds of The evolutionary strategic management approach is supported by the

strategies findings of management research, which decides different kinds of
strategies:

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Fig. D 2-1-1 Typology of strategies in organizations

according (Mintzberg 1994)

For quite some time, it was assumed in management-related literature

that solid strategic planning was characterized by stability and a lack
of coincidences, but reality shows that realized strategies quite often
differ from the initially planned strategies. The main reason is that in
everyday business planned (deliberate) strategies meet up with spon-
taneous (emergent) strategies: “As implied earlier, few, if any, strate-
gies can be purely deliberate, and few can be purely emergent. One
suggests non learning, the other, no control. All real-world strategies
need to mix these in some way – to attempt to control without stop-
ping the learning process. Organizations, for example, often pursue
what may be called umbrella strategies: the broad outlines are deliber-
ate while the details are allowed to emerge within them” (Mintzberg
1994, p. 25). Overall, organizations need strategic planning as well as
vital, continuous strategic development by organizational learning.
This applies not only to commercial enterprises but also to HEIs.

In view of the increase of corporate responsibility and demands from Participative

different stakeholder groups (see section 1), a HEI following primarily management
an anarchic organizational principle would be lost. Instead institu-
tional governance mechanisms are needed which enable HEI members
to act in a more coordinated and focused way. Therefore the traditional
mode of academic self-governance which is institutionalized in colle-
gial decision-making bodies has to be complemented with new modes
of managerial self-governance like strengthening leadership and divid-
ing labour and competences clearly between several institutional lev-
els. In this context the evolutionary management approach is advanta-

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geous to HEIs because additional to a binding strategic framework for

the whole institution, it also emphasizes the importance of initiatives
and impulses from the decentralized level and attempts to combine
both in the name of ‘participative management’ (Nickel 2009). This
approach places high demands on the managers especially on rectors/
presidents and deans. It requires ‘sensible foolishness’ (cf. Cohen/
March 1986). This form of leadership entails a playful and creative
handling of structures, regulations, and objectives, while maintaining
the necessary amount of order and stringency which is needed for the
success of the HEI.

2.2 New public management approach

Hierarchical steering Strategic planning under New Public Management (NPM) follows the
idea of hierarchical steering:

• The state formulates strategic objectives relevant for the further

development of the national/regional higher education sector.

• On this basis the responsible ministry agrees with every HEI indi-
vidual objectives and performances which should be achieved
within certain time frames (usually 2 to 4 years).

• How the implementation is carried out is up to the institutions. The

achieved results are controlled regularly.

• The central leadership of every HEI has the duty to ensure that the
agreement with the ministry is fulfilled as well as possible. For this
purpose a set of management instruments is used which contains
amongst others tools like agreements on objectives between central
leadership and faculties or financial incentives.

Compared to the evolutionary approach described in the previous sec-

tion strategic management according to NPM is a more linear process
which deals primarily with deliberate strategies (cf. Figure D 2-1-1).
Institutions are not primarily seen as dynamic social systems but as
machines which convert a specific input in an intended output. Given
the extent to which governance of the public sector is based on it, NPM
influences processes in HEI substantially (cf. De Boer et al. 2007).

NPM is not an approach especially for HEI but for public administra-
tion in ministries and other authorities. In the 1980 initial attempts
were started to transfer business methods and approaches to public
administrative offices in order to boost effectiveness and efficiency.
Costs were to decrease while public benefits for society were to in-
crease. Even though scientific studies show that NPM leaves much to
be desired (cf. Pollitt/Bouckaert 2004), the approach has spread
worldwide and influenced governmental behaviour markedly.

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The implementation of NPM in the higher education sector has caused

notable changes:

• Ministries responsible for higher education let HEIs have much

more responsibility for the management of their internal processes
than 20 or 30 years ago. At the same time HEIs are obliged to
make their performances and services more transparent and report
their plans, activities and achieved results regularly.

• The government ties the appropriation of funds to the performance

of the institution. Funding is one of the key intervention instru-
ments – for government (ministries, funding councils) as well as
for decision-makers within HEIs (executive boards, deans, depart-
ment heads; for a critical overview see e.g. Jongbloed 2008).

• HEIs must compete for public funding with other HEIs or research
institutes. As shown in section 1 the European higher education re-
form led to a decrease of the governmental control and an increase
of HEIs’ autonomy. As part of this ‘autonomization’, HEIs were
forced to strengthen their self-governance by applying appropriate
decision and management structures. Subsequently topics like
“hierarchy” and “leadership” came into focus: “Managerial self-
governance concerns hierarchies within universities as organiza-
tions. Here the role of university leadership – rectors or presidents
on the top-level, deans on the intermediate level – in internal goal
setting, regulation, and decision-making is at stake” (De Boer et al.
2007, p. 139).

Particularly the trend towards more managerial self-governance Increase of managerial

through NPM implementation has often been criticized. It was seen as self-governance
an attempt to force HEI to act more like private enterprises at the ex-
pense of their scientific engagement. With regard to research depart-
ments it is often remarked that the linear, output-oriented, and indica-
tor-geared NPM system stifles the necessary room for unconventional
thinking and emergent processes at higher education institutions (cf.
Jansen 2008). On the other hand, the implementation of NPM at HEIs
steers them towards increased commitment and transparency regard-
ing their productivity in research and teaching. If and how well HEIs
fulfil their scientific and social responsibilities is easier to judge look-
ing from the outside in.

Another effect of the NPM-reform is that organizational weaknesses

in some types of HEIs, first of all research oriented universities, have
become evident. Especially the cumbersome collective decision mak-
ing processes and lacking capacity to act were focal points. These
characteristics are still a big challenge for strategic management in
HEI: “For universities to become strategic actors with distinctive or-
ganizational capabilities and knowledge, then they would have to de-
velop two sets of collective capabilities. First, to exercise discretion-

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ary authority over the acquisition, use and disposal of human and ma-
terial resources; and secondly to generate particular kinds of problem-
solving routines and knowledge that are organization-specific. Creat-
ing such enterprise-specific capabilities would require researchers to
share their intellectual goals, resources and knowledge in the joint
pursuit of organizational purposes, as distinct from those of individual
research groups and scientific fields” (Whitley 2008, p. 24).

2.3 The challenge to find an adequate individual way

of strategic management

The description of the evolutionary and the NPM approaches has

pointed out most notably two things:

• HEIs are specific institutions which are usually characterized by a

distinct decentralized structure and participative decision making
processes. With this organizational culture an evolutionary oriented
strategic management is highly compatible.

• The dominant strategic management approach in the public sector

is the NPM characterized by hierarchical steering and linear plan-
ning. HEI, at least those which are publicly funded, have to deal
with the demands caused by the NPM approach. This could cause
frictions, because it calls traditional academic thinking and actions
into question. On the other hand, the implementation of NPM at
HEIs steers them towards increased commitment and transparency
regarding their productivity in research and teaching.

Mix of ‘playfulness’ and
‘rationality’
The challenge for higher education leaders is to define a strategic
management approach which fits to the specific situation of their insti-
tutions: “Although there is no single, ‘right’ approach to strategic
planning, certain basic types can be identified that can function (more
or less) singly or in combination with each other, depending on the
context, timing and current status of organization” (Zechlin 2010,
p. 7). Strategic management is an art of coping with ambiguity and
therefore requires flexibility and readiness for continuous learning.
Leaders need to find the best mix between ‘playfulness’ and ‘rational-
ity’: “Playfulness is a natural outgrown of our standard view of rea-
son. A strict insistence on purpose, consistency, and rationality limits
our ability to find new purposes” (Cohen/March 1986, p. 225). Under
the public regulatory framework according to NPM principles HEIs
can take advantage of the leeway of their institutional autonomy. Re-
flective, open discussions within a HEI are an appropriate meaning to
solve the problems arising possibly by frictions between academic
culture and public governance and also to support joint learning and
mutual trust.

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3. Processes and tools

3.1 Basic model of the strategic management

process

The previous chapter has shown that the different strategic manage-
ment approaches overlap and will normally be practiced in hybrid
forms. Even though evolutionary approaches fit better into the organ-
izational culture of HEIs than NPM, the latter does contain elements
of a more rational approach, like the definition of verifiable objectives
and results, which forces HEI to act more transparent than in former
times. Managers in HEI have to identify the most suitable mix of ap-
proaches: A large research-oriented university may need a different
strategy management model from a small, application-oriented techni-
cal college. Furthermore it is clear that the chosen route must be sub-
ject to change over time. HEIs do not operate the same way all the
time. They are subject to developments – usually triggered by chang-
ing conditions – and therefore they must monitor their strategies as
well as their management structures and instruments regularly.

Regardless of the approach chosen, a pattern for strategic management Useful pattern
exists which can be divided into the following steps:

Fig. D 2-1-2 Basic model of the strategic

management process according
(Steinmann/Schreyögg 2000)

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The basic model shown in Figure D 2-1-1 is divided into three parts,
characterized by three different symbols:

• Planning
Based on a SWOT Analysis. SWOT is an acronym for Strength,
Weaknesses, Opportunities, Threats. The planning process com-
prises an environment and organizational analysis, the generation
of strategic options and decisions as to which strategic objectives
will be implemented.

• Operationalization and Implementation

After the strategic decisions are made the objectives have to be
concretized and implemented in the organization. Operationalized
goals and duties could differ between organization units but on the
whole should be complementary. Strategic success usually is a re-
sult of the cooperation between all institutional members.

• Controlling
Controlling is a continuous task that supports strategic planning as
well as the implementation of the strategies and monitors their out-
put regularly.

Involvement of faculties Strategic management in HEIs never consists of just one central pro-
and institutes cess. Due to the extremely decentralized organizational structure and
high degree of individual autonomy of the academic staff, strategic
management processes take place on the top level as well as on the
faculty or department level. Hence the risk of parallel and repetitive
processes is high. In respect of this the rectors/president and deans
need to possess appropriate management skills. It is their responsibil-
ity to combine the outcome of the diverse strategic planning activities
into a consistent strategic plan for the entire HEI. Embedded in the
overall strategic plan, faculties and institutes can define additional
individual strategic goals according to their own specific needs. There
is a disagreement as to the timely frequency of strategic management
processes in HEI. On the one hand, it is a continuous task, especially
with respect to the strategic controlling that keep the top managers
informed about the current developments within the institution and
support their decision-making. On the other hand, the realization of
strategic goals in HEI often takes a long time so that it could make
sense to establish new strategic plans not every year but every two or
three years.

Even if the scheme shown in Figure D 2-1-3 is an ideal strategic man-

agement process and rarely realized one to one, it gives a good orien-
tation for the practice in HEI. “When the basic model for strategic
planning (the sequence of analysis, setting objectives, actions for
change and evaluation) is decentralized through such flexibility in the

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objectives, methodology, and participants, it remains both meaningful

and, for all well-ordered strategic process, even indispensable” (Zech-
lin 2010, p. 9). In the following chapter each step of the strategic man-
agement process is described more detailed. It is explained what must
be considered in HEI and which instruments will come into play. The
development of the mission statement/vision, which according to
popular opinion makes up the basis for strategic management, will be
neglected. HEIs have invested lots of energy in the development of
such normative principles, but very seldom did the benefits justify the
efforts. The mission and vision statements are usually very general in
nature and exchangeable (Nickel 2009, pp. 140 – 148). For that rea-
son, this measure is considered a voluntary option and not be dis-
cussed in this article.

3.2 SWOT analysis

The SWOT analysis is the basis of the strategic management process.

It is used to evaluate the opportunities and threats in the environment
of a HEI: How does its ability to compete for resources, staff and
students compared to other institutions? Is there a sign of imminent
danger? Are there any new opportunities and chances visible? Fur-
thermore, the organizational strengths and weaknesses will be ob-
served and the question will be answered how efficient/inefficient the
institution is in fulfilling its structural, personal and financial re-
quirements.

3.2.1 Environment analysis

HEIs function in an environment among other organizations and indi-

vidual players who, as stakeholders, have certain requirements vis-à-
vis the institution and therefore form important general frameworks
for strategic development:

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Fig. D 2-1-3 HEI stakeholders according

(Scheidegger 2001, p. 19)

Identification of crucial Each HEI has to define, which stakeholder groups are relevant for the
environmental demands medium- and long-term organizational success. The environment
analysis tries to identify which environmental demands have been
crucial to its success in the past and which will be crucial in the future.
Management must choose appropriate environmental requirements in
line with the profile of the institution as well as future measures capa-
ble of responding accordingly. If this limitation is missing, there is a
danger that “demands on universities outrun their capacity to respond”
(Clark 1998, p. 129).

3.2.2 Organization analysis

The environment analysis has to be connected with an organization

analysis. The aim is to scrutinize whether external demands and inter-
nal capacities are compatible and what kind of changes might be nec-
essary. The diagnosis of the institutional core competences, a critical
examination of internal structures as well as personnel and financial
resources are at the centre of concern.

Core competences To assure oneself of the core competences and potential of an organiza-
and potential tion is an important starting point of any strategic developmental pro-
cess. The past should be analyzed before future goals can be named.
Answering the following questions, e.g. in a workshop, will help clarify
this (cf. Nagel 2007):

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Analysis of Institutional core competences and potential

1. Yesterday: Past successes

What were the biggest successes of our institution in the past few
years?
What factors played a deciding role in those successes?

2. External perspective 1: Distinguishable benefits for stake-

holders
How would you describe the basic benefits for our relevant stake-
holders?
Why are certain stakeholder groups prepared to invest more or less
resources for those benefits?

3. External perspective 2: Differences with competitors

How would our currently relevant stakeholders describe the differ-
ence between us and our competitors?
How would our competitors describe us?
For what do our competitors envy us?

4. Internal perspective: Special internal process knowledge

What internal processes (research, student mentoring, develop-
ment of courses, financial management, marketing etc.) are our
strengths?

5. Tomorrow: Expandability of our core competences

How high is the potential of our present core competences to open
new fields?
Which new stakeholders might we address?
What core competences are required for our future success?

6. Countercheck: Learn from your mistakes

Which of our projects have failed and why?
What are our most painful failures of the past years?

Checklist D 2-1-1 Analysis of Institutional core competences

and potential

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Working structures The strengths and weaknesses becoming evident by the analysis of
and processes core competences and potential are indicating also strengths and
weaknesses of organizational working structures and processes. The
review of internal working structures and processes is a very demand-
ing task because three organizational areas are included that operate
on different kinds of logic.

Fig. D 2-1-4 Organizational trisection of higher education

institutions (Nickel 2009)

As explained in section 2.1, research is characterized by a low control-

lability and therefore is difficult to manage in a linear input-
realization-output way. This area shows distinct self-organization and
a high level of emergent processes. Therefore, research needs an evo-
lutionary oriented way of management. Planning of future research
projects or setting priorities is only possible if decentralized scientific
units take an active part in this process and the top management ac-
cords sufficient individual freedom to the academic staff.

Teaching proceeds much more formal than research and is more easily
accessible for management techniques: “Within the educational sys-
tem, the university in fact acts as an organization. Certain offers re-
garding education and training, curriculum and the associated person-
nel and financial infrastructure, are offers by the university and its sub-
divisions which must be organizationally executed and accounted for”

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(Stichweh 2005, p. 124; own translation). While HEI are able to take
corporative responsibility for the quality and quantity of their teaching
outcome, research is still primarily an issue of the individual researcher
or the academic collective (e.g. faculty, institute, research groups).
Administration is the most highly structured division within an institu-
tion. Clear traditions, hierarchic and work-sharing structures and pro-
cesses, as well as highly formalized rules, exist. Administration is out
of all three organizational parts the easiest to control and to manage.

The analysis of organizational internal labour structures and processes

must, on the one hand, take the immense differences between the three
organizational areas into account, but on the other hand, it should not
risk losing itself in separate analysis and separate solutions. The main
duty is to look at the organization from a holistic point of view: with-
out high-quality achievements in research and curricula a HEI would
not be viable in the medium or long term. Therefore a HEI needs be-
sides excellent researchers and teachers, an excellent support by the
administration. Strategic success depends in large part on smooth co-
operation of all three organizational areas.

3.3 Strategic options

If, with the help of the SWOT analysis, the environmental opportuni-
ties and threats and the organizational strengths and weaknesses have
been identified, medium- and long-term objectives as well as necessi-
ties for action can be defined. The idea of having individual strategic
options, on top of those defined by the government, is still new to
some, especially publicly financed HEI. In order to define the perspec-
tives clearly, adequate methods are needed for the development of
ideas by management together with other members of the institution.
So for instance a moderated workshop, preferably not on the premises,
would be a good procedure, in which the scenario method can be pro-
ductive.

Scenarios serve to compact visible trends via well-founded assump- Creating and checking
tions in order to define alternatives when it comes to crucial decisions. of alternatives
Usually the scenario method is practiced in two steps.

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Scenario method

1. Step: scenario development

First at all, two to four potential scenarios should be developed that
can range from “continue as before” to “radical changes”. It is impor-
tant to lay down in the very beginning which scenarios deserve future
consideration. In order to choose a scenario, it is important to proceed
based on factual and not associative data, meaning via SWOT analy-
sis and – if necessary – considering additional data. The scenarios
must be plausible and realistic: “Rather, the goal is to reduce uncer-
tainty to manageable proportions by developing several scenarios,
each of which is a plausible possibility for the future. The task is de-
manding because each scenario must be internally coherent and
based on good supporting information” (Morrill 2007, p. 173). Stimu-
lating scenarios are best produced in workshops, where relevant
members of the HEI could stay together in a creative atmosphere.
The initiative and the invitation has to come for the management (rec-
tors, vice rectors, deans etc.).

2. Step: scenario analysis

After the scenarios are developed they have to be tested systemati-
cally: “The focus of scenario analysis can be to test a strategic vision,
a broad strategic initiative, a single project, or a major decision.
Whatever the level, its purpose is to assess whether the option in
question is adequate to meet the contextual challenges of each of the
scenarios” (ibid.). The test of the strategy against an adverse set of
circumstances prepares the HEI for success under a wide variety of
contingencies. Based on its analysis the HEI may choose strategic
options based on the existing scenarios or may decide that additional
alternatives are needed.

3.4 Strategic decisions

Because the assessment of the options and the subsequent choices of

strategies have a critical influence on the positioning of the HEI or the
faculty, the involvement of members and committees in this decision-
making process is crucial. A lot has been written about how challenging
decision making is in HEIs. So for example they were characterized as
“hypocritical organizations” (Brunsson 1989) spending more time talk-
ing than making decisions and acting upon them or “garbage cans” and
“organized anarchies” (Cohen/March/Olsen 1972; cf. section 2.1).
Decision making in such unconventional organizations needs a lot of
sensitivity, persistence and time consuming communication.

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The responsibility for the strategic decision making process lies – as Communication and
always – with the management of the institution; decisions regarding negotiation
the overall strategy of an institution concern the presidents/rectors,
faculty strategies concern the deans. For them the scientists Cohen and
March created a set of advices on decision making situations. One
main rule is to manage unobtrusively: “If you put a man in a boat and
tell him to plot a course, he can take one of three views of his task. He
can float with the currents and winds, letting them take him wherever
they wish; he can select a destination and try to use full power to go
directly to it regardless of the current or winds; or he can select a des-
tination and use his rudder and sails to let the currents and wind even-
tually take him where he wants to go. On the whole, we think con-
scious university leadership is properly seen in third light” (Cohen/
March 1986, p. 212). This means that strategic decision making
should be prepared very intensively. Responsible persons need a clear
strategic plan, but should also have alternatives ready and be able to
react flexible to suggestions from other HEI members.

Another challenge is the organizational trisection of HEI described in Correlation of different

section 3.2.2. It has an important influence on the strategic decision- perspectives
making process: “The problem behind the problem is that the univer-
sity lacks a coherent strategic understanding of itself as an integrated
system” (Morrill 2007, p. 80). Therefore, strategic developmental
processes are at the same time also organization-development pro-
cesses, which require the individual members and departments to
communicate and act corporately to assure the further success of their
institution. In this context a Strategy Map (Kaplan/Norton 2004) could
be a helpful instrument. It is especially well-known in Anglo-Saxon
higher education systems. A Strategy Map helps to prepare strategic
decisions by pre-structuring relevant aspects in an integrative way. It
is a frame of reference dividing strategic goals of organizations into
four perspectives:

1. financial perspective,
2. customer perspective,
3. process perspective, and
4. the teaching and developmental perspective.

Correlations are established between them. This makes it possible to

get an overall picture. Strategy Maps are closely connected to Bal-
anced Scorecards (cf. 3.5.3). While a Strategy Map describes the stra-
tegic gaols of an institution, the Balanced Scorecard is an instrument
for their operationalization, implementation and measuring.

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Practical example “Strategy Map”

The Strategy Map of the University of Leeds (UK)1 shows that HEIs
use this instrument individually. The institution, in its Strategy Map,
displays cohesively and transparently its values (“Academic excel-
lence by community, inclusiveness, integrity, professionalism”), its
strategic principle (“By 2015 our distinctive ability to integrate word-
class research, scholarship and education will have secured us a
place among the top 50 universities in the world”), its organizational
requirements for a successful strategic positioning (“A sustainable, ef-
fective and efficient organization; Financial sustainability; Valuing and
developing all our staff”), and data regarding its benefits for relevant
stakeholders as well as key strategic themes of the institution. The
University adopted the basic principles of the Kaplan/Norton 2004
model, but designed the content according to their own concept. This
process is legitimate and typical for the higher education sector. In-
struments originally created for the business sector often has to be
modified for the specific organizational needs in HEI.

3.5 Operationalization and implementation

This step aims to transform the results of the decision making pro-
cesses into a plan for the practical implementation. Strategic plans will
never be able to comprise all activities of an institution, but must con-
centrate on areas critical for its success. As mentioned before, HEIs
are highly complex organizations with a distinct decentralized work-
ing structure, while simultaneously maintaining a broad individual
scientific autonomy. Therefore the preferred type of strategy used in
HEI is the umbrella-strategy as described in section 2.1. This means
that the top management defines an overall strategic framework within
is ample room for emergent processes and strategies.

Goals, resources, A strategic plan contains not only future goals, but also the necessary
timeline and resources, timeline and responsibilities for the implementation of the
responsibilities specific steps that lead to achieving the strategic goals and parameters
with which the performance and its success or failure can be meas-
ured. It is self-evident that not all objectives can be achieved simulta-
neously. It is therefore necessary to prioritize. Last but not least, all
personnel requirements must be in place. Without motivated, compe-
tent institutional members, the best strategic concept is worthless. The
personnel policy as well as the staff developmental programs and in-
centives must be in line with the strategic goals.

1
For further information see: http://www.leeds.ac.uk/downloads/Strategy_map
_aw.pdf, accessed on 2 January 2011.

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Two of the most popular approaches for the operationalization and

implementation of strategies in the higher education sector are “man-
agement by objectives” and “balanced scorecard”. Both will be intro-
duced below. With respect to the management by objectives, two
forms must be differentiated: agreements on objectives as (1) an in-
strument for the implementation of strategic measures and projects,
and as (2) an instrument for human resources management.

3.5.1 Agreements on objectives as an instrument for the

implementation of strategic measures and projects

Agreements on objectives are a participative management instrument

that is primarily used by executives of faculties and institutions to
determine the strategically important measures and projects on basis
of binding provisions. Binding provisions guarantee that the superior
strategic framework is applied in decentralized organizational areas.
Additionally, the provisions can apply to faculty- and institute-specific
strategic goals, which are not part of the overall strategy but deemed
important by the participating actors. Usually objectives in HEIs can-
not be ordered top-down, but require negotiating processes in which
all partners involved have a voice and are active participants. In this
respect, this tool is highly compatible with the participative organiza-
tional culture of HEIs (see also section 2) and is therefore well ac-
cepted.

Agreements on objectives is in itself are not sufficient for strategic Connection with
management. There is an additional need for accompanying budgeting budgeting
methods; otherwise this instrument is in danger to become a “toothless
tiger” lacking sufficient effects. Usually the budgeting of the agree-
ments is carried out in form of providing money to the extent that is
needed to realize the stipulated measures and projects. It is unclear if,
besides project related financing, budgeting methods in the higher
education sector are also able to set effective incentives for the pro-
duction of premium performance. Some (cf. e.g. Frey/Osterloh 2002)
question categorically if motivation can be achieved with external
stimulus – especially among professors considered to be highly intrin-
sically motivated – while others (cf. Ziegele 2001) consider it sensible
and possible.

Overall, the following basic model for the implementation of strategic Learning cycle
projects and measures by agreements on objectives has established
itself in the higher education sector.

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Fig. D 2-1-5 Basic model for the implementation

of strategic measures and projects in
higher education institutions by agreements
on objectives (Nickel 2009)

Accordingly, every one to two years, faculties/institutes negotiate

objectives with the president/rector and receive funding. Under a re-
porting requirement, successes and failures must be communicated,
information must be relayed, reflected upon and the information will
then be used for the future strategic development of the HEI. This
results in a feedback and learning cycle, also found in models of or-
ganizational learning (Argyris/Schön 1996).

Practical example “Agreements on objectives”

Every year the Rectorate of the University of Vienna (Austria) lay
down agreements on objectives with faculties and programme man-
agers. They are a based on performance agreement between the
Rectorate and the federal ministry for science and research. This cor-
responds to the NPM approach described in section 2.2. With this
contract the University of Vienna commits itself to produce agreed
performances in research and education on behalf of the government.
Therefore it gets a lump sum budget. The contract period lasts three
years. In contrast the internal agreements of objectives are controlled
and revised annually.

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The negotiations concentrate on three main topics:

• Education (programme improvements, budget, conditions for stu-

dents etc.)

• Research (main focuses, publications, third party funding, invest-

ments, expenditures on staff and equipment etc.)

• General conditions (e.g. gender mainstreaming, staff and organ-

izational structure, support structure)

The results of the discussions between Rectorate and faculties/pro-

gramme managers are summarized and published in the intranet. The
same happens to final versions of the annual contracts.

The University of Vienna uses its internal agreements on objectives

mainly to put its strategic development plan into practice2. Therefore
they are combined with an internal budgeting system. With a number
of indicators the performance of the different organization units are
measured. The distribution of budgets is calculated according to a
specific formula.

3.5.2 Human resources management by agreements

on objectives

Initially Management by Objectives was not developed for the strate-

gic regulation of organizational units, but for strategic human re-
sources management. Based on the fact that the strategic success of an
organization largely depends on the quality of its members, the objec-
tives must coincide with the personal goals of the individual employ-
ees in order to achieve a high level of motivation and workplace satis-
faction, which, in turn, will result in a successful organization. The
degree of target tracking and achievement of every member of the
organization will be evaluated periodically and used for merit ratings.
At the same time, managers analyze with staff members their individ-
ual advancement and development potentials and, if possible, support
them to get appropriate measures for career promotion. The results of
such annual personnel talks are fixed in individual agreements on
objectives, which will be negotiated between superiors and staff
members.

2
For further information see: http://rektorat.univie.ac.at/en/development-plan-
of-the-university-of-vienna/, accessed on 3 January 2011.

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Staff recruitment and Especially in HEIs staff quality plays an important role. Without ex-
development cellent researchers, teachers as well as highly qualified managers and
administrators, HEIs cannot be successful. This means that recruiting
of new personnel is a very important process for the success of a HEI
as well as the professional development of the already employed staff.
Human resources management should be linked to the strategy of the
HEI. The applied procedures and measures should support the organ-
izational success.

Currently, three variants of agreements on objectives for human re-

sources management come into play in HEIs:

• Agreements between top management and (newly recruited) pro-

fessors regarding their future productivity in research and teaching
areas as well as the associated level of pay and workplace infra-
structure (sufficient number of jobs for supporting staff, equipment etc.),

• Agreements between early stage researchers and their mentors

concerning their projected scientific qualification, and

• Arrangements between superiors and administrative personnel

regarding the participation in further education courses and other
measures for staff development.

Following this, a model for human resource management by agree-

ment can be identified.

Fig. D 2-1-6 Basic model for human resources

management in higher education
institutions by agreements on objectives
(Nickel 2009)

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An important question is whether the application of agreements on Evaluation risk

objectives for personnel management and development for all HEI-
members is practical or if this causes a too high level of regulation.
Another crucial factor is that the executives must evaluate the out-
come on the basis of agreements on objectives. This causes expenses
and could result in conflicts, which must be tackled with. However,
without a periodic assessment this tool will remain ineffective. HEI
should decide individually which path is reasonable; when in doubt,
less is more.

3.5.3 Academic Scorecard

The Balanced Scorecard (BSC) operationalizes the Strategy Map de-

scribed in chapter 3.4. The BSC differentiates between four central
and important perspectives regarding strategic development:

1. the financial perspective (Which material results should be

achieved?),

2. the customer perspective (What qualitative and quantitative per-

formance is expected by the stakeholders?),

3. the internal process perspective (Which work processes are impor-

tant for the organization’s success and must therefore be monitored
and managed?), and

4. the learning and development perspective (What activities will be

necessary to develop the organization and its personnel further in
order to guarantee the success of the organisation? What can be
learned from failures for the future?).

On basis of the objectives named in the Strategy Map with the BSC
specifications, measures and parameters will be defined in order to
give the members of the organization a transparent orientation for the
implementation processes. Like the Strategy Map, BSC tries to create
a connection between the four perspectives, but on a more concrete
level than the Strategy Map.

For the past ten years, BSC has been more prevalent in the higher ‘Balanced Scorecard’
education sector. This tool has been so highly modified to serve the method
needs of HEI that it is sometimes called the Academic Scorecard. In
order to illustrate this point, we will introduce the example of the Uni-
versity of Edinburgh.

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Practical example “Academic Scorecard”

The University of Edinburgh (UK) has broad practical experience with
the Balanced Scorecard method3. Based on the overall strategic plan,
which comprises, inter alia, superior objectives like “excellence in
education”, “excellence in research” and “excellence in knowledge
transfer and commercialization”, the University of Edinburgh names
its Academic Scorecard following four implementation perspectives:
“The learning and growth perspective”, “The financial perspective”,
“The stakeholder perspective” and “The internal business perspec-
tive”. Each one of these perspectives contains a number of operative
objectives, measures and responsibilities, which can support the re-
alization of superior strategic goals vertically as well as the horizontal
realization of other operative goals. This two-dimensional planning of
objectives and measures is advantageous compared to a one-
dimensional vertical direction.

One danger of the BSC is the overmodulation. A higher education

institution that cannot limit its goals and indicators as recommend by
Kaplan/Norton (2004) to five or seven per strategic perspective but
engages in an overflowing and detailed collection of objectives will
surely create a close-meshed control net which hinders the process of
self-organization and supports a tendency to bureaucratize.

3.6 Strategic controlling

The concept of ‘controlling’ has sometimes a negative connotation in

the higher education sector. It is being associated with surveillance
and control and is partially understood as a synonym for the ‘econo-
mization’ of HEI. In contrast, the concept of controlling as understood
here is usually quite different: a continuous support for the executives,
which offers analysis and information helpful for all fields of strategic
management from the creation of objectives to the assessment of the
outcome.

3
For further information see: http://www.ed.ac.uk/schools-departments/
governance-strategic-planning/home, accessed on 3 January 2011.

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Fig. D 2-1-7 Controlling tasks in higher education

institutions (Ziegele et al. 2008)

In addition to its feedback-function, strategic controlling has the duty

to identify new chances for the HEI: “If strategic controlling is to offer
a real contribution, it will present new horizons by reflecting the ordi-
nary and enhancing the overall opportunity to raise questions.” (Kap-
pler 2003, p. 254; own translation). Thus controlling can contribute
substantially using the strategic management process coincidentally as
an organizational development process. This includes also alerting the
top management of threats and signalling necessary changes to the
strategic course early enough. Last but not least, strategic controlling
is only useful if management is actually using the information and
analysis. Controlling for the sake of controlling, producing idle “data
graveyards”, is a squandering of resources.

4. Conclusion
As shown at the beginning of this article, strategic management is of
utmost importance for every higher education institution which under-
stands itself as an autonomous actor. It is a core competence to act
successfully in an increasing complex environment. Higher education
managers have to find an approach which, on the one hand, fits to the
specific organizational constitution and culture of HEIs and, on the

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other hand, meets the requirements imposed by the New Public Man-
agement. This is a big challenge but at the same time an essential duty:
“Managing in a complex, knowledge-based, interpretive institution is
difficult, frustrating, and imprecise. But good management is essential
for institutional success, and to be a good manager is a goal worthy of
the time and effort of administrators and faculty who are committed to
the enduring purposes of higher education. Good academic manage-
ment is not the same as good business management, and an uncritical
acceptance of management innovations and fads invented to meet the
needs of government, business, or the military is more likely to harm
than benefit colleges and universities” (Birnbaum 2001, p. 240).

Strategic management tools adequate for HEI do exist. Instruments

and procedures coming originally from the business sector are usually
modified for the specific needs of higher education institutions. How-
ever, the success of strategic management does not only depend on the
right use of single instruments. The real aim should be the establish-
ment of a consistent connection between the tools. Strategic planning,
implementation and controlling serve best if they enable the institution
to reflect its development and to learn for the future.

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Biography:

Dr Sigrun Nickel, since 2005 working as higher education researcher and consultant at the CHE
Centre for Higher Education Development (Germany). Main fields: higher education governance,
quality assurance, staff development. Comprehensive practical experience as manager in different
higher education institutions, amongst others as member of the Rectorate of the Hamburg School
for Economics and Politics. Master of German Studies, Sociology and Pedagogy at the University of
Münster, doctorate in Social Sciences at the University of Klagenfurt.

Contact: sigrun.nickel@che.concept.de

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