On the efficiency frontier


On the efficiency frontier

The Australian
15 May 2019

Key Takeaways:

  1. Seek (a proponent of online education) has invested in online education with Swinburne University, leading to the creation of Swinburne Online.
  2. Swinburne University shows exceptional efficiency in academic staff, but its overall expenditure efficiency is distant from the frontier.
  3. Online education commitment can lead to efficiency gains, seen in the University of New England’s case.
  4. Certain technologies can offer excellent educational experiences, but quality may vary.
  5. Specialization in online education could potentially improve efficiency, requiring support and policy changes for successful transitions.

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Full Article:

Two weeks ago, The Australian’s higher education editor Tim Dodd commented on the “level of efficiency and effectiveness that online courses promised to deliver”. The comment came after entrepreneurial Australian online job placement firm Seek announced further strategic investments in online education.

Seek, a proponent of online education, joined with Swinburne University of Technology to create Swinburne Online in 2011.

Following the recent government release of 2017 university financial data, we see Swinburne — with significant student enrolments in both the “bricks and mortar” faculties and the online arm — placed on the sector’s “efficiency frontier” as measured by the research and education efficiency frontier index. For the first time, Swinburne defines the efficiency frontier. It does this with a balance of education and research outcomes. The University of NSW also defines the frontier with a more research-intensive profile.

Note that the index rates the efficiency of an institution’s chosen mix of research and education outcomes using two alternative measures: output per million dollars in expenditure or output per number of (full-time equivalent) academic staff members.

Swinburne’s exceptional performance relates to the second of these. In respect of the first measure, overall expenditure efficiency, Swinburne is some distance from the frontier.

The divergence of the two measures is itself of interest. It is more common among Australian universities for overall expenditure efficiency to be closer to the frontier than academic staff efficiency. Swinburne is one of a handful of institutions where the results are the other way around.

The conventional interpretation of this is that academic staff efficiency outstrips the efficiency of non-academic activities (including the application of policies and procedures, use of infrastructure and the like). Other plausible explanations also exist.

These analyses are based on archival data, so one cannot directly attribute causality. That said, plausible explanations for Swinburne’s efficiency include the implementation of its new workload model and the significant growth of Swinburne Online. Given the divergence of the two efficiency measures, the second is likelier to be the dominant factor.

Two noteworthy features in the smaller graph are: that year-on-year efficiency change is largely (but not entirely) positive; and improvements are as much about research (shown by the vertical axis) as they are about education (shown by the horizontal axis).

The ultimate test of the source of efficiencies can involve analysing disaggregated data from individual academic units within a university. This data is generally private. Recently we completed a within-institution analysis for another university that showed the relative efficiencies of academic fields. This analysis permits vice-chancellors to observe relative internal efficiencies and to recognise excellent outcomes and/or provide targeted support as appropriate.

The model for Online Educational Services (Swinburne Online’s name after recent ownership changes) appears to have proved fruitful with its recent expansion to other universities. Perhaps, in the future, efficiency effects will be seen in these institutions. There is other evidence that a strong commitment to online education is associated with efficiency. The University of New England, long committed to online and distance education, is close to the overall efficiency frontier despite the inevitable costs of being regional.

In terms of quality, there is compelling evidence that certain existing educational technologies (virtual reality, augmented reality as technologies and applications such as Smart Sparrow) can offer exceptional educational experiences. But, like everything, there can be variability in quality of inputs and outcomes. Some will question whether efficiencies gained may reflect reductions in quality.

While Swinburne, like many universities, makes transparent its academic staff profiles, less is known of the academic staff who teach the online components of Swinburne degrees.

A search of a global research database shows no publications affiliated to Swinburne Online academic staff. The presumption is, therefore, that these staff members are strongly, if not exclusively, education-focused.

Perhaps this efficiency outcome speaks to a possible future staffing structure that involves greater specialisation. There is evidence in other parts of the sector that shows academic staff transitioning to more focused roles, be they education or research.

The economics of specialisation would suggest that this move may deliver efficiency improvements. The realities of academic careers mean that specialisation may require significant support to transition successfully into these roles. This support includes change to institutional policies and the provision of mentoring and coaching.

There are opportunities and challenges within online education. There is an argument that, for reasons of efficiency and because of the ability to provide scope and scale, digitally delivered education will be a crucial component in the future of the Australian post-secondary education sector.

Keith Houghton is chief academic strategist at the Higher Education and Research Group and a former dean of business and economics at the Australian National University.

Mark Clisby is chief executive of Research Coaching Australia.

Research Coaching Australia chief executive Mark Clisby and Higher Education and Research Group chief academic strategist Keith Houghton. Picture: David Geraghty

Earlier this year, the Higher Education and Research Group released its latest annual analysis of the productivity of the Australian university sector, including, for the first time, the three large private universities.

There is growing anticipation that the federal government’s response to the Universities Accord review’s final report will come soon. Given this and the fact that the budget is less than a month away, it is timely to review one of the final report’s key insights.

Recently released analysis finds that one large Group of Eight university outperformed other public universities in its research and education productivity outcomes during the pandemic.

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