FAQs for Deans and Directors

What is the role of Deans?
What is the role of Directors?
What is the role of President’s Council?
How does the RCM model work?
What are the major principles that support the “Made at Algonquin” model?
What has Algonquin learned so far in implementing RCM?
Which institutions have successfully implemented RCM?
What will it mean for regional campuses?
What will be the impact on service areas?
What does “hold harmless” mean?
How will service delivery be evaluated?
What are the incentives for collaboration?
What are the current fiscal pressures on Algonquin?
What are the anticipated benefits?
Will there be training?
Where can I read more about RCM?

What is the role of Deans?

As Algonquin’s Responsibility Center Management (RCM) project moves to implementation, Deans are preparing to take a more pro-active role as stewards of their departments in both the expense and revenue components of their budget. Going forward, when those great ideas are presented, Deans will have more leeway in determining which ideas to fund and support, guided by our principles, policies and guidelines. The ability to keep a percentage of net budget surpluses annually will give Deans a pool of money which is within their discretion to spend.

The RCM Steering Committee has worked one-on-one with Deans and finance staff in every department to prepare for conversion to RCM in this fiscal year (2015/2016). The leading principles guiding the transition to the “Made at Algonquin” model are fairness, transparency and data informed: in this way, all Academic and non-Academic departments play by shared guidelines regarding the delivery of internal services, the accessibility of fiscal records, and the use of solid metrics to make decisions.

Empowering our academic leaders is an important way for Algonquin College to support its entrepreneurial and innovative edge. RCM is expected to foster faculty, staff and students’ abilities to do the work on their desktops, to do collaborative work around the campus, and to participate in the College as a whole.

What is the role of Directors?

Directors also serve as stewards for their respective area and are responsible for meeting the terms of their Service Level Agreements to the College, and for providing accurate and timely metrics. Each non-Academic department provides services which are included in the Common Basket of Services accessible across the College.

What is the role of President’s Council?

President’s Council deals with strategic budget decisions with focus on directing the College as a whole; Deans and Directors manage their own operational decisions within their Approved Budget.

How does the RCM model work?

RCM is best known as a financial reporting framework that shifts from an institutional level to a departmental level to give individual departments responsibility for managing their own resources.

This is a shared fiscal responsibility approach which is attractive to many higher education institutions as a way to stimulate entrepreneurial thinking around attracting students and funders, and to improve efficiencies in response to tight fiscal conditions according to each department’s values and priorities.

Some key budgeting principles of the Responsibility Center Management model include:

Each academic or administrative unit receives the revenue it generates with a portion remitted to the college-wide budget to support shared overhead costs
Units have the primary decision-making authority in deciding how revenues will be acquired and spent
Units are permitted to carry surpluses over to the next year
Units are responsible for repaying debts/deficits
Emphasis on performance with direct financial consequences

What are the major principles that support the “Made at Algonquin” model?

The 7 principle statements that support the “Made at Algonquin” model are:

A department keeps X % of their surplus funds to be used within a defined period of time (suggestion: two (2) years).
A hold harmless policy at the Academic department level for two (2) years beginning April 1, 2015 (suggestion: two (2) years).
The net investment and impact of RCM implementation is sustainable.
Prior to any college level approval, a department must co-ordinate new initiatives with other departments which may be affected.
Non-academic costs do not as a % grow more than academic % cost growth.
RCM includes a definition of total costs of delivering a program or service
RCM includes a defined internal costing process

What has Algonquin learned so far in implementing RCM?

We have learned that staff want to be engaged in change. We have had many lengthy conversations on what RCM means and could mean to the College.

Engaging people in the change has allowed many issues to be put on the table for discussion, which has increased transparency to the administrative operations of the College. We know it will not change overnight, but by working together we are moving in the right direction.

Which institutions have successfully implemented RCM?

A number of leading academic institutions have transformed their management practices based on RCM; in Canada, notable examples are Queen’s University, the University of Toronto and Okanagan College; in the United States, the University of Pennsylvania, the University of Michigan, Kent State University, and the University of Florida. More recently in Canada, both Trent and Wilfrid Laurier University have expressed their intentions to move to an RCM model.

What will it mean for regional campuses?

Non-Academic departments provide services to all departments – not just those situated at Woodroffe. By completing the Service Level Agreements, all academic departments will see the services available to them, including the regional campuses. We expect this will decrease duplication and increase the use of best practice methodologies for all departments.

What will be the impact on service areas?

There is no impact to the service areas from RCM. However, the Service Level Agreements effectively stand as great internal marketing documents for the service or non-Academic departments by itemizing all the great services they provide.

What does “hold harmless” mean

This policy refers to the allowance of a ramping-up period for departments so that no school or department will be penalized financially by the move to the RCM model for an agreed upon period and also would be able to take time to adjust and prepare for the new expectation under RCM.

For example, a school could have the same base budget for the next 2 years equal to their F2014-2015 budget. During that period, the school would work on creating new sources of revenue implement expenditure reductions to ensure they meet the pre-established margins.

How will service delivery be evaluated?

As part of the Service Level Agreement process a Client Satisfaction Survey is being developed. Staff will have the chance to complete this survey approximately every 6 months following the Service Level Agreement (SLAs) inception on April, 2016. These surveys will help evaluate the rest of the college community’s satisfaction level with each department at Algonquin College.

There will also be a Business Intelligence dashboard which will report on the metrics per department, as defined in each SLA. For example, if a department has the capacity to complete 1,000 transactions in a month, the dashboard will report actual performance.

Each year, with the results of the surveys and the metrics dashboard, each department will be evaluated. The appropriate Vice President will meet with the Vice President of Finance and Administrative Services to discuss the results and discuss changes as necessary.

What are the incentives for collaboration?

In accounting, the contribution margin is defined as revenues minus variable expenses. In other words, the contribution margin reveals how much of a company’s revenues will be contributing (after covering the variable expenses) to the company’s fixed expenses and net income.

Each department’s contribution margin will be calculated annually as part of the annual budget process and based on the College’s Strategic Plan. This process, along with the periodic review of Service Level Agreements, will foster collaboration between departments and create an environment where departments work towards a common goal.

What are the current fiscal pressures on Algonquin?

Since the 2008 economic downturn, Ontario’s fiscal environment is changing, and this means changes ahead for publicly funded institutions of higher learning.

The bottom line is that enrolment is going up, but the funding to support growing programs is static. As Algonquin’s costs outpace our enrolment, we need to become much more conscious to create the array of “made to measure” services that the College depends on. Under RCM, Deans and Directors across the College will look at their services from a new perspective and plan their operations based on efficiency, competitiveness and accountability.

What are the anticipated benefits?

Beyond its function as a method of budget optimization, Responsibility Center Management (RCM) also yields non-fiscal rewards.

In 2012, Algonquin College conducted an Employee Engagement Survey to gather data on the status of the College environment from the employees’ perspective. The survey revealed that Algonquin employees are among the most engaged in the country, are finely focused on student success, and are exceptionally proud to work at the College.

The survey results are being used to set goals to foster a dynamic and supportive work environment. Algonquin’s 2012-2017 Strategic Plan supports the college’s commitment to empowering its employees. Strategic Pillar 3: Empowered People reflects goals that strive to promote engaged staff and leadership. The 2013-2014 Business Plan introduces RCM as a specific initiative to foster an empowered workforce.

Will there be training?

We are currently finalizing our Training Plan that will be composed of four (4) phases:

Just in time – within the next two weeks, the description of the journal entry processes and specific General Ledger Codes and descriptions;
Specific RCM Training – specific training geared to how to read the financial statements, general finance information and budget training to be available starting in June and repeated several times annually;
Review of actual financial information – in July and August, an opportunity with Duane McNair and Grant Perry to look at the financial reporting system and RCM entries. Two meetings would be scheduled to be able to focus on Academic and Non-Academic departments in separate meetings.
Tool Kit – this training is a more of a tool kit of resources and training, internal and external to the College to support skills needed to exceed in leadership and management under RCM, but also in a larger context of management skills.

We have created an RCM resources page, with links to training on RCM, Algonquin financial software’s and Financial Literacy. Go to the RCM Resources page at https://www.algonquincollege.com/rcm/rcm-resource-centre/. These baskets of training will be updated as needed, so check back often!