FAQs for Staff and Faculty

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?

RCM was initially a managerial framework created in the 1970s when American universities were approaching bankruptcy. Designed to decentralize the control of expenses, in practice, RCM has proven to to be an even stronger driver of revenues.

RCM is a methodology that fosters the following outcomes:

  • Enhance organizational effectiveness
  • Enhance competitive advantage
  • Support financial sustainability
  • Improve transparency
  • Drive innovation and entrepreneurialism
  • Foster greater employee engagement

Why does Algonquin consider RCM as a key strategy to empower its employees?

Responsibility Center Management (RCM) is designed to ignite innovative and entrepreneurial initiatives by employees. It empowers academic and administrative departments to manage their resources and it supports decentralized governance and fiscal management. By having input into and responsibility for their own revenues and expenses, departments reap the rewards of sound management.

What is the relationship between program costing and RCM?

The key distinction between program costing and RCM is the Provincial Grant recognition.

The College receives a large Provincial Grant on a 3-year average, 2-year lag basis, tied to enrollment and Weighted Funding Units (WFUs). Program costing is based on in-year funding, which is assumed to better represent the actual performance of any program.

RCM does not prescribe a methodology for allocating revenues or costs to any particular program. Each Dean has authority to determine on how budgets are allocated, if at all, between their programs.

How does an Algonquin-specific RCM differ from Algonquin’s current budget process?

2014-2015 Budget Management

  • Budget approved based on academic & financial necessity
  • Budget is set by xxxxxx for each department: any excess surplus is xxxxxx
  • Each school primarily responsible for financial performance for tuition and other revenue what is this?
  • Each school primarily responsible for financial performance for expenditures:
  • direct costs (name some of these)
  • Limited program costing reporting
  • President’s Council deals with operational budget decisions

2015-2016 Budget Management

  • Budget approved based on academic & financial necessity
  • Budget is set by contribution margin for each department: any excess surplus is kept by that department
  • Each school primarily responsible for financial performance for tuition and other revenue, based on WFUs allocation and enrollment, as well as RCM CPOG Grant and RCM Growth Grant
  • Each school primarily responsible for financial performance for expenditures:
  • direct costs (name some of these)
  • central administration costs (one basket of services for all) central services
  • space overhead by usable square footage overhead vs operating
  • Woodroffe operating
  • Continued program costing reporting
  • President’s Council deals with strategic budget decisions

What are the College’s Academic departments?

  • Algonquin College in Ottawa Valley
  • Algonquin Heritage Institute
  • Faculty of Arts, Media & Design
  • Faculty of Health, Public Safety & Community Studies
  • Faculty of Construction, Technology & Trades
  • School of Business
  • School of Hospitality & Tourism
  • Center for Continuing & On-line Learning
  • Language Institute
  • Corporate Training

What are the College’s non-Academic departments?

Central Administrative:

  • Academic Operations
  • Academic Development
  • Applied Research
  • Business Development
  • Community Partnerships
  • Communications
  • Finance & Admin
  • Foundation
  • Human Resources
  • Information Technology Services
  • Learning & Teaching Services
  • Student Recruitment
  • Registrar’s Office
  • Marketing
  • Student Support Services
  • Workplace & Personal Development
  • Office of President, BOG
  • Office of VPA
  • Physical Resources

Not included in Shared Costs

  • Ancillary
  • International

What will RCM mean for regional campuses?

The regional campuses will benefit from their portion of the Provincial Grant in Revenue, and will be charged for their portion of Central or Corporate Administration expenses and space costs. The determination of the portion of space costs will include local costs as well as general administration.

How will RCM affect my job?

The advent of full RCM will affect staff in different ways, depending on their job:

For Faculty and Staff, there will be more opportunity generally to contribute to your team by helping to create time-saving, cost-saving, cost-sharing or income generating opportunities. There will also be increased transparency of how the various revenues and costs fit within the bigger picture of the finances of the department.


What are RCM best practices?

Leadership

  • RCM works best with strong deans and strong senior management: dynamic tension is necessary to match the will of the part with the way of the whole.
  • Involve the whole institution: Identify champions and task force across all areas of the college.
  • Identify an RCM specialist as resident intellectual champion.
  • Good numbers make good neighbours: transparency and integrity in data promotes understanding of the internal economics of relative budget profiles.
  • Departments needs sufficient and liquid subvention resources (rainy days) and surge tanks (bumper crops).
  • Be transparent, communicate the evolution of the new model and ensure there is an effective training plan.

The Commons

  • Move forward: RCM cannot be made perfect by extensive and prevaricative debate or by continually refining the algorithms and rules.
  • Holding and advancing the commons requires active and aggressive leaders.
  • Central service providers need incentives to be efficient.

Responsibility Centers

  • RCM deans need professional financial officers.
  • RCM promotes the engagement of faculty and staff in the quantification and implementation of the plan they help formulate: this involvement yields a more robust organization that is more adaptable in the face of exogenous change.
  • Supplemental assistance from the common fund is not an entitlement: it is awarded to neutralize an exceptional revenue/cost mismatch; to plan for success; to advance institution-wide goals; to fuel promising startup ventures.
  • RCM encourages provision of efficient and competitive administrative services.
  • Measure and manage administrative services in both central units and responsibility centers to avoid duplication (e.g. through outsourcing).

What conditions lead to failure?

Documented case studies highlight the leading reasons why RCM implementation fails to deliver on its promises:

Weak Leadership

The president, senior management and deans must demonstrate strong support for the development and implementation of the RCM model.

One Size Does NOT Fit All

Institutions cannot copy de facto the RCM formula of their neighbour. Failure to customize the model to the specific needs of each institution means the “fit” flunks. Stay flexible and plan on periodic reviews.

Cumbersome Committees

Broad-based participation is essential. However, advisory committees and consultations are designed to inform the design of the model, not obstruct its effective evolution.

Insufficient Time

Start early and take the time to gain buy-in across the institution.

Unfair Play

Senior leadership is required to monitor the advent of “trade barriers” and enrolment grabbing between schools so that internal competition does impede the integrity of the College and its programs. The real wins in RCM come from proper exercise of the pie-expanding incentives rather than from rearranging rules to claim other center’s money.

What will be the impact on service areas?

Service Level Agreements (SLAs) will be negotiated with Academic departments to identify the services provided by non-Academic departments.

SLAs are used to clarify expectations and for reporting purposes. These formal contracts eliminate any potential confusion: Directors define the goods and services to be provided and Deans manage the scope of services provided internally.

Apart from providing services, non-Academic departments will derive the same benefits from RCM as Academic departments.

What are the key features of the Service Level Agreement?

The SLAs define key elements:

  • The scope of work for both core (common basket of services) and ad hoc (pay as you go) services;
  • The benchmarks for core and ad hoc service provision, using either current or industry (where possible) standards;
  • The timeframes for service delivery: for instance, a help-desk ticket response from ITS within two business days, or an expense report processed by Finance within 10 business days;
  • The metrics by which the provision of goods and services will be measured: performance tracking should be simple and meaningful;
  • The procedure for dispute, problem and service delivery (accountability) resolution in the event of an issue between the parties;
  • Duties and responsibilities applicable to both parties;
  • Guidance on ad hoc pricing and processes;
  • Specify methodology on resources for increased services

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?

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 is a contribution margin?

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.

How is “usable space” defined?

The cost allocation for physical resources will be based on real, measurable usable space per department (non-academic, academic and ancillary). This percentage promotes fairness regardless of building occupied and allows all departments to have a transparent allocation based on their space within their control. This method incentivizes all departments to optimize space utilization.

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 June 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!

Where can I read more about RCM?

Go to the RCM Resources page at www3.algonquincollege/rcm/. This area will be updated frequently so please check back often.