FAQs for the College Community

What is Responsibility Center Management?

The Responsibility Center Management model (RCM) moves key program decisions from a central governance model to a more decentered model. RCM puts emphasis on collaborative growth of the total “pie” rather than divisive competition for specific pieces of it.

Empowering our academic leaders to make the decisions that are right for their teams is one way Algonquin College can become more entrepreneurial and more innovative. Too often we hear of examples where a faculty member or a Chair has an innovative idea to improve their program, their department, or their school, and the message back to that person is, “Great idea, but we have no money for it.”

RCM empowers Deans and Directors across the College to define their own directions by managing revenues from sources (such as tuition, government grants, corporate training, entrepreneurial initiatives and ancillary profits) with operating expenses.

In an RCM model, Deans take a more pro-active role as stewards of their programs in both the spending 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 advent of Responsibility Center Management (RCM) as a strategic resource allocation model was implemented at the University of Pennsylvania in the early 1970s. Since that time, RCM has been adopted by dozens of universities and colleges in North America as a method of decentralizing ownership of revenues along with the more customary local responsibility for expenditures.

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, Trent University and Okanagan College; in the United States, the University of Pennsylvania, the University of Michigan, Kent State University, and the University of Florida.

As Robert Zemsky observes in his paper “Thinking about RCM: A Discussion Paper for The Algonquin College of Applied Arts and Technology“, the transformation is not only discernible in the institution’s “bottom line”, it also creates a new and essentially dynamic way of “doing business” supporting deans and heads of schools to exercise their considerable authority responsibly for the benefit of themselves, their students, their organizational units, and the institution as a whole.

The College, already practicing many core RCM principles, is at the forefront among Canadian colleges to shift to full RCM.

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 units responsibility for managing their own resources.

This decentralized approach 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 current fiscal pressures on Algonquin?

  • Since the 2008 economic downturn, Ontario’s fiscal environment is changing
  • Our costs are exceeding our enrollment growth and we need to become much more conscious to create the array of “made to measure” services that the college depends on
  • The bottom line is that enrollment is going up, but the funding to support growing program is static
  • We need to change, and we want to change
  • Directors across the college will look at their services from a new perspective and plan their operations based on efficiency, competitiveness and accountability

How does RCM promote program sustainability?

The underlying premise of an RCM model is that leaders are given greater financial authority, decision-making, and accountability over their areas. An RCM model inspires leaders to be more entrepreneurial and innovative when developing programs and services that attract more students to the institution, which in turn increases revenues.

RCM helps to reframe program management as program stewardship emphasizing greater autonomy, flexibility and innovation in managing both revenues and expenditures in balance with autonomous program priorities. In this model of budget optimization, Algonquin’s academic and administrative leaders become advocates for long-term sustainability, protecting and fostering academic and fiscal health.

What are some of the anticipated benefits of RCM?

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.

What are the guiding principles of the Made-at-Algonquin model?

In this past year, we have consulted with other institutions, initiated conversations across the College and reviewed best practices to create a custom “Made at Algonquin” model. The project is moving forward based on 3 pillars: Fair, Transparent, Data Informed.

Overall, transparency has resonated as a dynamic theme in the dozens of conversations held about RCM across campus:

  • Transparency between departmental budgets, so that everyone can see each other’s books
  • Transparency to see Service Level Agreements (SLAs) across the College
  • Transparency in metrics and customer service satisfaction
  • Transparency between management expectations and staff capacity
  • Transparency in the one common basket model; no cherry-picking

What are some specific examples of RCM in action?

Sample Scenario 1

Collaborating, not Competing

Program A offers a valuable training program for professional certification, and markets the course to corporate clients (business to business). Eventually, it is decided that this training should be part of the curriculum in Program B (business to customer).

Over time, the training program becomes heavily subscribed by Program B students, and reduces the demand from Program A corporate clients. A and B begin to dispute the territory for this training program and the matter goes before the Dean.

The Program A corporate salesmanager feels she has “lost” sales; however, the net effect of the increasing popularity of the training program in Program B has resulted in a 200% increase in revenue for the College.

The Dean persuades A and B to work together to streamline their offerings, by sharing the pool of qualified instructors and the costs for classroom space, thus bringing the cost down, and by proportionally realizing revenues based on their respective client bases.

RESULTS:

  • Best practice service delivery for same program
  • More revenue to College

Sample Scenario 2

Reaching out to the Community

A regional campus has dedicated space facilities suitable for corporate meetings and special events. The campus pays for the total cost of operating the space, even though it is used only about 20% of the time, for periodic daytime meetings.

Working with RCM principles, the Director decides to make overtures to the local community to seek groups who might make use of the space during its vacant periods for a small stipend. Agreements are created with several organizations, bringing the use of the facility up to 80% and significantly defraying the operating costs of the space.

The small (minimal) charge for administration and maintenance of the space is offset by increased parking and food services revenues from visitors to campus.

RESULT:

  • Community awareness of College facilities & programs for future student recruitment
  • Inexpensive marketing tool
  • Cost recovery of facilities expenses
  • Increased revenue opportunities for Ancillary services

Sample Scenario 3

Reducing Duplication

A certain collaborative software is licensed by the College’s Information Technology Services, who maintains tech support during weekday daytime hours.

Program C requires the same software, primarily for evening and international time zone activities. The program decides to purchase a separate (duplicate) license in order to get vendor-supplied 24/7 tech support.

Under RCM, Program C could negotiate with ITS to use the software under the existing ITS licensing agreement, and cost-share its portion of the additional tech support coverage required.

RESULT:

  • Decreased Direct costs to Program C
  • Simplified ITS network by standardizing to one software application – cost savings on duplicate software may offset increased costs to support 24/7
  • Increased service to all academic departments

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;
  • Training – specific training geared to how to read general finance information and financial statements. Budget training will 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 will 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.