3rd September 2019

HR Issues – Independent Schools: Assessing Your Cost Efficiency Options

The majority of us work within an increasingly competitive environment, being constantly met with external financial demands. These demands force us to think of new ways to save money, a consideration which represents a classic ‘bug bear’ for many organisations. Despite this, diligent cost-saving remains one of the most important means by which to ensure organisational efficiency.

Cost-efficiency is especially important for independent schools at this moment in time, for whom external financial pressures are three-fold: state sector pension contributions are increasing; state sector wages are increasing, and discounted business rates for independent schools are being abolished. All of these developments pose a challenge for independent schools if they are to remain competitive in this market both for staff and students.

Perhaps the most obvious solution for independent schools to create more expendable revenue is to raise fees. However, because fees have tended to increase at a higher proportion than wage inflation over the last few years, many schools recognise that continuing to do this could risk ‘pricing themselves out of the market’. Therefore, there is an increasing eagerness within the sector to explore innovative ways to cut expenses.

First and foremost, it is essential for independent schools to forecast budget and expenditure into the future to ensure spending within their means. Within this, smaller and larger schools will operate on different scales, meaning different techniques for cost-efficiency will be relevant to them. For example, on the one hand, larger schools may be able to benchmark salaries and review pay structures to ensure proportionate pay. However, smaller schools may not be able to afford short-term increases or shifts in pay, and so will likely benefit more from skills audits and taking the time to cultivate a valuable group of staff.

But there are some cost-efficiency measures which can be considered regardless of the size of your school. Transport represents one area of potential saving: for schools that need to transport pupils each day, leasing or purchasing second hand minibuses or vehicles can be a more affordable alternative to commercial school buses. IT is another: schools might wish to investigate the pros and cons of employing in-house technicians as opposed to outsourcing, in terms of hard-wiring or other IT infrastructure work which is time-consuming and needs to be undertaken on a semi-regular basis. In addition, looking at cost-effective alternatives to PCs such as laptops or netbooks is another option.

 Moving away from examination of processes and infrastructure, further avenues for cost-efficiency might be opened up by focusing on the actual personnel involved in independent schools. Regarding academic staff, it might be worth auditing your existing teachers to establish whether any are qualified to teach to a higher examination level. Exploiting this advantage will afford schools greater flexibility. For non-academic staff, term-time only contracts might be more efficient, or annualised hours.

There is an array of options for independent schools to reduce costs and increase efficiency. Even though some measures will be irrelevant or unachievable, there will be a solution suited to your specific school. With the correct guidance and planning, your school can successfully manoeuvre its way through financial turbulence across the sector, and achieve sustainable progress.

If you have any queries or comments regarding the above article, please contact Scott McCrory-Irving.

Any independent schools who find themselves in a similar situation to that described above – regardless of the point they are at on their cost-saving journey – are recommended to attend our upcoming half day workshop on ‘Assessing Your Options’. This course is the first of Navigator’s 4-day ‘Independent Schools Series’, coming off the back of our successful conference last May entitled ‘Financial Future Proofing for Your School’. Details are below.

Day 1 – Tuesday 10th September 2019: Assessing Your Options

Day 2 – Thursday 3rd October 2019: “Fit for Purpose” Staffing Structure

Day 3 – Wednesday 6th November 2019: Changing Your Pension Scheme

Day 4 – Wednesday 4th December 2019: Changing Your Pay Structure

3rd September 2019