Leader

Even the Smart Ones Can Fall into the Performance Trap

Imagine a relatively large or even a really large corporation that manufactures products A, B, C, D and E. The corporation has one big client from which it receives about two thirds of its revenue stream. The client determines the products that are ordered and their properties, even though there is some room for negotiation. If the corporation takes on other orders, they are also manufactured with the knowledge that has been developed on the main lines.

At times, the big client changes its order. F and G replace E, the properties of A and B or the ordered number is changed. Because the corporation is economically completely dependent on the client, and it does not have a possibility of finding a demand to replace it, it renews its production lines and transfers the work of the personnel and other resources from one line to another in order to fulfil the orders and to secure its finances.

This is roughly how the universities’ funding model that is based on performance management operates. Defenders of the model claim that it does not jeopardize the autonomy of universities, because the funding model is only a model for distributing funds. Once the money is distributed, universities are completely free to decide how they use it.

This may be, but if the operation produces something other than the performances that the orderer determined, the university does not receive a single cent from the ministry. In addition, the well over ten other universities in the country manufacture the same performances, and they do everything they can to increase their portion of the revenue stream that the performances generate. In these conditions, it is hypocritical to assume that the university administration could bypass the bonds of the funding model and still succeed financially.

The Finnish universities’ funding model is, in an international comparison, exceptionally performance- and competition-focussed. When the ministry that is guided by the Government leads the determination of the performances and the competition about them, the university community’s gaze is too fixed on fulfilling the ministry’s wishes.

This may be the most devilish feature of the “subcontractor model” that is tied to performances, and it concerns everyone in universities. Everyone, starting from the youngest dissertation researchers, knows for example, what Jufo 1-3 means: there is some probability for scientific quality, but full probability for money and pats on the back from the management.

Universities should see their “clients” – if this term is appropriate – largely in completely other directions: in students, corporations, in the civic society and everywhere where knowledge and competence are of use. The most important focus should be on research, the demands of which should primarily come from the international and national science community.

If Finnish universities had, like universities in many other countries do, more basic funding that is not tied to performance indicators, their gaze could more easily turn from the ministry to science, citizens and corporations. Discussion could be had directly based on the wishes and resources of interest groups. The funds management of the ministry is a strong instrument, and a much smaller lever than now could be used to fulfil a sufficient number of the wishes of the government and civil servants.

The performance-based funding model has been defended on the grounds that particularly the funding that is based on degree indicators has historically been relatively steady. The fact that the annual fluctuation of the results of the distribution of funds has been small over the recent years does not eliminate the basic problems of the model, like the oscillation between production lines that the personnel faces. It also does not guarantee the future stability of funding.

The proposition for the new funding model that was published as a result of the vision work by the Ministry of Education and Culture on October 24 does not, unfortunately, increase universities’ freedom of operation with regards to content, nor does it increase the stability and simplicity of funding as compared to the current model.

In Rovaniemi, October 17, 2018

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