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Tilden Watson, head of education at Zurich Municipal

The challenge for academy leaders? To think like a CEO

Rapid academisation of UK schools over the past five years has brought about massive changes to the sector, says Tilden Watson

Posted by Stephanie Broad | December 05, 2015 | Law, finance, HR

Over 4,700 schools have now left local authority control and converted to academy status, up from approximately 200 in 2010. There is no sign of this process slowing down, either. For the schools who have become academies, the changes have been revolutionary, with the leadership of the school taking on vastly increased powers and responsibility in the business management of the school. 

It goes without saying that such upheaval does not come without risk, especially for those leadership teams with little prior experience in proper business or budget management.

The simple fact of the matter is that managing the size and complexity of some schools is equivalent to that of managing a major business. Cutting the ties with local authorities and all that entails is not always a simple process, and will require schools to adopt behaviours which are not natural to them.  

Just as a Chief Executive or Financial Director is required to do, academy leaders must ensure that they are properly informed of how best to balance, manage and improve their finances. This is especially true as the pressure on academies to run their schools more efficiently, whilst continuing to deliver high-quality education for their students, is only likely to mount in the coming years. 

On top of the regular per pupil funding, powers and responsibility over staff pay and the funding of additional services such as special needs support, requires complex budget management, applying new pressures to allocate funding appropriately. 

For example, an academy can benefit financially if it is able to buy in the services it needs more cheaply, or chooses not to offer those services at all. More freedom over staff pay can also mean they make savings or attract and retain good teachers by paying more, while control over the length of the school day can allow them to teach more lessons. 

However, whilst such decisions might be advantageous for budgeting, academy leaders must ensure that such decisions do not do damage to the quality of its service or its reputation. Now, more than ever, the decisions of a head teacher must balance the education of their students, with more forward-thinking strategies about the school as a business.

It is for this reason that academies are increasingly looking towards more innovative streams of funding to balance the books and grow additional income. 

One of the most common source of income generation amongst academies today is the utilisation of school facilities for use by the broader community, with many academies opening up their leisure centres and other facilities for public use. Other academies have chosen to invest their income into trading companies, whilst others have undertaken event-driven fundraising – such as fashion shows, concerts or dinners - to provide additional income.

However, a number of new threats have emerged in recent years as a result, and by pivoting from their core function, academies are opening themselves up to previously unknown risks. For example, recognising income and expenditure with designated accounting periods has proved challenging for some academies, whilst failure to recognise the tax implications of additional income has left other academies open to allegations of fraud. 

Separately, academies must ensure that they are adequately covered for any additional activity that takes place on school grounds especially as insurance policies are unlikely to provide protection against public liability claims. For example, an injury following a treadmill tumble at the school’s leisure centre could cost the academy dearly. Whilst many academy heads have put proper risk management processes into place, others may be unaware that the activities that would provide short-term gains have hidden costs and have not made the necessary changes to risk protocols and insurance cover.

Looking forward, there is no doubt that the financial constraints on many academies will remain. Innovative methods of income generation should therefore be welcomed and actively encouraged, but only if the risks are taken into account and mitigated against.

As many academies have shown, careful management of resources and maximising the use of school facilities can significantly aid the academy in the generation of additional funding. However, academy management must ensure that they act like a CEO in the process, mitigating and preparing for any financial and strategic risk that might arise, and ensuring that they are properly protected should anything go wrong.  

Tilden Watson is head of education at Zurich Municipal

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