Leadership Foundation

TThe Getting to Grips (G2G) publications offer guidance for governors on important areas of an institution's work, for which they carry important responsibilities.

The G2G with Efficiency: guide for governors, differentiates between the concepts of economy, efficiency and effectiveness.

Economy describes the cost of procuring resources; efficiency how inputs are turned into outputs; while efficiency is about producing desired outputs. All three elements - economy, efficiency and effectiveness - determine whether an institution is achieving value-for-money (vfm).

In practice, there are often trade-offs between the elements of economy, efficiency and effectiveness. This suggests that institutions need to exercise care if they are to ensure, for example, that an improvement in efficiency does not impair effectiveness or economy. Rather the aim should be to improve efficiency, without compromising effectiveness or economy.

Higher education institutions (HEIs) in receipt of public funding in each of the four devolved nations of the UK are required to evidence that they are achieving vfm in their use of public resources. This requires governing bodies to seek assurance that the institution is achieving vfm in its use of resources.

In exploring how a governing body can gain assurance, the Guide describes the work of an Audit Committee and internal audit; the use of performance indicators and benchmarking; gives examples of how efficiency has been improved by different HEIs; and highlights a number of sector-wide initiatives (e.g. the work of The Efficiency Exchange).

Governors would be well-advised to consider whether engagement in the initiatives described in the latest G2G Guide could helpfully assist their institution in improving its vfm.