American professor lectures on Responsibility Centered Management
by Natnipha Vimuktanon
Almost 100 AIT faculty and staff learned more about the concept of Responsibility Centered Management (RCM) in a seminar on Wednesday, 1 March. Professor H. Öner Yurtseven, Dean of School of Engineering and Technology, Indiana University-Purdue University Indianapolis.
RCM aims to integrate and coordinate academic and fiscal management. Prior to RCM many universities in the U.S. did that separately.
Indiana University is the first public university in the United States to implement the concept of RCM which is being used widely now in U.S. universities under increasing financial pressures.
Prof. Yurtseven opened his presentation with the background of Indiana University, which is the largest state-funded university in Indiana, with eight campuses and 92,619 students.
Prof. Yurtseven then gave an overview of RCM, saying the system began at Indiana University in 1989. A former president introduced the concept, adapting it from Stanford University and the University of Pennsylvania where he used to work.
'Academic units decide what degree programs to have and what degree programs to keep, what to eliminate. But the finances are done separately and usually sometimes those two groups do not talk to each other or they talk only at the highest level,' Prof. Yurtseven explained.
With RCM system, decision making is decentralized, and authority is given to the school deans who make decisions about the schools without checking with the president, vice presidents or chancellors. RCM further creates incentives and costs. Each school is given incentives to increase income and decrease costs. Deans have to make choices for financial reasons.
The most important part of RCM, Prof. Yurtseven said, is information sharing. Prior to RCM, schools did not know how the finances were being done in the university. With the current environment, the dean knows the his own school's as well as the other schools' financial situations. It helps the multi-year planning without the approval from the president.
The schools automatically have extra money that they can plan for one year or more than one year. If the school faces a deficit, it has to plan multi-year how to recover and how to become profitable.
Prof. Yurtseven added that RCM does not create more money; it reorganizes and rearranges the financial information and it does not set academic priorities, which is very important.
'Sometimes the faculty members and department chairs are under the impression that finance people decide what programs should exist and what programs should be eliminated, which is not the case with RCM system. RCM provides data for dean and associate dean and department chair to make the decisions,' he said.
Prof. Yurtseven said there are three principles for RCM: first, assigning all the costs and income to each academic unit; second, assigning the cost of a support unit to all academic units; third, creating appropriate incentives for each academic unit to increase income and reduce costs to further a clear set of academic priorities.
He cited steps to establish RCM that include indentifying an RCM center, creating new accounts or consolidateing existing accounts, attributing income to an academic RCM center, assigning cost of support RCM centers to all academic RCM centers, and building budgets.
Prof. Yurtseven further explained that to define RCM, it depends on the university and how the organization is set up.
'Management responsibility has to be clearly understood and there has to be one person making decisions in that unit, for that unit. You can have faculty governance in any academic unit. You can have faculty senate, but there has to be one person who makes decisions on finances and that is usually either the dean or the director of the unit. In considering RCM, you have to put all of the funds coming to the unit and all the expenses that go out so that you have the complete picture,' he said.
Those who were unable to attend the presentation on RCM, the video and power point presentations have been archived and is available at:
http://203.159.5.16/lectures/RCM/