Academic journal article Planning for Higher Education

Organizational Portfolio Management and Institutions of Higher Education

Academic journal article Planning for Higher Education

Organizational Portfolio Management and Institutions of Higher Education

Article excerpt

The outcome of organizational portfolio management is a tighter alignment of institutional resources with strategic objectives and defined mission.


THE CHANGING CONTEXT OF HIGHER EDUCATION is creating a perfect storm of conditions (Gumport 2007) that could compel institutions of higher education to transform more dramatically than ever before in order to adapt to the industry paradigm shift. While higher education has faced changing forces in the past, this is the first time that all five of the recognized industry forces known as "Porter's Five Forces" (Porter 1980)--supplier power, threat of substitutes, threat of new entrants, buyer power, and competitive rivalry--are changing simultaneously. In the higher education sector, these forces manifest as (a) society shifting toward a view of higher education as an individual benefit rather than a social good, thus believing the expense should be borne by the individual and not the state; (b) state budgets in fiscal crisis in conjunction with the economic downturn; (c) legislatures less inclined to fund institutions of higher education as a result of social pressures and less able to fund them as a result of fiscal pressures, (d) for-profit institutions increasing in number and competitiveness, (e) enrollments rising, increasing pressure on institutional infrastructure; (f) the student demographic shifting from students immersed in the traditional post-high-school four-year experience to older working adults or more transient students who stop and start or come and go among schools; and (g) distance education breaking down geographic boundaries and expanding the competitor base from which students can select an institution (Birnbaum 1988; Duderstadt and Womack 2003; Eckel 2002).

In private-sector industries, organizations adapt to changing conditions by restructuring their portfolio of resources to align with new objectives (Donaldson 2000), similar to the rebalancing of a financial portfolio in response to changing risk/return objectives (Kumar, Ajjan, and Niu 2008.) In restructuring the portfolio, resource investments are rearranged to ensure alignment with predetermined criteria, such as strategic objectives. Through a process of evaluation and prioritization, a mission-critical program may be augmented with additional resources while a lower priority program may see its resources reduced or eliminated.

Some higher education institutions are likewise reevaluating their organizational portfolio of programs in an effort to optimize performance and meet strategic objectives (Dickeson 2010.) This strategy may be effective in improving or demonstrating institutional performance and justifying resource allocation in alignment with mission objectives.

However, little research exists that studies portfolio management in institutions of higher education.

Understanding the application of organizational portfolio management in the higher education sector can help institutions respond to demands for accountability and performance improvement and react with greater agility to changing sector-level conditions while maintaining strategic alignment with quality and the academic mission.


For the purposes of this study, the term organizational portfolio management is operationalized as the process of evaluating, selecting, and prioritizing the allocation of organizational investments in alignment with predetermined criteria and parameters (Donaldson 2000; Hossenlopp 2010; Project Management Institute 2008; Reginato 2005). In the higher education sector, the organizational portfolio consists of academic and administrative programs and their associated investment of institutional resources (e.g., funding, physical assets, human resource time and effort).

Effectiveness is defined here as achieving the desired quality of results, irrespective of cost. Efficiency is defined as achieving outputs greater than the inputs invested, irrespective of quality. …

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