Performance indicators and rankings in higher education

In times of austerity sectors which are publicly funded are inevitably under pressure to use their resources more efficiently. As a consequence, there is a tendency for the distribution of funds to be linked to past performance. During the 1980s, a period of funding cuts in the UK, the higher education funding bodies strove to develop performance indicators the purpose of which was to aid in the distribution of funds. In the early years, these indicators were simply ratios of one output to one input such as the proportion of students with ‘good’ degrees or the cost per student. Higher education institutions (HEIs) are multi-product firms, however, with complex production processes, and simple ratios cannot possibly capture the true picture of performance. In the ensuing thirty years, as techniques have developed to capture performance in a multi-output multi-input production framework, indicators have become more sophisticated. There is still a tendency, though, to stick with the more simple (easy to interpret) indicators as demonstrated by the interest in media rankings of universities. But the danger of these simple indicators is that they are open to manipulation and gaming. This paper examines and compares media rankings and performance indicators and proposes and evaluates a methodology which both captures performance and reduces the likelihood of gaming behaviour.