“Best value” rankings in higher education: bang for buck universities?
September 11, 2014
A post written by Dane Pflueger and Tommaso Palermo
As a recent NY Times article has pointed out, the public rankings regime in higher
education is changing. From the elusive quest of determining quality or ‘who’s
the best’, public and private authorities in America have moved to the even more
daunting quest of determining best value, or, as the article explains it, ‘where you
can get the most bang for your buck’.
Although, as the article makes clear, there are innumerable different ways in which
this new notion of best value is being measured and expressed, it is made possible,
in principle, by placing a denominator, cost, below those sort of public measures that
might be summarised as quality.
Best Value = Quality/Cost
We might consider this movement to be simply another instantiation of the public
ranking phenomena, producing yet another set of dysfunctional effects through
mechanisms such as reactivity and commensuration to use Espeland and Sauder’s
However, one ranking is not necessarily the same as any other. As accountants are
well aware, fractions are very different from integers. Indeed, as we aim to quickly
show here, drawing from examples in management accounting, public rankings
that are conceptually-conceived fractions, might produce quite distinct sorts of
phenomena and effects.
The movement from an integer to a fraction reorients attention and action in two
directions. Faced with the fraction quality/cost, administrators confront two options
for increasing performance: increase quality or reduce cost.
This sounds initially like a more enlightened form of ranking than quality alone.
Indeed, it transforms inputs from a constraint on performance, into an asset, thus
injecting the notion of performance with a more relative and even democratic appeal.
No longer, it might be argued, is organizational performance constrained by one’s market
or business model. Instead, quality is reconstituted as something closer to ‘fit for purpose’.
However, much management accounting literature has drawn attention to the fact
that such options are heavily constrained by the organization’s existing place in the
league table, leading to ‘under-optimization’ from the standpoint of the system as a
whole is a common result.
In the case of the Return on Investment ration (Profit/Assets), which is conceptually
similar to Best Value, organizations that initially achieve high performance are
encouraged to under-invest in assets that will be productive from the system
perspective, but that will lower the ROI of the individual unit. At the same time, poorly
performing units are encouraged to invest to generate new returns, but at much less
efficient rate than the system as a whole. The net result is that overall performance
of the system declines at the inside of the edges: either through under-investment in
profitable assets or over-investment in unprofitable ones.
In the educational setting, using quality/value as a primary public measure of
performance might manifest itself as a constraint on overall educational market,
discouraging high performing universities from expanding its offerings into less
value products, while encouraging low performing universities to expand poor value
The movement from an integer to a fraction also highlights the distinctive relationship
between the numerator and denominator, which presumably interact in a quite
specific manner. In the ROI regime, there is seen to be an imperfect relation
between return and investment. Managers, it is sometimes thought, can increase
returns by increasing investment, but very good managers can increase return/
investment at a higher rate. This may be true in the long term, but in the short
term, ‘very good managers’ are made by exploiting the imperfect relationship
between the two terms, often in dysfunctional ways. Managers, for example, often
manipulate the timing of investment and booking of revenues so as to drive a
temporarily artificial wedge between the two and increase returns.
In the educational context, the relationship between cost and quality is under-
explored and undoubtedly complex. We might imagine that, like ROI, the best value
school, like the good manager subject to ROI calculations, will try to interact the
two terms opportunistically (shifting more costs from tuition to fees, for example, or
borrowing heavily to boost quality at one point, only to pay for it in increased fees
It is also unclear how quality and cost relate and interact. If cost and quality relate
in a perfectly elastic way, then the ratio merely presents different possibilities for
organizations to move along the ratio line, repositioning itself in a different ‘market’
but not affecting the overall value of the product delivered. This scenario might be
quite likely given the existing arguments about costs simply providing market proxies
If cost and quality are perfectly inelastic, then the ratio merely presents two variables
to optimise without considering them to have a tradeoff or mutual effect. Hence we
would have merely an extension of the ranking system on merely a number of new
One final point relates to those who produce or sponsor a ranking system for higher
education institutions. As a recent article shows, ranking systems themselves
‘compete’ with each other. A successful ranking is one that combines familiarity
(some universities have to be at the top!) and surprise (something unexpected that
attracts the attention of the media). On this basis, it is clear that the production of a
specific ranking system is far from being a neutral game.
Considering all the unintended consequences and behavioral problems that rankings
may trigger, the question is whether some sort of auditing or external certification
of the quality of rankings might help. The answer is probably not. As shown in
Free at al. (2009) on the FT ranking, the auditing of the data underlying
universities’ rankings is subject to several constraints leading to the auditing of the
relatively small portion of data that indeed is auditable.
In summary, rankings need to be handled with extreme caution by university
administrators and those responsible for allocating funds to the higher education
sector. The cursory discussion of changes in the public measure system suggests
some interesting questions to be pursued regarding the changing public measures
regime in education. Often a number is seen to be just the same as any other
number, but a closer attention to the type and form of the number might help
us better understand the many complex ways in which public measures and
organizational performance intertwine.
Tommaso Palermo is a Lecturer in Accounting at the London School of Economics.
Dane Pflueger is an Assistant Professor in Performance Management at at Copenhagen Business School.