Oxford University’s OMINDEX rating of BB- indicates <40% realisation of Total Stakeholder Value

There are a range of league tables which purport to determine the top universities from around the world. Harvard and Oxford are currently in positions No. 3 and No. 6 in the ‘Topuniversities.com’ 2018 rankings. As with any ranking though, it is only as serious as the questions being asked and the veracity and validity of the answers.

The Maturity Institute (MI) exists to ask the most important and yet most challenging questions including – ‘what value do you bring to the world’? Our goal is to do everything we possibly can to realise the full potential value people for everyone’s benefit. More importantly, we gauge progress by measuring increases in Total Stakeholder Value (TSV). On this measure, Oxford University does not score as highly as one might have expected. This apparent paradox needs a great deal of explaining.

In 2015, two Harvard Law School academics (as part of their ‘Labor & Worklife Program’) produced a report entitled “The Materiality of Human Capital to Corporate Financial Performance” (see our response here). One of the primary reasons why Harvard posed this question was the worrying forecast that the US (as with most Western economies) might struggle to provide sufficient pensions for future generations.  The equation is simple: people have to be enabled to create enough value to pay for their own pensions. The research was funded by the Investor Responsibility Research Center Institute (IRRCi) to ensure corporations were acting responsibly in getting the best value out of their people.

The basis for the study was a literature survey of academic research into the adoption of human capital management practices. Unfortunately, Harvard could find no clear, causal link, concluding – “In sum the debate over causality remains a contested one” (page 38). The authors of the report, having stumbled across MI’s maturity rating process, approached us in January 2016 to get a very different perspective. We engaged with them and they subsequently completed MI’s Orientation Programme. Then, on the 5th December 2017, MI launched its project to include the world’s universities in OMINDEX.

When introducing any organization to OMINDEX for the first time, MI follows a protocol  which progresses through a simple series of steps. In the specific case of Oxford:-

  • We invited the Vice Chancellor, Louise Richardson, to engage with us in this endeavour.
  • Having not received a response, we advised that we would be producing an indicative OMR rating based on externally available information; and reserved the right to publish our findings.
  • We later advised them of their indicative BB- rating and asked if they wished to enage or respond.
  • Yesterday we received their confirmation declining to take part.

Based on our extensive experience, we have come to expect an unwillingness to confront this ultimate question of value and the part people play. It is an obvious, Catch 22 situation. Immature organizations cannot realize what they are missing unless and until they mature and the academic world is certainly immature in terms of its willingness and capability for managing academics. We accept that there is often a natural, human reluctance to embrace change but should we not have a right to expect a more positive reaction from institutions whose raison d’être is learning and where costs are rising significantly?

When we do receive a response, it is often a referral to the HR director. This was the case with Oxford. We gathered some evidence to check whether his ‘HR Strategy’ had moved away from the sort of practices cited in the Harvard study; but it proved be very typical in its lack of evidence, measurement and causal diagnostics. How does this sit with the many Dons at Oxford whose ‘religion’ is the scientific method? Are they aware just how unscientific and unprofessional their people management is?

One of the reasons we chose Oxford as our first university case study was the hope that its tradition of learning might encourage it to become an exemplar for innovative thinking and practice in the sector. Another reason was its recent issuance of a bond for £500 million. Holders of such bonds might want to ask why the Moody’s rating of Aaa is at odds, on an almost identical scale, with our OMINDEX rating of BB-. The rest of society might also ask whether scarce university funding is in the best hands for achieving the highest returns in Total Stakeholder Value?

OMINDEX is a benchmarking scale that has an over-arching purpose. To identify the best, and what exactly it is that they do so well, so that others can learn how to create more value with their own human capital. No organization has yet scored a AAA rating on OMINDEX, so there is always room for improvement and, who knows, maybe it will be a university who reaches that pinnacle first? Moreover, while we openly acknowledge that Oxford has brought huge benefits to society, in its very long and illustrious history, it also has a responsibility to its staff, students and wider stakeholders to offer them every opportunity to make the most of their own talents.

Academia should know that the fear of the unknown is worse than not knowing. The health of the university sector should be a positive indicator for a brighter future for all. We cannot allow simplistic and automatic assumptions that higher spending on higher education will increase societal value. We need much better evidence that the sector is working to its full potential.

MI offers a very warm and understanding welcome to any universities that recognise the scale of the opportunity awaiting them. We would go further in stating that we have yet to experience any negative effects for those who have started learn and apply the lessons of organizational maturity.

Oxford University Indicative OMR – Summary report

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