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, it is only as meaningful as the questions that are being asked and the veracity and validity of the evidence used to determine the answers.

The Maturity Institute (MI) has always asked, what it believes to be, the most important and yet most challenging questions anyone can ask of another human being, including – ‘what value do you bring to the world’? Our goal is to do everything we possibly can to produce an answer that tells us the world is moving towards getting the full potential value from all of its people. More importantly, we gauge progress by measuring increases in Total Stakeholder Value (TSV). On this measure, Oxford University, surprisingly, does not score as highly as one might have expected and 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 to future generations.  The equation is simple: employees 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 most value possible out of their people.

The basis for the study was a literature survey of academic research regarding what value, if any, is added by the adoption of human capital management practices. Harvard could find no clear, causal link stating – “In sum the debate over causality remains a contested one” (page 38). As a direct consequence of this finding, the authors of the report approached MI in January 2016, having stumbled across our maturity rating process, which offered a very different perspective. We engaged in dialogue with them and they subsequently participated in MI’s Orientation Programme; to learn how we measure and rate organizations in terms of getting the best value out of their human capital, relative to their cost.

On the 5th December 2017, after OMINDEX had been rapidly gaining significant credibility and traction with a wide range of stakeholders (including banks, investment professionals, regulators), MI launched its project to include the world’s universities in the index.

When introducing any organization to OMINDEX for the first time, MI follows a protocol we developed 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, since establishing MI in 2012, of contacting hundreds of organizations to introduce a mature perspective, we have come to expect an unwillingness to confront this ultimate question of their value and the part people play. It is an obvious, Catch 22 situation. Immature organizations cannot realize what they are missing from a lack of maturity unless they mature. We accept that there is often a natural, human reluctance to embrace change but, nevertheless, history constantly reminds us that change will out in the end. We also accept that the state of the corporate world today, with its heavy emphasis on presenting a positive image or brand, is wary of any criticism but should we have a right to expect a more positive reaction from institutions whose raison d’être is learning?

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. Moreover, while we openly acknowledge that Oxford has brought huge benefits to society, in its very long and illustrious history, it has a responsibility to its staff, students and wider stakeholders to offer them every opportunity to make the most of their talents.

The fear of the unknown is worse than not knowing. The health of the university sector in any nation should be a positive indicator for a brighter future. We can no longer assume that this is the case; that there is an automatic and causal link between spending on higher education and 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 just what an opportunity might await them. We would go further in stating that we have yet to experience any negative effects for those who have started to understand and apply the lessons of organizational maturity.

Oxford University Indicative OMR – Summary report

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