Applying Value for Money in a School
Summary of VfM
- Core value of VfM is clear in all definitions: economy, efficiency, effectiveness.
- VfM is a requirement to maximise the use of scarce resources in daily operations.
- Economy means doing things cheaply: cost of labour, information, materials kept under control.
- Efficiency means doing things well: good systems and inputs that avoid waste and rework.
- Effectiveness means doing the right things: achieving the objectives.
The Key Principle
No matter how cheap your operation is, no matter the degree of your efficiency, if your operation is not effective the effort is total waste.
- A good manager does things right (efficient).
- A good leader does the right things (effective).
- The importance of leadership becomes obvious.
- Most losing organisations are over-managed and under-led.
Stephen Covey (1989) on climbing the wrong wall
Their managers accomplish the wrong things beautifully and efficiently. They climb the wrong wall.
Covey popularised the wrong-wall metaphor in The 7 Habits of Highly Effective People; the underlying management-vs-leadership distinction (“doing things right” vs “doing the right things”) is most often associated with Peter Drucker.
The most important insight from the resource management literature is that effectiveness matters most. A school can do many things cheaply and well and still fail because it is doing the wrong things. Applying VfM in practice means putting effectiveness first, then efficiency, then economy.
A clean summary of VfM
The core value of VfM is shared across definitions: economy, efficiency, and effectiveness. VfM is a requirement to maximise the use of scarce resources in daily operations.
- Economy means doing things cheaply. The cost of labour, information, and materials is kept under control.
- Efficiency means doing things well, with good systems and inputs that avoid waste and rework.
- Effectiveness means doing the right things, that is, achieving the objectives.
Three short phrases capture the three E’s:
| E | Phrase |
|---|---|
| Economy | Doing things cheaply |
| Efficiency | Doing things well |
| Effectiveness | Doing the right things |
A school head can hold all three in mind when reviewing any expenditure or programme.
Why effectiveness is the most important
No matter how cheap your operation is, no matter the degree of your efficiency, if your operation is not effective the effort is largely wasted.
This is the central insight. Effectiveness matters most because without it, the other two are meaningless.
A school that runs a programme cheaply and efficiently to produce no useful outcome has wasted everything. The cheap inputs were wasted. The well-organised process was wasted. The whole effort was wasted because the output did not achieve the goal.
Conversely, a school that is somewhat expensive and somewhat inefficient but produces real outcomes is still doing the work. The inefficiency is a problem to fix; the effectiveness is what justifies the effort.
A school head should pursue all three E’s, but if she has to prioritise, effectiveness comes first. Get the right things done. Then make them efficient. Then make them economical.
The leadership connection
VfM connects to the leadership-management distinction. A good manager does things right (efficient). A good leader does the right things (effective). Management focuses on efficiency. Leadership focuses on effectiveness. Both are needed.
The leadership question (are we doing the right things?) is more important than the management question (are we doing them efficiently?). If the answer to the leadership question is no, the management question becomes irrelevant.
Schools need both modes. Pure management without leadership produces efficient pursuit of the wrong goals. Pure leadership without management produces inspiring vision and weak execution. See Leader vs Manager for the underlying distinction.
The over-managed, under-led organisation
Stephen Covey captured the most common failure mode: most losing organisations are over-managed and under-led. Their managers accomplish the wrong things beautifully and efficiently. They climb the wrong wall.
A losing organisation has put a ladder against a wall and climbed it carefully, only to discover at the top that it was the wrong wall.
For a school, this is unfortunately common. A school can have:
- Tight financial controls.
- Detailed operational procedures.
- Disciplined staff.
- Clean buildings.
- Punctual operations.
And still be producing children who cannot read at grade level, who are not prepared for the next stage, who have learned compliance but not thinking. The school is well managed; it is the wrong wall.
A school head doing her job seriously asks the leadership question first: are we climbing the right wall? Are we trying to produce the right outcomes? Are our priorities the priorities that actually matter for the children?
Only after the leadership question is answered does the management question become useful: how do we climb this wall well?
Practical VfM in a school
A school head can apply VfM in daily practice through three habits.
Before any major decision, ask all three E’s
For any new programme, expenditure, or policy:
- Is this the right thing? (Effectiveness)
- Are we doing it well? (Efficiency)
- Are we doing it at reasonable cost? (Economy)
If the answer to (1) is no, do not proceed regardless of how the others would look.
In regular reviews, ask all three E’s
When reviewing existing programmes:
- Is it still producing the intended outcome? (Effectiveness)
- Is it producing the outcome with minimum waste? (Efficiency)
- Is its cost still justified by its output? (Economy)
A programme that fails (1) should be redesigned or cancelled, not just made cheaper.
In strategic planning, lead with effectiveness
The school’s strategic plan should be built around effectiveness questions. What are we trying to do? Why does it matter? How will we know we have succeeded? Then add efficiency and economy questions: how should we do it? How can we do it well? How can we do it at reasonable cost?
A strategic plan built around economy and efficiency alone (“we will spend less and run tighter operations”) misses the real strategic question.
A summary thought
Management is necessary but not sufficient. A well-managed school can still fail if it is leading itself in the wrong direction. The work of school leadership starts with effectiveness questions and uses efficiency and economy in service of them.
A school head who reverses this order, focusing on efficiency and economy first and treating effectiveness as a bonus, has misunderstood the job.
Effectiveness matters most. Without it, economy and efficiency are meaningless.
A school can do the wrong things cheaply and efficiently and still fail. The metaphor: “Their managers accomplish the wrong things beautifully and efficiently. They climb the wrong wall.” (Stephen Covey)
The leadership connection: a good manager does things right (efficient); a good leader does the right things (effective). Both are needed, but the leadership question (are we doing the right things?) comes first.
Most losing organisations are over-managed and under-led. They are well-organised, financially disciplined, and producing the wrong outcomes.
A school head should lead with effectiveness questions in strategic planning, programme reviews, and major decisions. Use efficiency and economy in service of effectiveness, not in place of it.
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