Achieving Success in Responsibility Center Management: An Analysis of Stakeholder Perceptions of the Implementation of Responsibility Center Management at Public Research Universities

Institutions of higher education have increasingly been adopting responsibility center management (RCM), an incentive-based budgeting system, in order to help drive innovation and improve financial stewardship. RCM decentralizes responsibility and authority within institutions, thus allowing schools, colleges, and other units to make financial and academic decisions based on their priorities and knowledge of their activities. Higher education institutions are complex organizations, which makes adoption of RCM challenging; institutions can falter in their implementations, decide to return to their pre-RCM state, or adopt modified RCM models. Given the wide range of RCM and RCM-like models in use in higher education institutions, this study aimed to discover how employees within adopting institutions view their RCM models, with specific focus on whether those employees believed institutions successfully adopted RCM and its practices.

This study explored how administrators within institutions that recently adopted RCM models viewed the results of the adoption, thus helping to answer the question of whether RCM created the change intended. Employees, including presidents, provosts, deans, budget directors, financial analysts, and faculty, from seven public, R1 institutions that implemented RCM in fiscal years 2011 or later were invited to respond to a survey consisting of closed- and open-ended questions about RCM practices at their institutions and questions relating to implementation success.

The research questions for this dissertation were:
1. To what degree do institutions that adopt RCM successfully implement its practices?
a. To what degree do adopting institutions attribute both direct and indirect costs to their constituent units?
b. To what degree do adopting institutions attribute direct revenues to their constituent units?
c. To what degree do adopting institutions decentralize responsibility?
d. To what degree do adopting institutions maintain worthwhile incentives in their RCM models?

2. To what degree do institutions that adopt RCM achieve success in their implementations?
a. To what degree do adopting institutions achieve shared understanding of roles and responsibilities among central administrators and responsibility center leaders?
b. To what degree do adopting institutions have clear and widely shared implementation plans?
c. To what degree do adopting institutions pay attention to their personnel, technical, and financial resources during and after implementation?
d. To what degree do adopting institutions exhibit evidence of continuous improvement of their RCM models?
e. To what degree do adopting institutions exhibit evidence of innovation and entrepreneurialism?

Of the 669 employees invited to the study, 141 submitted the survey (21%). Participants within and among the represented institutions responded differently to the survey questions, indicating that the value and effects of RCM depended on individual perspectives. Participants cited positive and negative features of RCM in line with the literature, though more strongly emphasized the negatives, and provided sound advice for future implementers, based on their experiences at their institutions. Findings from this study will help inform institutions looking to adopt RCM in the future, as leaders consider the potential consequences, both positive and negative, of embarking on an implementation.