Responsibility center management: A financial paradigm and alternative to centralized budgeting

Purpose . The purposes of this study were to (a) examine and describe the purpose and characteristics of responsibility center management (RCM) systems at two institutions of higher education, (b) describe the RCM system used at each institution at the school level of the organization, (c) examine and analyze the implementation of RCM at each institution, (d) identify the advantages and disadvantages of RCM systems at each institution, (e) examine and describe the impact of the RCM system on various constituencies affected by implementation of the process at each institution, and (f) provide data which may assist institutions of higher education in determining whether or not to institute a RCM model to assist administrators in the budgeting process. Procedure . The researcher conducted 12 interviews. Respondents included one provost, one chief financial officer (CFO) and one dean from each institution, and six faculty (three from each institution) who had knowledge of, in varying degrees, and/or responsibility for the school-level implementation of RCM systems. These individuals provided information regarding their perceptions of their respective RCM systems and related activities associated with the implementation process at each institution. Twelve content analyses were developed; two provost content analyses, two CFO content analyses, two dean content analyses, and six faculty content analyses. Two case studies were developed from the content analyses: one case study between the faculty and the administration at each institution. In addition, the researcher developed a cross-case summary from the case studies. Conclusions . The administrators in this study felt that RCM systems were implemented at each institution whereas; the faculty reported that this was not the case. Other significant findings included: (a) all the respondents indicated that each person or office might assume different roles depending on the stage of the RCM process however, good budget planning and performance was facilitated by stable environments; (b) ten out of the twelve respondents reported they could be responsible for their programs and accountable for fiscal integrity if they acted upon accurate and timely information; (c) four out of the six faculty pointed out that RCM implementation was more difficult at smaller institutions primarily, in increasing efficiency and reallocation of resources; (d) two administrators and six faculty raised concerns that information usually flowed downward in the authority hierarchy; (e) two administrators and six faculty indicated that tension resulted from the academic centers wanting more decentralization than the administration; (f) four out of the six faculty reported RCM implementation had occurred on paper only, without sufficient faculty input, and with insufficient information regarding the system\u27s implications; and (g) all the respondents further indicated that they reserved judgment on the implementation of RCM systems until decentralization and autonomy for the academic centers is embedded in the institutional culture