Holding companies and strategic business units (SBUs) of Malaysian public universities are struggling to generate substantial revenue, despite various efforts and internal support.
Let's examine why governance and autonomy issues are at the core of these problems, hindering the financial aspirations of public universities and preventing them from achieving self-sufficiency.
The governance structure of university holding companies is fundamentally flawed. Subsidiaries often bypass the holding company, reporting directly to the university administration.
This undermines the strategic oversight and control that holding companies are supposed to provide. The holding company's power is diminished, leading to inefficiencies and misaligned priorities. It's akin to having a ship where the crew disregards the captain's orders, steering the vessel into chaos.
Subsidiaries, when allowed to operate independently from their holding companies, fail to align their operations with the strategic vision and goals set by the holding company.
This lack of alignment results in fragmented efforts and suboptimal use of resources, ultimately undermining the income-generating potential of these entities.
Decisions critical to the financial health of these entities are often controlled by university boards rather than the holding companies' management. This power-distance creates a disconnect between operational realities and strategic directives.
Decisions are made by individuals who may not fully understand the day-to-day operations and market dynamics, leading to poor oversight and accountability. This misalignment weakens the holding company's ability to function effectively.
Imagine trying to run a business where key decisions are made by individuals with little understanding of daily operations — this is the stark reality for these university entities.
The lack of autonomy granted to these holding companies and SBUs is a significant impediment.
Each significant business decision often requires approval from university authorities, leading to bureaucratic delays that stifle innovation and responsiveness.
This bureaucratic inertia prevents these entities from acting swiftly on market opportunities.
It's like trying to navigate a maze with every turn blocked by red tape, ensuring that any attempt at progress is met with frustration and delay.
Holding companies need the freedom to make timely decisions without the burden of excessive bureaucracy.
This autonomy is crucial for exploring new business ventures and responding to market changes quickly and effectively.
Public universities remain heavily dependent on government funding, an unsustainable model for achieving long-term financial health.
Despite budget increases, universities still rely on external funding for a significant portion of their expenditure.
This financial dependency restricts the holding companies' ability to invest in profitable ventures.
Without sufficient initial capital and continuous funding, these entities struggle to explore and invest in high-potential projects.
Many subsidiaries were established before the creation of the holding companies and maintain deep-rooted organisational structures resistant to change. This legacy system creates inertia that prevents subsidiaries from aligning with the new strategic goals of the holding company.
Historical inertia makes it difficult to adapt to new income-generating activities, limiting the holding companies' effectiveness.
The culture within public universities often does not prioritise entrepreneurial activities.
There is a notable lack of incentives for staff to engage in income-generating initiatives, and traditional academic focus overshadows commercial endeavours.
Without strong financial or recognition incentives, there is little motivation to pursue innovative business strategies.
The core issues hindering the effectiveness of university holding companies and SBUs in generating income are deeply rooted in governance and autonomy challenges.
To overcome these obstacles, public universities must undergo significant reforms in their governance structures, grant greater autonomy to their business units, and foster a culture that encourages entrepreneurial activities.
Without addressing these fundamental issues, the goal of achieving financial self-sufficiency will remain elusive, and public universities will continue to struggle with sustainable income generation.
* The writer is an associate professor at the Faculty of Law, Universiti Kebangsaan Malaysia