Introduction to Responsibility Centered Management
- What is RCM?
In most modern American universities, authority is highly decentralized, but responsibility (specifically financial responsibility) is held centrally. This decoupling of authority from financial responsibility poses problems for decision makers at every level of the University. Responsibility Centered Management (RCM) is a combination of policies and practices designed to overcome these problems by coupling decision making directly to the associated financial ramifications. These policies and practices should be clearly articulated and crafted to fit the mission of the institution. The backbone of an RCM is typically a Budget Model which:
- prescribes precisely how revenues are shared amongst responsibility units,
- associates revenues directly to revenue creating activity (for example student credit hours or degrees awarded),
- allows decision makers to realize rewards from good financial decisions,
- allows good local decision making to benefit the entire institution.
The fundamental principles of an RCM are:
- transparency - everyone knows the rules and has access to the information they need,
- accountability - decision makers have clear lines of responsibility,
- equity - everyone is playing by the same rules and is held to the same standards,
- predictability - the rules don't change without broad discussion and lots of warning.
- Brief history of RCM adoption in the United States.
RCM is not a new idea. RCM was fully adopted at the University of Pennsylvania in 1974. In the 1980's RCM was adopted by University of Toronto, University of Michigan, University of Southern California and University of Indiana. These Universities have well over a century of experience with the ideas, benefits and problems of RCM and all of them continue to embrace the system. In the last two decades, many other public and private universities have implemented RCM. Among these are University of New Hampshire, Kent State University, University of Illinois Urbana Champaign and University of Iowa. The Universities of Arizona and Washington both have plans to implement RCM models for fiscal year 2012.
- Brief history of RCM development at the University of Oregon.
In Fall 2007, Provost Linda Brady formed a task force to study the possible implementation of RCM at the University of Oregon. Members of the task force:
- Linda Brady, Senior Vice President and Provost
- Frances Dyke, Vice President for Finance and Administration
- James Bean, Dean of the Lundquist College of Business
- Tim Gleason, Dean of the School of Journalism and Communications
- Laura Hubbard, Associate Vice President for Budget and Planning
- Marianne Nicols, Senior Associate Dean and Chief of Operations, College of Arts and Sciences
- Jamie Moffit, Associate Dean for Finance and Operations, School of Law
- Randall Hale, Senior Financial Analyst, Budget and Resource Planning
- Andrea Larson, Associate Director of Institutional Research
- Peter Keyes, Associate Professor of Architecture
- Brad Shelton, Professor of Mathematics
- Further reading on RCM models.
- Responsibility Center Management: Lessons from 25 Years of Decentralized Management, John Curry and Jon Strauss, 2002. (An excellent and reasonably short discussion of the pros and cons of RCM. Freely distributed in pdf format.)
- Incentive-Based Budegeting Systems in Public Universities, Edited by Priest, Becker, Hossler and St.John. Edward Elgar Publishing Lmtd, 2002.
- Responsibility Centered Budgeting, Edward Whalen. Indiana University Press, 1991.
- RCM at Indiana University Bloomington, 1990-2000, N. Theobald and M. Thompson et al.
- Other (informative) University RCM websites:
Last Updated: August 18th, 2012