Benchmarking is Not a Solo Sport

benchmarkingBy Amy L. Sales, Ph.D.

When asked whether it is “good” or “bad” if 20% of the seats in a school are empty, my answer is always, “compared to what?” Without comparison to some other number, it is difficult to know. Yet in our work to create a system to answer such questions, we frequently encounter Jewish day schools that are resistant to using comparison data. This resistance is particularly curious at a time when benchmarking is on the rise among all kinds of organizations that are using it to understand their areas of strength and of potential improvement.

The schools’ most common argument is that they are unique. “Other schools are not like us,” they say. Granted each school is unique, just as each person is. But no school is so unique as to be excused from the lessons of best practices.

Some schools seem to believe that benchmarking is a solo sport. They plan and make decisions based on their own data. Next year’s goals are based on this year’s performance (e.g., “let’s increase fundraising by 10%”) and are neither informed nor inspired by what others have demonstrated to be possible. When a school benchmarks against itself, it knows if it has achieved a “personal best.” But without comparison data, it does not know if it has beaten the odds or been beaten by them.

Other schools believe that the only comparison of value is one that pits them against their ideal match – the one school they most admire or secretly wish to be. In fact, a broader comparison group provides a better foundation for analyzing the school’s standing. We know that size (defined as total number of students) makes a significant difference, so, a school should look within its size class. But within its class, the strongest comparison is not against the ideal other but against multiple and varied schools.

Because we are relatively data poor in the Jewish sector, we face a chicken-and-egg problem. The idea of benchmarking is to measure an organization against best in class. To determine who is best in class (i.e., leaders in certain aspects of their operations), we need to know numbers and outcomes. Only when we stack up the numbers can we see what the top of the stack looks like and other schools can see where they stand in comparison.

Last year JData researchers invited 150 day schools to provide ten data points that could be converted into a set of indicators of financial sustainability. Our aim was to give schools a simple benchmarking tool and to generate information about the financial health of the field.

Here’s a taste of what we learned. (Full results and description of the sample available here).

  • The vast majority of schools in the benchmarking sample have an annual fundraising campaign. If a school does not have an annual campaign, it is behind the game. If a school has an annual campaign and raised at least $5,300 per student, it is in the 90th percentile of the sample and is considered “best in class.”
  • A school is also distinguished if it has an endowment fund. It is true that the younger the school, the less likely it is to have established such a fund, but by the 10th year of operation, best practices dictate that there be such a fund. It is also true that the larger the school, the more likely it is to have an endowment fund. If a school has an endowment fund and its valuation is at least $26,000 per student, then it is in the 90th percentile of the field along with the other “best in class” Jewish day schools.
  • The endowment fund is an important indicator of financial sustainability. Day schools with endowment funds tend to have more students, and they operate at a higher level of capacity utilization than do other schools. They have significantly larger budgets with expenses and revenues at least twice as great, on average, as those of schools without endowments. They also award over twice as much in financial aid (a likely factor in their high enrollments and high capacity utilization). On average, tuition represents a smaller percentage of their total revenues, as they are not as heavily reliant on tuition income.

From a research perspective, trend data are the most informative. For this reason, we are continuing the benchmarking project this year in order to create indicators based on percentage change in enrollment, capacity utilization, endowment valuation, cost per student, and the like. Financial strength resides not just in what a school has, but in the rate at which its resources are growing.

Ahead of us are three challenges:

  1. Jewish organizations need to understand that as unique as they may be, comparison data can help them.
  2. Schools that are otherwise siloed or competitive entities need to accept the interdependence required for benchmarking. They need to appreciate that benchmarking is not a solo sport, and recognize that they benefit from others’ data just as others benefit from theirs.
  3. The data should be on the table at meetings of the board, the management team, and the faculty and staff of every participating school. The biggest challenge perhaps is convincing schools that having the data is never as meaningful and productive as using it.

Amy L. Sales, Ph.D. is senior research scientist and associate director of the Cohen Center for Modern Jewish Studies at Brandeis University, and project director of JData.