4 practices to reduce financial risk of microcredentials
January 4, 2024, By Davis Cousar, Associate Director
Last month, members of EAB’s Professional and Adult Education Advisory Services Team attended the 2023 Convergence: Credential Innovation in Higher Education Conference jointly sponsored by UPCEA (University Professional and Continuing Education Association) and AACRAO (The American Association of Collegiate Registrars and Admissions Officers). This joint sponsorship by two major organizations reveals just how much attention microcredentials have gained across university campuses. Presenters covered a range of issues in the microcredential space, from how to define a microcredential to identifying employer-aligned skills to the role of microcredentials in DEI efforts.
Throughout the week, microcredentials were compared to online education ten years ago. Presenters that were used against online education. These critics worry that the adoption of microcredentials will lessen the integrity of the degree, and they raise fears that microcredentials will cannibalize enrollment in traditional offerings. Many professional, continuing, and online (PCO) leaders believe that these arguments are simply manifestations of the inevitable fear that comes with progress in higher education.
But the practical realities of making that progress in the microcredential space are often still a challenge. In fact, failing to consider the practical realities of microcredentials can lead to serious risks for PCO units. If units assume that microcredentials will attract students and generate revenue without engaging in serious evaluation to ensure this is the case, they risk:
- Building costly microcredential programs that do not appeal to students or address their needs
- Losing funds on microcredentials, since these offerings are typically expensive to build and risk low revenue due to their short format
- Failed employer partnerships, where the PCO unit builds a program for the employer, but the employer backs out before sending any students
EAB’s recent study helps institutions reduce financial risk of microcredentials by providing strategies to better analyze financial sustainability and ways to build successful employer partnerships. Read on to learn about a few of the strategies that we uncovered.
Prioritize financial health in new microcredential launches
Practice 1: Socialize microcredentials with a roadshow
Many institutions struggle to help faculty understand the role of microcredentials in the overall portfolio and the importance of proposing microcredentials aligned to market needs. Institutions that use road shows to teach faculty about microcredentials overcome this challenge by cultivating an understanding of the types of microcredentials that align with their goals.
New Mexico State University presents a roadshow in a variety of faculty settings, explaining the role microcredentials will play in their overall portfolio. They also share the science behind bite-sized learning approaches and address concerns about cannibalization. The University of Texas at San Antonio also presents a microcredential roadshow to faculty. Their presentation focuses on the financial model behind microcredentials, and they demonstrate to their faculty the importance of positive margins. This foundation helps to prevent faculty from proposing microcredentials that won’t be financially viable.
Practice 2: Make sunsetting microcredentials the default option
Most institutions don’t have any sunsetting policy in place for any programs, much less for new program types like microcredentials. In fact, 64% of institutions disagree that their institution has a clear policy for sunsetting programs. But leaving failing programs on the books risks draining valuable resources most institutions cannot afford to lose.
To avoid this problem, Kansas State University Global Campus offers temporary approval for microcredentials. Their microcredential offerings are approved for 18 months, and each program must demonstrate success to continue beyond that time. This approach flips the script of traditional sunsetting policies where a program is only sunset if it is failing. Here the microcredential program only continues if it is successful, providing an additional safeguard to ensure financial health.
Use employer partnerships to achieve scale and align with market need
Practice 1: Leverage labor market intelligence to identify and motivate partners
Many institutions approach employer partnerships with the perspective that all partnerships are equally valuable. However, best practice institutions are strategic with their partnerships. Rather than approaching a broad range of companies, they focus on those companies where needs are most closely aligned with programs the university is especially well-suited to offer.
These institutions start by analyzing job postings and other labor market data to identify needed skills in particular industries and mapping those skills to their current programs. This approach allows them to bring a more strategic proposal to potential employer partners, clearly demonstrating how their programs will meet the company’s needs.
Practice 2: Hardwire needs assessment into partnership development
Another useful way to bring a more strategic proposal to potential employer partners is to reverse the traditional process of identifying the employer’s training needs. Instead of relying on the employer (often, the HR department, which is typically a step removed from the skills needed in practice) to identify their training needs, innovative universities conduct an independent needs assessment to identify those needs for the employer. They then map their findings to programs they can offer in partnership with that employer.
The University of California, Irvine uses this strategy in setting up their employer partnerships and reports that it accelerates the timeline for forming the partnerships and improves the overall design of their training.
For more strategies for building financially viable stackable or standalone microcredentials, join us for EAB’s virtual roundtable on microcredentials.
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