Key Performance Indicators (KPIs) are vital tools for school business leaders, helping to align financial objectives with strategic priorities and making data-driven decisions. By regularly tracking metrics like average teacher costs, schools can ensure transparency, accountability, and more efficient resource allocation, driving improvement and building trust across the community
As a school business leader, I have come to appreciate the power of setting and monitoring Key Performance Indicators (KPIs), how they help to communicate financial objectives and how they can help to promote a shared understanding of the targets we have set ourselves as a trust. They help to measure progress towards achieving targets in a meaningful way, so that we can remain aligned with our strategic priorities and therefore make informed decisions that ultimately drive improvement.
Academies receive funding directly from the government and are responsible for managing these funds with a high degree of transparency and efficiency. I believe setting financial KPIs is particularly important, due to the degree of autonomy and accountability we operate under. It is therefore key to have robust systems in place for tracking financial health, operational efficiency and have further understanding into different aspects of financial and operational position.
Take average teacher costs for example. I believe this is an important financial KPI for schools. It is calculated by dividing the total teaching staff cost by the full-time equivalent (FTE) number of teachers. This allows you to measure the financial resources allocated per teacher and helps in understanding how these costs stack up against other similar schools.
The DfE’s schools’ financial benchmarking service, where you can compare the income and expenditure of schools or trusts in England that are similar, includes this metric in the ‘expenditure’ section, giving you a comparative perspective, which you can then use for financial planning and management. You can also find this metric on your annual Benchmarking Report Card from the Department of Education, a useful document principally aimed at headteachers and school business leaders and captures highlights of your school’s spending and provides comparisons with similar schools.
Trustees, governors and school leaders could use the average teacher cost KPI to explore several questions, especially when the average teacher cost is noticeably higher than at comparable schools. One area to consider when exploring reasons behind this KPI, is your profile of staff salaries. Do you have a higher number of staff on the upper pay scale? Do you adopt the schoolteachers’ pay and conditions? Are staff on the leadership pay scale included in the calculation? This would typically increase the average cost per teacher. This might also reflect that you have a long standing and highly qualified team of teaching staff, which can be a significant advantage, and will require careful budget management and monitoring. Another factor influencing average teacher cost could be your Teaching and Learning Responsibility (TLR) responsibility structure and how they are distributed across your staffing structure. Allocating more TLRs than comparable schools could lead to higher average teacher costs but potentially also to improved educational outcomes through enhanced leadership and specialised teaching and learning projects.
Setting KPIs is one thing, but I think the real value comes from monitoring and reviewing them periodically, and integrating their insights into your strategic decision-making. Consider their accuracy and relevance to your school/Trust. Take advantage of the tools within your financial management software, which can help to automate and simplify the process of tracking your KPIs. This will save time, should provide more reliable data for decision-making but also reduce the possibility of human error if prepared manually.
In my experience, integrating KPI monitoring into regular management reviews and strategic discussions has been beneficial. It fosters a culture of collective accountability and continuous improvement, whilst strengthening trust and confidence. It is also a good way of demonstrating a commitment to transparent and effective leadership and management.
I have found that taking a proactive approach to financial management through KPIs can help to create a stable foundation for innovation and growth. Through understanding their intricacies and their impact on operations and resource allocation, you can track trends. For instance, an increase in your expenditure per pupil without a corresponding increase in educational outcomes could prompt a spending review to identify whether there are areas that can be optimised, or whether resources could be channelled more effectively towards pupil success. These are the kinds of considerations that KPIs help to surface, enabling more targeted and effective management decisions. The dialogue around KPIs can also enrich our conversations with parents, trustees and staff, who will appreciate transparency and the reassurance that comes from knowing the school/trust is planning prudently for the future.
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