Finance Director On How We Are Shaping Up In Testing Times
27 October 2010
A lot of uncertainty lies ahead following the outcomes of these reviews. We have put ourselves in the best position we can, especially from where we were a decade ago.
”University Deputy Chief Executive and Finance Director Hari Punchihewa
October has been a challenging month for higher education, with key announcements in the Lord Browne and Comprehensive Spending reviews.
Connected speaks to University Deputy Chief Executive and Finance Director Hari Punchihewa about how the University is shaping up.
It was a decision that paid dividends for the University of Derby - but it took a little persuasion.
In 2001 the University Board's use of a head hunting agency had found the right person to manage the institution's finances - but Hari Punchihewa first had to be convinced the University was happy to move to a more business-focussed culture.
Strong Reputation
Born in Sri Lanka, Hari had moved to the UK with his parents in the early 1980s. His career began in corporate finance and he trained with Cooper Lybrand. Hari is qualified as a Chartered Banker and Chartered Management Accountant with a MBA. Roles at Morgan Grenfell and Deutsche Bank followed, before joining the Mercedes Benz group to set-up a new operation in the UK and Europe. During this time Hari also studied at Harvard Business School, in the USA, for a three month Leadership Development Programme.
When Derby approached him its deficit of £4.5m wasn't the concern - Hari says he relished the challenge - it was venturing into the public sector, with all its levels of bureaucracy.
Culture Change Challenge
But a meeting with then Governing Council Chairman, Alan Woods, Vice-Chancellor Professor Waterhouse and our current Chairman, then Chair designate, Dianne Jeffrey convinced Hari that they wanted a culture change and would support his actions to achieve it.
He told Connected: "When I first joined Derby it was difficult. Many people felt the institution should not change, they wanted to carry on the way they had before. But there were very helpful and supportive governors, led by the Chair, who were happy to support the culture change I had to lead, and which was needed.
"Personally, I do not consider failure as an option in my career, after working at senior level for American and German owned companies. I always relish taking up new challenges, of which joining Derby was one. I had come from a tough corporate environment, so I had the belief and confidence that I could improve things."
It was about getting the fundamentals right. He found no clear Finance Strategy, weaknesses in financial controls, and a lack of emphasis connecting people's responsibilities and their accountability for decisions as core weaknesses at Derby.
Hari explained: "We wanted robust business planning and budgets for departments, to show how they were going to generate the income and spend the money on the necessary resources without creating too heavy a fixed cost base.
"It was about prioritising investments, channelling money into the right areas in line with the Corporate Plan and monitoring progress."
Improved Outlook
Since he took the job, the University's financial outlook has been steadily improving, not least because of the excellent partnership created when Professor John Coyne joined the University as Vice-Chancellor in 2004. Hari and John established a formidable partnership in further encouraging the culture change and helping Derby to be one of the financially stable, highly respected new universities in the UK.
Hari says he built up a new Finance department which has also done an excellent job in supporting and implementing the financial strategy, and the team's achievements have been recognised through key national awards.
He also became the first director in the University sector to gain the prestige's 'Chartered Director' status in 2005, and he has been involved with HEFCE on developing sustainable finance initiatives.
When Hari arrived at Derby in August 2001 he had set the target that in three years the University would break even. It was actually 'in the black' by 2003, in reasonable shape within five years and last year (2009-10) announced a best ever operating surplus of £8.1m.
Current Economic Environment.
"When the recession loomed, the way property prices were going and the way banks were lending, I thought there may be some sort of recession but nothing on the scale of what we have seen.
"The Financial Times and other agencies indicated that the Icelandic banks' ratings were going down so I made a judgement call and moved the money the University had invested there a month before the big collapse. We were lucky and I can now claim this was a good judgement call," added Hari.
This month (November) the University publishes its Annual Accounts, approved by Governing Council. Further financial success is set to be announced - a good position to be in during such difficult economic times.
Hari added: "I think that we are in a strong position. A lot of uncertainty lies ahead following the outcomes of the Comprehensive Spending Review and Lord Browne's Review. We have put ourselves in the best position we can, especially from where we were a decade ago.
Well Placed For The Challenges Ahead
"A lot of organisations have been enjoying the last few years and now have to face up to the challenges ahead. We have already faced up to serious financial challenges in the past at Derby, which means we have a strong platform to work from in facing up to a changing market which will certainly alter the UK's higher education landscape forever.
"An open market for course fees is a good thing but it is difficult if there is no softening of the transition from 'fixed price' to an open market. The behaviour of both institutions and students has to change as it is going to be a new way of thinking.
"The Government will need to instil direction and a smooth market transition. It will be the right move if it listens to people in the sector about how to move forward."
After nearly a decade at the University Hari has seen a steady cashflow used to transform its physical environment, including the refurbishment of the three Kedleston Road towers.
Outside of the University, Hari has sat as a magistrate in Northamptonshire, where he lives, since 2006. His pastimes include supporting local rugby club Northampton Saints as season ticket holders with his wife, son and daughter.
As a keen sports fan, having played rugby and cricket in his youth, Hari has also overseen the improvement of sports provision at the University and is Chair of the Team Derby sports development initiative.
Looking ahead, Hari said: "People at the University should be confident, but not complacent, in the current climate and use the opportunity to be creative, and to support the future of the University as a good value and top quality education provider."
