• November 27, 2014

Universities Can Save Millions by Cutting Administrative Waste, Panelists Say

Universities must attack their growth in administrative spending by undertaking a thorough review of their business operations and convincing campus groups of the necessity of major restructuring, panelists from three prominent universities said at the annual meeting of university business officers on Sunday.

The well-attended session on the first day of the National Association of College and University Business Officers' meeting focused on the cost-cutting efforts at three universities that have hired Bain & Company, a management-consulting firm, to help them identify and reduce wasteful and inefficient practices in information technology, purchasing, and other areas.

Bain's high-profile contracts­—with Cornell University, the University of California at Berkeley, and the University of North Carolina at Chapel Hill—along with promises of millions of dollars in savings have attracted considerable attention over recent years as colleges try to weather deep budget problems.

Officials at each of those three universities said they had pursued strategies that are broadly similar: to seek savings in administrative areas, such as purchasing and information technology, while studiously avoiding a parallel effort in more-contested academic terrain such as instruction, teaching, and tenure.

Joanne M. DeStefano, Cornell's chief financial officer, said increased regulations have been only partially responsible for the well-documented growth in administrative spending. Reversing that growth requires a "culture shift," she said.

"In the past at Cornell, everything was just additive," Ms. DeStefano said. "Yes, there's new compliance, but we never evaluated what was redundant or what we needed to do less of."

All three campus officials said their efforts with Bain were paying off, especially in the area of procurement, where they said a decentralized purchasing process had left them with large inefficiencies. For instance, different parts of one university often pay wildly different prices for the same thing, they said.

Berkeley is expected to save in the "high single millions of dollars" in procurement reforms by the end of the year, said Frank D. Yeary, vice chancellor for strategy and planning. Chapel Hill saved about $2.6-million in the first year on procurement, said Richard L. Mann, vice chancellor for finance and administration.

But the panelists acknowledged that getting the faculty and other groups to buy in to the changes was a constant challenge, even on nominally administrative issues like purchasing contracts.

"The one I'm really expecting will be a big payoff is a contract for scientific equipment," Mr. Mann said. "But we're in the middle of a death struggle with some faculty members over that."

One questioner asked the panelists whether they had considered turning their cost-cutting attention to the academic side, provoking laughter and scattered clapping from the audience of business officials. "I wanted to know about the concept of tenure," the questioner said. "Have any of you looked at that?"

"No," Mr. Yeary said, to more laughter. "Next question."

Comments

1. 11242283 - July 26, 2010 at 07:20 am

The sense I get from this article is that the "administrative" savings seem to be in jobs performed by fairly low-level purchasers, etc. -- not the redundancies in "directors" (and assistant directors, associate directors, etc) that proliferate on many campuses (certainly on mine -- lots of people "directing" a fairly small group of workers to work even harder and more productively!! The only "fat" we have to cut is in their ranks, but they see themselves as bone!). The fact that the conversation in this article turns from one set of hands-on workers to another (faculty & tenure) is pretty telling to me. And of course, faculty are positioned here as the heavies against change -- witness the "death struggle" at Berkeley over the procurement system.

It's all very depressing. How come those of us at the bottom on the food chain (and I include faculty at all but the most elite places here) are told in the present climate that we are lucky to have a job at all (never mind pay cuts and furloughs, etc) whereas top administrative salaries keep going up. At my campus of about 10,000 students, 60 administrators have salaries over 100K (only about 5 faculty do) and lock up about 12% of our overall budget when benefits are included. It's probably even more than 12% now as the overall base budget has been reduced but their salaries havent'. So I say (not knowing anything else about her) good on the governor of Connecticut for wanting to close down the system office and for questioning 8-10% salary increases for senior administrators. Most of them truly are lucky that they even have jobs . . . .

2. jeff1 - July 26, 2010 at 08:49 am

I am a vice president and I totally agree with 11242283! There are too many vice presidents at most institutions today. We need to flatten our upper administrations and administration and drive more decentralized staffing where staff are more at the point of service end of things so our "customers" (e.g., students) get the best adn most direct service. Please NACUBO don't rehash the same old same old . . . make some tough, hard-nosed recommendations!

3. 11178264 - July 26, 2010 at 08:58 am

What a cute and funny quesiton about tenure; how wonderful that all the attending NACUBO business officers though it was such a laugh generator. How come nobody thought to ask -- or that the Chronicle thought to report -- how much money Cornell, Berkeley, and Chapel would have saved if they'd used their own brains instead of hiring Bain and Co. to do their thinking for them.

4. honore - July 26, 2010 at 09:13 am

A couple of clues to cut administrative costs:


1. Fire all the legal flunkies in the divisions of university "counsel". 50 years ago NOT one school had these goon squads of richly paid lawyer-wannabes who do nothing but create storms of paper to defend indefensible behavior on the part of faculty or "administrators". Quite simply, there is NO incentive for them to resolve legal/administrative issues quickly. Cornell has had more than its share of constant scandals and the Day Hall parking lot is never large enough to accommodate all the Cadillac Escalades, Hummers and Land Rovers driven by their "legal" trolls.

2. Take a cue the DECADES of horrendously failed "diversity" initiatives that cost TONS of money and only provide campus ghettos of fake oppression to separate and divide all campus constituencies along lines of race, culture and class, made even more absurd in our mythologically "class-free", "race-free", "socially-just" social charade. Feel free to substitute "multi-cultural", "equity" or "safe zones" for the word "diversity". It's all the same scam. UW-Madison is the poster child for fake diversity publications, but it is not alone. Check the websites of all Ivy and Big 10 schools for the fake diversity Benetton billboard claims?

3. Stop hiring the family members of upper administration, (wives, husbands, children, in-laws) and awarding them do-nothing jobs with HUGE price tags. (fill-in-the-blank with the school of your choice).

4. Stop awarding fat corporate contracts to political maggot friends of the governor, rich alumni or benefactors who arrive at the campus "development" office with carpet bags filled with money.

5. Focus on providing students with REAL financial aid (grants, gifts, scholarships) and NOT decades and tens of thousands of dollars of future debt, which will only prevent them from reflecting on their college "experience" in a positive light and prevent them from EVER opening their checkbooks when the never-ending stream of "alumni" funding requests arrive in their mailboxes. Common sense, but yet to be embraced by H/E. Happy alumni are generous alumni. Loan-burdened alumni are NOT.

6. Take a good look at the changing demographics of the country and ask yourself if the current lemming squads of spinning bow-tied, Larry-King-suspendered, tanned, $200 hair cut, teeth-bleached administrative clowns are even aware of the major social shift that is happening beyond the scope of the lap-top screen. And stop wondering why they arrive on campus with orange wigs, red-ball-noses, baggy pants and floppy shoes. They were clowns before and their repertoire of tricks is very limited.

7. Immediately fire faculty and staff that harass, bully or mob other members of the campus community. Way too many schools waste immeasurable sums defending these socio-path losers and in the end the school winds up paying HUGE settlements that could have been avoided much earlier by resolving the matter in a humanistic manner and destroying fewer lives and careers.

8. Pay lower/lowest level employees a decent wage and you will have fewer issues with unions.

9. Pay T/A staff realistic salaries so they can pay their rent, buy food and perhaps even attend a professional conference more than 1 in their program.

10. And STOP paying these exorbitant salaries to top administration. The perks alone make these jobs very lucrative financial decisions (homes, cars, retirement packages, tuition-free enrollment...etc.). You only make the schools look like ant-hills of gluttonous insiders. At least, more than they already are.


The CHE is replete month after month with accounts of this type of wastefulness and no end in sight so far.

5. sethtucker - July 26, 2010 at 09:30 am

I am always amazed in articles like this one and the associated comments exactly how parochial we have become. Administrators have fat salaries with litle purpose, faculty are obstructionist protectors of their own narrow world view, students are disengaged idiots...and on and on. I believe there are sprinkles of truth and lots of hyperbole in each. We would do better to seek to understand each other's perspective on the issues we face than reactively assume the other's actions are less worthy and the core of our problem.

6. ald8m - July 26, 2010 at 09:35 am

The problem with a company like Bain is that they take a formulaic approach to their staffing analysis, with no consideration for workload or function of the unit. Can institutions become more efficient? Absolutely. But that ultimately requires that the senior administration bite the bullet and make the difficult decisions about reorganization and staffing. Using a firm like Bain as a cover for that decision-making is wasteful.

7. cshunt312 - July 26, 2010 at 10:03 am

Last year I was asked to write a chapter about the new employee-employer contract in higher education. Among other recommendations, I addressed the need for "smart centralization." Here's the excerpt that discusses my ideas:

"Smart Centralization" will enhance both efficiency and effectiveness. Leaders will need to be very savvy about how to devise and maintain organizational structures that offer an efficient and effective balance between centralization and decentralization. For some institutions, many of the activities and functions that have been decentralized have created new challenges in terms of inefficiency, ineffectiveness, and administrative growth, and functional and personnel redundancies. These institutions are recognizing that these activities and functions may be better handled centrally, so there will be a move to consolidate them. Similarly, institutions that are heavily cnetralized may be administrative staffs that have become too large and inflexible, with individual positions being defined in very narrow terms. They will be better served by having these functions run byb a small cadre of administrators and staff who are more competitively paid, with flexibility about how they apply their ever-growing competencies and resulting careers. For these staff, the notion of a job description will probably give way to the concept of assignment based on competencies required by changing tasks that support initiatives - making the statement "it is not in my job description" irrelevant. All institutions may also find that it is in their best interests to allow certain functions to be handled by outsiders, and there will be a move to outsource these functions. The key with all of these changes is to determine what makes the most sense for the organization to achieve not only its financial goals, but also its strategic goals.

Please email me at cshunt@renaissance-solutions.com if you'd like a copy of the complete chapter.

8. 22228715 - July 26, 2010 at 10:13 am

Standardizing and centralizing fairly routine things sounds like a great idea... until you try to apply it across thousands of people who have vastly different jobs. As with many things, the devil is in the details, and for this topic the devil is in choosing which purchasing processes are "normal" and should be the standard by which all other processes must adapt or get special dispensation to deviate. Sometimes, the more efficient process that gets standardized means that every other purchase (smaller or larger, or qualitatively different) that is not that "type" will now require 2 or 3 times more paperwork, approvals, staff time, and frustration.

9. prof_truthteller - July 26, 2010 at 10:31 am

Two comments, somewhat linked- One, I am curious regarding the "death struggle" over purchase of scientific equipment. In my experience, too often we hear that faculty are resistant to change, with the implication that they are archaic, comfortable, hide-bound, or just plain ornery. Rarely are their reasons for resistance. Maybe the new contractor is less reliable, or has poor quality equipment, or is a bad match in some other way. But no, faculty's reasons are just dismissed, not mentioned, not asked about, no one in the audience was curious!

Second comment is about what they WERE curious about, tenure, and the "laughter and scattered clapping" behavior, which I find chilling, and have seen it from the faculty side as well. Think about it, people, if that kind of behavior was directed towards a person or group of persons due to their age, sex, race, religion, etc., we would be appalled, and lawsuits would follow. While we are all pretty much aware enough nowadays to recognize bias and discrimination, on those legally mandated criteria, and try to avoid it, somehow it's OK to be so horribly insulting of a group based on their class.

The two are linked because I feel the burden of responsibility to avoid discrimination on campus among all employees, including classist discrimination, must fall primarily on the administrators. They are in the more-powerful position, they make more money, and have more power to force change on anyone, not just the faculty, but all employees. They have an obligation to maintain professional and respectful relationships with all employees. They must learn to ask, and to listen, before pushing down the mandates. They have no right to make such insults in public forums. Had someone made a joke about Jews, Catholics, or Muslims- or about fat people- or about how women just aren't qualified- or about Latinos- what do you suppose the audience reaction would have been? and how is this any different? Condescending insults are NEVER socially acceptable. This college officer should be reprimanded by his/her supervisor.

10. tee_bee - July 26, 2010 at 11:28 am

4. honore: Bitter much? Clearly, there are places to save money in administration. But your screed reads like someone who has done battle with the admniscritters and has repeatedly lost. Given the tone of this screed, I can only imagine why. The problem with management is that it cuts both ways. Faculty also need to make good faith efforts to do their jobs. I have no reason to believe you don't do yours--but based on these ravings (some of which are just silly attacks on some provisions, and some of which are simply ungeneralizable across all of higher ed) I can only conclude that you're part of the problem, not the solution.

11. jack_cade - July 26, 2010 at 11:41 am

tee_bee, your ad hominem is showing.
Um, "Faculty also needs to make good faith efforts to do their jobs" what university system are talking about? Sure, there are slouches in every department at every institution. But I have never seen or heard of widespread cases of faculty not doing their job.
Your comment is total garbage, basically a personal attack, so I'll do you one back but better.
Honore certainly could use some less vehemence and much less colorful language (clearly a result of personal feelings). However, rather than pointing out such things you might have responded to the substance of their one or all of their points.
Instead, you'd rather point the finger and say "farter." Unfortunately, we all fart tee_bee, even you.

12. tappat - July 26, 2010 at 12:00 pm

Great comments, especially by 11242283, truthteller, and honore. Honore gives a plain and cogent action plan that could yield literally hundreds of millions of dollars in savings, across the country, AND create an academic environment on campuses, something that would surely be experienced today as new and different. The fruit of executing honore's action plan would be people hanging out on campus, and rather than languish in their boredom, they would go to the libraries, the art galleries, the concert venues, the available exercise venues, the arboretum and gardens, the various pubic lectures, the observatory. . . . I don't think anyone today gets any good, humane cultivation, from hanging out on campus, and rather than languishing in her boredom, she goes to a diversity administrator for a visit or to a member of the univeristy's legal counsel or to one or more the many interim acting assistant to the associate deans and chairs. Campuses should be places of humane cultivation, not administrative processing, unless we want to keep the people being educated at the universities from being fostered in their various forms of humane living. I suspect, however, that we DO want to administer more than to cultivate at our universities, as another of the mechanisms of shrinking the American middle class, so that there is no longer any meaningful middle class in America. The experience in university is becoming a chief means of transforming and eliminating the middle class. The middle class is a distincly humane phenomenon of modern society, and it seems that we're done with it. What were the three estates of the Middle Ages? How did we get out of that relationship into the socio-economic relationship productive of the middle-class? These are rhetorical questions, of course. We know the answers to these questions, just as we do know what we are doing now to transform American society. Is the transformation what we want? That is, I am not asking if we want to change or not change, but, rather, if what we are changing ourselves into is what we want. I don't want the hyper-administrative or managerial or bureaucratic society that academe seems to be making itself into, even as I do not necessarily want to stick with the now old modern manner. And what are we to do with all these young Americans? Are we to make them as poor as the immigrant laborers the new Arizonans so love to hate so that they -- the entirely poor young Americans with college degrees -- will do the work of immigrant labor, at immigrant labor wages? I fear that that last question of mine is becoming a rhetorical question, and not in a good way.

13. soc_sci_anon - July 26, 2010 at 12:42 pm

#4 "honore": Funny you should mention the Day Hall parking lot. My office happens to overlook it (no I'm NOT an administrator), and I see the following: a old-ish Camry, a minivan of some sort, a Rav 4, three Outbacks (it's Ithaca, after all), and a delivery truck. Now, one could fault the aministrators for not buying American, I suppose, but your implicit charge of gluttony in their choice of cars is complete bollocks.

The rest of your comment is just as misinformed. In the past two years, the Cornell central admin has eliminated 3-4 VP positions (arguably too many, but that's a different post), taken salary cuts, and absorbed appx. 25% of cuts to Provost's level programming, most of which are academic initiatives that don't "belong" to a particular College. They did this to protect faculty jobs and student financial aid, which has *expanded* over the past two years.

Don't get me wrong: I don't think sunshine flows out of the Cornell admin's every orifice. IMO, they concentrated too much on administrative savings and as a result missed a one-in-a-lifetime opportunity to cut some weak *academic* programs that are a drain on Cornell's reputation. But your post is a complete caricature of reality.

14. jcas3309 - July 26, 2010 at 01:29 pm

Very good comments by many on this topic and you may say it's a good debate. Many have ideas on how to cut costs in higher education. The fact is - all aspects of higer education institutions must be reviewed, efficiencies implemented, and non-value added processes, services, and program need to have tough decisions made and ultimately, those decisions implemented. It will take all the constituencies at institutions to make the required change needed in higher education in the future. I hope senior leadership, faculty, and staff are up to the process. Financially the future is not looking brighter for IHEs - so change is mandatory.

15. 11286747 - July 26, 2010 at 01:37 pm

Response to Honore (post #4). If you hate Cornell that much, perhaps you might give the university a gift by taking your anger somewhere else and providing a place for someone who who would appreciate the opportunity to serve in a world class institution as good as that one.

While working at Cornell, I drew on its outstanding legal services department from time to time. They're not creating work; regretably, the world has changed over the years. Much of the Cornell legal team's work is focused on processing the many contracts and grants that that the faculty and staff receive from foundations and government sources. The lawyers also defend the university against many, many frivilous law suits filed by people who want to get their hands into what is perceived as deep pockets.

16. hawkeyecc - July 26, 2010 at 04:39 pm

This is an interesting debate, and obviously causes passionate discussion regardless of your view point. The one concern I have with the article is that faculty are presented as obstuctionists who resist change at all costs. I have never witnessed a "death struggle" over purchasing equipment, and I believe faculty can be reasonable if a more cost effective comparable item is available for purchase. And combining and consolodating purchases, so that large purchase discounts are available just makes sense. The key here is that the equipment is comparable, will perform the same functions, and doesn't require extensive remediation to learn how to use it.
As for bloated administrative salaries, this is a given. When I started teaching, I made approximately half what our then president made. Now I make one fourth of our current presidents salary. To say that I haven't kept up is putting it mildly. It saddens me that administrators are valued so highly, and faculty, who actually do the work with the students, are valued to such a lesser degree.

17. shiksha - July 26, 2010 at 05:52 pm

Beware of flat organizational stuctures. I just left a college with one -- just about everyone reported directly to the Dean who got involved in too much minutiae - which she actually loved -- but is not how a deal should be using her time.

Also, people like to move up in an organization and if the structure is flat they have no place to go but elsewhere.

Also, lots of admins have "Director" title but they direct no one. Just makes them happy and looks good on the resume. Go figure.

18. 11161452 - July 26, 2010 at 10:49 pm

Why is it necessary to hire Bain (can Mr. Keller provide some figures as to what this cost?) when this sort of thing is what administrators are hired to do?

If they really do it just to have a scapegoat when the budget ax falls, the administrators should be replaced with people who are willing to own their decisions.

19. realtyannie - July 27, 2010 at 05:51 am

#3 and #19 make a sad and relevant point. These three prestigious universities should be natural incubators of ingenious solutions to these problems.

A. They have generations of experience in the higher education field.

B. They presumably employ the some of the best administrators in academe.

C.Their faculty oversee excellent programs in areas such as, oh, say, management!!

Why on earth can't they integrate all of this talent to figure this out themselves? Why do they need outside consultants?

20. honore - July 27, 2010 at 09:36 am


tee-bee...spoken like a typical H/E smiley-faced drone. Oh yeah...let's keep our T/As below poverty level, let's continue to waste MILLIONS on failed campus social engineering programs, let's keep hiring (at VERY fat salaries) the "spice" of presidents/chancellors to grin and shake hands, let's keep study abroad the province of the wealthy. We wouldn't lower SES kids to see the rest of the planet other than a tent in the Middle East surrounded by artillery and body parts. Oh, yeah, we wouldn't want to depart from the current academic culture that will produce yet another generation of cultural and social boors complete with graduate degrees in academic esoterica who have NEVER left campus. Sounds just like Mr. Chips' world doesn't it? Now go get moldy pom-poms out. I hear a rally coming across campus. Oh,and let's keep those bullies too.


jack_cade...good advice,thanks. I will take my Rx's and meditate for an extra hour today before I run to the post office to send tee_bee an industrial-sized barrel of "Beano".


soc_sci_anon...the Hummers, Escalades and Land Rovers were being detailed downtown by a legion of illegal workers, that no one on campus sees from their windows either...now go to your window and look again. P.S. I don't hate Cornell...too many relatives graduated from it and I have way too many lovely friends there, for whom I have much respect.


11286747...good for you, but don't get too comfortable on that dusty pedestal and take the time to look down at the many Cornell faculty and administrators who have been less than "protected" by legal counsel who get their paychecks from Day Hall. Now go have an extra-special day at the mall and don't stand too close to the helium balloon vendor inhaling THAT gas.

21. chrisgoou - July 27, 2010 at 09:49 am

So many good comments, I wanted to respond to a two.

17. hawkeyecc -- I agree. Top level administrators vs faculty salaries is a disservice to students and the organization. Especially when comparing pay across disciplines as well. However, please be cautious with the term "administrator." Technically I am administration at my university (student affairs - admissions), but I am arguably one of the lowest paid at the whole university. You probably were referring to only top level administrators, but I feel a distinction should be made when referring to Presidents, Vice Presents and even some Directors vs the street-level administrators.

20. realtyannie -- excellent comment. I often wondered this myself. With so many intelligent and dedicated experts within faculty, should some of the research time be dedicated to analysis of their own university? Collaboration would increase productivity, foster internal culture and perhaps even break down silo barriers among similar academic fields (for example: assessment work could be shared by both business administration and public administration, both of which are typically in different schools or colleges).

22. bjgeorge - July 31, 2010 at 03:40 pm

Interesting discussion. Number 5, to me, seems getting closer to what matters. From my experience it is best to try to understand differing point of views, which takes time, and solutions can be more finding a starting point that everyone understands to move forward on. At the same time I know from experience that with some people, or situations, I have lost my perspective (i.e. I have anger, whatever, from the past) to completely understand them or the situation. This is tough because negative emotions will show and may continue after working on matters, and solutions worked out may be half heartedly felt-while the negative emotions are more fully felt. So, there is the ideal and there is less then ideal, which is what maybe the commentary here represents to some degree.

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