Cost-cutting in post-secondary institutions: Rank and Yank, Lift and Shift

All the bulletins open with the same rhetoric: Universities are undergoing historic change due to the sharp downward shift in government funding, hence there is an urgent need to remove redundancy and cost while being able to preserve and improve service levels and academic excellence. 

The same goes for the implementation: Apply a “Dicksonian” approach to prioritize academic programs and services, and if in doubt hire external consultants. And don’t forget to plaster the word “excellence” all over your branding exercise to put a positive spin on what is often a dismantlement of years of collective responsibility, effort and achievement by dedicated faculty and staff.

There are two thrusts to these intellectualized cost cutting exercises. First, we have the “rank and yank” approach to prioritizing academic programs a la Dickeson, which is becoming quite popular among North American university administrators. Also known as PPP (for program prioritization process), it subscribes to the notion that universities should “rank and yank”, i.e., centrally review, rank and select survivors among their academic and non-academic programs. A parody of such process, dubbed TransformUS, is being currently played out at the University of Saskatchewan. The real cost of such a process has been thoughtfully addressed by Leo Groarke (Provost of the University of Windsor) jointly with Beverley Hamilton.

A parallel but not completely disjoint process, one that is more focused on support services, is also spreading like wildfire in North Americans post-secondary institutions. It is the phenomenon of relying on shared services as a cost cutting tool. I have already blogged about what happened at the University of Michigan, with some warning about what may be tempting UBC. The phenomenon seems to be much more widespread and one aspect of its implementation is particularly alarming.

The proposed idea is simple: instead of each academic department having its own staff to handle various administrative tasks, departments should rely on a pool of staffers located in a “central” location, which may or may not be so central in a geographic sense.

According to Anthony Mora and Alexandra Minna Stern, “their models start with the presumption that every staff member is interchangeable and every department’s needs are the same. They frame departments as “customers” of centralized services, perpetuating the illusion that the university can and should function like a market. This premise devalues the local knowledge and organic interactions that make our units thrive.”

At the University of California in Santa Barbara, they call it “Operational Effectiveness (OE),” while UC-Davis went for “Organizational Excellence (OE).”  UC-Berkeley chose “Operational Excellence (OE).” UC-San Francisco couldn’t come up with yet another name, so they used Berkeley’s nomenclature. The University of Michigan omitted the term excellence by choosing “Administrative Services Transformation,” which may not be the only reason why the administration there has a revolt on its hands. Michigan is just the latest campus to turn to “shared services,” following the UC system, the University of Kansas, the University of Texas at Austin, Ohio State, Tufts and Yale.

The approaches seem to be similar. “Hey, other peer institutions are doing it and therefore we should also do it.” The administrations start by hiring external consultants to tell them how and where to cut. The cost of getting consultants to help you cut cost is non-trivial. Michigan’s contract with Accenture is $11.7 million. Bain’s contract with Berkeley is worth $7.5 million.

The diagnosis and proposed solutions also seem to be similar: “Centralize and Save” is often the verdict, which is obviously music to the ears of central administrations.  The first problem with this approach comes from the inherently flawed analyses of the costs and benefits of distributed vs. centralized support. For one, the savings are always centralized while the costs are distributed and therefore harder to measure. Even then, the announced savings almost always end up being significantly lower than originally announced. Michigan’s predicted savings of $17 million eventually shrank to $5 million, and by some accounts will be as low as $2 million.

The most controversial aspect of the centralization of HR is the idea of plucking staffers out of their current offices scattered across campus and moving them into a single building on the edge of town. These are the dreaded “Shared Services Centers”. Michigan’s laid-off employees found little comfort in learning that they would be free to apply for one of 275 new positions in HR or finance that will be contained at an off-campus “shared services” center disconnected from the intellectually vital campus life.”

UT-Texas has taken a different tack. “Instead of moving all of its staff from their current jobs to a central location in one swoop – an approach known among administrators as the “lift and shift” – it is giving staff time to decide whether they want to move to the center.” In other words, if you don’t want to move to the new building, look for another job! If you do want to move, send in a job application!

Tufts has even developed an independent “Shared Services Organization (SSO),” leading some to venture that “these consolidations look like the first step in efforts to out-source and then off-shore.”

Yes, certain administrative functions lend themselves to this sort of centralization, but I suspect that many of them don’t. Plus, savings seem to be paltry, the start-up costs high, and the turmoil and disruption are palpable though not quantifiable. One should question whether replacing or displacing dedicated employees from their departmental homes to what essentially are glorified offsite “call centers,” does really enhance efficiency.

Institutions need to assess carefully the lost human capital, the lost productivity, the lost morale and esprit de corps, and the lost humanity in subjecting staff to workplace models that are reminiscent of the industrial economies of the 19th century and which are out of step with our post-factory world.

  

Here are some related links:

 

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3 Responses to Cost-cutting in post-secondary institutions: Rank and Yank, Lift and Shift

  1. Phil Hultin says:

    “The first problem with this approach comes from the inherently flawed analyses of the costs and benefits of distributed vs. centralized support. For one, the savings are always centralized while the costs are distributed and therefore harder to measure.”

    Absolutely. Every “improvement” to administrative processes here at U of Manitoba has resulted in a huge increase in workload in frontline offices accompanied by hiring of more staff in the central administration to do God-knows-what. We burn out and they pat each other on the back over how “efficient” the University is becoming.

  2. Will says:

    Many thanks for the excellent post ! This is a link for an open letter to the President of the University of Saskatchewan:

    http://freeacademiausask.blogspot.ca/

  3. Pingback: A ton of career blood in the cause of clearly defining academic freedom | Piece of Mind

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