Efficiency and UNC-Chapel Hill (Opinion-Editorial Column)
The News & Observer (Raleigh)July 29, 2009
When I proposed a major study that would look for ways that the University of North Carolina at Chapel Hill could be more efficient and effective, my announcement was met with skepticism on campus. I had been chancellor for less than a year, and by all accounts, things on campus were going pretty well in spite of the serious economic situation and budget cuts the likes of which we hadn't seen in many years.
So why, then, would a chancellor still on his first-year honeymoon propose such a study? And why on Earth would I commission a firm whose specialty was global business consulting?
The immediate assumption was that men in suits would visit campus a few times, crunch a few numbers, and return with recommendations for outsourcing or eliminating hundreds of jobs.
Fast forward to last week when we released to the campus the final report from Bain & Co. They are, by the way, the global business consulting firm that has spent the last few months on campus, helping us look for ways to streamline our operations and become more effective. If we could identify savings, we could redirect those savings into the academic mission.
And here's the fascinating thing — a lot of people are actually enthusiastic about the work that Bain did. That's in large measure because we were transparent about the work that Bain was doing, and we solicited the views of hundreds of people on campus.
Interest in the Bain report has been high. Last week, we posted a summary of the report and the full report on a special budget Web site where we've been updating the campus. The report was downloaded more than 8,000 times (see: universityrelations.unc.edu/budget/).
There are two reasons why this report is so important.
First, the economic crisis isn't over. Recent projections suggest that North Carolina's unemployment rate could continue to increase for three more quarters. Implementing the recommendations described in the Bain report could help us prepare for additional cuts without affecting research and teaching. Second, public confidence in the way that universities are managed is strained. Legitimate concerns are being expressed about the growth in our administrative costs. We're proud that Carolina has been ahead of the curve in addressing these concerns this year, and this report shows that we are serious about changing the way we do business.
There are two key findings in the report. Bain's analysis indicates that the university's administrative expenses per student have grown faster — at an annual rate of 6.6 percent from 2004 to 2008 — than academic expenses, which grew during the same period by 4.8 percent. (Note that this is about rate of growth. This university has never spent more on administrative costs than on instruction.)
The consultants also noted that the university's complex organization leads to inefficiencies. And while we learned from the consultants that our complexity is probably no worse than in large organizations in the private sector, we feel an even greater obligation to address it, because the public that is supporting us has so much hope in what we can do to transform the future.
The good news is that these are things that we can fix. I place a lot of emphasis on the importance of this work, especially because of the budget constraints and public scrutiny we face now.
The really hard work is ahead of us. I've asked Joe Templeton, a longtime faculty member and former chair of the faculty, to help lead our response to the Bain report. We're also fortunate that Bain has committed to come back to campus for a pro bono follow-up engagement to help us measure how well we've done. We'll make the results of their follow-up public so that we can be held accountable for addressing the recommendations.
Most people don't become chancellors to work on procurement, performance management and enterprise resource planning. But I'm downright excited about these topics now. And I sure am glad we started this study last fall: we owe it to higher education and the people of North Carolina to get this right.
Holden Thorp is chancellor of UNC-Chapel Hill.(Posted with permission from The News & Observer).