Report: U can improve

A report requested by the Legislature found the U can improve admin. efficiency.
March 11, 2013

A recent examination of four University of Minnesota administrative units found the school could increase the number of staff per supervisor to maximize efficiency.

University President Eric Kaler presented the preliminary analysis report conducted by Sibson Consulting, a national human resources consulting firm, to regents Friday.

Over five weeks, Sibson recorded and reviewed the number of supervisors and subordinates in the information technology, finance, human resources and purchasing departments.

Sibson will conduct the same analysis on the 50 remaining administrative offices by summer.

Kaler said the reports are the first steps in increasing administrative efficiency.

“This is not the silver bullet,” he said. “It calls out areas in need of examination.”

The report, which two state legislators requested in January, identified a few areas where the University could maximize the number of employees per supervisor.

In Gov. Mark Dayton’s budget proposal, he said an additional $80 million to the University was contingent on Sibson’s findings.

Dayton is happy with the findings and plans to include the funding in his revised budget this week, according to his spokeswoman Katharine Tinucci.

According to the report, each supervisor should oversee six or more employees, depending on the job.

It highlighted the Office of Information Technology as a relatively streamlined department. The average supervisor oversees more than nine employees and in one case 38.

But in Purchasing Services and the Office of Budget and Finance, supervisors manage an average of 3.63 and 3.86 employees, respectively — low by industry standards.

In a media briefing Thursday, University Chief Financial Officer Richard Pfutzenreuter said the low averages indicate “areas of opportunity” in which the University can conduct a more in-depth evaluation.

He said the low numbers, like in purchasing, are an “alert” but don’t necessarily mean that immediate action must be taken.

He said there may be good reasons for the low average of employees reporting to a supervisor.

In a hypothetical example, Pfutzenreuter explained a supervisor in finance may oversee only one employee while also managing a $1 billion University debt portfolio. In that case, Pfutzenreuter said he would not add more reporting employees due to the high level of responsibility for the supervisor.

‘Part of the U’s problem’

Kaler will present the final report to the Legislature’s higher education committees Monday and Tuesday while continuing to push his $1.2 billion budget request.

Sen. Terri Bonoff, DFL-Minnetonka, and Senate Majority Leader Tom Bakk, DFL-Cook, requested the University conduct a spans and layers analysis after a late-December Wall Street Journal article used the University to exemplify the issue of administrative bloat.

Bonoff and Bakk requested an interim report of the findings no later than March 15 for lawmakers to use as a “strong tool” in formulating the 2013 budget.

Vice President of Human Resources Kathryn Brown said she and Kaler had talked about doing a spans and layers analysis when Kaler first became president in July 2011. The analysis never happened because of an outdated human resources system and questionable data accuracy.

Brown said after the January legislative request, she and Kaler determined it was a good time to conduct the analysis.

“President Kaler and I agreed we were in a position to move forward with [the analysis] at that time and do a good job of it,” Brown said. “Prior to that, we just weren’t sure whether it would be accurate enough to be worth the time.”

Rep. Gene Pelowski, DFL-Winona, one of the school’s biggest critics at the Capitol this session, questions whether the University would’ve conducted the analysis had it not been pushed.

“It’s not the U doing it voluntarily; it’s the U doing it because they’re in a situation where they’re forced to,” he said. “Should they have done it voluntarily? Yes.”

The University paid Sibson $48,000 to conduct the initial analysis of the first four offices.

The second spans and layers analysis of the remaining administrative offices will require an additional contract, University spokesman Chuck Tombarge  said in an email. The details and pricing of that work are still being negotiated.

The University also hired Chicago-based Huron Consulting Group to conduct a benchmarking analysis of the University’s administrative costs in relation to peer institutions, as requested by Bakk and Bonoff.

This second analysis will cost the University an additional $495,000 and will be completed by the end of June.

“To spend an additional half-a-million dollars on something they already should have known is part of the U’s problem,” Pelowski said. “They just don’t seem to be able to get a handle on complex issues.”

At Friday’s meeting, Kaler acknowledged these costs “are not small” but said they’re necessary because “the status quo is not OK.”

After an analysis, implementing changes to large universities can take up to three to five years, but Kaler said he’s not interested in waiting that long and wants an expedited process.

“We will put our foot on the gas,” Kaler said.

At Friday’s meeting, regents applauded Kaler for his commitment to reducing the cost of operation and streamlining administration in a short time period.

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