Administrative Re-engineering

To: The NYU Community	Date: 3/7/2008
From: Executive Vice President Michael Alfano
Re: Administrative Re-engineering - A Follow-up to John Sexton's Memo

Background

On February 27th President Sexton sent a note to the NYU Community outlining many of the pressures that now confront all institutions of higher education, and describing a commitment to identify additional resources for the University to use to meet both its needs and aspirations. This communication elaborates on the plans for administrative re-engineering and frames the general approach that will be used to achieve both savings and process improvements within the next few years. These process changes will increase the efficiency and effectiveness of administrative support for NYU's academic enterprise. At heart, this effort is about the University's future, and whether NYU can sustain the remarkable trajectory of the past two decades.

The University's budget remains sound. However, NYU must identify resources to address very important aspirations here at Washington Square. These range from generating additional student financial aid to supporting research priorities to funding the many new and improved facilities that have been planned for the New York City campus. It should be noted specifically that our global programs do not need these additional resources since each is self-sufficient. The creation of NYU Abu Dhabi is fully funded by external sources; and the global study abroad programs will participate in the administrative re-engineering as a part of the Office of the Provost. Thus, resources from this University administrative re-engineering program will be directed to projects and initiatives for the New York campus of NYU.

The President's memo described administrative savings, process changes, and improved efficiency, as a means to generate some of the resources, and many specifics are provided below. At the outset of this process, it should be clearly understood that we see the experienced and dedicated team of NYU administrators as part of the solution, not part of the problem; they have been an integral component of the team that has enabled NYU to achieve the stature it enjoys today, and they will be an indispensable part of a successful future. Thus, "administrative savings" should not be construed to mean a single-minded focus on "administrator savings." As discussed below, there are many methods to augment administrative savings that do not include reductions in administrators, and re-conceptualizing how we do certain tasks will be a key element to our strategy.

The University Administration should be the right size to support the University's foremost missions of research and education - no more, and no less. While the difficult and bold decision to redeploy administrative resources to the greater good of scholarship and education did indeed come from the "top," the development and implementation of a plan to achieve the University's goals will be a consultative process which draws on the many talented people working across all sectors of NYU. It will be designed and implemented in the most sensitive way capable of delivering the targeted savings and process improvements.

General Plan for Administrative Efficiency

The goal of this effort is to achieve annual recurring administrative savings of at least $25 million. There are three broad components to the approach to be taken.

First, all non-school based administrative units of the University will have annual, recurring savings targets which must be achieved not later than the Fiscal Year 2010 budget. Many tools, as described later, will be available to these units to meet their goals, but the specific combination of approaches will vary within reason based on the needs and special expertise of the unit in defining its own core processes. Nevertheless, widespread practices that have been left unexamined for years - such as various human resource management practices -- will be changed across all units of the University.

Second, each of the NYU schools will be invited to undertake a similar exercise in generating administrative efficiencies. All of the budgeted expense savings achieved by individual schools will be retained within the school in a special fund to be used for that school's purpose with the guidance of the Provost. Moreover, schools that participate actively in this re-engineering of administrative support will be able to draw either on University credit capacity or resources for future projects of high academic merit. The University Administration also is committed to provide budgetary and managerial assistance to any school that seeks help in defining its efficiency plan.

Third, a series of five task forces, each chaired by a dean, will be established to review and address the effectiveness of a number of key NYU management functions. The task forces will provide a fresh perspective, draw on ideas from throughout the University, and offer options and recommendations. These task forces and chairs will be:

Information Technology
Ricky Revesz, Chair
Construction and Facilities Management Optimization
Robert Lapiner, Chair
Human Resource Policies
Charles Bertolami, Chair
Revenue Programs
Suzanne England, Chair
University Finance Systems
Thomas Cooley, Chair

Each of these task forces will be comprised of a broad cross-section of University citizens who are committed to undertake a comprehensive review of the existing policies and services, and each will be staffed by key administrators who are familiar with the policies, and can provide requested data to the teams. In addition, when appropriate, external expertise will be provided to these working teams. This approach has proven effective in recent years in such diverse areas as The Green Action Plan, NYU Plans Space 2031, and the University Benefits Assessment Taskforce. These five new task forces will be charged to review their areas and complete their recommendations by May 2009.

Available Methods

Many organizations have undertaken plans to increase efficiency similar to the one now beginning at NYU. Therefore, there is a large set of well-known tools that are available to use. The University will rely on a broad set of changes and process improvements to achieve its goals; and the approaches to be used include, but will not be limited to, the following methods:

Hiring Pause and "Rightsizing"

The most significant approach to achieve desired savings is to take stock of the optimal size and structure of the administration by pausing most administrative hiring at the University; accordingly, NYU will pause administrative hiring effective March 31, 2008. Over the course of a year, the University customarily has 450-600 vacancies. In this regard, there can be little doubt that the easiest job to reconfigure is the one that is vacant. However, such an approach cannot be done in an isolated way since many unfilled slots require movement, reassignment, and/or retraining of other individuals to fill a crucial void often across schools and units. Individuals who participate in this realignment can often be rewarded with the potential for additional training, increased job skills, and sometimes a promotion into the vacant slot.

Consolidation

NYU has established an administrative infrastructure in which individual units often develop their own support groups, especially in the areas of human resources and finance, which creates small isolated groups of specialists in these areas that can struggle to operate efficiently. Similarly, situations where managers have individual administrative assistants where the actual workflow suggests alternative, shared arrangements would be sufficient should also be reviewed. Consolidation is an excellent way to support our managers better with improved coverage for vacations, less down time when someone leaves, and lowered requirements for expensive temporary help. It also helps in leveling the workflow for the people who provide the assistance.

The first major consolidation moves will take place in the newly combined units of Facilities, Construction and Management, Faculty Housing, and Campus Services, now collectively named simply, Operations. This unit, lead by the recently promoted Senior Vice President for Operations, Alison Leary, has an excellent track record of promoting efficiency and savings, and it will provide an example for other units in the University to emulate.

Outsourcing

NYU is a very large institution that presently does not outsource much of its administrative service. However, given the savings goals and the successes other organizations have achieved through outsourcing, it would be a mistake not to review all appropriate opportunities for outsourcing. Companies that specialize in components of administrative support can often provide better, faster and cheaper services. This is not unprecedented for NYU: examples of outsourcing already in place here would include food service, specialized construction management teams, and cleaning services.

Human Resource Guidelines

The University has already begun to add more precision to its HR practices under the expert guidance of Katie Casey, VP for Human Resources. Over the years, NYU has slipped into some HR approaches that add cost without commensurate value. For the most part, these areas are best addressed directly with HR Officers and their colleagues from around the University. However, discontinuing such practices as using salary pool funds from vacant positions, job upgrades in the absence of a position banding system, and inappropriate use of overtime would be advisable. HR has also undertaken a pilot program to reduce costs for temporary help by providing an internal pool of temporary assistants, and has lowered advertising costs when new jobs are posted.

Efficiencies in physical plant

Great progress has already occurred in running the buildings on campus; indeed, the division of Facilities and Construction Management recently re-negotiated the cleaning contract for the Dental Center such that service was maintained at the same level but at a savings of several hundred thousand dollars per year. Savings were also achieved by benchmarking NYU's performance against peers, and by incorporating many suggestions of the NYU Sustainability Taskforce. In addition, a second sustainability grants program from which NYU might benefit will once again focus the creativity of the entire NYU community on the Green Action Plan. One mark of success from last year is that most major buildings on campus are now linked to a system that measures energy consumption in real time; and, next month there will be an interesting energy conservation competition among our student residence halls. Sustainability principles continue to be good for the planet, and good for our budget.

Our portfolio of buildings will also be reviewed to see if facilities have been fully optimized for hours of operation. Without doubt, many of our buildings must be available 24/7, but certain operations might function well with reduced hours, thereby saving on both security and energy.

Finally, while NYU has a very efficient footprint relative to most other research universities, and President Sexton has properly described the institution as "space starved," the University can do better in its space management approaches. In Manhattan, building costs are extremely high, so NYU needs to set tougher standards for space utilization. In general, too much administrative space is deployed as private offices, classroom size is often poorly matched to the number of students attending a given class, classrooms are too often empty, and too many documents are stored on site for too long a period of time. The rewards for improved space management might include rehabilitating many of the classrooms that do not now achieve the standards that make us proud.

Purchasing

NYU has already taken advantage of many of the modern improvements available in purchasing and reimbursement systems. Nonetheless, the large amount of purchases made by NYU warrants continued vigilance for every savings opportunity. For example, just this week, Purchasing negotiated new agreements with its two largest lab chemical suppliers, which resulted in free shipping for all NYU purchases, a $75,000 savings. There is like need to review funding levels and purchasing methods for the numerous travel expenses, catering events, phone and computer purchases, and many other purchases made on behalf of the NYU community.

Summary

Achieving the process improvements sought and the resources required to keep NYU moving forward will not be easy. Many will say NYU is fine just the way it is. To be sure, comfort with the status quo can be a beguiling sedative, but it is one that numbs aspirations. NYU has met its high aspirations in past decades by reaching for the requisite resources, and the outcomes these resources have funded have been quite spectacular. To meet aspirations for the next 25 years, it is imperative that the process improvements and additional budgetary resources be generated on an expedited basis. It is one of the great blessings of NYU that our community - our faculty, our students, our staff and our administrators - so fully embrace the idea of making the future NYU even better than the one they inhabit now, and so readily step forward to assist in achieving it. Your help is most welcome and much appreciated as the process proceeds.