Consultant: Administrative Costs Grew Faster Than Academic

The global business consultant Bain & Co. has concluded that UNC has management and organizational inefficiencies that keep it from getting the maximum bang for its bucks in the core missions of teaching and research.

Bain, which gave its final report to the trustees in July, found that administrative expenses grew faster than what was spent on academics between 2004 and 2008. During that time the University added more than 1,000 full- and part-time employees, the majority in support roles. Meanwhile, the consultants found the University’s management structure to be inefficient – with as many as nine layers of management from the staff level to the chancellor’s office, and 50 percent of managers supervising only one to three employees.

The study included the University’s administration and all 14 professional schools. It was paid for by a private donor and was initiated as UNC instituted budget cutbacks in anticipation of state funding reductions related to the economic slowdown.

Chancellor Holden Thorp ’86 acknowledged that Carolina has a complex organization structure and said it would look for ways to reduce that. He said the rapid growth in the University’s research enterprise over the past few years could be a significant contributor to slippage in efficiency.

Bain identified 10 areas in which it said UNC should try to improve its operational efficiency: overall organizational structure, procurement of goods and services, information technology, finance, human resources, administrative standardization for its centers and institutes, research, utilities, building and grounds services, and the way it uses classroom and other space.

Estimates of annual savings from having a more efficient operation are in the millions of dollars in most of those categories. Thorp stressed that the dollar figures were rough estimates.

A campus task force will tackle the recommendations and decide on which areas to concentrate. Bain has offered to return at no cost, probably in 2010, and to give UNC “a 10,000-mile checkup” on its efforts.

The campus response to the Bain report could be driven in part by information revealed by The News & Observer of Raleigh in August. The newspaper found that the number of associate vice chancellors at UNC had grown to 19 from 10 in the past decade, that the money spent on those salaries had more than tripled and that 14 assistant vice chancellors had been added in that period.

Thorp told the paper that the revelations, which included large-scale management growth across the UNC System, were “troubling,” and UNC System President Erskine Bowles ’67 said campus administrations needed to be trimmed.

Thorp said the number of associate vice chancellors already has been reduced to 15.

Thorp has named Joe Templeton, immediate past chair of the faculty and former chair of the chemistry department, to a part-time role as special assistant to the chancellor for planning and initiatives. Templeton’s primary charge is to manage the University’s response to the Bain report.

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