Operational Excellence Efforts Under Way

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For over a year, UC Berkeley has worked with consulting firm Bain & Company on an ambitious endeavor to save the campus upward of $75 million annually.

Now, Operational Excellence's seven teams are starting to make moves to change the size and scope of campus operations - most controversially with the recent announcement that 280 positions will be eliminated by June.

Staff reductions are already under way and the campus expects to save about $20 million annually, administrators announced Thursday in a campuswide e-mail. Nearly 150 staff members will be laid off and the remaining positions will be cut through retirements, voluntary separations and the elimination of already vacant positions.

In addition to streamlining staff, the organizational simplification team will publish preliminary plans for shared service centers within a month, which will house administration for human resources, finance and information technology.

Position cuts have affected all levels of staff, as one-fourth of the eliminated positions have salaries and benefits of $100,000 and above. The number of managers who supervise fewer than three staff members will decrease from 45 to 20 percent, with a new campus average of seven staff members per supervisor.

However, SAVE the University and the Berkeley Faculty Association are questioning why the campus did not make any reductions in top administrators and offices, according to Richard Walker, professor of geography and vice chair of the Berkeley Faculty Association.

The organizations also have concerns about the transparency of the distribution of layoffs across the campus units, as well as "potential discriminatory effects" of the cuts in terms of the ethnic and gender demographics of those laid off, Walker said in an e-mail.

"Where does slash and burn cutting end and long-term planning begin?" he said in the e-mail. "OE has to be carefully thought out, involve everyone on campus, be transparent, and be implemented step-by-step, but it is being rushed or ignored in the drive to reduce staff by large numbers."

An Outside Firm Comes In

Bain & Company was originally hired to assess operating costs after the campus suffered a budget deficit of nearly $150 million in the 2009-10 school year and took $67 million in permanent budget reductions.

Though the campus hired the firm in October 2009 at a cost of $3 million, the firm's continued support of the initiative through Dec. 31 of this year cost an additional $4.5 million.

The initiative's final diagnostic report completed in April showed potential for savings of at least $75 million per year, and seven initiative teams have been charged with recommending savings in their respective categories.

However, additional funding may be required to complete the initiative's implementation. A clause of the Phase Two Amendment of Operational Excellence signed April 1 states that the initiative may require much more funding, estimating further investments at $50 million to $70 million in total over the next three years, with annual costs of $5 million thereafter. Further investments will occur in process redesign, automation projects, people and training, the amendment said.

Claire Holmes, associate vice chancellor for public affairs and university communications, said in an e-mail that the ultimate cost of the initiative has yet to be determined.

"Until the plans are actually finished and approved, there is no way to know what investments in technology, training, etc. may be. However, we do know that we will need to invest in the campus to ultimately achieve our permanent savings," she said in the e-mail.

Future Plans Begin to Develop

As large changes occur in organizational simplification, other initiative teams continue at varied paces, with most planning to submit their recommendations to campus administration by March before implementing changes. Teams have found savings in areas of energy, information technology and travel, among others.

The campus currently runs a deficit of $6 million in utility bills due to a lack of state funding, but energy cost cuts could save between $3 million and $4 million to help close the gap.

Plans to increase campus energy efficiency by allowing faculty to track energy usage via meters installed in all campus buildings will be completed by the end of January as part of the energy management initiative.

Altering the campus's software licensing, servers and data centers could be another area for big savings. The information technology team found that new software such as BFS9 - the updated version of the Berkeley Financial System - cost between 300 and 600 percent more than originally budgeted. The team hopes to decrease annual information technology spending of $140 million by 10 percent and is currently drafting case studies.

Cuts in the costs of lab supplies and equipment as well as travel and entertainment could save the campus anywhere from $1.7 million to $6.4 million, according to a preliminary draft of recommendations published by the procurement team in December.


Alisha Azevedo covers academics and administration. Contact her at [email protected]

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