When Holden Thorp, the chancellor of the University of North Carolina, was looking for ways to cut the university’s budget, he did what many executives in private industry do — hired a management consultant.
The consultant, Bain & Company, came up with recommendations that it said could save the university more than $150 million a year. They included centralizing some of the university’s widely dispersed procurement operations (up to $45 million) and information technology functions (up to $19 million) and simplifying its organizational structure (up to $12 million).
And since Mr. Thorp hired Bain, both Cornell University and the University of California, Berkeley, have followed suit. In each case, the management consultants examined business functions but stayed away from academic issues like courseloads and tenure.
“Like any other large organization,” Mr. Thorp said, “we hire people, we buy stuff, we connect to the Internet, we build buildings and take care of our property, and we wanted Bain to look at how we could carry out those functions as efficiently as possible.”
“I thought someone from outside the university world would provide a new perspective,” he added.
Bain did offer a new take on a university known for its teaching and research and its beautiful old campus: the report summed up the university with a 10-color organizational chart with 380 little boxes, each representing a department.
For all its academic prominence, the 107-page report found, the university has plenty of inefficiencies. For example, more than half its managers have three or fewer people reporting directly to them.
In addition to the recommended changes that could save up to $161 million a year, the report suggested reining in the more than 100 centers and institutes that have sprung up around the university, many with their own finance, information technology and human resources departments.
“We’ve already done some of that,” Mr. Thorp said recently. “The Institute for Outdoor Drama isn’t getting any more state funding.”
While most of Bain’s recommendations made intuitive sense, Mr. Thorp said, it would have been far harder without the report to know just how to address the problem areas.
“I felt there were too many layers, but I didn’t know exactly what and where,” he said. “We’re trying to cut out two layers.”
At North Carolina, the consulting project was financed by an anonymous donor, who specified that Bain should be the company to do the analysis and that the cost should not be disclosed.
At Berkeley, Robert J. Birgeneau, the chancellor, said the Bain contract would cost $3 million — and hopefully save far more.
“If we could save $30, $40, $50 million for an investment of $3 million, I’d be ecstatic,” said Dr. Birgeneau, whose campus has been hit this year with particularly brutal budget cuts. “I’m a physicist, not an expert on organizational structures. But I believe we can be more efficient.”
For example, he said, Berkeley has one human resources person for every 85 employees, when the university norm is one for 130 and the industry norm is one for 200.
“We have already successfully consolidated some research functions,” Dr. Birgeneau said, “and we want to get a comprehensive view of procurement and I.T. and H.R. across the university to see if there’s consolidation we should be doing there, too.”
Shrinking endowments and cuts in state financing have forced many colleges and universities, public and private, to turn to hiring freezes, layoffs and furloughs. But for long-term solvency, many will need to find longer-term ways to trim their budgets without damaging their academic mission.
At the same time, parents and politicians alike have become increasingly angry that tuition has been rising far more quickly than inflation — and that the growth in support staff in recent years has far outpaced the growth in enrollment.
Still, some university employees criticize the hiring of Bain, or any outside corporate-oriented consulting firm, to advise on university budget cuts.
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