09 September 2010

The Berkeley Bain Report

The consulting firm of Bain & Co. has finally released their Operational Excellence report commissioned by Chancellor Birgeneau. It's chok-full of organizational jargon and catch phrases, not excluding crimes against the English language (who knew that to "incent" is now a verb?). I have taken only the most cursory of looks at the 205 slides of the report, and here are some first-hand impressions.

There are, of course, some commendable ideas in the report, for instance when it comes to energy savings (yes, it's a good idea to turn off the lights when you leave your office). But the rest of the recommendations are informed by just two principles: centralize and standardize. The distributed nature of many services at UCB, along with the diversification it entails, are identified as cost sources. The proposed solution is to centralize as much as possible the delivery of services, not just to achieve economies of scale but also to bring about increased efficiencies when the units reach a given critical mass – the appropriate size (measured in FTEs) to allow for  a more rational allocation of tasks.

The report addresses several areas:
  1. Procurement
  2. Organizational simplification (including HR, Finance) 
  3. IT
  4. Energy management 
  5. Student services
  6. Space management
(the last more tentative). One recurring theme that is bound to be the most controversial is the issue of supervisory span, i.e., the average number of people who report to a given supervisor. The average span at Berkeley is relatively low (about 4.4). The report recommends bringing that closer to the benchmark of "6-7 for expertise-based functions and 11-13 for task-based functions" (whatever that means). The result would be a much flatter organizational chart, with many people now in supervisory position re-classified as "contributors" (i.e., people with no further employees below them – gotta love the jargon, in the best Minitrue tradition). The report makes no effort to hide that as part of this flattening process, many employees would have to be "transitioned" (the transition is of course from "gainfully employed" to "out of work").

The main thrust of the report seems to be that about $100M of potential savings can be achieved by reducing diversification in the delivery of services, downsizing and re-organizing lower-level staff, and centralizing many functions. (I also could not help noticing how the report makes no mention of the extravagant expenses incurred by the supposedly self-sufficient UCB Athletics department, which, have been consistently backfilled with campus funds for many years.)

It is also important to take notice not just of the substance of the recommendations, but also the manner of their implementation. Bain envisages these changes to be brought about in a completely top-down manner (the word they use, of course, is "cascaded"), with no participation by the staff and faculty that would bear the brunt of these measures.

And all this, of course, cost Berkeley about three million dollars. I am sure many of our own faculty at business schools across the system could have come up with better solutions for a lot less.

1 comment:

  1. UC profs raise doubts about UC Berkeley Chancellor Birgeneau spending $3,000,000 for OPerational Excellence (OE).A legacy of waste in UC Berkeley Chancellor’s Office: easily grasped by the public, lost on University of California’s President Yudof.
    The UC Berkley budget gap has grown to $150 million, & still the Chancellor is spending money that isn't there on $3,000,000 consultants. His reasons range from the need for impartiality to requiring the consultants "thinking, expertise, & new knowledge".
    Does this mean that the faculty & management of UC Berkeley – flagship campus of the greatest public system of higher education in the world - lack the knowledge, integrity, impartiality, innovation, skills to come up with solutions? Have they been fudging their research for years?
    The consultants will glean their recommendations from faculty interviews & the senior management that hired them; yet $ 150 million of inefficiencies and solutions could be found internally if the Chancellor & Provost Breslauer were doing the work of their jobs (This simple point is lost on UC’s leadership).
    The victims of this folly are Faculty and Students. $ 3 million consultant fees would be far better spent on students & faculty.
    There can be only one conclusion as to why inefficiencies & solutions have not been forthcoming from faculty & staff: Chancellor Birgeneau has lost credibility & the trust of the faculty & Academic Senate leadership (C. Kutz, F. Doyle). Even if the faculty agrees with the consultants' recommendations - disagreeing might put their jobs in jeopardy - the underlying problem of lost credibility & trust will remain. (Context: greatest recession in modern times)
    Contact your representatives in Sacramento: tell them of the hefty self-serving $’s being spent by UC Berkeley Chancellor Birgeneau & Provost Breslauer.
    Let there be light!