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Human Resources

Riding Out the Storm

Part two of a two-part column on how HR is coping with economic realities
University Business, May 2009

MANY PEOPLE HAVE stopped watching the evening news. Why bother? More corporate greed. More stocks plummeting. More people losing their jobs, homes, or life savings. There’s the occasional “nearing the end of the recession” headline thrown in, but budget struggles have caused a number of layoffs on campuses.

As of this writing, The University of Washington plans to cut at least 600 jobs. Up to 50 people may lose jobs at Colorado State University. Utah State University is laying off 20 workers. The jobs of eight workers at Riverland Community College (Minn.) are in jeopardy. Nearly 100 workers at Harvard—supposedly the richest university in the world—have lost their jobs over the past year.

A Clemson University program allows employees to voluntarily switch from full-time to part-time.

As the nation’s unemployment rate continues to climb, many higher ed leaders aren’t sitting back, waiting for the inevitable to happen. HR professionals are being proactive, taking advantage of the recession to either streamline or create practices that save money, stabilize expenses, and, ultimately, prevent layoffs.

Part one of this column, published in March, highlighted some ideas from HR professionals about how they’re using the down economy to develop more efficient programs and practices. Part two presents more ideas from HR professionals on how they’re positioning their schools to ride out this perfect storm.

Staffing levels at Clemson University (S.C.) are still the same, although officials have frozen hiring and salaries as well as stopped several construction projects, reports Michelle Piekutowski, associate chief HR officer at the school, which employs 4,700 workers.

“We’ve had a budget cut of about $38 million as of last July 1,” she says. Since deeper cuts may be on the horizon, the HR team is making numerous changes. Two of them are the creation of a three-year phased retirement plan for faculty and the implementation of a program that includes a five-day mandatory furlough, a 90-day voluntary furlough, and a voluntary reduction in time through which employees, with supervisor approval, can permanently switch from full-time to part-time.

So far, several employees have cut back their hours. While the average reduction has been about 20 percent, Piekutowski points to two who slashed their hours in half, saving the school at least $40,000.

“[Budget cuts] are causing folks to re-evaluate their needs and positions,” she says, explaining that some jobs, such as landscapers, may not be needed year round. “Should they have hired [employees] in a reduced position to begin with?”

But hard times also generate compassion. Based on an employee suggestion, the school developed a mandatory furlough relief fund this year for low-paid staff. About 300 university employees, alumni, retirees, and local residents contributed $71,000. Surprisingly, Piekutowski says the tax-deductible donations helped 75 percent of these workers come within $15 of their normal paycheck.

In the end, she believes the recession will have encouraged HR to eliminate programs that weren’t contributing to the school’s overall goals. It is forcing many schools to take a second look at how they operate and to develop fresh practices that make fiscal sense.

Another example is Davidson County Community College (N.C.), which supports approximately 650 employees. It just received a 4 percent budget cut and is expecting a 7 percent cut next fiscal year.

Besides developing an online application process involving job ads placed on the college’s website instead of in newspapers or magazines (which will result in savings in the five figures), the HR office recently piloted a four-day work week for employees in maintenance, physical plant, and business services, says Christine Herrick, the college’s executive director of HR. “We’re hoping it will reduce the need for some part-time staff,” she says. “We can schedule [full-time] staff in a way that will provide coverage for evening hours, which is when a lot of our part-time staff work now.”

Each week, some full-timers now work four, 10-hour shifts that carry over into the evening hours. Herrick believes more staff will be attracted to this schedule for the three days off each week it provides.

Enrollment at the institution has increased by 13 percent, yet officials have implemented a hiring freeze (which excludes new faculty positions).

“We have growth and have to figure out how to get the job done,” Herrick says, adding that HR is exploring ways to shift responsibilities. “Employees have been really great at offering suggestions. They realize anything they can come up with and do will not only help themselves but coworkers they care about, so they’re all very motivated to do their part.”

Some institutions are luckier than others. Consider those located in states not hit hard by the recession, or private colleges and universities, mainly funded by nongovernment sources. Is it all about luck, or is proper planning also involved?

At Mercy College (N.Y.), which supports roughly 1,000 employees, it’s business as usual, says Joe Schaefer, Mercy’s chief operating officer, who oversees HR. “We’re always looking at where we can create efficiencies in all departments, not just HR,” he says, adding that the school didn’t receive any budget cuts this year and doesn’t expect any next year.

To save money, the college no longer outsources training or its student call center. Officials streamlined student affairs through a new mentoring program, Personalized Achievement Contract. Instead of several employees dealing with the same student on overlapping issues, Schaefer says that at least six employees from student advising and career placement were trained as professional mentors. Each was assigned a caseload of 100 students to avoid duplication of services.

Employees at the College of Southern Nevada are being cross-trained to perform multiple functions.

Likewise, Lehigh Carbon Community College (Pa.) isn’t facing budget cuts, despite one-third of its funding coming from the state, says Ann Bieber, VP of the school’s administrative services, which includes HR. “Our college already operates with a skeleton crew.” Although enrollment is up by 6 percent, no new positions have been approved.

Besides implementing direct deposit, which saves an estimated $6,000 a year, changing utility usage, expected to save another $20,000 per year, and decreasing advertising by $70,000 per year, the community college participates in a health care consortium with local school districts. In 2007, that saved approximately $231,000. Last year, Bieber says, the school’s health care expenses would have been 20 percent higher if not for the consortium.

Savings are also realized in other areas. The VP of academics recently filled an associate academic dean position with three full-time faculty who share that position. They each earn more money for the added duties, but the school saves money in new hire training and benefit costs.

Some budget cuts are so severe that layoffs are inevitable. Iowa State University may be facing a $25 million budget reduction in 2010, which represents approximately 80 percent of its personnel budget, says Carla Espinoza, the school’s associate VP of HR services. “It’s hard to escape layoffs when people are the biggest part of our budget,” she says, adding that the university employs more than 13,000 staff. “The common approach is looking at actual cost savings, examining what we’re providing for employees in terms of benefits. We’re exploring the university’s costs, increasing the employee’s portion, or reducing these benefits altogether.”

The university’s president asked all employees for cost-cutting ideas. So far, HR has requested unit administrators to identify their business priorities and offer ideas for staff reduction. Since January, hundreds of employees have volunteered to take off one day each month (unpaid) for three months. Others may work four days a week instead of five. And programs that don’t pay for themselves could be on the chopping block. But through it all, Espinoza says it’s critical for the university to stay connected to its employees. “We’re one big family, and it’s very important to have that positive connection.”

Other institutions may also be in serious trouble. As executive director of HR at the College of Southern Nevada, John Mueller says the school experienced a 14 percent budget cut last year. But next year is what’s causing its 2,800 employees to grow gray hair—a proposed 30 percent cut, which he says could devastate the school. So leaders are on the defensive. They implemented a hiring freeze and are considering a salary freeze, while automating manual processes such as employee evaluations and sick and annual leave.

To offset staffing decreases, employees are being cross-trained to perform multiple functions. Recruiters, for example, are now performing tasks involving salary and benefits administration. Even Mueller is working in the trenches, since his department has three vacancies that can’t be filled.

“Most employees are performing a wider range of duties,” explains Mueller. “We can’t afford a specialist’s model. We need the flexibility of being able to juggle staff to function in areas that are really necessary.”

The financial troubles confronting colleges and universities may continue for some time. Many are simply trying to survive this year or this round of budget cuts. Hopefully, the creative strategies being implemented by these institutions will provide ample ideas on how an institution can remain healthy and strong during good times or bad.

Carol Patton is a Las Vegas-based freelance writer who specializes in covering HR issues.