Administrative Bloat

Administrative bloat is a natural tendency of organizations.  I am not entirely sure why, though I understand some of the drivers.  Never-the-less, I have seen it in nearly every organization I have worked in or consulted for.

Even the best-run private companies still have this problem.  To remain competitive, then, they have to come through every few years and wield the ax on these growing staffs, almost like trimming back a hedge that keeps trying to overgrow your house.  I spent a depressing amount of time as a consultant helping them.  It is uncomfortable, sometimes heartbreaking work, and one wonders the whole time why there is not some better way to keep staff in check.  To my mind, there is a still a great academic work to be written on this topic some day.

The alternative, in organizations that can get away with it, is administrative bloat.  Like, for example, in this public institution:

via Mark Perry, now at AEI

That staff adds up to an incredible billion dollars in administrative salaries, or nearly $21,000 a year per full-time student.  And remember, if this is just salaries, the actual cost is much higher because they all need offices, supplies, travel, etc.

  • fredrick.

    While this does look bloaty, I do realize that there are a lot of tasks required to keep a University running, and Universities do not outsource. For a company, for instance, the janitorial staff is usually outsource to some other company and is therefore an expense item rather than a personnel count.

    There is a need for librarians, admissions, groundskeepers, janitors, assistants to the prof (department secretary) I suspect many of the jobs go to students who are paper graders, and class assistants, etc.

    Yes cuts can happen but don't be surprised if the "Blue bar" only goes down some 10%.

  • Wayne

    I believe that the non instructional number should not be assumed to be administrative. The OSU Medical Center seems to employ more than 8,000 staff and I would guess that most would be considered non-Faculty.......

  • Ted Rado

    Many years ago, the R&D organization I worked in had an ovwerhead of 28%. Then came the MBA's and computers. All sorts of admin procedures and data keeping came to be, and overhead went to 81%. I got a huge sheaf of computer printouts every month which promptly went into the circular file. Everybody wastes time on paper shuffling. When you hire an engineer or research chemist, the cost is already committed. Why not explain the assignment to him and leave him alone to do it? The best administration is the LEAST administration. This seems to be contrary to current US practise.
    In the old days, the boss new his people and they knew what was expected of them. Little time and paper was spent on admin BS. You got an assignment that the Chied Engineer knwew you were capable of doing, given the necessary resources, and then left alone to do it. No more. Now we have all sorts of reports, meetings, accounts, etc. etc. ad nauseum. We are now paper and computer printout bound. Most of this is a total waste. Project accounts are a joke. If a project is overrunning, the excess is merely charged to a project that is underruning. I have even been asked to do this by the VP, for God's sake.
    If I seem down on MBA's, it is true. They are a menace in an technical setting. All they do is bury everything in admin BS. Perhaps they serve a useful purpose elsewhere.

  • Mole1

    OK, what is the "correct" ratio?

  • glenn.griffin3

    You say "universities do not outsource", like it is a given. Is there something magical and special about university garbage and floors, such that specially degreed janitors are required? Are the parking rules really so confusing, that the university needs its own specially trained police force? Is there some reason highly paid onsite personnel is required, rather than contracting all this stuff out?q

    Examine your assumptions.

  • a_random_guy

    It would be nice to know the breakdown for the medical center. However, I doubt that it will change the picture that much.

    For what it's worth, a real data point: an efficient teaching university can easily be 50% teaching staff. This may vary somewhat, depending on how you count graduate students who are also hired for various tasks. However, any ratio more than 1.5:1 is just awful.

    Eliminate the staff required to deal with federal regulations (which shouldn't exist anyway). Eliminate all the irrelevant "feel-good" projects that have zippo to do with real education. Eliminate the semi-professional sports programs. Etc. etc.

  • MingoV

    Administrative bloat results directly from perverse incentives: managers increase prestige by increasing the numbers of workers and the budgets of the department or section they head. Also, managers use bloat as an insurance policy in case of budget and/or personnel cuts. Since most administrations make across-the-board cuts instead of cuts based on productivity and profitability, managers with lean departments get screwed.

    It should be the opposite: prestige should accrue to managers who accomplish their tasks or missions with fewer workers and lower costs. In tough times, lean departments should retain staff and budget while bloated departments get the ax. But, that would require intelligent, informed, logical, and steadfast administrators: such people are rare.

  • Wintercow

    We have a full time director of recycling, a full time study abroad office, a full time office to offer students a quiet place to take exams, we have deans of diversity, we have full time positions to oversee the student clubs, ... And it goes on and on ... Hilariously, we are fighting with the SEIU right now about benefits packages for the janitors and other service workers...

  • Will

    Which is why there should be more of a push towards online universities without huge buildings or grounds to maintain. At my company virtually all training is taken online, either via a live instructor or through recordings/printed texts etc. I of course would love to travel somewhere, but this kind of training works just as well in terms of learning.

  • Barak A. Pearlmutter

    You're looking for "THE LAW OF MULTIPLICATION OF SUBORDINATES" from the C. Northcote Parkinson paper at http://www.berglas.org/Articles/parkinsons_law.pdf, he actually studied this stuff and has some delightful analysis and case studies.

  • bob sykes

    Well, OSU is state property and Columbus' police have no jurisdiction on the OSU campus (other than hot pursuit), so some sort of state police presence is needed. Drunken 18 year-olds can be a big problem, although the current generation is rather tame compared to their parents in the 1970s. No more burning cars and trashed store fronts on High St. after a Michigan win or loss.

    OSU did recently sell the rights to its parking system to an outside corporation for almost $500M, which went to its endowment. Fortunately, emeritus faculty like me kept our free parking, an $800 per year bene. (Good for football games, too.)

    The so-called faculty includes some graduate students with teaching duties and librarians. We also have clinical faculty, mostly in the medical school. Additionally, some administrators (department chairs) are counted as faculty, so the faculty number is overstated.

    The hospital/medical school campus is stunningly hugh, and its costs and personnel distort all the data. It is also growing rapidly. Like a cancer.

    Over the last 40 years, the State Legislature has run amok on all the state colleges and universities (some 13 with graduate programs and another two dozen or so 2 and 4 year schools) and paid off all sorts of political debt by a construction frenzy. At OSU the volume of buildings almost tripled and nearly every open piece of ground has been built on. This requires and army of janitors and groundskeepers, who, of course, must be union.

    Oh, and our Mormon, teetotaling president has an entertainment budget of $7.7M per year. He is, by the way, an extraordinarily effective room worker and schmoozer.

    At least in Ohio, the state college/university system is really part of the state's patronage system. That is its primary purpose. It should not be judged by any other standard.

    Of course, such a system is deliberately inefficient, and unintended consequences do happen. Like some students (not all) actually get educated and some faculty (not all) actually are productive and do useful, innovative research. However, the patronage system is not designed to weed them out,

  • Roy Stogner

    There seems to be some slight-of-hand in the jump from "non-instructional staff" to "administrative staff". I and half the scientists and mathematicians I work with are in the former category but not the latter, yet the only "overhead" involved is the ~50% of our our research grant money that gets taken to pay for general administration and less-externally-funded departments.

  • fredrick.

    I am not saying there is something special about the University Janitorial class. Just an observation that Universities tend to do things in house. And that skews the numbers compared to a private company.

    The Janitorial service was quite apropos because it is easily outsourced. Look at this: Let's assume Company A and University B both have the same level of non-production personnel overhead. "A" decides to outsource janitorial - and now it looks like "A" has lower personnel overhead than "B" but the reality is the costs are still about the same for both. Company A has turned employee salaries and benefits into a vendor cost.

    So how do you compare? That is the real point.

    Beware of raw numbers in an argument and read the asterisks.

  • fredrick.

    Focus man, focus. Arguments are stronger if you pick one point and focus on it.

    You're a rambin' man!

  • Arthur Felter

    Does your $21,000 per year number include just take-home pay, or does it also include benefits?

  • drB

    If we discount janitors etc then we are still left with faculty/senior administration ratio of about 1/1

    http://keepcaliforniaspromise.org/2001/ucs-administrators-crossed-the-line

    To the person who suggests online universities:

    (1) Please look up how many students are in loan default after graduating from online universities, and how many default after brick-and-mortar schools.
    (2) Please look up what is cheaper for students - current online schools or real universities.
    (3) Please look up faculty/administration ratio at online schools.
    (4) Please inform us how will the labs be done at online schools in disciplines that actually matter (ei where you can actually get productive jobs) - such as chemistry and engineering. And why should an oil refinery hire a chemist from online school who has not passed lab course, and consequently may set the plant on fire.

  • dnkz

    Could it be because the instructors are left to actually instruct, and the rest of admin stuff are performing other misc. functions

  • http://matthewjudebrown.com/ Morven

    The university I work at (USC) has outsourced its janitorial work to one of the big contractors for that, so it's not a universal thing. I suspect it is more so at state universities than private.

    Bear in mind that departments that do a serious amount of research will have staff employed to support that research; they are not fairly counted as teaching overhead.

    Another part of the issue is the inflation of amenities that universities offer to the students in an effort to chase their (subsidised loan) dollars. All these must be staffed. Read Megan McArdle's posts on the higher education bubble (e.g. http://www.thedailybeast.com/newsweek/2012/09/09/megan-mcardle-on-the-coming-burst-of-the-college-bubble.html ) for more. A university that but teaches well will lose out, it seems, by comparison to the one offering four years of resort living with a side order of education.

  • fredrick.

    Issue 1) Yes, but there are two interesting issues about all the folks you want to discount.

    1) Are these folks hired at optimal levels or are the many more janitors and groundkeepers than needed

    2) Why aren't these being outsourced? Universities are like US companies from the 1970's where companies tried to do everything in house. It isn't the way the world works any more.

    You can't just drop whole scads of employees and then claim a 1:1 ratio, and say problem solved.

    Issue 2) There are already universities out there where you can attend some courses in person and some online. Eventually more and more will go online - it is just a matter of time. Your comparison may be accurate based on a few year old data, but be assured in 5 years I would guess half the students will do at least half the courses online. I have to say the courses I could take online at school (via video-tape) were better than showing up.

  • Jon

    "To my mind, there is a still a great academic work to be written on this topic some day."

    Nope can't be done. This would lead to a truly free market and ordered anarchy. People don't want to leave behind the gunvernment as we know it. Can't have anarchy in our lives!

  • drB

    1. I am saying that there IS an administrative bloat. One-to-one ratio of overpaid SENIOR administrators is way too much, esp since 20 years ago there were many more faculty than administrators. Also, at a school where I am many (most) groundkeeping is outsourced. The bloat is top-heavy, with overpaid administrators creating more overpaid administrator positions.
    Issue 2 - the quality of online schools sucks, and no serious employer in oil and gas which I am familiar with will hire a chemist or petroleum engineer from online schools. May be secretaries can be educated online, but then again you do not need university education for that. And yes, more and more education will be online - with even less interactions with professors than now - and result will be that amount of administrators will increase but amount of actual teachers will decrease.

  • fredrick.

    I was using Janitorial staff more as an example. As in the figures Warren presented were not exactly apples and apples. If private companies contract out more - it looks like they have less personal when in fact, they may have the same amount but peoples salaries are now categorized a business expense, rather than a direct employee salary.

    And my personal belief (though it may be based on old personal observations) is that Universities do tend to in-house more. In the late 90's @ 'SC It didn't seem like the did much outsourcing. Of course all Universities were flush with cash at the time due to the .com boom.

  • Bill Drissel

    From Wikipedia: "He [Cyril Northcote Parkinson] notes in particular that the total of those employed inside a bureaucracy rose by 5-7% per year "irrespective of any variation in the amount of work (if any) to be done"."

    This is the real meat of Parkinson's Law.

    Regards,
    Bill Drissel

  • bob sykes

    Thanks. Too early in the morning, not enough coffee.

  • mark

    i was going to say, jesus chris! that sounds like my university! and then I realized who was commenting haha

  • fredrick.

    I wasn't trying to be harsh - just some friendly teasing.

  • fredrick.

    I am not sure if the quality of online schools suck, or if they just have a bad reputation due to preconceived notions. I have some experience with a precursor to online schools, I had a regular class that was tape recorded and sent to businesses in the area. The prof had a strong accent, the class was late at night and I had early classes that day, so I was half asleep, and there was no book. I was not understanding the class at all.

    About half way through I found out I could check out the tapes from the library, and went through them over spring break. When I didn't understand something I could rewind six times until I got it, if I wanted to, I was able to watch the tapes during the day when I was awake, at my leisure. I finally understood what was going on in the course (it was a linguistic class trying to teach about putting phonemes into a database in ways where the phonemes are searchable - to allow voice recognition. ) It worked so well, I stopped going to the evening class because it was a waste of time and just watched the tapes. I ended up learning more because of the "online" course than I would have if I just had the live class itself.