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April 25, 2006
BACKGROUND
In the summer of 2005 President James Wright invited McKinsey & Company,
a management consulting firm, to come to Dartmouth to help assess the
administrative structure and to help identify ways in which the College could
enhance administrative functions. As part of that effort, President Wright
developed the following set of priorities for the administration.
- To support the work of the faculty and students
- To recruit and retain talented and diverse officers and staff and to
encourage and support their advancement through competitive compensation and
professional development programs
- To steward the resources of the institution in a prudent and fiscally
responsible manner to advance academic goals and community
- To communicate effectively across the institution to encourage a sense of a
shared Dartmouth
- To encourage innovation on the part of officers and staff within a culture
of interdependence, transparency, responsibility and accountability
President Wright noted that Dartmouth's mission is to provide a
transformative student experience within a world-class research environment. He
stressed the College's leadership role in undergraduate education and the
excellent graduate programs in business, engineering, medicine, and the arts
and sciences. As Dartmouth works to maintain this leadership position within
the world of higher education, the President stressed the need to look at how
the administration supports that mission.
The McKinsey team came to Hanover during November, December, and January and
met with approximately 50 faculty, students, and staff. They also analyzed an
extensive set of data on administrative functions from across the institution,
compared that to historic trends and data from other institutions, and
leveraged their experience in serving other leading institutions, both academic
and corporate.
The McKinsey team found that the Dartmouth administration displayed many
strengths and successes. They noted in particular the outstanding job of
attracting some of the best students in the country and even world, to all
degree programs; the successful transition in leadership in several
departments; and the effective management of a major facilities program and
library expansion, all of which has been accomplished despite budget
constraints and limited resources.
KEY FINDINGS
1. Growth in Positions
The Dartmouth College-only administrative and support functions have seen a
modest compound annual growth rate (CAGR) of 1.1 percent over the past five
years. During this time, the College added 111 new positions. In the same
period, it cut 25 positions for a net gain of 86 full-time equivalents. When
benchmarked against other institutions, the ratio of the administrative staff
to total students was in line with other peer institutions.
These numbers refer to the College-only part of the budget and include
support services provided by the central administration to the professional
schools in the areas of compliance, research support, legal affairs,
development, endowment management and other areas of the College. These
services are often provided without the assessment of a corresponding charge
against the professional schools budgets. 3
Most of the growth occurred in the areas of development (+38) in preparation
for the Campaign for the Dartmouth Experience, and student life (+28.5) in
response to a broader set of needs and expectations displayed by students as
well as compliance issues in athletics and health services. Other areas that
saw increases included the expansion of the Dartmouth College Child Care Center
(+8); administrative positions in the Dean of Faculty area (+14) in response to
curricular and research needs of the faculty; and compliance (+8).
The College-only administrative growth of 1.1 percent over this five-year
period (net gain of 83 FTEs) compares to an increase in Arts and Sciences
faculty of 50 new positions or 3 percent CAGR.
The professional schools also saw significant administrative growth with the
addition of 101 new positions or 5.2 percent CAGR in these years. The primary
driver of this growth was research at the Medical School.
2. Growth in Administrative Compensation
Administrative compensation grew more quickly than positions and more
quickly than faculty compensation despite lower annual non-faculty compensation
increases. There were a number of reasons that explain this including:
- Administrative departures tend to be replaced at the equivalent level,
often at higher cost in response to market forces while faculty departures are
more often replaced by more junior faculty
- New hires generally cost more than continuing employees because of market
adjustments and competition for new employees
3. Increased organizational complexity
McKinsey found an increase in institutional complexity in recent years in
terms of the demands of the student body, academic program, and research, all
of which resulted in increased pressure on the administration. Students come to
college today with greater expectations and needs. Thus, for example, the
counseling service has seen a 27 percent increase in outreach hours and an 11
percent increase in total contacts in the last five years.
Research projects have become more complex, often involving multiple
departments and schools. Indirect costs do not cover the full cost of such
research, and the compliance demands of granting agencies have increased.
Finally, as the faculty and administration has grown, so too has the number of
cross-departmental transactions.
Moreover, as Dartmouth has grown, the organizational structure has become
more complex. Faculty, students, and employees do not always know who to call
or how to move a project forward. McKinsey identified particular frustration
around hiring processes and confusion over the roles of Institutional Diversity
and Equity and Human Resources. Many respondents believed the hiring process
takes too long and is too caught up in procedural bureaucratic red tape without
realizing the diversity goals established.
4. Accountability
Dartmouth has a collegial and positive culture that encourages consensus
decisionmaking. But officers and employees do not always understand who sets
institutional priorities and makes decisions. Moreover, there is insufficient
accountability around departmental and individual performance.
5. Budgeting Process
The annual budgeting process for administrative services is not explicitly
tied to institutional priorities and there is no formal planning process that
creates the necessary linkage.
6. Shadow Organizations
Several departments at the College have developed "shadow"
organizations around some functions including fundraising, communications,
institutional research, and information technology. This decentralization can
be an effective way of organizing functions but needs ongoing careful
assessment to ensure that it provides effective service within a fiscally
prudent framework.
RECOMMENDATIONS
1. Transparency and Priority Setting
The president and senior leadership have developed a set of institutional
and administrative priorities through a strategic planning process. They need
to more effectively communicate these to all levels of the institution. Vice
presidents, deans, and managers need to ensure that their programmatic planning
ties into the priorities identified by the president. The provost and executive
vice president should establish a programmatic planning process and modify the
annual budget process to tie into the planning recommendations and ensure that
budgets and priorities are aligned.
2. Cross Departmental Processes
Dartmouth needs to redesign and reinvigorate the following functions:
a. The Hiring Process: Senior leadership needs to clarify
the functions of Institutional Diversity and Equity and Human Resources with
respect to hiring of new employees, development of candidate pools, and the
handling of grievances. McKinsey recommends that HR handle all the
transactional aspects of the search and hiring process, and that IDE
concentrate more on a broader institutional diversity program effort as well as
on the development of diverse pools of candidates. Individual departmental
managers and divisional leaders need to be held more accountable for results.
HR should develop better support and clearer policies around advertising, the
search process, and compensation and benefits packages. The College should more
effectively leverage technology and data in this area.
b. Facilities Planning and Construction: Dartmouth is in
the midst of an extensive and impressive construction program but the planning,
design, and construction responsibilities are currently divided among several
departments (Facilities, Operations and Management; Planning, Design and
Construction; and Student Housing in the Office of Residential Life). McKinsey
recommends that the College work to improve coordination and priority setting
among them and ultimately consider how they could be consolidated.
c. Payroll: Technology could be better used to reduce
errors and increase productivity. Automated timesheet and payroll authorization
systems are needed.
3. Departmental Service
The president has established as one of his priorities for the
administration the need to be more service oriented. Several departments in
particular need to focus on this priority.
a. Human Resources must work to reestablish its reputation
as a reliable service organization that supports managers in recruitment and
hiring, that reviews compensation issues, offers new employee orientation,
employee training, and a host of other services around employee relations. The
department needs to assess and update policies and procedures.
b. Computing Services is at the core of much of the
administrative and academic life of the College. McKinsey recommends upgrading
the director position to the vice presidential level reporting to the provost.
At the time of this report, the College was in the midst of a search for a new
head. When that search is completed, the department needs to focus on the
basics of operations and customer support. The charges for the several
computing committees need to be clarified and there needs to be better
prioritization of projects and communication.
c. Procurement provides a major opportunity for the College
to increase efficiency and to realize cost savings. The addition of a new
director of procurement provides the occasion to reorganize Dartmouth's
policies and practices around procurement.
d. Institutional Diversity and Equity should provide
campus-wide leadership in setting the institution's diversity strategy and
coordinate educational efforts. Personnel related activities around grievances,
training, and childcare should transition to HR.
e. Institutional Research is currently divided among three
different offices. McKinsey recommends that these be consolidated within the
Provost's Office of Institutional Research and that that office serve as the
office of record for all institutional data.
f. Communication functions exist in multiple locations
around campus and the College would benefit from greater coordination and
consolidation of these functions. McKinsey recommends that Dartmouth undertake
further analysis of how this could be done.
4. Performance Culture
President Wright has outlined his key priorities for the College and
administration, and these need to be clearly and repeatedly communicated
throughout the administration. College leadership also need to establish clear
expectations around achieving goals, and managers must be encouraged to set
explicit milestones and reach these goals. The culture needs to encourage
innovation and accountability.
Dartmouth must more systematically monitor and evaluate individual and
departmental performance. Departments must outline goals and must develop
mechanisms to gather and review feedback from their key constituencies.
Departmental managers must also more regularly establish employee performance
objectives and must regularly evaluate employee performance against these
objectives and better link compensation and recognition to these.
5. Organizational Structure
Dartmouth's organizational structure has developed over many years and is
consequently not necessarily the most effective organization to serve the needs
of the modern college. McKinsey recommends that Dartmouth consider some
reorganization of departments to streamline functions, optimize resources, and
create well-focused, reasonably sized divisions.
McKinsey recommends the following changes:
a. Consolidate institutional research into the Provost Office
b. Have the International Office report to the General Counsel's Office
c. Elevate Computing Services to a Vice Presidential area reporting to the
Provost
d. Have Web Content Development report to Public Affairs.
Longer term, McKinsey recommends:
a. The consolidation of facilities planning, construction, and
operations
b. The consolidation of personnel-related activities to Human Resources
c. The movement of the Dartmouth Child Care Center to Human Resources
Over a still longer term, Dartmouth should consider the establishment of a
Vice President for Administration to oversee the business functions needed to
support an outstanding institution of higher education.
CONCLUSION
While Dartmouth has many strengths within its administrative team, it has an
opportunity to upgrade its organization to better support faculty and students.
Just as Dartmouth is a leader providing an outstanding education to its
students, so too can it model best practice in delivering administrative and
support services in academia. To advance this goal, the president should
appoint a dedicated team to work over the next several years in implementing
the recommended changes.
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Executive Summary is available for download
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