Last September, the Compass introduced a regular column, "Innovation Corner," designed to keep the Penn community informed of the results of restructuring and other University-wide initiatives that demonstrate Penn's commitment to implementing service improvements and administrative cost reductions. Throughout the academic year, the column featured such topics as the implementation of FinMIS, initiatives to leverage Penn's purchasing power with large vendors, energy conservation strategies, a new delivery system for computing services and a plan to re-engineer Penn's research administration support processes.

Last week, the column began its regular publication with a report on changes in the University's Internal Audit strategy and management structure. Future columns will focus on such topics as implementation of the Public Safety Strategic Plan, progress with Penn's new procurement program, and the Dining Services market survey. In addition, Compass will continue to carry related news and feature stories.

Recently, Compass writer Phyllis Holtzman asked Executive Vice President John Fry for his views on the first full year of restructuring, and what to expect in the year to come and beyond.

Question: How would you evaluate the progress the University has made so far with its restructuring program?

Answer: I think we've made substantial progress so far in implementing a number of key initiatives, and laying the groundwork for others. We were aware from the beginning that some of the changes we wanted to implement could be accomplished rather quickly, while others would be longer-term. An important thing to remember is that the purpose of restructuring is not to just change certain administrative processes, and then be done with it. The overarching goal is to continuously evaluate our operations to make sure they are serving our campus community well and managing costs aggressively.

Question: What are some of the highlights from this past year?

Answer: Our partnership with Barnes & Noble to build the first University superstore in America is an example of an initiative that will improve the delivery of service to students, faculty and staff, enhance the quality of life on campus for everyone and generate significant new revenues for the University to invest in the implementation of its strategic plan, Agenda for Excellence. Other highlights include energy conservation strategies that in the next several years will deliver annual recurring savings of $4.2 million; re-engineering of our purchasing practices to leverage Penn's considerable buying power (the University and Health System together spend $640 million annually in goods and services, and we have already targeted areas where we see potential savings of $15 million over time); implementation of a new strategy and delivery system designed to make computing services easier and more cost-effective for those who use them; development of a Public Safety Strategic Plan, with the following elements already underway: upgrading security technology on campus, reorganizing command structure, and seeking national accreditation for Penn's Police department.

These are just a few examples. There are many more, and we will continue to report on them regularly.

Question: What kinds of fiscal goals are set and are we on target?

Answer: The goals are outlined clearly in Agenda for Excellence. We hope to reduce the cost of center and school administration by $50 million over the next five years and reinvest savings in strategic priorities, and generate at least $10 million centrally in new revenues through entrepreneurial business ventures and better management of our assets.

I believe we are on target; the results of restructuring have to date yielded savings in excess of $12 million.

Question: How are these savings being reinvested?

Answer: The savings we have captured over the past year will go to fund, among other things, upgrades in public safety equipment and technology, the construction of the Barnes & Noble superstore, and the development of the Perelman Quad.

Question: What is the total number of jobs that have been eliminated so far due to restructuring?

Answer: Since July 1 1995, 175 positions have been discontinued. When we launched our administrative restructuring project, we were aware that one result of re-engineering our business processes would be the elimination of certain positions. For that reason, we developed the Position Discontinuance and Staff Transition (PDST) policy. The policy provides salary, benefits and job counseling to employees whose positions have been eliminated. Many employees affected have obtained new jobs either at Penn or in the local market, and we will continue to work hard to help people find new employment opportunities. We need to encourage managers at the University who have vacancies to give first consideration to people who are going through the discontinuation process.

Question: How many people will lose their jobs all together?

Answer: There has never been any predetermined number of jobs that would be eliminated as a result of restructuring. That's not how restructuring works. The goal is to dramatically improve service while simultaneously managing costs. Sometimes this results in a new organizational structure that requires fewer, or differently configured, jobs. I do expect that other jobs will be eliminated over time as the central administration and the schools continue their restructuring efforts. However, as we move further along with our efforts, we will focus increasingly on service excellence and professional development, because this is where lasting value is created.

Question: We've heard a lot about outsourcing, particularly since Barnes & Noble took over management of the bookstore. What will be outsourced next?

Answer: Outsourcing is a strategy that will certainly be considered when we examine selected business and/or service operations. We will consider it in those areas where it can demonstrably improve services and reduce costs while at the same time serving the specific needs of the University community. Before any decision is made to outsource, we will conduct a thorough review and analysis of the area under consideration. We will consider all options available to us, and will select outsourcing only if it appears to be the best option. We are bound by our responsibility to provide the campus community with the best possible services in the most cost-effective manner: sometimes, the best option is outsourcing; other times it is self-operation, and in yet other cases it may be a University-vendor partnership. The form is not as important as the substance, which is better service for equal or less cost. Because we know that outsourcing affects people who work at Penn, we will enter into outsourcing arrangements only with organizations with world-class reputations and progressive human resources practices.

It is important to remember that when we do outsource an operation, we don't just hand it over to an outside company. We will monitor and review the effectiveness of all outsourcing arrangements on an ongoing basis to make sure that services are being improved and costs are being reduced. This will be done in part by systematically gathering input from our faculty, students and staff.

Question: What kinds of news can we expect from your office about restructuring in this coming year?

Answer: You can expect to hear a lot about enhancements to our Public Safety programs, which is a high priority. We are moving forward with our upgrade of blue light phones, and other state-of-the-art security technologies. We will be reporting on the Dining Services analysis which will get underway shortly. This is a significant project that will affect all of our campus community. We intend to find out what people want in the way of food services at Penn, and then develop a plan to deliver those services in a cost-effective way to our students, faculty and staff. We will begin to implement our plan for re-engineering research administration support processes. This is a critical undertaking for Penn; we are one of the top research universities in the nation, and we want to provide the best support possible to our faculty researchers.

You can also expect to hear about efforts in Human Resources, where work is underway to study Penn's "total compensation" package, with a goal of reducing costs while remaining competitive in our primary employment markets. We will be reporting progress in our procurement program and in our efforts to upgrade internal controls and compliance mechanisms.

Essentially, we will continue to work our way steadily through the organization, seeking opportunities to improve service, reduce costs and invest in the professional development of our employees. At the same time, we will increase our emphasis on improving the quality of life on campus, specifically in the residential, retail and recreational areas.

Return to Compass Features for September 24, 1996