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Point/Counterpoint: Was the UI right to expend money on an employee reclassification?

BY DI EDITORIAL STAFF | MARCH 30, 2011 7:20 AM

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YES

After it was released that the University of Iowa designated over a half of a million dollars to improve its employee-classification system, many questioned the necessity of such an investment — especially when considering the state’s recent, high-profile cuts to public universities.

But, considering the current system’s inevitable deficiencies, the uncertainty of modern economics, the proposed life span of the new system, and the amount other universities have paid for human-resource restructuring, the UI’s consulting investment was both necessary and well within financial reason.

“Bottom line is, it needs to support the recruitment and retention of our staff,” Robert Millsap, an associate director of Human Resources, told me Tuesday.

The purpose of the investment was to restructure an outdated employee classification and salary-increase system so that it reflects up-to-date salary and market pressures, with the goal of recruiting and retaining quality employees at competitive rates.

Is the consultant fee of $560,000 worth its payoffs? It’s difficult to predict the outcome of a salary restructuring plan, and even more so to quantify it monetarily. It’s easy, however, to compare it with similar consulting fees at other public universities.

The University of Wisconsin recently hired the Huron Consulting Group to develop a new human-resources system to serve the entire university for $80 million.

The duration of the Buck contract is also worth noting. The project has been ongoing since 2007 and is projected to be finished by this fall. The individual evaluation of the estimated 600 employees who have appealed their new classification may take longer, but Buck is not involved in the appeals process. So, including the costs of the initial evaluation, the UI has paid Buck Consultants under $135,000 per year, which would represent less than 1 percent of the UI’s total salary and benefit expenditures.

By replacing the 35 year-old employee classification system with one that is consistent with current market pressures, the UI has positioned itself to run both more efficiently and more competitively for, if the last system’s life span was any indication, a very long time — and for a comparatively miniscule consulting fee.

— Chris Steinke

NO

In the middle of an ostensible budget crisis (and one that has prompted both continued tuition increases and graduate department cuts), the University of Iowa has been spending money — more than $560,000 of it, in fact — to reclassify its employees.

Does this seem right to anyone?

Even though hindsight is, as the saying goes, 20-20, paying such sums to an outside consulting firm at the current juncture is irresponsible — particularly when nobody can say it will save us money in the short- or long-term.

Sure, the UI initially hired Buck Consultants in the sunny financial climate of April 2007. But while recession-based austerity fervor only caught up with higher education funding in 2009, the economic downturn was already underway in June 2008, when the UI rehired Buck to revamp its employee-classification system.

It would be hard to miss the budget cuts looming on the horizon. Barring any immediate emergency in employee structure, the UI could have taken Buck’s suggestion of a complete revamping and waited, at least until its financial future was more certain.

Instead, university administrators hired them on — a precise demonstration of the kind of imprudent spending that has been cited by state lawmakers as a rationale for the budget-cut and tuition-cap combo. The whole state university system has begun to resemble a messy family fiasco: Legislators hold appropriations hostage as they demand that the universities cut the fat; universities scream for more funding; and students ultimately pay the bill.

A 35-year-old system may be outdated, but if there is no pressing need to revamp it, perhaps it should have been saved for a better time. “Competitiveness,” the rationale cited by Associate Director of Human Resources Robert Millsap for the overhaul, can wait until we’re sure we have the money to pay for it.

If, in the end, the new classification system saves the university money, I’ll support it wholeheartedly. But that outcome is nebulous, particularly with the staff challenges to the revisions. For now, this kind of spending in a crisis looks foolish.

Next time the UI wants to spend money in a turbulent fiscal time, it should exhibit greater caution.

— Shay O’Reilly


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