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NEWS RELEASE

02/26/92

CONTACT: Stanford University News Service (415) 723-2558

Layoffs

STANFORD -- If Barbara Butterfield's prediction comes true, no more than 40 or 50 employees may be laid off as the university implements the plan for a $43 million budget cut over the next two years. In fact, Stanford's vice president for human resources thinks the number could be even lower.

She also predicts a spate of promotional opportunities for existing employees.

Butterfield said the coming challenge will not be handling massive layoffs but managing large attrition. Backing up Butterfield's crystal ball are some hard numbers:

  • Despite the recession, Stanford's staff turnover rate is hovering around 9 percent to 10 percent - more than 700 vacancies per year at the university and Stanford Linear Accelerator Center. (Normal attrition hovers around 15 percent nationally and at Stanford in good economic times.)
  • Approximately 1,200 staffers are eligible for a recently announced enhanced early retirement program. Based on the experience of other institutions, Butterfield expects as many as 400 to 500 employees to sign up.
  • However, budget-cutting plans submitted by schools and vice presidential units call for reduction of only about 230 positions.

Furthermore, in the past few months, departments have left vacancies unfilled, further easing the layoff pressure.

In fact, even more positions could be and should be reduced if the university could find ways to redefine and simplify work so as not to further burden remaining workers, Butterfield said in an interview.

The bottom line for Butterfield is that the university should have fewer staff doing well-structured, non-redundant work "and pay them very well for that" rather than more staff who are overloaded and earning lower pay.

Her top priority, she said, is to "find placement for those employees whose positions are being eliminated when there is a skills match or where some training can help a person move into a new job." Butterfield's second priority is "aggressive internal promotion," as another way of "taking care of our own family."

Early retirement opens options

How the final numbers will play out depends on how many employees take advantage of the staff early retirement program.

Often employees who qualify for early retirement occupy higher-level positions. Their retirements will unlock opportunities for staff to move up the ranks, resulting in lower-level vacancies to be filled, Butterfield said. Either situation is likely to produce salary savings for the institution.

Approved by trustees earlier this month, the new program offers supplemental pay to those who take normal early retirement - that is, age 55 or older with 10 years of at least half- time service. A second plan also is available for a limited time: Long-term employees who are not yet 55 can qualify if their age and years of work at Stanford total 75.

Early retirement applications will be accepted between March 15 and Aug. 31 of this year, with the retirements to take effect by Aug. 31, 1993.

Layoff notification

For those who face layoff, Human Resources is planning a host of services, including a directory containing profiles - but not names - of employees who are being laid off (see separate story).

Employees whose positions are subject to elimination are not likely to be notified until at least April, when the University Cabinet and other leaders give final approval to unit plans. Thirty days' written notice, or pay in lieu of notice, will be provided. Staff members will qualify for severance pay and can apply for state unemployment benefits. Severance pay ranges from 4 months of salary for 10 years' service to 12 months for 25 years' service.

On average, it takes six months for a Stanford employee who has been laid off to find other employment in the university. However, Butterfield said she wants to shorten that cycle as much as possible through early contact with employees.

In the wake of publication of budget plans, some of that contact already has begun as some employees anticipated the inevitable.

"We can begin work before the official notice period," Butterfield said. "We are encouraging managers to alert employees as far in advance as possible to allow them to take advantage of our services."

In this way, Butterfield said, the focus can be on "managing mobility" and avoiding layoff.

Butterfield said she is "hardnosed" on the obligation of units to reabsorb their own laid-off staff when vacancies occur. Deans and vice presidents have told her they will try to fill vacancies from other units' lay-off candidates after reabsorbing their own staff.

Employees who are not eligible for early retirement can volunteer for layoff - and collect severance pay - but university officials cannot accept the offer if it would violate policy, Butterfield said. For example, accepting an offer from an employee with longer service than another staff member who performs the same duties in the same classification would actually violate the senior employee's rights.

Butterfield has examined reduction policies of nearby Hewlett-Packard Co. and discovered that Stanford lacks only the electronic giant's "voluntary quit" program. She plans to examine that after seeing how many employees partake of early retirement.

In voluntary quit, an employee who fails to qualify for early retirement collects severance but does not qualify for state unemployment benefits or university medical benefits. Like early retirement, a voluntary quit program is employee-driven and could result in unwanted losses for the employer, Butterfield said.

Monitor the process

With help from other university offices, Human Resources will monitor the layoff process to make sure layoffs follow plans submitted and approved in the budget-cutting process and policies such as preference for long service.

"I have promised this: If one wrong layoff occurs, I'm committed to putting the person back to work," she said emphatically.

A departmental plan to eliminate a position violating any university policy will trigger a review by a committee composed of representatives from Employee Relations, the Office of Multicultural Development and the Legal Office.

During repositioning, that committee reviewed every targeted position and found 17 out of nearly 170 that violated policy. This time, a unit's staff affairs officer with the Human Resources field office will review positions and forward to the committee any proposals that look questionable, Butterfield said.

To determine how departmental plans will impact minorities, women and other groups, the Office of Multicultural Development, Human Resources and local staff affairs officers are collaborating on charting positions they think will be affected by early retirement or layoff. They will then look across the institution to see if any one group is affected disproportionately. Butterfield cited a hypothetical example: If each of Stanford's 20 major units were to lay off one American Indian or Alaska Native, that population at the university would be cut almost 50 percent.

Redesigning Stanford; simplifying work

One of the big challenges and opportunities of the next year, Butterfield predicted, will be the need for organizational redesign in the face of early retirements, natural attrition and lay- offs. Complicating the matter is the impending leadership change at Stanford, and the push and pull of decentralization.

As part of the organizational issue, she plans to begin reporting on how the university manages its headcount. Nothing is accomplished, she said, if overtime pay and supplemental hiring is costing as much or more than positions cut. Butterfield said she would study the cause for overtime and supplemental pay, and the use the temporary employees, which apparently has grown from a pool of 2,000 to 3,000 individuals.

"How do we move forward and transform the organization," she asked, dealing along the way with simplifying or eliminating tasks, management of stress and change, communication skills and intervention activities. Human Resources is starting to consult with vice presidents and deans on such organizational issues, she said.

The vice presidents, meanwhile, are interested in working with deans and faculty to study the potential for process planning and quality improvement. Butterfield said the university probably should cut more positions than were offered up in the units' reduction plans.

"But I think we could do it through work restructuring" so remaining employees are not further loaded down, she said.

Discussing the role her department could play supporting schools and vice presidents, Butterfield said, "We haven't given them enough help." A quarter-time consultant from Human Resources is now helping employees tackle two simplification projects sponsored by the Chief Financial Officer and the Dean of Research.

The biggest problem is simplifying major processes, such as bill paying, purchasing, hiring and separation from employment, Butterfield said. The key is to identify the "minimum processes required, and then not add a lot of complicated machinery beyond that.

"We're interested in supporting employee teams that actually work on processes that make it easier and more satisfying for themselves and their customers," Butterfield said.

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