Copyright © 2011 by ScottMadden. All rights reserved. December 21, 2011 N.C. State University Work Activity FTE Inventory Analysis Summary Report

Copyright © 2011 by ScottMadden. All rights reserved. Table of Contents Topic Page Introduction  Team Introduction3  Project Approach4  Survey Participants5  Survey Timeline and Response6 Overall Functional Totals  Functional Areas Surveyed – FTE and Labor Cost8  Functional Area FTE and Labor Cost by OUC9  All OUCs – FTE and Labor Cost by Type of Work10 Human Resources Analysis  Overall HR Observations12  HR FTE and Labor Cost by Major Activity 13  HR FTEs by OUC and Major Activity14  HR Labor Cost by OUC and Major Activity15  HR – Comparison of Top and Bottom Quartiles16  HR FTE and Labor Cost by Employee Type Served18  HR Normalized FTE by Employee Type Served19  HR FTE by OUC and Employee Type Served20  HR Labor Cost by OUC and Employee Type Served21  Recruiting and Staffing Activity Detail22  Leave Administration Activity Detail23  Maintenance of Personnel Files Activity Detail24 2 Topic Page Financial and Budgeting Analysis  Overall F&B Observations26  F&B FTE and Labor Cost by Major Activity27  F&B FTEs and Labor Cost by OUC and Major Activity28  F&B – Comparison of Top and Bottom Quartiles29  Accounts Payable Activity Detail31  Accounts Receivable Activity Detail32  Budget Planning and Management Activity Detail33  Other Financial Transactions Activity Detail34 Contracts and Grants Analysis  Overall C&G Observations36  C&G FTE and Labor Cost by Major Activity37  C&G FTEs and Labor Cost by OUC and Major Activity38  C&G – Comparison of Top and Bottom Quartiles39  Pre-Award Activity Detail41  Post-Award Activity Detail42 Summary Observations44 Appendix  Survey Response Summary by OUC  FTE and Labor Cost by 4-digit OUC* 2 * Included for those OUCs where 4-digit comparisons are applicable

Copyright © 2011 by ScottMadden. All rights reserved. Team Introduction The Business Operations and Realignment Steering Team (BORST) requested that ScottMadden perform an FTE inventory of current Human Resources, Financial, Budgeting, Contracts and Grants, and General Management and Administrative activities at NCSU. BORST team members  Don Patty  John Fountain  Gwen Hazlehurst  Nikki Kurdys  Brian Simet  Virginia Teachey ScottMadden team members  Doug Utley – Partner  Karen Hilton – Director  Alyssa Valdez – Analyst  Mike Christopher – Research Analyst 3

Copyright © 2011 by ScottMadden. All rights reserved. Project Approach  Work with the BORST to design, configure, deploy, and tabulate a survey of work activities accomplished by selected staff across the campus  Capture percentage of time individuals dedicate to activities associated with targeted functions. Targeted functions include: —Human Resources —Financial and Budgeting —Contracts and Grants —General Management and Administrative  Join survey data with organizational and wage/salary data to calculate the costs of these activities by organization at the various levels  Delineate the nature of the work performed, specifically transactional activities in each function  Based on ScottMadden experience and benchmarks, identify areas for further investigation 4 Confirm Work Plan and Team Define Activities and Employee Groups Configure and Test Survey Tool Run Survey Tabulate, Analyze, and Report

Copyright © 2011 by ScottMadden. All rights reserved. Survey Participants Colleges/Divisions SurveyedUnits/Departments Surveyed (Cont’d)  College of Agriculture and Life Sciences (CALS)  College of Design  College of Education  College of Engineering  College of Natural Resources  College of Humanities and Social Sciences (CHASS)  Poole College of Management  College of Physical and Mathematical Sciences (PAMS)  College of Textiles  College of Veterinary Medicine (CVM)  Athletics  Housing Services  NCSU Libraries  Office of Legal Affairs  Undergraduate Affairs  Division of Enrollment Management and Services  DELTA  Diversity and African American Affairs  Office for Equal Opportunity  Office of International Affairs  Vice Chancellor for Finance and Business  Associate Vice Chancellor for EH and PS Division  Centennial Campus Development  Facilities Division  Resource Management  Campus Enterprises  Human Resources  Treasurer’s Office  OIT  Student Organizations Fee-Supported Units/Departments Surveyed  Chancellor’s Unit  Vice Chancellor/Provost  Graduate School  Student Affairs  Research  Office of University Advancement  Office of Extension and Engagement 5

Copyright © 2011 by ScottMadden. All rights reserved. Survey Timeline and Response  The survey was deployed on Tuesday, November 8 th with invitations sent to all invitees with a deadline of November 23 rd  On November 4 th, test sessions were conducted for three separate groups. This allowed for adjustment to the activity wording and questions prior to full deployment  Information sessions were held across campus and reached over 300 participants  A series of reminders and follow-up by the Lead Finance and Business contacts in each college and division encouraged further participation  After reviewing the data collected, the survey was re-opened for a brief period from December 8 th – 12 th to capture final responses and add detail where missing  The final summary statistics are as follows: 6 Total Invited Total Responses FTE Total Part Time Employees* Response Rate % *Employees indicating less than 40 hour/week

Overall Functional Totals

Copyright © 2011 by ScottMadden. All rights reserved. Functional Areas Surveyed – FTE and Labor Cost  FTE Total: FTE; Labor Cost Total: $37,235,000  The General Management and Administrative and Financial and Budgeting functional areas represent the highest percent of FTEs and cost of areas surveyed  Approximately 268 FTEs in OUCs are providing Financial & Budgeting services  Approximately 143 FTEs in OUCs are providing HR services 8 FTE and Labor Cost by Functional Area Percentages are associated with FTE Allocation Totals

Copyright © 2011 by ScottMadden. All rights reserved. Functional Area FTE and Labor Cost by OUC 9 Labor cost shown in $000

Copyright © 2011 by ScottMadden. All rights reserved. All OUCs – FTE and Labor Cost by Type of Work Observations  FTE Total: FTE; Labor Cost Total: $37,235,000  For the body of work captured through this study, 68% of the FTEs are focused on transactional or administrative work  21% are performing functional/specialist work which may be well suited for centers of expertise  Very little of the current work is strategic in nature 10 Percentages are associated with FTE Allocation Totals Unspecified FTEs are included in the Transactional category FTE and Labor Cost by Type of Work

Human Resources

Copyright © 2011 by ScottMadden. All rights reserved. Overall Human Resources (HR) Observations  Approximately 143 FTE of effort representing almost $7 million is expended to perform HR activities in the University’s units  Units exhibit significant differences in HR support requirements with the lowest ratio of 28 employees to one HR FTE and the highest ratio of 830 employees to one HR FTE. The median ratio is 132 employees to one HR FTE  Almost 75 FTE representing $3.3 million is expended in units on activities that might be further automated including —Personnel transactions —Payroll —Leave administration —Maintenance of personnel files  Benefits related activities and employee recognition activities in the units require approximately 5 FTE or $233,000 for administration  Top quartile units spend an average of 4% less effort relatively on Classification and Compensation than do bottom quartile units 12

Copyright © 2011 by ScottMadden. All rights reserved. HR FTE and Labor Cost by Major Activity  HR FTE Total: FTE; HR Labor Cost Total: $6,975,000  Personnel Transactions represent the highest percent of HR FTEs and the second highest labor cost  Recruiting & Staffing and Payroll are the next highest effort activities  Recruiting and Staffing, Leave Administration, and Maintenance of Personnel Files are potential areas to investigate to reduce work 13 FTE and Labor Cost by Major HR Activity Percentages are associated with FTE Allocation Totals

Copyright © 2011 by ScottMadden. All rights reserved. HR FTE by OUC and Major Activity 14

Copyright © 2011 by ScottMadden. All rights reserved. HR Labor Cost by OUC and Major Activity 15 Labor cost shown in $000

Copyright © 2011 by ScottMadden. All rights reserved. HR – Comparison of Top and Bottom Quartiles Quartile Description  Top quartile is 25% of OUCs with highest employees served per HR FTE  Bottom quartile is 25% of OUCs with lowest employees served per HR FTE  Median = Excluded OUCs : Student Organizations and Finance & Business

Copyright © 2011 by ScottMadden. All rights reserved. HR – Comparison of Top and Bottom Quartiles (Cont’d) Quartile Description  Top quartile is 25% of OUCs with highest employees served per HR FTE  Bottom quartile is 25% of OUCs with lowest employees served per HR FTE Observations  Bottom quartile OUCs expend significantly more effort on Classification & Compensation and Benefits than top quartile OUCs  Top quartile OUCs expend significantly more effort on Payroll than bottom quartile OUCs 17 Excluded OUCs with 0 HR FTE: Student Organizations and Finance & Business

Copyright © 2011 by ScottMadden. All rights reserved. HR FTE and Labor Cost by Employee Type Served  Of the HR FTE, FTE are spent on activities which were identified by the employee type served by the HR activity  Labor costs associated with the FTE are $5,067,000  The highest levels of HR FTEs and labor costs are associated with activities supporting three employee types: —SPA Employee —Temporary Employees —EPA Non-Faculty 18 FTE and Labor Cost by Employee Type Served Percentages are associated with FTE Allocation Totals

Copyright © 2011 by ScottMadden. All rights reserved. HR Normalized FTE by Employee Type Served Observations  Ratios across three primary permanent employee types are fairly consistent (EPA Faculty, EPA Non-Faculty, SPA Employee)  Higher ratios are expected for temporary employees and graduate assistants who should have fewer HR support needs  The level of HR support provided to Post Doc employees appears to be twice as much as the nearest other category 19

Copyright © 2011 by ScottMadden. All rights reserved. HR FTE by OUC and Employee Type Served 20 This table presents the HR FTEs captured by employee type served by OUC (college or division)

Copyright © 2011 by ScottMadden. All rights reserved. HR Labor Cost by OUC and Employee Type Served 21 This table presents the HR labor cost by employee type served by OUC (college or division) Labor cost shown in $000

Copyright © 2011 by ScottMadden. All rights reserved. Recruiting and Staffing Activity Detail Observations  Recruiting and Staffing FTE Total: 24.8 FTE; Recruiting and Staffing Labor Cost Total: $1,260,000  Recruiting and Staffing activities for Temps, SPA Employee, and EPA Non-Faculty represent more than half of the effort expended for all types of employees  Only 1.0 FTE (4%) of effort is devoted to Strategic Staffing / Workforce Planning in the decentralized units 22 Recruiting and Staffing FTE and Labor Cost Percentages are associated with FTE Allocation Totals

Copyright © 2011 by ScottMadden. All rights reserved. Leave Administration Activity Detail Observations  Leave Administration FTE Total: 13.8 FTE; Leave Administration Labor Cost Total: $688,000  9 FTEs (65%) are used to administer leave for one employee type – SPA Employee 23 Leave Administration FTE and Labor Cost Percentages are associated with FTE Allocation Totals Normalized Leave Administration FTE by Employee Type

Copyright © 2011 by ScottMadden. All rights reserved. Maintenance of Personnel Files Activity Detail Observations  Maintenance of Personnel Files FTE Total: 13.4 FTE; Maintenance of Personnel Files Labor Cost Total: $570,000  Maintenance of Personnel Files for Temps, SPA Employee, and Graduate Assistants takes 71% of the effort 24 Maintenance of Personnel Files FTE and Labor Cost Percentages are associated with FTE Allocation Totals

Financial & Budgeting

Copyright © 2011 by ScottMadden. All rights reserved. Overall Financial and Budgeting (F&B) Observations  Approximately 268 FTE of effort representing $12.7 million is expended in the units on F&B activities  The ratio of employees to F&B FTEs by unit varies between 8 and 152 with a median of 57  The units expend 135 FTE of effort or $5.8 million to accomplish Accounts Payable activities  Less effort and money, 39 FTE or $1.6 million, is expended on accomplishing Accounts Receivable activities in the units (This figure may be skewed by allocation of some effort to C&G activities)  Budget Planning and Management requires almost 74 FTE effort or $4.3 million  Bottom quartile units spend 7% more relatively than do top quartile units on Budget Planning and Management  Budgets require almost 18 FTE of effort or $888,000 to reconcile  Salary Distribution Changes require more than 8 FTE of effort or $392,000 in the units to complete 26

Copyright © 2011 by ScottMadden. All rights reserved. F&B FTE and Labor Cost by Major Activity  F&B FTE Total: FTE; F&B Labor Cost Total: $12,680,000  The highest percent of Financial & Budgeting (F&B) FTEs and labor cost is accounts payable  Budget Planning & Management activities represent the second largest category 27 FTE and Labor Costs by Major F&B Activity Percentages are associated with FTE Allocation Totals

Copyright © 2011 by ScottMadden. All rights reserved. F&B FTE and Labor Cost by OUC and Major Activity 28 Labor cost shown in $000

Copyright © 2011 by ScottMadden. All rights reserved. F&B – Comparison of Top and Bottom Quartiles Quartile Description  Top quartile is 25% of OUCs with highest employees served per F&B FTE  Bottom quartile is 25% of OUCs with lowest employees served per F&B FTE  Median = Excluded OUC with no headcount data required for this metric: OUC 91 - Student Organizations

Copyright © 2011 by ScottMadden. All rights reserved. F&B – Comparison of Top and Bottom Quartiles (Cont’d) Quartile Description  Top quartile is 25% of OUCs with highest employees served per F&B FTE  Bottom quartile is 25% of OUCs with lowest employees served per F&B FTE Observations  Bottom quartile OUCs have more relative level of effort in Budget Planning and Management, but less effort in Other Financial Transactions 30 Excluded OUC with 0 F&B FTE: Student Organizations

Copyright © 2011 by ScottMadden. All rights reserved. Accounts Payable Activity Detail Observations  Accounts Payable FTE Total: FTE; Accounts Payable Labor Cost Total: $5,754,000  Vouchers and Travel account for almost half of all Accounts Payable work in the decentralized units  P-Cards and Travel have similar levels of effort 31 Accounts Payable FTE and Labor Cost Percentages are associated with FTE Allocation Totals

Copyright © 2011 by ScottMadden. All rights reserved. Accounts Receivable Activity Detail Observations  Accounts Receivable FTE Total: 38.9 FTE; Accounts Receivable Labor Cost Total: $1,618,000  Billing/Invoicing dominates Accounts Receivable in the units with 67% of the effort  Approximately 20% or 7.7 FTE of work is on Credit Card Receipts, which potentially could be automated 32 Accounts Receivable FTE and Labor Cost Percentages are associated with FTE Allocation Totals

Copyright © 2011 by ScottMadden. All rights reserved. Budget Planning and Management Activity Detail Observations  Budget Planning and Management FTE Total: 73.9 FTE; Budget Planning and Management Labor Cost Total: $4,338,000  Budget Planning and Management are dominated by Budget Administration (35%), Budget Creation (25%), and Reconciliation (24%)  Automation of reconciliation could reduce a portion of the 17.8 FTE of effort 33 Budget Planning and Management FTE and Labor Cost Percentages are associated with FTE Allocation Totals

Copyright © 2011 by ScottMadden. All rights reserved. Other Financial Transactions Activity Detail Observations  Other Financial Transactions FTE Total: 19.2 FTE; Other Financial Transactions Labor Cost Total: $936,000  Salary Distribution Changes dominate Other Financial Transactions – process improvement could potentially reduce this level of effort  Almost 3.4 FTE are dedicated to Financial Systems Access 34 Other Financial Transactions FTE and Labor Cost Percentages are associated with FTE Allocation Totals

Contracts & Grants

Copyright © 2011 by ScottMadden. All rights reserved. Overall Contracts & Grants (C&G) Observations  About 79 FTEs are spent on Contract and Grants activities, representing over $4 million in labor cost  Nearly 60% of the FTEs supporting Contracts and Grants are in two colleges – Engineering and Agriculture and Life Sciences  The remaining Contracts and Grants FTEs are spread across 24 colleges/divisions with none representing more than 8% of the total Contract and Grants effort captured  Post-Award activities dominate the effort and represent approximately 47 FTE or $2.3 million in labor cost  An opportunity may exists to reduce effort for System Access Requests for C&G systems 36

Copyright © 2011 by ScottMadden. All rights reserved. C&G FTE and Labor Cost by Major Activity  C&G FTE Total: 79.1 FTE; C&G Labor Cost Total: $4,023,000  The highest level of effort for Contracts & Grants is spent on post-award activities  Over 6 FTEs are spent approving and entering system access requests for C&G systems 37 FTE Allocation and Labor Cost by Major C&G Activity Percentages are associated with FTE Allocation Totals

Copyright © 2011 by ScottMadden. All rights reserved. 38 C&G FTE and Labor Cost by OUC and Major Activity

Copyright © 2011 by ScottMadden. All rights reserved. C&G – Comparison of Top and Bottom Quartiles Quartile Description  Top quartile is 25% of OUCs with highest number of active projects per C&G FTE  Bottom quartile is 25% of OUCs with lowest number of active projects per C&G FTE  Median = Excludes the following OUCs with no C&G FTEs or no active projects: 2 OUCs reported FTEs but no active projects Shown in $000

Copyright © 2011 by ScottMadden. All rights reserved. C&G – Comparison of Top and Bottom Quartiles (Cont’d) Quartile Description  Top quartile is 25% of OUCs with highest number of active projects per C&G FTE  Bottom quartile is 25% of OUCs with lowest number of active projects per C&G FTE Observations  Bottom quartile OUCs have more relative level of effort on Proposal Preparation & Entry and Project Management & Administrative Tasks than top quartile OUCs; top quartile OUCs have more relative level of effort on e-PAR requests 40 Excluded OUCs with 0 HR FTE: Student Organizations and Finance & Business

Copyright © 2011 by ScottMadden. All rights reserved. C&G Pre-Award Activity Detail Observations  C&G Pre-Award FTE Total: 25.2 FTE; C&G Pre-Award Labor Cost Total: $1,346,000  Nearly 60% of the pre-award FTEs are spent on proposal preparation and entry  Less than 2 FTEs support compliance and the award negotiation process 41 Pre-Award FTE and Labor Cost Percentages are associated with FTE Allocation Totals

Copyright © 2011 by ScottMadden. All rights reserved. C&G Post-Award Activity Detail Observations  C&G Post-Award FTE Total: 46.7 FTE; C&G Post-Award Labor Cost Total: $2,297,000  Over half of the post-award FTEs are focused on ‘Project Management and Administrative Tasks’ and e-PAR Requests  The project close-out process is the third largest activity representing 15% of the post-award FTEs 42 Post-Award FTE and Labor Cost Percentages are associated with FTE Allocation Totals

Summary Observations

Copyright © 2011 by ScottMadden. All rights reserved. Summary Observations N.C. State University’s decentralized units expend approximately 774 FTE of effort representing $37 million to perform transactional and administrative functions as depicted in chart below These activities are frequently performed by employees in the units who have diverse responsibilities leading to  Policies and processes that are not standard or applied in a standard manner  Employees having knowledge of many functions, but less depth in some  Excessive workloads resulting from tasks that are sporadic or cyclical in nature  Delays in accomplishing some services during periods of high workload  Institutional knowledge being closely held by individuals instead of generally available to the workforce Like similar institutions, N.C. State can reduce work and reallocate financial resources by  Standardizing policies and processes across units  Consolidating transactional and administrative activities into shared service centers (business operations centers, in this case)  Pooling financial resources to further automate newly standardized processes across the campus  Cross training employees with narrower portfolios of responsibilities to provide services across multiple organizations  Automating service management and knowledge management to better enable service providers and reduce risks of employee turnover 44

Appendix