The University of Utah is paying an outside firm $6 million for its advisers to come in and coach the school on how it could, in turn, save millions of dollars.
The flagship institution is the latest in the country to follow the consulting trend that promises to conserve universities money if they spend big bucks upfront in order to learn how to operate more efficiently. For its turn, the U. has contracted with the massive and controversial McKinsey & Company.
The project has been named “Operational Excellence.” And the U. says the point is to streamline processes and reduce wasteful redundancies across campus. Once fixed, the school can refocus efforts and, more importantly, resources on achieving the institution’s long-term goals, including graduating more students.
“The whole idea is to help us become the best version of ourselves,” said Brett Graham, chief strategy officer at the U., who is overseeing the work.
But the expensive endeavor comes as Utah lawmakers have turned a watchful eye to extravagant administrative spending in public higher education and are bandying about budget cuts for colleges and universities in the state. Most departments have been told to prepare for at least a 10% cut — some higher. Meanwhile, any significant savings from the consulting won’t be realized for years to come.
The choice of McKinsey has also ignited concern among faculty and staff.
The firm is a global enterprise, with a presence in 65 countries and more than 45,000 employees that has built a reputation off of coming into troubled organizations and cutting costs, often times through layoffs. In a book about the company, one journalist who has long covered the firm said McKinsey may be “the single greatest legitimizer of mass layoffs than anyone, anywhere, at any time in modern history.”
(Christopher Cherrington | The Salt Lake Tribune)
Graham told The Salt Lake Tribune that staff reductions were not being considered as part of the “Operational Excellence” effort. But a notice sent to employees a few days after The Tribune’s interview with Graham left some questioning that. It stated layoffs were “not our objective currently.”
The consulting firm has also often been scrutinized for its secrecy and ignoring conflicts of interests. Most notably, the company was used by Purdue Pharma to help market and drive sales of the opioid Oxycontin during an addiction crisis in the U.S. that contributed to 450,000 deaths. At the same time, McKinsey was also advising the U.S. Food and Drug Administration, which is responsible for ensuring the safety of pharmaceutical drugs prescribed to the public, on a new and more lenient opioid regulation policy.
At the end of 2024, McKinsey agreed to pay out a $650 million settlement for its role in exacerbating the epidemic.
The company was also chastised by former U.S. Sen. Marco Rubio for working with Russian weapons makers and the Pentagon at the same time. “With every new report of McKinsey & Company’s work with authoritarian regimes, I grow increasingly concerned about its work on behalf of the U.S. Government,” Rubio wrote in a letter to the firm, also mentioning the firm’s contracts with China and Saudi Arabia.
When asked whether the consulting group’s past work gave the university pause, Graham said: “McKinsey is large. We really selected a specific practice area within McKinsey that would not have been involved there.”
In recent years, McKinsey has branched out from advising businesses and corporations into contracting with universities. The U. says similar plans for efficiency at other institutions have informed the work being done here.
That includes a $4.7 million contract with the University of Florida in 2023 — part of a spending spree reported by student journalists there that led then-President Ben Sasse to resign — and $14 million paid out by the University of Arizona in 2019. Other schools have gone with the firm Huron Consulting Group; the Universities of Wisconsin system paid consultants there $51 million over several years for a strategic plan, according to WORT Radio in Madison.
In each of those states, faculty have sounded alarm bells over the private companies’ influence on public education that continues to expand largely unchecked. McKinsey, in particular, has been shielded from having to disclose records of its work, all while being given unfettered access to huge amounts of data from schools.
Faculty have said the contracts can bring more harm than help.
The University of Utah’s vision
(Trent Nelson | The Salt Lake Tribune) Taylor Randall speaks about higher education and the Legislature at the University of Utah in Salt Lake City on Thursday, Jan. 16, 2025.
Bringing in consultants had been a murmur at the U. during its previous administration. It was shouted into action when current President Taylor Randall, who had been leading the business school before, took over.
He came in with a more corporate and analytical approach than his predecessors, focused on metrics-driven success. At his inauguration in fall 2021, Randall said he wanted to transform the university into an institution with “unsurpassed societal impact.” Out of that came “Impact 2030,” a series of lofty goals he intends the U. to meet over the next decade.
They include:
•Getting undergraduate student enrollment up to 40,000; it’s currently at 35,000.
•Improving graduation rates to 80% of students finishing their degrees within six years; the rate now is 64%.
•Growing annual research funding to $1 billion; it was $691 million for fiscal 2024.
•And becoming both a top 10 public research institution and top 10 school, overall; at the moment, it’s ranked No. 43 and No. 69, respectively.
To hit those marks, Randall said, it would require a deep understanding of how the school was already operating and how it could be operating better.
“To ensure we are positioned to meet our goals,” the president explained in one email on the process, it’s essential to “engage a strategic consultant who can provide outside expertise and a holistic assessment of our key processes, services and resource allocation.”
He had spoken to the school’s board of trustees about the idea several times. And by March 2023, his administration posted a request for proposals, or RFP, for companies to submit bids explaining how they would problem-solve and instruct the school on improvements.
That public RFP document provides the best glimpse into what the U. hopes to get out of the consulting.
It mentions the words “efficiency” and “efficiencies” eight times in its 32 pages. And it refers to saving money through those efforts 18 times.
“Prospective students, policy makers and prudent fiscal managers are increasingly examining the value proposition of higher education,” it reads.
Because of that, the document says, the U. aims to find “opportunities to avoid costs as we scale, or reduce costs and identify cost savings that result in additional expendable revenue.” The university particularly wants to avoid costs on “services that don’t support university strategic goals.”
The goal is to save $100 million over the next 10 years. The first $30 million would take five to six years, said U. Chief Financial Officer Cathy Anderson during one trustees meeting in December 2022.
The RFP directed any bidding consultant firms to build off of the work the school had already done to study its processes, while bringing in a broader perspective, software tools and additional capacity to question nearly every aspect of campus. (Only the health system falls outside of the scope, as it’s been separately conducting its own analysis.)
The document suggests specifically looking at how the U. recruits and admits students, how it supports them throughout their studies, how many aren’t graduating and what hurdles have stopped them. It calls for an examination, too, into how teaching is delivered and how research functions. On-campus housing, student support services (like counseling and advising) and operations of the Campus Store are also on the table.
Administration makes the list, as well, including “where operating in silos results in sub-optimal results.”
Everything, the document posits, has the potential to be streamlined.
A firm that operates in secrecy
What McKinsey recommended in its initial proposal in response to that document, though, is unclear. The Tribune has submitted a public records request for that bid and has not yet received a response from the U. But the company often requires those with whom it contracts to protect its documents as proprietary and containing trade secrets.
It has left McKinsey’s work, particularly at universities, shrouded in secrecy.
The U. did say McKinsey’s proposal won the bid out of the 10 companies that also submitted plans. Graham said the firm was selected from three finalists because of its “experience doing transformation efforts” and that its price was “one of the lowest.”
Neil Grace, a spokesperson for the firm, called it a “competitively won RFP.” On other questions, though, he declined comment.
“In your discussions with the University of Utah, they should have addressed a number of your questions and we defer to them on the answers,” he said.
McKinsey started working with the school, in an initial phase, in fall 2023. The first portion of the work, Graham said, involved looking at the university’s internal data, studying its systems and developing an understanding of what’s working and not. That cost $3.2 million over a nine month period.
The company came up with a document of areas that could be improved. But the U. has declined to release that because it says it’s a protected “draft” under Utah law, and the document continues to change depending on what suggestions the school does or does not choose to move forward with.
So the full scope of McKinsey’s recommendations, after looking at how the U. operates, is also being concealed — despite taxpayers footing the bill for the work at the public university.
At other schools, there have been complaints that the final work wasn’t relevant to the institution and had been recycled, without specific or targeted goals for their university.
One professor at the University of Arizona, who complained about the consulting work there, told The Arizona Daily Star: “None of it was specific to higher education, which is a lot more complicated than a corporate hierarchy. I expected more for what they were charging.”
(Christopher Cherrington | The Salt Lake Tribune)
The U. also agreed to an extension for another nine months, bringing the total cost to $6 million, Graham said; that second phase expires at the end of this month. It is focused on training employees at the U. to do the same kind of work as McKinsey’s consultants — looking for deficiencies, finding fixes and expanding efforts to “optimize” other areas of campus.
“They’re not telling us what to do,” Graham said of the company. “We make all the decisions.”
The point was to combine the outside perspectives from McKinsey with the “use of our good people” at the U., he added. Universities using consulting groups have often been criticized for overlooking their own resources on campus that could do the same kind of analysis; Graham said he didn’t want that to happen at the U.
The university has started to address a few of the items on the list it says are the easiest and quickest to change, while also having a sizable impact. Bigger projects will come in the future.
What work has been done?
Graham emphasized that the “Operational Excellence” work at the U. started before the Legislature’s focus on cost savings in higher education — not in reaction to it. But the goals aren’t in opposition.
“Cost is always on our minds,” Graham said. “We realize there’s great sacrifice by students.”
He pointed to one project that has already saved the U., the state and students money: A look at how the first phase of the new West Village student housing for families and graduate students went when construction began in fall 2021, and what could be learned before starting phase two.
The school studied how the next area could be built more efficiently: how to communicate better with contractors, how to get supplies at a cheaper rate and where they didn’t need to spend as much on unnecessary infrastructure.
The U. was able to build the second phase, Graham said, for about 15% less than projected.
The school went to the Legislature and was able to reduce the amount that it needed to bond for. And it also plans to charge students less to live there. The total savings, collected over time — including not paying interest on as high of a bond — will amount to $18 million.
And the same lessons are being applied to new construction on campus down the line. Similarly, the U. has also decided to tackle what’s called “deferred maintenance” projects to save money.
Deferred maintenance is upkeep on older buildings that’s often pushed off for other priorities; the university’s list includes about $16 million in projects. The McKinsey study found that addressing those fixes sooner can “reduce future capital expenses by 300% or more by correcting issues before they grow into capital needs,” like more expensive repairs or needing to fully tear down and replace a building.
(Francisco Kjolseth | The Salt Lake Tribune) The University of Utah library is pictured on Tuesday, Dec. 10, 2024.
The U. has changed, too, its process for purchasing supplies — from chemistry beakers to pens and paper.
For decades, the school had a central warehouse on campus. It was tricky to get supplies delivered there and then shuffled out to different buildings. Often, Graham found, faculty and staff were making purchases directly through Amazon or Costco instead. So the U. decided to match that workflow and make it uniform.
The school phased out operating its own warehouse. The employees that worked there were retrained to now help process online orders for departments. And the U. negotiated, too, with providers to get better rates on products.
The space that the warehouse was taking up on campus is also now new real estate that the school can expand and use for a different purpose.
Some of the projects, Graham says, may seem “boring,” but are worthwhile. That includes making sure all faculty and staff are using the same set process for booking travel for out-of-state conferences, which should save an estimated $500,000 by the end of 2027.
“This effort is far different than cost cutting,” Graham said.
One project the U. is eyeing for the future is making parking on campus more efficient. Right now, it’s one of the most cited frustrations for employees and students, who say they get stuck circling around lots looking for a spot.
The university hopes, through the McKinsey model, that it can eventually streamline parking with cameras to direct drivers to lots with empty spaces.
That project is still a ways off, Graham said, but he sees it as part of the vision of what “Operational Excellence” can do to transform campus. The U. also plans to put much of its savings into faculty and staff salaries and benefits, which account for roughly half of the school’s operating expenses each year.
Faculty remain concerned
Some faculty and staff are worried, though, about the U. working with McKinsey — and not having transparency on the full extent of what the firm has recommended.
Hollis Robbins, who recently stepped down as the dean of the U.’s College of Humanities, wrote about the increasing dependence by universities on outside consultants, saying it signals “a fundamental crisis in higher education leadership.”
“The problem with hiring McKinsey has always been that its consultants come away better than the client, as a matter of pocketbook, morale and wisdom,” she added.
McKinsey will get $6 million from the U., as well as a trove of valuable data on the institution that it could then use in contracts with new schools to make comparisons.
Like other detractors, Robbins believe the work could be done by experts already at schools: the professors who know how to do similar studies and inherently understand the purposes and day-to-day operations of higher education — but whom are instead fearful that McKinsey is proposing cutting their jobs or departments, like the firm has done at corporations it’s advised.
(Francisco Kjolseth | The Salt Lake Tribune) The Warnock Engineering building on the University of Utah campus is pictured on Monday, April 22, 2024.
Several professors reached out to The Tribune saying that hiring the firm sent shock waves of anxiety across campus. None wanted to use their name for fear of retaliation for speaking out.
They pointed to concerning examples of McKinsey’s past work, including its recent recommendation that University of Michigan researchers be pushed to produce more, while also cutting $150 million in expenses, according to reporting from The State News. The initial phase of that contracted consulting cost $2 million.
Despite being a global company garnering roughly $16 billion in revenue annually, in recent years, McKinsey has also laid off its own staff. It cut 350 jobs in 2024 and about 2,000 in 2023.
“That was not our charge,” Graham said when asked if the “Operational Excellence” project included talk of staff cuts. McKinsey’s spokesperson, Neil Grace, though, declined to answer questions on whether the firm’s recommendations to the U. included that.
“Like all our work in higher education, the University of Utah partnered with us to enhance and deliver better on its mission, including improving student and research outcomes and providing a better experience for students, faculty and staff,” he said.
Grace also declined to say if the firm was working with other schools in Utah, again citing a policy of confidentiality with its clients.
The $6 million spent by the U. on McKinsey is a small share of the school’s total annual operating revenue, accounting for about 0.1%. And the U. says the savings gleaned from the consulting will more than make up for it.
But those who are concerned have compared the total to public higher education budget cuts expected from the Legislature this year. Those are set to have a price tag of $60 million across the state, and the U.’s share will be about $20 million.
The money used on McKinsey, then, is 30% of that figure that faculty and staff instead have been told to make up from their departments. One professor said, to him, that doesn’t seem like “efficiency” or “operational excellence.”
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(Bethany Baker | The Salt Lake Tribune) The University of Utah in Salt Lake City on Wednesday, April 17, 2024.
