Large scale restructuring begins at U.

With the goal of saving $50 million over the next five years, University financial officials are planning to reduce Penn's workforce, reorganize the central administration and cut down on purchasing costs, according to Executive Vice President John Fry. University President Judith Rodin said restructuring will help Penn cope with reductions in federal funding for higher education and maintain a competitive advantage over other top-notch schools. "We want to take some of the administrative costs and reinvent them into our academic ventures," Rodin said at last Monday's town meeting with students. Fry said the first phase of the project is to reevaluate why University purchases total more than $640 million of goods and services each year. Vice President for Facilities Management Art Gravina drafted a plan to save the University $8.8 million a year in energy costs by 1999, Fry said. And the University will save an additional $1.2 million a year by using a new process for buying insurance coverage for employees, he added. But while purchasing reforms on an institutional level are fairly simple, Fry said he expects smaller offices to resist his efforts because they are attached to specific service vendors and product brands. Another key component of the project is reorganizing Penn's administrative workforce, according to University officials. Due to a reduction in service and technological improvements, Fry said, the University will eliminate jobs. "The fact is there will be less jobs here in the future," he said. John Heuer, director of Staff and Labor Relations, said the University can reduce its workforce through layoffs, attrition -- not filling a job that has been vacated -- and providing incentives for early retirement. The University will merge the operations of related departments to eliminate redundant positions and improve overall efficiency, Vice President for Human Resources Clint Davidson said. "[We're] measuring what the customer needs and seeing how well we provide that service," he added. But the University faces the daunting task of reorganizing its administration while still providing services to students and academic departments. "A lot of this is like rewiring the house with the electricity on," Davidson said. "You want this to have minor disruption." The University will use financial incentives to convince departments to in-hire -- employ workers laid off as a result of restructuring -- rather than interview outside candidates for open positions, Davidson said. The financial incentives allow offices to train laid-off employees that are appropriate for the job but lack a skill necessary for the position, like how to use a specific computer program. The University gives laid-off employees 30 days to find a job within the University and offers them help from staffers in the Human Resources Department, according to Heuer. But while the administration is trying to entice offices to in-hire, the departments first have to "overcome the suspicion that these people are damaged goods," Fry said.