Higher education leaders are preparing for sizable losses from the COVID-19 crisis, on top of losses from refunds and emergency costs they’ve already incurred. While the extent of the damage is still unfolding, cost containment resources for business leaders are emerging to cope with the impact.
While the urgency to cut costs is great, leaders should avoid reactive labor cuts that impede staffs’ ability to serve the university community. A purely reactionary approach (i.e., dramatically cutting labor budgets from one year to the next) can leave institutions even more vulnerable. Instead, leaders should strategically rebase the labor cost curve—pursuing tactics that achieve an immediate drop in labor costs while preserving resources and processes necessary to continue operations.
Modeled labor cost growth following
principled savings tactic implementation
Use our new cost containment resources for business leaders to identify and execute strategic cost containment tactics.
Compendium of administrative cost containment tactics
First, EAB’s COVID-19 Administrative Cost Containment Playbook compiles the full menu of options to contain administrative costs. It contains over 60 labor, operations, and procurement cost-savings tactics for leaders to consider. Each tactic is evaluated on three factors: savings potential, time to achieve savings, and need for union negotiation. Each tactic description also includes a higher ed case study and implementation guidance.
Guide to building a tiered financial contingency plan
Second, EAB’s Toolkit for Creating a Tiered Financial Contingency Plan provides a step-by-step guide to proactively identifying and sequencing cost containment tactics based on potential financial scenarios. It first helps leaders organize potential cost containment tactics into tiers of action, which specify which tactics an institution will pursue immediately and which it may pursue if financial conditions worsen. Then, it helps leaders determine when to execute tactics in each tier by setting quantitative triggers for each tier.