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Research Report

Bending the Administrative Labor Cost Curve

Executive strategies for sustainable, long-term labor savings

To help business executives slow administrative labor growth, this report provides 12 executive best practices to implement the necessary cross-silo tools and incentives to achieve meaningful savings.

Executive summary: Current state of higher education labor spending

Facing increasingly tighter budgets, colleges and universities are exploring any and all principled methods to control costs. Clearly, labor comprises the vast majority of costs at all institutions, often 60% to 70% of operating budgets. So, while there are other meaningful cost savings opportunities, few institutions will be able to significantly impact costs without addressing labor.

To date, most institutions have sought to reduce administrative labor costs before touching the academic core. There are sound financial and mission-related reasons institutions may choose to avoid faculty layoffs and focus cuts on administration. However, institutions too often cut administrative staff because it is more expedient, not because it is right answer. Further, indiscriminant administrative cuts can cause significant damage to the institution, including drops in staff morale, negative impact on productivity and risk compliance, and potential negative press.

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