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University of Alaska to lay off 95% of HR staff, upgrade tech

The University of Alaska's approach to modernizing its HR department began with the elimination of nearly all of its HR positions. It's part of a move to shared services to make IT more efficient.

The University of Alaska is centralizing its HR operations and making technology changes. The move came with a dramatic announcement: The university is laying off 48 of its 51 HR employees.

This near-total layoff of the HR staff is part of a "system-wide redesign" of HR into a single, centralized office. The university now has four decentralized HR operations.

University of Alaska HR employees learned this week of their layoffs. The affected employees will be able to apply for HR jobs in the newly centralized HR department. Otherwise, they'll be laid off on Sept. 14.

The university's HR redesign calls for "changes in HR software or HR vendors." The University of Alaska is also making IT changes. It wants a 20% reduction in IT costs by forming a shared services organization.

Mass HR layoff is unusual

The school is under pressure because of state budget cuts, but a mass HR staff layoff is unusual.

"How do you justify it?" said David Lewis, president and CEO of OperationsInc, an HR consulting firm in Norwalk, Conn. Even a shift to automation couldn't justify this reduction, he said.

The university has only described its HR reorganization goal and not the reason for the mass layoff. A spokeswoman only confirmed the layoff count.

The University of Alaska's three accredited universities on 19 campuses are far-flung because of the state's sheer size. The school may be avoiding the cost it would take to relocate employees in the university's efforts to centralize. But Lewis said a mass department layoff is not how other organizations centralize.

Part of HR's role is to limit liability for the employer; this is throwing gasoline on the fire.
David LewisPresident and CEO, OperationsInc

"The process that almost every HR department would follow in this case is more conservative," Lewis said. Instead, an organization would have said to HR employees: "Here's the new job. Here's where it's going to be. Here's what it's going to pay. You are welcome to apply for that role." It would not have included relocation help, he said.

The University of Alaska's approach may leave it vulnerable to discrimination claims, Lewis said. If the new HR hires are younger, for instance, it may raise an age discrimination complaint, he added.

If a current employee is offered a new job that pays less, it still might bring a court challenge, Lewis said. "Part of HR's role is to limit liability for the employer; this is throwing gasoline on the fire," he said.

The university's ERP provider is Banner by Ellucian, and it's a higher-education-specific system. The university uses Banner for its finance, human resources, student and financial aid systems. Some colleges are combining ERP systems, including HR, to reduce costs. The University of Alaska has about 27,000 full- and part-time students.

Centralization vs. decentralization in HR

Alaska's IT operation has problems, according to James Szmak, a university-hired consultant, in a report last year.

The university's IT organization is "inherently inefficient," the report said. "Cross-campus relationships are often combative due to technology philosophy and execution differences," it noted.

The broader HR organizational goal today isn't an example of a centralized versus decentralized HR argument. Instead, it's about how to get various types of HR work "done to maximize value," said Dave Ulrich, a business professor at the University of Michigan's Ross School of Business.

Some HR work is routine, standard, transactional and done through service call centers, Ulrich said. "Instead of outsourcing HR work, technology-enabled digital information will bring that work back into the organization," he said.

Ulrich said HR technology will allow geographically dispersed locations to have similar processes, similar to "the same ordering system in a McDonald's restaurant anywhere in the world."

Regarding the mass layoff of the HR staff by the University of Alaska, Ulrich said he hasn't heard of a similar case.

"It sounds like someone is sending a message and wanting to make a major transformation," Ulrich said, adding that it may have been a political move.

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