New HR Position Will Be Worth The Cost

Editor's Note: In the print edition of this article, Mr. Diaz was quoted as saying he "can’t even imagine that it will show a return sooner," when he actually stated that he "can’t even imagine that it won't show a return sooner." The Purdue Review regrets this error.

On February 2nd of this year, the Purdue Board of Trustees approved the nomination of Luis Lewin as Vice President of Human Resources, creating a brand new vice president level position in the Purdue President’s cabinet. The decision to create such a position has faced much scrutiny in the past few week weeks by many members of the Purdue Community, most notably Purdue faculty and staff.

Facing a giant tax revenue shortfall, Indiana Governor Mitch Daniels has asked higher education institutions in the state to trim $45 million from their budgets. Purdue will have to cut $45 million from its own budget, $33 million from the West Lafayette campus alone. Purdue employees will not receive pay raises for the second year in a row and their benefits are being cut due to the budget shortfall. It is understandable then that many faculty and staff members are skeptical of or opposed to this new position and its $100,000 price tag.

With any potential investment, it is necessary to calculate the present value of its costs and benefits. If benefits exceed costs, then the investment is worthwhile, but so many people have focused on the seemingly high, upfront cost of the new vice presidential position that they have forgotten to compare it with the benefits which are likely to result from this position, which is an investment in the faculty and staff of Purdue University.

According to Al Diaz, Executive Vice President for Business and Finance, Treasurer, the creation of a Vice President for Human Resources came from a recommendation made by a human resources committee that was part of the strategic planning phase in 2008. Diaz has only been with Purdue Since July of 2009.

Purdue University employs more than 18,000 individuals and it is unusual for an institution of this size not to have a human resources director with the authority to make and implement policies with respect to human resources.

“I don’t know of another situation where with this many people you don’t have someone at a very high level reporting with respect to HR,” Diaz said. “It’s really something I would have expected to see here.”

It is important to note that a new position has not really been created. Rather, the previous position, Director of Human Resources, has been elevated to a cabinet-level position. The Director of Human resources was more of an advisory position and did not have the ability or stature to influence and make decisions concerning human resources.

“I think [the human resources director] did a great job given the position they were in, but this is a much bigger job, than they’ve been able to address.”

The elevation of the director’s position to a vice president level position will allow the University to more effectively manage human resources which is currently decentralized and inconsistent in its practices. Every college and school in the University has its own human resources unit which leads to inconsistent practices and overall confusion about how human resources decisions are made and who makes them.

Diaz explained, “I think we’ve seen human resources as what I’ll call a “transactional activity,” essentially performing actions at every level. What we need is somebody who will look at it more as a “transformational activity” and try to understand how best to have it organized and how best to deliver the services that are provided.”

Chris Berger, Associate Professor of Management and Human Resources, expressed a similar sentiment: “I would envision this role ought to improve the quality of service provided. I would argue that looking at current jobs and assessing how well those jobs are carried out will help us out tremendously.”

Additionally, the new position is likely to help improve the selection of employees’ benefits packages in the midst of immense budget cuts. 

“I’m really anxious,” Diaz stated, “to take advantage of [Lewin’s] insights into healthcare benefits and how we can accomplish our objectives, not only in terms of reducing the University’s expenses, but reducing the overall cost to all of us of healthcare. I think he can bring some insights there that would take a lot to develop ourselves.”

The recruitment process for the position now held by Lewin began shortly after Diaz arrived at Purdue last July. The decision to wait until the position of Executive Vice President for Business and Finance was filled before searching for a Vice President for Human Resources was made because the latter would be reporting directly to the former.

According to Diaz, the new position will be funded by the redirection of accrued savings, money that the University already has.  

“We have internal resources,” Diaz explained. “We’re not asking for additional resources. It is limited to an investment that I have every reason to expect will show a return at the outside of three years. I can’t even imagine that it won't show a return sooner than that really.”

The $100,000 price tag may seem steep to some, but it is necessary in order to attract someone with the knowledge, skills, and abilities of Lewin. It would be difficult to fill a position of such stature and importance without a substantial increase in salary expense.

As Berger noted, there are reasons for making investments outside of just reducing costs. “It often depends,” he said “on what you are getting in exchange for those employment dollars that are expended. It depends very much on the executive level of the individual that is heading it up. How persuasive can they be? How much do they understand the mission and goals of the organization? “

Is Luis Lewin then, the right man for the job? According to Diaz, “Absolutely. He has 30 years of experience in HR at every level and most recently at Ohio University, but before that at the corporate level at the Tribune. I think we have every reason to believe that he has the kind of background and capabilities needed.”

Only time will tell if the benefits of such a position will outweigh the upfront cost which has been the center of many individual’s concerns, but it is very likely that this will be the case. Even though the University is facing a budget crisis, this is the right time (if not a little past time) to invest in the employees at Purdue.

Diaz summarized, “Given where we are and given the kind of issues that we need to address, this is exactly the time we need a person of this stature to be helping us through this process. It’s my expectation that having someone in this position will make us far more effective in dealing with human resources issues. I think it’s going to be a net positive experience any way we look at it.”