John A. Fry is atop the Walnut Street overpass, looking down at the land coveted by the University of Pennsylvania. Somewhere in the distance is the dull-brown Schuylkill River.
Doing his best General Sherman, Penn’s executive vice-president declares, “This campus must reach the water.”
But in between him and the river is a cacophony. Amtrak trains roll out of the nearby 30th Street Station. A commuter train screeches past. Hard against the river, the Schuylkill Expressway is clogged with afternoon traffic. The 22-acre U.S. Postal Service sorting center, just below him, is all concrete, asphalt, and mechanization. A freight train, loaded with Ford minivans and mammoth spools of wire, crosses a trestle overhead.
Mr. Fry is fairly screaming now. “This is no way to enter an Ivy League campus!” he shouts. He envisions athletics fields and lawns, rolling down to a tranquil river lined with biking paths and picnic spots, the better to have a place to watch the sculls on the water.
Did someone say Cambridge?
Of course, what he is dreaming of could also be fairly described as a political if not a physical impossibility.
But people at Penn have learned that what Mr. Fry dreams, he generally gets. In his four years as executive vice-president, he and President Judith Rodin have reshaped the face of the university. Ms. Rodin, a noted research psychologist, came up through the ranks the traditional way: first as a scholar and then as an administrator. Mr. Fry, 39, never worked for a college before coming to Penn, but he has called on his experience as a consultant to introduce on the campus a range of cost-cutting practices commonly used in business. He embodies the new, corporatized Penn: tactical, innovative, not tied to tradition, and with an ever-sharp pencil.
He set a goal of trimming $50-million from Penn’s $1.4-billion annual budget in five years -- and saved $60-million in four years. Much of that money has gone for campus renovations or directly into academic programs.
Mr. Fry and a team of staff members are systematically reviewing every business function at Penn, and deciding whether each one can be done better by the private sector. Most notably, he brought in the Trammell Crow Company, a private developer and property manager, to maintain all of the university’s buildings and real-estate holdings. The review is only about half-done, but already 500 positions from among 25,000 have been eliminated, mostly through outsourcing.
The campus is thick with bulldozers and concrete mixers. All told, there is $500-million in construction under way on or adjacent to the campus. New buildings or additions are being built for the Wharton School of business, the School of Dental Medicine, and the Annenberg School for Communication.
On Penn’s western edge, the actor Robert Redford is building the first of his planned chain of Sundance Cinemas. Construction has just been completed on a new hotel, the Inn at Penn, across Walnut Street from the campus, right next to the new college bookstore. The university hired DoubleTree Hotels to run the inn, and Barnes & Noble to run the bookstore.
As Mr. Fry sees it, Penn is a more vibrant place now, where employees work more intelligently and efficiently. “They are taking less for granted in terms of their employment status,” he says.
“I think it’s a healthy environment in that regard. Is it the kind of thing that people have a hard time adjusting to? Yes. But over time, I think it puts us on the proper trajectory.”
In return, Penn recently started offering more training to its workers, including executive-development seminars. There are also career courses, and resume-writing classes, to ease the transition into the job market should a worker’s job at Penn be terminated.
After weeks of testy talks, Penn decided in 1997 to give about 120 employees who were moving to Trammell Crow the benefit they wanted to keep the most: tuition assistance for themselves and their families. “We’re not so hard-hearted here,” Mr. Fry says.
But he is candid about what -- and who -- is expendable. “I feel very, very strongly about this,” he says. “The trustees have appointed the officers to be fiduciaries of the institution. And I feel we do the institution a disservice if we all allow inefficiency to perpetuate because we don’t want to rock the boat, or we don’t want to deprive these poor people who have been working here for five decades from their jobs. I don’t consider it cold-hearted. I consider it an absolute responsibility.”
The transformation is more remarkable because it is happening at Penn, a sprawling, academically elite institution that is fractious even by Ivy League standards.
The 12 colleges that make up Penn have their own budgets, fund-raising organizations, and teaching policies -- and they famously move in 12 directions at once.
“Frankly, I didn’t think it was possible to make change as fast as he has,” says Russell E. Palmer, who stepped out of the chief executive’s office at Touche Ross, at the time a Big Eight accounting-and-consulting firm, to serve as dean of the Wharton School from 1983 to 1990. He is now a Penn trustee. “I remember when I came to Wharton, it amazed me how slowly things got done. I suggested a long time ago that they outsource some functions. Everyone looked at me with a blank stare.”
Not all of the changes wrought by Mr. Fry have gone smoothly, though.
In December 1997, unionized workers at the faculty club, dressed as Santa and his elves, crashed the club’s Christmas party and dumped a load of Baggies filled with lumps of coal. In August 1999, the club was moved to the Inn at Penn, and workers who lost their jobs passed out leaflets on the streets, calling Penn a “disgrace” for throwing them out of work.
The campus was up in arms in November 1997 over the secretly negotiated contract with Trammell Crow, privatizing Penn’s property management. In an unprecedented special meeting, the University Council -- which includes representatives of the faculty, the staff, and the students -- passed a resolution condemning the contract and calling on the trustees not to approve it. The trustees ignored the resolution.
The university argues that it has treated the affected employees as well as it could. At least 70 per cent of the employees in the facilities department and at the faculty club were guaranteed new jobs with Trammell Crow and DoubleTree, respectively.
The anger shown by the University Council then has died away, much like the mom-and-pop stores around the campus that have been replaced by such chains as the Gap. A lawsuit filed in June 1998, alleging that the outsourcing of jobs to Trammell Crow illegally reduced employee benefits at the university, has only one plaintiff. The other former employees who did not get job offers from the company accepted severance packages and signed releases agreeing not to sue Penn, said Stephen S. Pennington, the lawyer for the plaintiff.
Professors have, for the most part, retreated to their classrooms. A number of faculty members declined to be quoted about Mr. Fry, saying that they feared retribution, or that they find protest futile in the face of the strong current administration.
“There is an unwillingness to get involved in the political process, because it is so time consuming -- and unless you are a full professor whose career is established and your salary is not at risk,” says Elsa R. Ramsden, an emeritus professor of social psychology and chairman of the Penn chapter of the American Association of University Professors.
The situation has left many long-time staff members feeling disheartened. “Educational institutions should be a humanizing force in society, where the value of people is always a priority,” says James Gray, a library-service assistant at the Annenberg school and co-chairman of the African-American Association of Faculty and Staff. “That doesn’t mean sacrificing the efficiency of business, but we don’t need universities to become corporations, too.”
The only shades of gray at the Franklin Building, the campus business center, however, come from the tinted windows. Inside, all is bright lights, white walls, progress charts, and business-staff members dashing to the next meeting. Everything says bottom line.
Four cashier’s windows in the ground-floor lobby face the front door. The Penn credit-card office is to the left, financial aid to the right. The bursar, the banker, the scholarship-maker are upstairs. And on the top floor sits Mr. Fry, squeezing nickels.
He came to Penn in 1994 as a consultant from Coopers & Lybrand. His assignment was to look at the administrative functions at the university and find ways to streamline them. What he saw amazed him. Penn is the largest private employer in this city, but it was dissipating its strength by dealing with more than 1,000 vendors, he found. Separate offices in the university were often paying different prices for the same product.
Ms. Rodin, then the provost at Yale University, had been selected to be president of Penn, and was set to take over in July 1994. Mr. Fry was lining up candidates to interview for the executive vice-presidency, but she decided that he was who she wanted.
“The fact that he didn’t have a lot of broad management experience didn’t bother me,” says Ms. Rodin. “I realized that we had created this vision for what the university could be together, and I wanted him to be there with me.”
Mr. Fry tore into the work of centralizing the business functions. He ordered purchasing officers to pare their lists of vendors, then renegotiated their contracts to give Penn better terms.
He signed a series of contracts that gave some suppliers exclusive access to Penn, but as a condition, he demanded cash up front. So far, he has collected $60-million. Barnes & Noble agreed to pay $1.3-million a year to Penn for 15 years, plus a percentage of sales, in return for the opportunity to operate the bookstore. In Penn’s best years, it made only $250,000 at its old university-operated store. Trammell Crow has agreed to pay the biggest sum, in excess of $30-million.
“We like to go first in a lot of these things, in part because I think it shows the kind of leadership and commitment we have to managing in a new way in higher education,” says Mr. Fry. “But also it gives us, I think, a tremendous amount of leverage, because we can say, ‘Work with Penn, and if you are satisfied, and if we are satisfied with what you’ve done, your market will be made.’”
In the once crime-plagued neighborhoods to the west of Penn, the university has encouraged gentrification by offering $15,000 toward a mortgage for any university employee who will move in. Mr. Fry masterminded the creation, and is now chairman, of the University City District, a 250-block area north and west of campus where businesses, hospitals, Penn, Drexel University, and the University of the Sciences in Philadelphia have agreed to pay for increased marketing, street cleaning, safety patrols, and bus service. Penn pays $2.25-million of the district’s $3.9-million annual budget.
Mr. Fry is paid $330,000 per year and also earned a total of $95,000 in incentives for fiscal 1997 and 1998.
He doesn’t use his office much. He prefers to operate from a windowless conference room decorated with black-and-white photos, most of them of Penn athletes from the first half of the century.
On a recent day, in a series of meetings with business-staff members, most of whom he has hired himself, Mr. Fry rolled through a wide agenda: parking problems at the university hospital, year-2000 computer compliance, investment in a project to convert a former General Electric warehouse into apartments, Penn’s use of “straw corporations” to buy nearby properties to try to keep prices from spiraling, and maybe a “road trip” to Providence, R.I., to study the retail mix near Brown University.
The talk frequently descends into banter about who’s-really-behind-the-deal. Mr. Fry grins easily and mischievously, and his dark-brown hair, now increasingly gray, keeps dropping in front of his eye. He grew up in Brooklyn and Queens, N.Y., the son of middle-class parents. But there is a touch of the Brahmin in his clipped speech, and his wardrobe has the look of Hamptons weekend wear.
He swaps tactics with staff members and suggests possible contacts, compulsively tearing the working papers before him into small squares as he is satisfied that his concerns have been dealt with.
“I tend to be very impatient,” he says. “Sometimes that serves us well, sometimes not. I have a foot-on-the-gas mentality. I don’t always want to listen to reasons. I just want to get results.”
He has one rule: Always try new ways of doing things.
“I am unforgiving when people don’t try, and I’m especially unforgiving when people say, ‘Well, we can’t do that at Penn,’” he says.
When he began work as Penn’s executive vice-president in April 1995, however, Mr. Fry kept a low profile. He solicited meetings with business-management experts at Wharton and scheduled leisurely dinners with deans.
“He would assert and reassert the primacy of the academic mission,” says Thomas P. Gerrity, who was Wharton’s dean for nine years, until this summer. “He would emphasize that he was trying to use scarce resources to bring excellence to research and teaching.”
Mr. Fry succeeded in establishing a network of support. With the backing of Ms. Rodin and the Board of Trustees assured, he spelled out a restructuring plan by January 1996, and then pushed the accelerator to the floor.
Along with the facilities-maintenance department, the bookstore, and the staff at the faculty club, Mr. Fry has outsourced management of the campus dining facilities, the construction-audit department, benefits administration, and all tax work: preparation as well as advising.
But he has not followed the lead of many other institutions in farming out their information systems and the construction and management of their student residences to private vendors. Both are too important to Penn, he says.
Philip J. Goldstein, a consultant who worked with Mr. Fry atCoopers (now PriceWaterhouseCoopers), says that Mr. Fry’s “strength was always his ability to think strategically, and then to think of ways to get there. Then he would hire a bunch of good people, and give each of them a little chunk of his dream, and tell them to get it done.”
That strategic thinking extends to the way Mr. Fry has plotted his own career.
Even when he took the job at Penn, he was already thinking about the next step: becoming president of an institution himself, says Mr. Goldstein.
“He knew if he was successful there, he could take the next step, and he was talking about it even back before he ever started at Penn.”
Ms. Rodin says she and Mr. Fry are discussing ways he could earn a Ph.D., often a prerequisite for a college presidency.
Mr. Fry believes that the skills he already possesses may be enough. “I think I’m pretty well prepared” to lead a college, he says. “The president is no longer this sort of person in the tweed jacket wandering around the campus with all sorts of free time, engaging in intellectual dialogue with students and faculty. I think the things that boards increasingly care the most about are the things that people like me know how to do.”
As to where he would go, Mr. Fry says only that it must be “a compelling institution.”
“The most important thing is not whether it’s a university, college, public, private, in Nebraska or in Florida. They would have to be doing God’s work. They would have to get my juices flowing.”
As long as he remains at Penn, though, Mr. Fry sees much more to accomplish. He plans to rein in travel budgets by cutting down on the “many, many” travel agencies that are now used.
By doing so, he expects to get better rates from US Airways, the leading commercial carrier in Philadelphia.
And he intends to continue changing the university’s culture.
Penn has been systematically taking over non-university-owned buildings on the campus -- converting fraternity and sorority houses into housing for students with the same majors, for example.
Next on the agenda is the Penn Christian Association building, and its 27,000 square feet of floor space, a carved-granite exterior, and burled-wood interior walls.
Penn has been trying to acquire the building for more than five years. The Rev. Beverly Dale, executive director of the association, once dismissed the offers as ridiculously low, but negotiations have resumed.
Meanwhile, the group has been a launching pad for protest, an ethic that it maintains today. “Is this a Penn Jesus?” asks a sign in the lobby next to a portrait of Jesus in a white shirt, necktie, and suitcoat. Nearby, two tables are covered with fliers, urging students and others to support Penn’s ousted workers, among other causes.
At the time of the Trammell Crow outsourcing, Reverend Dale said trust had been broken on the campus.
“We have to be fair to the people who right now are feeling as if they’ve been kicked in the stomach, who have been loyal employees for decades, and who now are questioning whether or not they are going to have a job in a couple of months,” she said then.
Now, with negotiations for the building finally heating up, Reverend Dale has joined others at Penn who, in the new bottom-line era, have muted their criticism.
http://chronicle.com Section: Money & Management Page: A72