All Star University, the product of a government-sponsored amalgamation between the prestigious 115-year-old Sandstone University and the 20-year-old Redbrick Institute of Technology, is facing great financial difficulties, having lost more than $10 million in the last financial year. Sandstone University had a traditional academic emphasis, which was reflected in its courses of study. Its graduates mainly entered academia, the public service, banking and consulting. In contrast, Redbrick Institute of Technology offered applied programs of study oriented to the needs of business, with its graduates going into a diverse range of private sector industries. As part of the amalgamation, the School of Economics at Sandstone University was combined with Redbrick’s School of Business. The School of Economics taught economic theory, economic geography, economic history, statistics, mathematical economics, labour economics and industrial relations. Student demand for its courses (especially in economics and industrial relations) has been in long-term decline. Students, government and local businesses have been pressuring the school to introduce more business-oriented subjects into the curriculum. Reflecting its different background and focus, Redbrick’s School of Business offered majors in finance, marketing and HRM. The School of Economics employs 35 academics and has 700 students who are predominantly young and study full-time (the average rate is 21), while Redbrick’s students are made up of both full-time (65 percent of the student population) and part-time mature-age students (average age of 33). Sandstone University’s staff are highly academically qualified (90 percent hold a PhD) and they perceive themselves as research-oriented academics. Academic qualifications and research publications are prized over practical experience and teaching ability. The majority are members of the left-wing Tertiary Academics Union. Employment terms and conditions are determined by a collective agreement negotiated by the union and the university. Eighty five percent of the staff have tenure. Pay is determined by seniority and all employees in the same classification receive the same rate of pay. Sandstone University’s academic staff remain angry at having to merge with a teaching university and that the focus that is now being placed on costs and performance. Fears that job security, academic standards, research output and prestige within the community will suffer are common. Redbrick’s staff of 28 are less well qualified academically — only 40 percent have a PhD and only 20 percent have tenure. Staff are employed on individual contracts (varying from one to three years in duration). Most Redbrick staff have had extensive work experience, take great pride in their reputation for teaching excellence and aim to prepare their 1000 students to go into the ‘real world’. Sandstone staff are generally regarded as being too theoretical and divorced from the needs of business. Redbrick courses have proved highly popular with students and the local business community and its students are in high demand. Less than 50 percent of Redbrick’s academic staff belongs to a union. Those that are union members belong to the right-wing Australian University Teachers Union (a bitter rival of the Tertiary Academics Union). Private consulting is encouraged and this, along with a performance-related pay system, means that it is possible for top-performing Redbrick academics to earn incomes significantly higher than those traditionally paid to Sandstone University academics. It is anticipated that the newly created School of Business at All Star University will need to reduce its head count by 20 percent if it is to meet the proposed budgetary guidelines.

1. What HRM problems could be expected to arise from this amalgamation? As HR consultant to All Star University, what would you recommend (and do) to prevent or overcome such problems?

2. Formulate a plan of action to reduce the head count by 20 percent (pay attention particularly to how you would identify and select those academics to be terminated). Identify the major challenges you might face and explain how you would overcome them.