Business and Finance Expanded Forum September 8, 2005 B&F Strategic Framework 2004-2005 “Looking Back and Looking

1. Business and Finance Expanded Forum September 8, 2005B&F Strategic Framework 2004-2005“Looking Back and Looking Forward”

2. B&F Forum Agenda • Welcome • B&F Strategic Framework: • FY05 Performance • Updates on Goals • Key Initiatives –results/plans; AVP area reports • FY 2006 and Beyond: Vision and Challenges • Closing

3. B&F Strategic FrameworkFY05 Performance Update • Roll out B&F Strategic Framework • Validated B&F Strategic Framework with BF Expanded Forum • Collaboratively developed engagement approach and roll out materials • 2000+ employees attended over 45 interactive roll out sessions from 11/19/2004 to 2/1/2005 • CFO co-presented at 11 departmental all-staff Strategic Framework roll-out sessions (close to 1,000 staff members) • Posted all Strategic Framework materials on (new) B&F Websitehttp://www.umich.edu/~busfin/

4. B&F Strategic FrameworkFY05 Performance Update • Goals and Initiatives • Conducted first ever B&F-wide Employee Satisfaction survey • Conducted first ever comprehensive B&F Customer Survey • Established baselines, set targets for improvement • Began analyzing data to determine strategies/actions for improvement • Established metrics and targets for two B&F Strategic Goals (Employer of Choice, Provider of Choice) and added a third • Made significant progress on 12 top priority Key Initiatives for B&F

5. President Coleman – April, 2004 • Vision • Define great public University of the world • New level of excellence • Expand collaborative innovation • Strategies • Sustain academic excellence • Foster active engagement • Build collaborative learning communities • Create greater access to UM academic quality • Presidential Initiatives

6. B&F Vision – 3 parts High Performance Organization • Deep expertise • Technical • Business 2. Understand University’s businesses • Teaching • Research • Service • Patient Care Implemented, Fall, 2004

7. B&F Vision – 3 parts 3. Fiduciaries of the University assets Information Human Financial Technology Physical Implemented, Fall, 2004

8. B&F Mission • We partner with the University community to provide the technical, financial, physical, information and human resource infrastructureessential to being one of the greatest public universities in the world. Implemented, Fall, 2004

9. Business and Finance “WE MAKE BLUE GO” Implemented, Fall, 2004

10. B&F Strategies • Work in collaborative manner to meet customer needs • Leverage technology investment for strategic gains and operational efficiency • Attract, develop, retain and invest in highly-productive and diverse staff • Develop and expand programs that promote good stewardship of our resources and protect the citizens of our community Implemented, Fall, 2004

11. B&F Goal 1- Employer of Choice* • Scope and Results from B&F Employee Survey • Satisfaction Rating: 77 overall • 75% B&F-wide participation rate (2101 surveys returned) • 35 B&F departments collected actionable local unit data • Data rolled out at B&F, AVP area and department level • All data made available to all employees * Become EMPLOYER OF CHOICE for high performing staff members and teams

12. B&F Goal 1- Employer of Choice • Observations • Successes • Opportunities

13. B&F Goal 1- Employer of Choice Next Steps with Employee Survey • Phase I – Roll out results (completed) • Phase II – Action planning and setting targets (in progress) • Complete templates and worksheets by October 15, 2005 • Announce unit action plans to all staff by November 15, 2005 • Phase III – Implementation and tracking progress • Phase IV – Re-survey employees; October, 2006

14. Employee Survey Targets • B&F Target • 5% increase in overall B&F Employee Satisfaction score from 77 to 81 • Priority B&F wide dimensions for improvement: • Workload • Communication • Recognition

15. Employee Survey Targets • Unit Specific Targets • Set a target to maintain or increase Employee Satisfaction scores at unit level (up to 5 points) • Set a target for each unit priority dimension and include at least one of the three B&F-wide priority dimensions

16. B&F Goal 2- Provider of Choice* • Scope and Results • Survey information gathered about 34 BF core services during May/June, 2005 • 3,408 surveys received (10,164 surveys distributed) • Segmented Customers • Core (general UM community) • Core Targeted (experienced the core service in the last 6 months) • Key (extensive knowledge or significant influence) • Mega (Deans, Chancellors and EOs) • Overall B&F Customer Satisfaction Rating = 7.53 * Become the University’s PROVIDER OF CHOICE for the UM services we offer

17. B&F Service Attributes • Attentive to customer needs (listens) mean rating = 7.60 • Understands customer needs mean rating = 7.45 • Responds in a timely manner to customer requests/questions mean rating = 7.49 • Understands and explains University policies and procedures mean rating = 7.38 • Communicates service standards mean rating = 7.28 • Demonstrates functional/technical expertise mean rating = 7.69 • Communicates service change effectively mean rating = 7.25 • Implements service change effectively mean rating = 7.26 • Adapts to changing customer needs mean rating = 7.03 • Easily accessible mean rating = 7.39 • Leverages technology to improve service mean rating = 7.56 • Provides friendly and courteous service mean rating = 8.20

18. B&F Service Attributes • Attentive to customer needs (listens) mean rating = 7.60 • Understands customer needs mean rating = 7.45 • Responds in a timely manner to customer requests/questions mean rating = 7.49 • Understands and explains University policies and procedures mean rating = 7.38 • Communicates service standards mean rating = 7.28 • Demonstrates functional/technical expertise mean rating = 7.69 • Communicates service change effectively mean rating = 7.25 • Implements service change effectively mean rating = 7.26 • Adapts to changing customer needs mean rating = 7.03 • Easily accessible mean rating = 7.39 • Leverages technology to improve service mean rating = 7.56 • Provides friendly and courteous service mean rating = 8.20 highest scores

19. B&F Service Attributes • Attentive to customer needs (listens) mean rating = 7.60 • Understands customer needs mean rating = 7.45 • Responds in a timely manner to customer requests/questions mean rating = 7.49 • Understands and explains University policies and procedures mean rating = 7.38 • Communicates service standards mean rating = 7.28 • Demonstrates functional/technical expertise mean rating = 7.69 • Communicates service change effectively mean rating = 7.25 • Implements service change effectively mean rating = 7.26 • Adapts to changing customer needs mean rating = 7.03 • Easily accessible mean rating = 7.39 • Leverages technology to improve service mean rating = 7.56 • Provides friendly and courteous service mean rating = 8.20 lowest scores

20. B&F Service Attributes • Attentive to customer needs (listens) mean rating = 7.60 • Understands customer needs mean rating = 7.45* • Responds in a timely manner to customer requests/questions mean rating = 7.49 • Understands and explains University policies and procedures mean rating = 7.38 • Communicates service standards mean rating = 7.28* • Demonstrates functional/technical expertise mean rating = 7.69 • Communicates service change effectively mean rating = 7.25 • Implements service change effectively mean rating = 7.26 • Adapts to changing customer needs mean rating = 7.03* • Easily accessible mean rating = 7.39 • Leverages technology to improve service mean rating = 7.56 • Provides friendly and courteous service mean rating = 8.20 *lowest scores with highest correlation to satisfaction

21. B&F Goal 2- Provider of Choice Next Steps with Customer Survey • Phase I – Share Customer Survey results (September-November, 2004) • With B&F staff • With UM Community • Phase II – Coordinated B&F action planning • Create methods for coordinated “deeper dive” understanding and action planning; “learn from others”; identify quick wins • Small team makes recommendations by November 1, 2005 • Phase III – Core services identify and implement actions • Phase IV – Re-survey customers; February/March, 2007

22. Customer Survey Target • BF Target = • 5% increase in overall B&F mean customer satisfaction score (from 7.53 to 7.91) • Specific Focus for service attributes improvement (2) Understanding of customer needs (5) Communication of service standards (9) Adaptability to changing customer needs

23. Customer Survey:Accountability and Action Planning Dialogue Programs Findings Customer Survey Strategies We Make Blue Go • Articulate the U of M Provider of Choice Brand • Service Difference • Quality Difference • Other performance metrics • Report Survey Findings • Report data at BF, AVP level, and dept level (as available) • Provide verbatims, as available, to provide deeper understanding • Identify gaps between desired and current state • Action Planning • Identify necessary changes • Develop transition management strategy and structure • Ensure interventions are specific, relevant, and integrated • Survey development and administration • Identify important questions from customer survey • Create new questions or data gathering processes based on desire for deeper understanding

24. B&F FY05: 12 Key Initiatives • Implement Classification System – Laurita Thomas • Support the President’s Health Initiative – Laurita Thomas • Strengthen internal controls and improve financial management of units– Peggy Norgren • Define the framework for BF “Strategic Integrated Consulting” service for the University – Laura Patterson • Develop a strategy for delivering business intelligence that is agreed upon by the schools and colleges, health system and administrative units– Laura Patterson • Improve the security of the University’s information technology resources– Laura Patterson • Establish the priorities for Central Campus Planning and successfully launch the priority projects– Hank Baier • Exploit e-Business opportunities– Laura Patterson • Support the Residential Life Initiative – Hank Baier • Implement strategies for investments to maintain the level of return– Erik Lundberg • Develop Voice of the Staff Initiative – Laurita Thomas • Implement recommendations from the lab renovation project and related initiatives to enhance accountability for construction costs per square foot for appropriate stakeholders– Hank Baier

25. B&F FY06 –12 Key Initiatives • Organize and launch the next stage of the Classification System Project - Laurita Thomas • Advance the goals of President Coleman's vision for a healthy community and create a culture that fosters employee health and well-being by implementing three major areas of activity during FY 2006: 1) leadership and community engagement; 2) the promotion of physical activity; and 3) an enhanced ergonomics program   - Laurita Thomas • Implement strategies for investments to meet or exceed the targeted level of return with acceptable level of risk - Erik Lundberg • Strengthen internal controls and improve the financial management of units - Peggy Norgren • Improve targeted financial business processes for improved controls and better customer service - Peggy Norgren • Implement business intelligence strategy recommendations that were agreed upon by the schools and colleges, Health System, and administrative units – Laura Patterson • Design and implement an information technology security framework for providing robust, scaleable, and innovative solutions to protect the University’s information resources – Laura Patterson • Support the Residential Life initiative - Hank Baier  • Implement recommendations from the lab renovation project and related initiatives - Hank Baier  • Support Children's and Women's replacement hospital project - Hank Baier  • Lead Energy Conservation - Hank Baier  • Implement actions to achieve the targets set for the Employee Satisfaction Survey and Customer Satisfaction Survey - all

26. B&F Updates • FY05 Key Initiatives – Results • FY06 Key Initiatives – Plans • AVP area Goals and Challenges • Hank Baier • Erik Lundberg • Peggy Norgren • Laura Patterson • Laurita Thomas

27. B&F FY05: 12 Key Initiatives • Implement Classification System – Laurita Thomas • Support the President’s Health Initiative – Laurita Thomas • Strengthen internal controls and improve financial management of units– Peggy Norgren • Define the framework for BF “Strategic Integrated Consulting”service for the University – Laura Patterson • Develop a strategy for delivering business intelligence that is agreed upon by the schools and colleges, health system and administrative units– Laura Patterson • Improve the security of the University’s information technology resources– Laura Patterson • Establish the priorities for Central Campus Planning and successfully launch the priority projects– Hank Baier • Exploit e-Business opportunities– Laura Patterson • Support the Residential Life Initiative – Hank Baier • Implement strategies for investments to maintain the level of return– Erik Lundberg • Develop Voice of the Staff Initiative – Laurita Thomas • Implement recommendations from the lab renovation project and related initiatives to enhance accountability for construction costs per square foot for appropriate stakeholders– Hank Baier

28. B&F FY05: (12) Lab Renovation Project and Initiatives

29. B&F FY05: (7) Priorities for Central Campus Planning • Biology • School of Information • Libraries • Interdisciplinary collaborations • Business and Law Schools • Division of Kinesiology • Student Life and Student Services

31. Observatory Lodge Renovations

32. B&F FY05: (9) Residential Life Initiatives • Infrastructure Improvements - $49M • Major Renovations • West Quad • Mosher Jordan/Hill Dining Center • New Facilities • North Quad

33. North Quad Site

34. North Quad: Conceptual Design

35. 202 South Thayer Building

36. Mosher-Jordan Renovation and Hill Dining Center

37. B&F FY06 –12 Key Initiatives • Organize and launch the next stage of the Classification System Project - Laurita Thomas • Advance the goals of President Coleman's vision for a healthy community and create a culture that fosters employee health and well-being by implementing three major areas of activity during FY 2006: 1) leadership and community engagement; 2) the promotion of physical activity; and 3) an enhanced ergonomics program   - Laurita Thomas • Implement strategies for investments to meet or exceed the targeted level of return with acceptable level of risk - Erik Lundberg • Strengthen internal controls and improve the financial management of units - Peggy Norgren • Improve targeted financial business processes for improved controls and better customer service - Peggy Norgren • Implement business intelligence strategy recommendations that were agreed upon by the schools and colleges, Health System, and administrative units – Laura Patterson • Design and implement an information technology security framework for providing robust, scaleable, and innovative solutions to protect the University’s information resources – Laura Patterson • Support the Residential Life initiative - Hank Baier  • Implement recommendations from the lab renovation project and related initiatives - Hank Baier  • Support Children's and Women's replacement hospital project - Hank Baier  • Lead Energy Conservation - Hank Baier  • Implement actions to achieve the targets set for the Employee Satisfaction Survey and Customer Satisfaction Survey - all

38. F&O FY06 – BF Key Initiatives (Added) • Lead Energy Conservation Effort • Support Children’s and Women’s Hospital Project

40. Gulfport, Mississippi

41. Children’s and Women’s Hospital

42. B&F FY05: 12 Key Initiatives • Implement Classification System – Laurita Thomas • Support the President’s Health Initiative – Laurita Thomas • Strengthen internal controls and improve financial management of units– Peggy Norgren • Define the framework for BF “Strategic Integrated Consulting”service for the University – Laura Patterson • Develop a strategy for delivering business intelligence that is agreed upon by the schools and colleges, health system and administrative units– Laura Patterson • Improve the security of the University’s information technology resources– Laura Patterson • Establish the priorities for Central Campus Planning and successfully launch the priority projects– Hank Baier • Exploit e-Business opportunities– Laura Patterson • Support the Residential Life Initiative – Hank Baier • Implement strategies for investments to maintain the level of return– Erik Lundberg • Develop Voice of the Staff Initiative – Laurita Thomas • Implement recommendations from the lab renovation project and related initiatives to enhance accountability for construction costs per square foot for appropriate stakeholders– Hank Baier

43. B&F FY05: (10) Implement strategies for investments to maintain the level of return Maximize performance of the Long Term Portfolio with an appropriate level of risk: Exceed the return of the performance benchmark by at least 0.5% on a rolling three-year basis. Achieve top quartile performance versus other Colleges and Universities over time. Maximize the performance of the University Bank with an appropriate level of risk: Exceed the return of the performance benchmark by at least 0.25% on a rolling three-year basis. Exceed the return of 90-Day T-bills by at least 2.0% over rolling three-year periods. Maximize the performance of the financial reserves of M-CARE and Veritas as well as the deferred gift vehicles: Exceed the return of the respective performance benchmark over rolling-three year periods.

44. Objective: Maximize performance of the Long Term Portfolio with an appropriate level of risk Goal: Exceed the return of the performance benchmark by at least 0.5 percent on a rolling three-year basis. The goal of exceeding the benchmark by 0.5 percent annualized for the past three years equals about $55 million more than if performance had matched that of the benchmark. The actual performance exceeded benchmark by 3.3 percent annualized for the past three years, which equals about $375 million more than if performance had matched that of the benchmark. Goal: Achieve top quartile performance versus other Colleges and Universities over time. Actual performance for the past 3 years was among top 5 percent of all college and university endowments, which is about $360 million better than if at the bottom of the top quartile and about $525 million better than the average college and university endowment.

45. Objective: Maximize the performance of the University Bank with an appropriate level of risk Goal: Exceed the return of the performance benchmark by at least 0.25% on a rolling three-year basis. The goal of exceeding the benchmark by 0.25 percent annualized for the past three years equals about $15 million more than if performance had been at benchmark. The actual performance exceeded benchmark by 2.1 percent annualized for the past three years, which equals about $135 million more than if performance had been at benchmark. Goal: Exceed the return of 90-Day T-bills by at least 2.0% over rolling three-year periods. The goal of exceeding 90-Day T-bills by 2.0 percent annualized for three years equals about $120 million, or about $40 million annually. The actual performance exceeded 90-Day T-bills by 5.9 percent annualized for the past three years, which equals about $360 million, or about $120 million annually.

46. Objective: Maximize the performance of the financial reserves of M-CARE and Veritas as well as the deferred gift vehicles Goal: Exceed the return of the respective performance benchmark over rolling-three year periods. Performance for M-CARE reserves was 2.8 percent annualized for the past three years, which was 0.2 percent annualized above the benchmark, or about $250,000 when compared to benchmark performance. Performance for Veritas reserves was 8.6 percent annualized for the past three years, which was 2.8 percent annualized ahead of its benchmark, or about $14 million when compared with benchmark performance. The CRTs returned 10.3 percent annualized for the past three years, compared to 10.9 percent for the benchmark. The Gift Annuity program returned 8.6 percent annualized for the past three years, compared to 6.0 percent for the benchmark. The Donor Pooled Income Fund returned 10.3 percent annualized for the past three years, compared to 8.9 percent for the benchmark.

47. B&F FY06 –12 Key Initiatives • Organize and launch the next stage of the Classification System Project - Laurita Thomas • Advance the goals of President Coleman's vision for a healthy community and create a culture that fosters employee health and well-being by implementing three major areas of activity during FY 2006: 1) leadership and community engagement; 2) the promotion of physical activity; and 3) an enhanced ergonomics program   - Laurita Thomas • Implement strategies for investments to meet or exceed the targeted level of return with acceptable level of risk - Erik Lundberg • Strengthen internal controls and improve the financial management of units - Peggy Norgren • Improve targeted financial business processes for improved controls and better customer service - Peggy Norgren • Implement business intelligence strategy recommendations that were agreed upon by the schools and colleges, Health System, and administrative units – Laura Patterson • Design and implement an information technology security framework for providing robust, scaleable, and innovative solutions to protect the University’s information resources – Laura Patterson • Support the Residential Life initiative - Hank Baier  • Implement recommendations from the lab renovation project and related initiatives - Hank Baier  • Support Children's and Women's replacement hospital project - Hank Baier  • Lead Energy Conservation - Hank Baier  • Implement actions to achieve the targets set for the Employee Satisfaction Survey and Customer Satisfaction Survey - all

48. B&F FY06: (3) Implement strategies for investments to maintain the level of return Maximize performance of the Long Term Portfolio with an appropriate level of risk: Exceed the return of the performance benchmark by at least 0.5% on a rolling three-year basis. Achieve top quartile performance versus other Colleges and Universities over time. Maximize the performance of the University Bank with an appropriate level of risk: Exceed the return of the performance benchmark by at least 0.25% on a rolling three-year basis. Exceed the return of 90-Day T-bills by at least 2.0% over rolling three-year periods. Maximize the performance of the financial reserves of M-CARE and Veritas as well as the deferred gift vehicles: Exceed the return of the respective performance benchmark over rolling-three year periods.

49. B&F FY05: 12 Key Initiatives • Implement Classification System – Laurita Thomas • Support the President’s Health Initiative – Laurita Thomas • Strengthen internal controls and improve financial management of units– Peggy Norgren • Define the framework for BF “Strategic Integrated Consulting”service for the University – Laura Patterson • Develop a strategy for delivering business intelligence that is agreed upon by the schools and colleges, health system and administrative units– Laura Patterson • Improve the security of the University’s information technology resources– Laura Patterson • Establish the priorities for Central Campus Planning and successfully launch the priority projects– Hank Baier • Exploit e-Business opportunities– Laura Patterson • Support the Residential Life Initiative – Hank Baier • Implement strategies for investments to maintain the level of return– Erik Lundberg • Develop Voice of the Staff Initiative – Laurita Thomas • Implement recommendations from the lab renovation project and related initiatives to enhance accountability for construction costs per square foot for appropriate stakeholders– Hank Baier

50. B&F FY05: (3) Strengthen internal controls and improve financial management • Unit certification of FY05 financial results • Adherence to Fiscal Responsibility SPG • Adherence to Stewardship Document • Review of financial results and understanding of results • Identification of Internal Controls process to document and assess effective controls • Select Hotline service for “whistleblower” • Improve internal controls awareness and education • Setup Internal Controls Advisory Group