Layoffs Begin

It is unfortunate that Harvard is laying off 275 employees, because of America’s economic slump. Fortunately, the layoffs affect only about 2 percent of Harvard’s non-faculty workforce, with no layoffs of faculty members. Because it employs about 13,000 full-time non-faculty staff members, Harvard plans to lay off additional employees in the near future. Hopefully, America’s economy will improve, so that a minimal number of employees will be affected by this plan.

Dear Sirs:
Perhaps everyone would agree to at least a twenty percent (20%) cut in salary, including top administrators, who might be asked to take a thirty percent cut (Or perhaps there should be a sliding scale: the higher the salary, the larger the cut). I hope no one would then have to be dismissed into this dire economy.
Sincerely,
Felipe Farley (class of 1986)

I would like to know the extent to which the Harvard financial managers in charge of the endowment are being held responsible for the loss of endowment. From my observations, most all private universities are saying very little about the role of their own financial decisions in their investment failures. Yet, the high salaries paid to these managers should come with a high level of responsibility. I myself lost a much lower percentage than Harvard by making a few key decisions within the past 2 years on my mutual fund investments after spending only a small amount of time reading about aspects of the current financial state of the country. But I am a physics professor with a full time job. Is it not the job of the financial managers to spend full time to make even better decisions? It is not acceptable for Harvard to portray itself as a passive victim of the market if it is paying 8 figure salaries to its fund managers. When their decisions go wrong, we should hear about the consequences for the financial management instead of hearing that janitors will be fired.

Greetings:

It is a shame that the “Best and the Brightest” portfolio managers did not take simple precautions like selling automatically securities within Harvard’s Endowment when their value declined beyond a certain percentage.

James Fallows in Atlantic Monthly roughly 2 years ago, predicted the collapse of the U.S. real estate market. Similarly, Professor Nouriel Roubini predictions of a global financial crisis were largely ignored. Niall Ferguson of Harvard’s History Department is spot on when he has criticized many economists for failing to predict the greatest economic decline since the great depression.

In any event, one wonders to what degree did Harvard explore the possibility of employees accepting interim wage decreases in some equitable manner to preserve as many jobs as possible.

Often employers are not well acquainted with both federal and state laws dealing with age discrimination. While I would think that both Harvard’s Office of General Counsel and the labor unions are well advised in this area, I am often surprised that this is not always the case.

Some individuals may find the following PowerPoint presentation of interest:

http://www.slideshare.net/ethansb/is-your-employers-reorganization-a-lat…

Regards.

I think the layoffs are disgraceful.
Alternatives:
1] Reduce the ridiculous salaries/bonuses at Harvard Management. These are thr “pros” who gbot the collegwe in thisa mess. [I note some are fleeing already}
2] The faculty should also feel some pain.Why are they exempt.

It’s happening over there, too…
~ C

Impact of US Recession on educational institutions.

The implication is that the economy shrank thirty to forty percent. The troubling being that represent excess capacity which has to de-leveraged. Unfortunately, everyone bit into the myth to the same degree except for the perpetrators. As Harvard was supposed to be so smart about managing the endowment I think their advisors were stupid. Clearly, breaks in the top occurred in 2007 but by 2008 in August the correction was in free fall. My beef is that Harvard had become sold out to the prevailing mentality of greed which jeopardized the gains. Where were the profits? We should be cash positive withy no losses at all. If your people were smart Harvard would be cash positive. To augment the endowment positions should have been shorted all the way into March 10th. Goldman Sachs did, why didn’t you? I thought your advisors knew what the deal was about. I guess not. Now you expect the Alumni to pick you back up? There is going to be a problem with this, ie 10 billion dollars from where, the sky? Personally, I am pissed off the way the way the whole thing went down.

Let me see if I understand this. 275 employees are losing their jobs in the middle of what looks like a repeat of the ’30s Great Depression because the school’s investments lost 30% of its value?

Forgive me for my naivete, but at what point did Harvard start depending on the investments to operate? isn’t that eating the seed corn?

Am I confusing the Endowment with the Retirement Fund?

Harvard continues to ask for money when it’s had an almost obscene amount of investments (Endowment, Retirement, et al).

And because it is still 2/3rds as large you need to put 275 people out in the street?

I would think we/you/whoever could do better than that.

Ed

I don’t know the salaries of the employees in question, or the current value of the endowment, but here’s an informed guess:
275 employees x $60k/yr =$16.5M/yr.
$35B - ($35B x 0.30) = $24.5B
$16.5M / $24.5B = 0.00067

The amount recovered by layoffs is only 0.07% of the endowment, a drop in the bucket. As the sign in the photo says, “HARVARD HAS THE MONEY!” Why must the employees feel the pain? Just accept the investment loss and get on with the 100-year plan.

I always assumed the Harvard “family” included the employees.

But the last time I looked, families, at least the functional ones, don’t throw sis or grandpa out on the street when times get tough.

The savings to the university here seem like a pittance. They certainly pale when compared with the pain Harvard is subjecting some of its “family” to.

Harvard is not the only institution trying to save itself by throwing people overboard, but somehow I expected more from one of the wealthiest and most influential institutions on the planet. My bad.

Hm. I notice no faculty (even visiting) or senior AdMin positions are being cut.

This is a typical Harvard response. Make those people at the bottom do more with less (fewer positions means more work for those who are left doing those jobs) while totally insulating those at the top. Yes yes, I know they had a wage freeze. So, OK, they did get affected in a small way—not totally insulated- but they all still have their jobs.

I guess it is understandable in a way since Harvard is in the business of research and education, and it would look even worse to start laying off some of its faculty. That would probably have even worse repercussions for its reputation and future.

However, it just doesn’t sit well with me that really NONE of those people are being affected by this situation very much at all, while those who do a lot of the WORK work at Harvard are losing their jobs.

This happened in the 90s when the janitors went on strike to get better health benefits. Harvard’s response then? Fire them all and subcontract the work to a company that paid no benefits! Remember that? I do.

Nice.

By the way, how about, you know, CANCELLING development of Allston? The whole thing is kind of a boondoggle anyway. The plan is to close the three Quad Houses and build three new ones in Allston so that students can be closer to the action. (They will, by the way, be just as far from the Science Center as The Quad is now.) That is just wasteful! When you have a fully functional, beautiful piece of property with history and tradition, with Pforzheimer, Cabot and Currier, why build something to replace it—- especially for dubious reasons?

Wasteful, wasteful, wasteful.

Plus, I don’t really get what’s wrong with the Harvard Law School physical plant as it stands. Are you honestly telling me that if it doesn’t expand then Harvard Law School—- HARVARD Law School—- won’t be able to compete anymore?

If they cancelled the Allson plan and sold that land, this would clear up a good portion of the budget shortfall.

Time to batten down the hatches and make do with less.

But people should be last on the list of things to cut, physical plant first.

10 endrant
20 goto 10

“The faculty ranks have not been affected by either action.”

And this statement says it all….

I agree with both the criticism of the the apparent immunity of the Harvard Fund managers and agree strongly with the last two comments. The state of AZ has a “Rainy Day Fund” which is to be available at times like this when annual revenues are down. Given the immensity of the Harvard endowment a “Rainy Day” should not cause Harvard to even consider contributing to the nations unemployment numbers at this time. If Harvard cannot show some loyalty and compassion toward its employees, then who should?

I understand that President Faust has wanted to keep a low profile after the problems of her predecessor, but more transparency re financial decisions is called for. Both the employees who were fired (I note a tendency to avoid that word) and the residents of Allston deserved better. I join many others who have called for a sense of community that uses shared sacrifice to approach it’s problems. In addition to relatively low percentages of all salaries being foregone to enable the avoidance of these firings, a more punitive loss of salary for the investment “gurus” might contribute.
I have no way of knowing how much internal discussion of alternative possibilities took place or which members of the community were involved, but President Faust and her administration have not made their case to the public. It again looks like “Imperial Harvard” acting with relative disregard of the little guy.
Judy F. Rosenblith, PH.D. 1958

Although a 30% decrease in the endowment is certainly a very significant loss, it is also important to note that the endowment, as of June 2008, was 36.9 billion dollars. So now it’s down to about 24.6 billion dollars. That amount is still much higher than the endowments of many other universities. So, although the percentage loss is significant, the remaining amount is not particularly worrisome.
Laying off the people who are already receiving relatively low salaries (administrative and clerical staff) results in requiring the people who are receiving higher salaries to increase their time spent on the tasks that had been handled by these staff. So, for every administrator who is let go, some faculty member who would, ideally, be writing articles and doing research or teaching to enhance the reputation of Harvard, is going to spend more of their time trying to figure out how to submit billing, or schedule meetings with multiple participants, etc. Thus, this layoff not only hurts the people being laid off, but decreases productivity of the remaining faculty and staff.
If this layoff had a substantial impact on decreasing the financial concerns faced by the university, there might be some merit to the layoffs despite the costs to performance of remaining staff and faculty. However, it appears that this layoff will have quite limited impact on the financial status of the university, as it accounts for a very small proportion of the budget. At the same time, the layoffs will significantly impair the productivity of faculty and staff at the university, as well as decreasing the morale of remaining faculty and staff. (As well as putting many people out of work).
The layoff plan just doesn’t make financial, or scientific, sense.

Hello again:

I just wanted to share with other members of the Harvard Community some additional perspectives of the present situation:

1) Harvard may be increasing the costs of the unemployment payments it is required to pay the State and if the individuals cannot quickly find new jobs is forcing Massachusetts taxpayers to bear the burden of its policies — which make no economic sense in any event. The Commonwealth of Massachusetts’ finances are in bad shape and raising taxes would be a burden on many taxpayers at this time.

2) How can Harvard seek alumni to contribute to the institution under these circumstances? Many alumni have seen their (and their parents’) retirement portfolios shrink over the last year. There are many deserving charities in the world — Harvard doesn’t even rank in the top 50.

3) Why not ask Harvard faculty, staff and alumni to contribute to a fund to preserve these jobs? Many of the individuals who have lost their jobs will suffer large non-economic costs (as will their families).

4) If a cashier at the COOP was short $50 dollars a week over a three-week period, they would likely lose their jobs. Why don’t those who have earned large incomes managing Harvard’s portfolio over the years take the initiative and pay to Harvard sufficient money to keep the 275 jobs. The more one earns or the higher one gets in a bureaucracy, the less accountable they become.

5) Perhaps if we polluted more and contributed to an increase in the speed of global warming, then Harvard could save enough money in utility costs to offset the cost of the salaries and benefits of the 275.

* * * *

I’m a Harvard clerical worker (holding the letters O and F in the photo above). Sincere thanks to all who support Harvard’s workers. Still, I can’t help being struck by the narrow ideological limits of the discussion, here as in every academic setting, when the rights of workers are at issue. Why isn’t the legitimacy of the wage-labor system itself, i.e.capitalism, ever questioned? —The flip answer is of course that this is the U.S., not Europe or Latin America. But I think the deeper explanation is in the failure of liberal education to encourage real critical thinking about the power relations we live under (or at the top of, as the case may be). Maybe Marx’s theory would be as widely accepted as Darwin’s or Freud’s, if it weren’t politically off limits. Maybe the phrase “class warrior” wouldn’t be merely an insult hurled by conservatives at liberals, who scurry to deny the charge. Well, stay tuned in the terrible times to come…

Ed Dupree
member, HUCTW

I am a Harvard staff member. I have never been a socialist or avid union type. I work hard, and though I’ve never made a lot of money, I have been treated respectfully and have an excellent benefits package. I read the article with interest. However, it only shows one perspective, that of the regretful harbinger of bad news to lay on the heads of the unfortunates, while trying to explain to the rest of the world how this has come to pass, without losing face.

Nobody has elaborated upon the hiring freeze instituted last December which will soon be lifted. Believe me, it is affecting faculty, staff and students in terms of loss of productivity, stress, and anxiety, and at every turn the Administration is trying to heap more work on fewer bodies. Essential business is often slowed to a crawl. Combined with the stress of looming layoffs, it has been a difficult season.

There is no sense of shared commitment to these extreme measures, when the upper administration has announced proportionately skimpy (any?) layoffs from its ranks.

It is rumored that most of the jobs that will be “unfrozen” will be term positions; in other words, the hapless “new” employees (many of them the recently-laid off) will have the privilege of applying for a job that may not be there in a year or two. Also, these jobs will likely have hours hacked off or more duties stuffed into them.

Additionally, if existing units and departments are consolidated in the vaguely-mentioned restructuring plans to be considered going forth, the workers who are here will essentially be pitted against each other in the next rounds of resultant layoffs. So while it is almost a relief to know the cuts are finally here, there will be more of them to look forward to.

I am mystified as to why this has to happen at all. Picking on a group of cooks (breakfast cooks laid off from the Cambridge campus this spring), cleaners (cleaners laid off from the Harvard Medical School campus earlier this year), staff, and lower-level professional staff seems a bit rich when nobody can come clean with the real numbers lurking beneath the balance sheets.

Yes, $10-12 billion loss is a lot of money, and staff and their benefits incur real costs. But Harvard still has money.

It is sad to see this come to pass.

Sincerely,
RT

I feel bad for the 275 workers who are losing their jobs during this tremendously challenging financial time. However, there are some other issues that need to be considered.

First, the Harvard endowment is staggering by comparison to every university in the country. That speaks to the intense dedication of the University’s benefactors. It also speaks to the investment prowess of the managers of the endowment. The same blend of risks that generated market leading returns for years caused losses. Even with the losses, the endowment is far bigger than most could ever imagine due to strong prior management.

The problem at Harvard is one that seems to run rampant in education and government. Those running daily operations seem unable to exercise fiscal restraint. There is a strong draw to spend it while you have, and no one ever wishes or is willing to scale back when necessary. American universities have been on an unconstrained spending spree for decades, with annual tuition increases grossly outpacing the rate of inflation. Even Harvard Magazine cited the fact that while private college tuition consumed 14% of the median income in 1950, by 2005 it exceeded 45%! As a parent with two children in private colleges, the challenge of funding this appetite for spending is duanting.

I’m sure my perspective is unpopular, but I believe universities have been spending beyond their means for decades. There are many wonderful and important things that this spending has enabled; however, now is the time that reality must prevail. I can’t speak to the choice to reduce employment in any area or to discontinue any programs. I only know the University needs to move with haste to reset its spending to reality.

The article kicks off with 275 and “symbolic”.

- Yes, it is symbolic. Harvard still has a huge endowment. The proportion of employees is small. Furthermore, the total costs of the affected employees are likely small.

- Is this an excuse for executing staff evaluation and replacement that should have been done before? If so, doing it during a severe recession just makes it worse for the fired employee (and also for the manager who has to deal with the perceptions of surviving and observing employees — its about more than just two people). It would indicate a lack of courage in management.

- If it really is necessary, not symbolic, and if it really is driven by “business needs”, and not “opportunistic and cowardly payback”, then there is a whole sequence of possible actions that can be taken instead, including:
benefits reductions,
reduced work weeks
reduced replacement hiring
(temporarily) reduced salaries

If explained well, and shared by ALL, with no bonuses for pushing them through, temporary salary reductions can be done. They can even be supported by the affected parties, even if disliked. I was part of management at a company that temporarily cut salaries 20%, and that restored salaries when the business was on better footing.

As I understand it, the drop in the endowment brings it down to about 24 billion dollars. Let us leave aside for the moment the fact that no other university endowment even comes close to this. When I began my doctoral work at Harvard, a little over a decade ago, I recall reading that the endowment at that time stood at about 10 billion dollars. No one was being laid off. Granted, costs in some respects have probably gone up since the late 90s — but by that much? And granted, the university has to live on a draw from this endowment, and one doesn’t want to kill the tree that bears the fruit — still, this is about as rainy a day as there is going to be financially, and could one not spare some of those fund as an alternative to laying off staff (which seems to mean, as some have pointed out here, going after the most vulnerable and least well paid). Probably there is something here I have failed to grasp, but the whole matter does not seem to speak well either for the management or the commitment to justice of the university.

Having been a senior adminstrator in FAS for several years, I felt that staffing was far from lean particularly in departments with the latitude to rely on endowment distributions. These departments were incredibly difficult to negotiate with in thinking about core functions, skills and relevant staff, as most financially accountable operations would be.

Layoffs are terribly disheartening yet many areas through FAS were so excessively staffed as to be disfunctional and truly kafkaesque. Frequently new staff positions were created, rarely if ever did departments think rationally about labor requirements or phasing out unnecesaary positions. Typically the burden of layoffs falls on the lower paid staff. The layer of administrators earning well over $100K at the dept level is staggering and absurd. Regardless of the current economic imperative, this is the functional area that should have been closely reviewed for common sense. Also the archaic structures of depts neither serves students nor financial accountability (why both english and comp lit?Could there be a modern language silo that incorporates Slavic, Romance and Germanic?). Yet these structures stand alone and drive up admin costs unnecessarily.

It was surely time for reassessment. Too bad that it could not have been done gradually and rationally over several years.

j

I am an HBS graduate, now retired from a management position in an engineering Co and working on a MA in History at the Sorbonne.
I sympathize with the concerns of the laid-off workers but there is not much I can do, and, Harvard being Harvard, I would expect efforts being made to find replacement jobs elsewhere for them .
My comment is focused on the Arts Departments at FAS and a response to Commentator #23 (jlk;’09.06.23). I do not know the inner workings of the Arts Departments at Harvard, but I have some experience of those of the Sorbonne.

Commentator #23 says that the FAS departments are incredibly difficult to negotiate with. This side of the pond, we have had a five month strike of the Professors (relayed by students a few weeks after the start) about a new program for evaluating the Professors at French Universities. It seems that managing U* Professors is difficult everywhere…

As for the fragmented nature of the FAS departments, their top heavy structure and the lack of phasing out of unnecessary positions, I’m afraid it is in the nature of a FAS to operate like this.

Here, we suffer from a reverse evil : The Sorbonne is run out of tradition, and each Professor is king in his realm - although as soon as the first Euro is to be spent he/she instantly morphs into an indentured servant. We have practically no administrative structure (but for a few bean counters) and no organization to speak of.
As a result the overheads are low -maybe the lowest on this planet- but I believe that it would be more efficient for the Sorbonne to add one or two layers (provided they be student- and/or research- oriented).

To conclude this comment in response to Commentator #23 :
A strong FAS department is the ultimate luxury of a developed nation. Although Administrators are expected to try hard to rein it in, they are not expected to fully succeed; and God forbid that they would: the Departments might become motionless and dying from too much restraint.

I sincerely wish that the FAS Departments at Harvard shall not be the prime victims of the current crisis

It seems that Harvard (and donors stipulating how funds are being used) values material over human wealth. I was told that one of the more recent biology research buildings cost a billion dollars, when times were good, without delivering a corresponding improvement in the facilities other than luxury (I was a biology major, so this is not to criticize the need for scientific research, but rather, how money is spent). And now, low-cost salaries are being dumped.

At my state-funded university (which probably has as much money as Quincy House) faculty and staff (and all state employees) have taken up to a one week furlough in pay. The lowest paid staff have had to take 1 - 2 days, the highest paid faculty and administrators have had to take 5 days.

I imagine this comparatively egalitarian solution has evaded Harvard for the fear of the impact on its reputation and prestige. I think Harvard has enough prestige and recruitment draw that it can spare some of it to protect the most economically vulnerable workers who do so much to make the university such a comfortable and productive environment.

These are serious economic times and few will remain unscathed. Though the layoffs represent a small statistical percentage of the Harvard workforce, the layoffs will be devastating to the people who have been laid off. No institution of higher education should teach the immoral lesson that such symbolism is worth it.