Memo to Harvard: Physician, Heal Thyself.

OK, I’ll admit it. I didn’t graduate from an ivy league institution. Probably closer to coastal bermuda league, but that’s beside the point.

Harvard University has just announced severe cost reduction moves as its endowment loses another 30%.

Cue violins… no, wait, kill the fiddles, guys.

Lest we fall into alligator tears here, realize that this endowment is now worth a paltry $25B (yes, Billion) dollars. I used to work for a man, Jerome Robinson, who would say “well, isn’t that just a nice, round number??” He was talking about single-digit millions, of course, but the concept holds true.

Harvard’s draconian cost cutting measures are taking them back to 2005 spending levels. Oh the horrors of it all — 2005 levels of spending??? So, you ask, why did spending increase so much in the four years since 2005??

Did enrollment increase? No, there’s been no significant increase in enrollment.

Did fixed costs increase? Not likely, excluding the 5-month spike in gasoline price we all endured.

What happened, then? Well, far be it from me to second-guess some of the best strategic minds in this country, but it seems to me it was simply mis-managed. They, like many in the financial world, found themselves with windfall increases in money, and… they spent it.

Now, of course, they aren’t cutting faculty, since faculty didn’t grow all that much (remember, enrollment didn’t substantially increase). No, they are using the time-honored tradition of cutting “overhead.” You know, clerks, professionals, administration, etc.

Unbelievable. Do those guys even read the books they put out? Does anyone there subscribe to that Harvard Business review? I can loan them some books of mine, since they seem to be short on dinero…

Save the company on the backs of secretaries and clerks. Wow, no one’s thought of that cool idea before.

But that’s just me…

KB

Kevin Berchelmann
http://www.triangleperformance.com/

Comments

  1. says

    Dr's are their own worst patients!

    I know this is no surprise to you as it is not to me. It would however make an interesting case study – Iwonder if HBR would publish it?? 🙂

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