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By late fall, it had become clear that our initial fiscal 2009 revenue projection was too bullish. It had also become clear that—even with skillful investment management and a rebound in the markets—it would likely be a long time before the University endowment recovered its steep losses.
HBS acted immediately to adjust to this new budget reality, imposing restraints on staff hiring, limiting the use of overtime, cutting back on the use of temporary employees and contractors, trimming catering and utility costs, and freezing salaries. At the same time, faculty and staff took the initiative to reduce spending in myriad ways across the School. The cuts at HBP were extensive, driven by aggressive expense management as well as reductions in variable costs as the publishing business contracted.
We also reduced administrative staffing levels. A combination of normal attrition, voluntary early retirements, and layoffs effective July 1, 2009, has pared the size of the School's fiscal 2010 staff by 100 full-time equivalents (FTEs) or 8 percent. Those employees facing layoff were offered enhanced severance benefits as well as extended outplacement services to help ease their transition to a new position in a difficult job market, whether within or outside Harvard.
The size of the HBS faculty increased in fiscal 2009. The School ended the year with 228 faculty full-time equivalents (FTEs), up from 219 in fiscal 2008. However, the School begins fiscal 2010 with 10 fewer faculty FTEs than in fiscal 2009: fewer new faculty were recruited than planned, and short-term appointments—as visiting faculty or senior lecturers, for example—were lower than budgeted.
In addition, reflecting the difficult job market our MBA students were facing, the School committed additional career services resources to help with coaching, networked job searches, and other placement initiatives in fiscal 2009. As a result of these efforts, 87 percent of 2009 graduates seeking employment had accepted a job offer three months after graduation. This compares with an average of 93 percent during the prior five-year period.