When significant change is approaching but has not yet materialized, there is an odd, unsettling silence that descends upon institutions. You might sense something similar when you stroll through Harvard’s Faculty of Arts and Sciences today: a conflict between the institution’s timeless marble and mahogany design and the very contemporary financial reckoning that is currently taking place behind closed doors.
The figures are not nuanced. A structural deficit of about $365 million, or roughly one-fifth of FAS’s total yearly operating budget, is what the company is facing. It’s not a terrible year. It’s not a hangover from the pandemic. A faculty committee identified this issue back in 2021, but the leadership failed to act quickly enough to address it for institutional and political reasons. The employees are now the first in line to pay the bill since it has become due.
This summer, up to 25% of FAS employees may lose their jobs. The layoffs of three senior divisional administrators have already been confirmed. Seven new positions are being sought internally as part of a restructuring plan that would combine departments, centers, and institutes into common administrative “clusters.” People at Harvard are aware of the irony: the company is simultaneously eliminating jobs and adding new ones, a sort of organizational surgery that appears more organized in a PowerPoint than it actually is.
And then there’s the McKinsey detail, which caused a lot of people to take notice. For advice on this restructuring endeavor, Harvard paid the consulting firm at least $250,000. Although the amount isn’t huge by McKinsey’s standards, it has symbolic significance for an organization that has one of the biggest endowments in the world. Watching the university spend a quarter of a million dollars on outside consultants while getting ready to give walking papers to seasoned administrators seems to have startled some faculty and staff.
It is worthwhile to take a moment to consider the underlying cause of all of this. Since endowment income accounts for more than half of FAS’s revenue, it is particularly vulnerable to the federal excise tax on university endowments, which increased from 1.4 to 8 percent. You can see why Dean Hopi Hoekstra has called for “decisive, long-term action” rather than another round of belt-tightening when you consider the uncertainty surrounding federal research funding, where new grants, agency budgets, and indirect cost recovery rates are all still uncertain.
According to the Task Force on Workforce Planning, they have been listening to the community for months. They allegedly discovered an administrative structure that had become cumbersome over time, with redundant procedures, hazy decision-making boundaries, and few career paths for employees. It remains to be seen if the suggested cluster model truly resolves those issues or merely reorganizes them. Large institutions can solve the organizational chart through reorganizations while maintaining the underlying culture.
Observing all of this makes it difficult to ignore how many fronts FAS is handling at once. 70% of faculty members recently voted in favor of capping A grades starting in the fall of 2027. After drastic cuts, Ph.D. admissions are being partially reinstated. Hiring decisions for faculty are now influenced by a diversity push. The organization is replacing ChatGPT Edu with Claude from Anthropic. Change is coming from all sides at once, and those in charge of managing it could soon see their own jobs reorganized or eliminated.
Beyond Cambridge, what Harvard does next is significant. Perhaps anxiously, universities around the nation are watching to see if one of the richest and most prestigious institutions in the world can successfully reorganize itself without shattering the culture that initially made it significant. It’s still unclear if this plan is audacious enough to close the gap or if another faculty committee will convene in a few years to identify the same fundamental risk.
