COVID-19: Harvard, MIT announce salary, hiring freeze and leadership pay cuts
New York, Apr 14 () Prestigious US educational institutions Harvard University and Massachusetts Institute of Technology are implementing salary and hiring freeze and their top leadership will take pay cuts as part of "hard choices" to control costs in a tough economic environment resulting from the global coronavirus pandemic, according to a report.
The report in The Harvard Crimson, the daily student newspaper of Harvard University, said that Harvard was "instituting an immediate university-wide salary and hiring freeze, cancelling or deferring discretionary spending, and considering deferring all capital projects."University President Lawrence Bacow announced in an email to Harvard affiliates on Monday that he along with Executive Vice President Katherine Lapp and University Provost Alan Garber will each cut their salaries by 25 per cent.Advertisement
The report added that senior school administrators, including the deans of Harvard's 12 schools, their vice presidents and vice provosts will also be either reducing their salaries or contributing to a support fund for employees experiencing hardship.
On the possibility of layoffs or furloughs, the three wrote in the email that Harvard was still working to "gain a more complete picture" before deciding whether to take such action."We will be scrutinizing the FY21 budget to determine what other steps are necessary to respond to the financial impact of the pandemic on our operations. We will communicate with you when more information is available," the report quoted them as saying.
Bacow said Harvard will tap into its endowment to address financial concerns, but its ability to do so was limited.Harvard's endowment - its largest financial asset - consists of more than 13,000 funds, according to the university's website.In the previous fiscal year, the endowment provided USD 1.9 billion of funding to university operations, consisting of more than a third of Harvard's total operating revenue for the fiscal year. By the end of that fiscal year, the endowment's value stood at USD 40.9 billion, the report added.Advertisement
In a letter sent to the MIT community, President L Rafael Reif said the institute cannot know now just how serious the global financial situation will be in Fiscal Year 2021.
"But we should expect hard choices. So we are preparing in advance by taking the following immediate measures to control costs, in a way we hope is sensible, prudent and fair," the president said.The top US institutions are implementing salary and hiring freeze and their top leadership to take pay cuts as part of "hard choices" to control costs in a tough economic environment resulting from the coronavirus pandemic.Advertisement
Reif said in order to conserve resources to support existing employees, MIT was pausing hiring except for essential personnel.
Along with Vice President for Finance Glen Shor and Acting Deputy EVP Tony Sharon, Provost Marty Schmidt will also provide detailed guidance to help all units rework their fiscal year budgets to reduce expenses and reflect anticipated additional savings from the hiring pause.MIT will also suspend merit increases for the coming academic year, beginning with those that would normally be awarded in July.Advertisement
Reif said that as the Institute's two most senior officers, he and the provost had decided to take a 20 per cent cut in compensation for the next twelve months.
The savings accruing from these cuts will go to support the MIT Staff Emergency Hardship Fund, which helps MIT employees experiencing sudden and severe financial distress.Members of the senior leadership team are also choosing to contribute a portion of their salaries in this period to support students and others in need in the MIT community, as well as the MIT research teams pursuing solutions to the larger crisis.Advertisement
Reif said that as compared to the 2008 financial crisis, the COVID-19 pandemic may be more severe in terms of potential financial impact."This time, the economic turmoil springs from a tragic public health emergency that has also caused dramatic changes in MIT's operations – with significant unknowns remaining on all counts. We must therefore prepare for the pandemic to drive reductions in many major sources of income for the institute: research grants, foundation funding, philanthropic support and the endowment," he said.Reif said in this global crisis, circumstances and forecasts change radically week to week and as the full financial picture becomes clear over the next few months, MIT may well need to take "additional actions" that affect the budget and the MIT community.Advertisement
On the possibility of layoffs, Reif said given the terrible state of the current job market, MIT feels a responsibility to avoid or delay as much as possible cutting costs by cutting jobs.
"That said, the year ahead may push many units at MIT to reduce or transform their operations, including asking that some staff respond with an openness to changes in their work and roles," he said.Globally, the coronavirus pandemic has kiled 119,666 people and infected almost two million people, according to Johns Hopkins University data. YAS MRJ
(This story has not been edited by Business Insider and is auto-generated from a syndicated feed we subscribe to.)