Stanford GSB Endowment losses mean 49 staff get fired!

STANFORD LAY_-OFFS. hmmmm, looks like reality is biting B schools, as well as applicants. Endowment may soon become a key driver of b school quality, and perhaps another factor to be added to the endless HBS versus Stanford debate, altho there are many ways to measure endowment beyond just size, including endowment per student, etc., endow. growth, and prob. an unanswerable metric, endow. pipeline. The fact is, as Booth/Chicago  windfall makes clear, an endowment can gain 20, 30 percent w. one key donation, sorta out of the blue.  Altho the chances of $100M+  gifts are now also becoming less likely.

Stanford culls 49 staff

By Della Bradshaw

Published: February 5 2009 12:31 | Last updated: February 5 2009 12:31

Stanford has become the first of the top US universities to announce lay-offs as part of its bid to rein in expenditure to deal with an expected shortfall in endowment income. This year the school expects a $15m – 10 per cent – shortfall in income.

Perhaps even more significant is that because endowment income is calculated over several years, business schools may be hit more significantly next year and in 2011, even if the economy improves. ”We’re essentially looking at an endowment revenue decline for three years,” according to Dan Rudolph, senior associate dean for operations at Stanford.

As a result, 49 staff members (12 per cent) have been laid off at Stanford GSB with a further eight people going on to reduced schedules. Cuts in travel, food, library services, marketing activities and printing have also been announced.

The announcements are a sad end to Bob Joss’s 10-year tenure as dean of Stanford, during which time he oversaw what was arguably the most radical overhaul of any two-year US MBA programme. ”This was the most painful decision I have had to make in my nearly 10 years as dean,” he said in a statement. ”We regret the need to lay off staff members who have been dedicated to the school and its educational mission.”

What is certain is that where Stanford leads, other top business schools will follow. Many have already announced pay freezes for both staff and faculty. At some business schools, faculty departments are rushing to fill tenure and tenure-track appointments in the belief that these positions will disappear if they are left vacant.

As a result, the US endowment model, widely lauded as the most sustainable funding model for business schools, is looking shaky. This comes at a time when most US schools were implementing expensive plans to increase their global reach in a bid to counter the growing popularity and reputation of business schools in Europe and, in particular, Asia. In last month’s Financial Times Global MBA rankings, there were three Asian schools in the top 20 and one, Ceibs in Shanghai, in the top 10.

www.gsb.stanford.edu

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