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Like many small, private business schools, Dartmouth College's Tuck School of Business (Tuck Full-Time MBA Profile) in Hanover, N.H., relied on its endowment for its budget before the financial crisis hit in 2008, says Steven Lubrano, assistant dean of administration and chief operating officer at Tuck. The crisis meant fewer alumni and corporate sponsors contributed, and endowment returns took a hit. The school struggled with a difficult question: To lay off staff or not to lay off staff?
Knowing layoffs would have a big impact on employees and the small town of Hanover, where jobs were scarce even in good times, the staff rallied to come up with creative ways to cut back on spending and become more efficient, says Lubrano. In the end, he says, Tuck was able to trim costs by nearly 3 percent and avoid layoffs by centralizing the school's recycling system, which saves janitors seven hours per week in labor; creating financial centers, where a few people handle all the necessary paperwork for employee expenses; reducing mailed print materials from 55 to 10 per year; and reducing travel in favor of videoconferencing and other technologies.
"We told people their jobs were not at risk, but we had to change how we do things," he said. "Once jobs were safe, people were more willing to participate and offer suggestions."
Indeed, business schools across the U.S. had to practice what they teach by becoming leaner—not to mention more creative—to get through the thick of the financial crisis.University endowments suffered losses averaging 18.7 percent in the year ended June 30, 2009—their worst year since the Great Depression—and are just now beginning to recover. And with virtually every state in the union facing massive budget shortfalls, 43 have made cuts to higher education, according to the Center on Budget and Policy Priorities.
For some business schools, the solution to dwindling resources was layoffs and program eliminations. At Ohio University, the College of Business (Ohio Part-Time MBA Profile) on Nov. 12 suspended its full-time MBA program, citing "major budget challenges." The school has also cut two undergraduate majors with low enrollment, and had a number of B-school staff redeployed to other parts of the university, says Hugh Sherman, Ohio's B-school dean.
But like many other B-schools, Ohio didn't stop there. To create more revenue and respond to demand, the school expanded its executive education programs, increased its part-time MBA program from two cohorts to six, and increased recruitment of international students.
"Being businesspeople, there's a need for us to be strategists," says Sherman. "That's a different concept for universities, which like to think that you can service everyone. You can't."
To avoid layoffs and other drastic measures, many business schools opted for cuts that minimized disruption, sometimes shifting resources where they're needed more. For example, the University of Chicago's Booth School of Business (Booth Full-Time MBA Profile) didn't fill open positions, reduced the number of temps and contract workers, delayed expenditures on facility updates, and began requiring dean's-office approval for most travel—a change that forced staff to start looking for bargains, says Stacey Kole, deputy dean for full-time MBA programs at Booth.
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