Covid-19 Sparks B-School Budget Cuts: Survey

Departmental budgets have endured widespread cuts as business schools around the globe grapple with the coronavirus pandemic, according to a new survey from the MBA Career Services & Employer Alliance.

As the pandemic extends into its seventh month, MBA CSEA, a nonprofit association for those working in graduate business career services or employing MBAs, released its latest snapshot of the COVID-affected state of world graduate business education. The new survey shows the internal effects of months of lockdown, pared-down curricula, decimated travel, and virtual instruction: Two-thirds of the overwhelmingly U.S.-based respondents said their departments’ budgets have been slashed, while a slim majority said departmental vacancies are being left unfilled.

The report comes as Dartmouth College’s Tuck School of Business has announced the layoff of 18 staffers. In an email to the Tuck community, Dean Matthew Slaughter said he expects the school to suffer a more than $3 million deficit due to the COVID-19 crisis. “I want each colleague to know that the financial steps we are taking have been carefully considered and distilled to what is absolutely necessary,” wrote Slaughter, who said he is giving back 20% of his salary.  “The pandemic has substantially affected our school’s financial situation, reducing revenues while also requiring us to make investments for the continuity of our academic mission in a virtual environment,” Slaughter said.

Back in April, Harvard Business School said it expects revenue to plunge by nearly $115 million, a prospect that will turn an expected operating surplus of $43 million into a loss of $22 million in fiscal 2020. To manage through the crisis, Dean Nitin Nohria noted that compensation for faculty and exempt staff will be held flat next year. They wrote that they looked carefully at planned capital projects and cut the school’s budget by more than 75%.

65% SAY BUDGETS HAVE BEEN CUT; ONLY 1% SAY THEY HAVE GONE UP

MBA CSEA’s field survey was conducted from August 27 to September 2. Of the 110 respondents, 83% were from North America, 13% from Europe, 3% from Asia-Pacific, and 2% from Africa. According to Megan Hendricks, executive director, MBA CSEA members work in the career services offices for B-schools, and the actual respondents are career center staff — “directors, associate directors, career coaches, etc.”

In perhaps the most striking finding of the survey, nearly two-thirds of survey respondents (65%) said their departmental budgets had been reduced as a result of the ongoing pandemic. Slightly more than one-third (34%) said budgets have been unaffected, while just 1% said budgets have actually increased.

How severe has the belt-tightening been at the schools where budgets gone down? “We did ask for schools to write in the amount their budgets were cut, but unfortunately we didn’t get enough responses to be able to derive an average or median,” Hendricks tells Poets&Quants.

MOST SAY OPEN POSITIONS ARE BEING LEFT VACANT

Asked whether their school as a whole has seen pandemic-inspired “restructuring,” 44% said they have not experienced a significant amount and do not expect it to happen. However, 26% said that while there has been no restructuring, there have been hints that it might occur, and another 24% reported minor restructuring. Only 6% said they have seen major restructuring across their school.

In the survey’s only other question, about more specific departmental restructuring, a majority of respondents (53%) indicated that open positions within their department are not being filled at this time. Another 28% responded that there has not been any restructuring and assurances have been given that it is unlikely to occur; 18% said no restructuring, but hints that it may happen. Nine percent said services have been consolidated, resulting in the merger of positions within the department, while 8% reported restructuring involving staff furloughs.

Another 7% each responded that services have been consolidated resulting in merging of services or positions with other departments, and that staff layoffs have occurred.

Past MBA CSEA surveys released during the coronavirus lockdown have shown the pandemic negatively impacting recruitment, even to the point of hiring freezes.

DON’T MISS: SURVEY: 9 IN 10 B-SCHOOLS HAVE SEEN MBA HIRING FREEZES or COVID-19 SURVEY OF B-SCHOOLS SHOWS RECRUITMENT STANDSTILL