MBA News: HBS to Cut Costs and Increase Class Size to Combat Downturn

In an open letter to HBS alumni, published on the HBS alumni Web site, HBS Dean Jay Light discussed the impact of the financial crisis on the school.

Highlights of the letter include the following:

  • MBA Applications and Doctoral Applications are up and the pools are “exceptionally strong.”
  • Executive Education (typically a major revenue driver at top-schools) has seen postponements and cancellations.
  • Job postings for both first- and second-year students are down significantly.
  • Alumni giving is down significantly.
  • HBS has identified areas where it can reduce its expense and intends to do by 5–10%
  • HBS plans to increase the class size of the MBA program to seize a “revenue opportunity” (even though job postings are down).

In early December, mbaMission attempted to not be alarmist but predicted that MBA programs would face problems because of shrinking endowments. HBS follows Stanford in announcing cutbacks as a result of the downturn but is the first to announce an increase in class size as a revenue-generating step. We will follow this story, yet hope that there will not be a story to follow.

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