Harvard Pushes Early Retirement

Harvard will soon offer early retirement packages to staff members in the University’s latest move to cut costs and push back the possibility of layoffs, top administrators said yesterday.

The plan—which covers staff over 55 who have worked at the University for over 10 years—will be implemented in two phases. The first is aimed at non-faculty employees at the Faculty of Arts and Sciences and Harvard Medical and Dental Schools, Vice President for Human Resources Marilyn Hausammann wrote in an e-mail to all staff yesterday. The second phase, coming in March, will consist of identical programs at the University’s other schools.

The announcement comes as the University struggles to right itself after the endowment plummeted 22 percent in a four-month period from its June 2008 value of $36.9 billion. Since then, University officials have projected a 30 percent decline in endowment value by the end of the fiscal year ending June 30, 2009.

Discussions for offering a “generous” early retirement package had been underway since early December, when University President Drew G. Faust cautioned in a letter to the deans that Harvard would be taking a “hard look at hiring, staffing levels, and compensation.”

The University has taken a series of progressively stronger measures to reduce personnel costs—which make up 48 percent of the overall budget—starting with a hiring freeze on FAS staff announced in November, soon followed by a University-wide salary freeze for faculty and non-union staff in December.

Hausammann wrote that the program aims to “both offer generous incentives to qualifying employees who may wish to retire and help the University make progress in reducing overall compensation costs.”

At yesterday’s faculty meeting when the plan was presented, Faust emphasized that University officials must maintain a continued commitment to Harvard’s academic programs despite growing financial concerns.

“It is extremely important that when we make cuts, we do so with a large strategy in mind,” Faust said.

Similar retirement incentives for faculty are also under consideration, FAS Dean Michael D. Smith said at the meeting.

Such early retirement plans would allow the University to control compensation costs and reduce the possibility of staff layoffs.

Bill Jaeger, director of the Harvard Union of Clerical and Technical Workers, said workers nearing retirement would likely find the incentive package attractive.

But Jaeger acknowledged that employee retirement savings may have “taken a beating” in the last few months, meaning that those affected may feel the need to stay in the workforce for several years longer than planned.

Roughly 500 of the union’s members would satisfy the program’s age and term of employment criteria, Jaeger estimated.

It is unclear how soon University officials will be able to gauge staff response to the program, as federal anti-discrimination employment laws mandate that employees be given at least 45 days to consider such an offer.

The University’s most recent effort to contain costs harkens back to the 1991 economic recession, when Harvard created a similar early retirement program for all non-faculty employees.

—Staff writer Athena Y. Jiang can be reached at ajiang@fas.harvard.edu.

—Staff writer June Q. Wu can be reached at junewu@fas.harvard.edu.