CORRECTION APPENDED

Harvard Management Company—the internal investment group charged with managing the University’s endowment—announced Friday afternoon that it will reduce staff levels by roughly 25 percent in the coming months.

In an effort to “re-balance and re-engineer the organization,” reductions will include investment professionals as well as “back office” and support personnel, according to University spokesman John D. Longbrake.

HMC—which currently employs more than 200 people—has faced heightened scrutiny in recent months as University officials prepare for a 30 percent decline in the endowment by June 30.

Harvard’s endowment, valued at almost $37 billion last June, was reported to have shrunk by 22 percent in the four months leading up to December—though other market indices posted even worse returns, with the S&P 500 falling 24.6 percent in the same period. [SEE CORRECTION APPENDED]

HMC chief executive Jane L. Mendillo wrote in a statement that an analysis conducted by the firm’s management team to evaluate the size and structure of the company in light of current market conditions had concluded that “the time was right for a significant rebalancing of our staff and our functions.”

But she added that the analysis was conducted more as a standard procedure than as a response to unprecedented losses in the endowment.

“This type of thinking and rebalancing is done, and should be done, continuously, in organizations that are and that want to stay at the top of their field, through all kinds of market cycles and economic conditions,” she wrote.

HMC has recently attracted renewed criticism from some alumni, who called for the University to withdraw the multi-million dollar bonuses paid to top managers in a letter written to University President Drew G. Faust.

In 2003, the same group of alumni from the College’s class of 1969 led a charge to reduce what they saw as exorbitant salaries, ultimately resulting in the departure of several managers including long-time CEO Jack R. Meyer.

The alumni had also voiced concerns about the cost-effectiveness of HMC’s reliance on expensive internal investment managers, arguing that other schools—including Yale—outsource large portions of management work to hedge funds and external investment firms and achieve comparable endowment returns.

But Mendillo—a 15-year veteran of the group and the former manager of Wellesley College’s endowment—wrote that HMC had no plans to change the current allocations.

“The business model at HMC—the internal platform combined with a selectively chosen external set—is the right one for our future,” she wrote.

—Staff writer Peter F. Zhu can be reached at pzhu@fas.harvard.edu.

—Check TheCrimson.com for more updates.

CORRECTION

The Feb. 6 news article "HMC To Cut Staff by 25 Percent" incorrectly stated that the announced 22 percent drop in the value of Harvard's endowment was for the four month period leading up to December. In fact, that figure referred to the four month period ending Oct. 31.