FAS Says it Will Recoup McKinsey Fees in Under Six Months, Declines to Disclose Costs

The Faculty of Arts and Sciences expects to recoup its spending on management consulting firm McKinsey & Company in less than six months following a sweeping staff restructuring, FAS Dean Hopi E. Hoekstra said at a Tuesday faculty meeting.

Last month, Hoekstra estimated that the restructuring — which eliminated roughly 150 staff positions across the FAS — would save the school $20 million annually and confirmed that the school had brought on multiple consultants from McKinsey & Company to advise on the changes.

At Tuesday’s meeting, she revised the annual savings estimate down to $18.5 million and said that consulting fees would be recouped within six months of operating under the new model. Assuming those savings accrue evenly, the timeline would imply consulting fees of less than $9.25 million.

The figure is substantially higher than the $250,000 in payments to McKinsey that The Crimson previously reported, but does not go beyond the pale of the company’s deals with other universities: The University of Florida reportedly signed a $4.7 million contract with the firm in March 2023, and the University of Arizona shelled out $14 million in payments made public in 2019.

At the FAS, the consultants — many of them Harvard graduates themselves — interviewed dozens of affiliates to inform a plan that would group academic units into “clusters” with shared administrative functions, including human resources and finance.

Hoekstra declined to provide a final figure for the McKinsey payout at Tuesday’s meeting, saying that the school had signed a vendor contract with restrictions on what it could disclose about costs.

She added that most one-time costs from the restructuring — including severance payouts and healthcare costs alongside consulting fees — would be recouped within 18 months. At the projected annual savings rate, that period would correspond to nearly $28 million, though Hoekstra did not disclose the total one-time costs.

Hoekstra said the structural savings could help combat a decline in the FAS’ unrestricted funds, which play an important role in covering graduate student budgets, financial aid, and maintenance, among other functions.

She shared the details after a lengthy series of questions from Physics professor Jennifer E. “Jenny” Hoffman, who also pushed Hoekstra on the total savings from the restructuring last month.

Alongside figures on the total severance and healthcare payouts, Hoffman demanded that Hoekstra provide a tally of staff who were laid off without choice and those who chose a layoff over a job change or demotion, as well as a breakdown of their years of service and job grades.

Hoekstra did not answer those questions, saying that she did not have the necessary data on hand.

The Crimson estimated a total of 149 direct layoffs this summer from disclosures mandated under the Older Workers Benefit Protection Act, though those documents did not encompass every position or job change under the restructuring. At Tuesday’s meeting, Hoekstra also revised the FAS’ earlier count of 165 eliminated positions down to 150.

Those layoffs caused a particular stir in the Physics department, which lost several core staff members — including a longtime grant manager who oversaw $150 million — in the reshuffling.

“The layoffs preferentially targeted our very best staff — those who had served the university for decades, and who had been promoted for their excellence,” Hoffman said at the faculty meeting before asking her questions.

Hoekstra pushed back on Hoffman’s assessment in her response.

“There were no targeted layoffs that targeted people who were senior staff,” she said.

—Staff writer Abigail S. Gerstein can be reached at [email protected] and on Signal at abbysg.97. Follow her on X @abbysgerstein.

—Staff writer Amann S. Mahajan can be reached at [email protected] and on Signal at amannsm.38. Follow her on X @amannmahajan.