Harvard Management Company Case Study Review. Book Report.

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Harvard Management Company Case Study Review
Harvard University was established in 1636 and the start of its endowment plan played a significant role in the institution’s financial structure. Harvard Management Company (HMC) was founded to offer proper financial management for Harvard University in 1974. Indeed, it deals with Harvard’s pension, trusts, endowment, working capital, and assets. Currently, HMC has 185 employees, among them, 45 are investment professionals. The organization has a yearly operating budget of about $42 million (Harvard Business School 2). At the top-three leadership positions of the HMC are the president, board of directors, and chief executive officer. The primary assets managed by the HMC include trusts and gifts, domestic equities, external management, emerging markets, foreign equities, commodities, foreign, and domestic bonds. The paper summarizes the HMC case study and portrays how the policy portfolio has enabled the organization to succeed in the management of finances of Harvard Corporation.
Jack Meyer joined HMC in 1990 and has made significant contributions to the management of the Harvard Organization. However, like other firms, HMC has its fair share of issues that Meyer was thinking about when he gazed out from his office window on the fifteenth floor facing Boston Harbor. Since Meyer introduced the policy portfolio at HMC, the board of directors usually review it annually to ensure that it is leading the organization in the right direction. Besides, the HMC board modifies the policy portfolio so that it can align with the organization’s short and long-term objectives. Specifically, the primary reason behind the introduction of the policy portfolio was to balance Harvard’s risks and the long-term endowment returns. In other words, the portfolio mix is the cornerstone of endowment management at Harvard (Harvard Business School 1). Moreover, Harvard’s policy portfolio measures the actual performance of the organization, and it is used for the calculation of incentive compensation. Therefore, the HMC board review the portfolio to ensure that it addresses the issues at hand since its failure might lead to poor management of Harvard resources.
The key findings of the HMC case study reveal that Meyer’s policy portfolio has helped the organization to overcome numerous problems that are encountered by Harvard University. Some of the common issues include supporting research and education, the need for renovating and maintaining the aging physical structures, increasing faculty members’ salaries, restraining tuition to retain the quality of education, and raising students’ financial aid. Harvard has a reputation for providing quality knowledge and skills to learners, which is an objective achieved due to the proper management of its resources. In particular, Harvard Corporation started fundraising in 1993 to obtain $2 billion to relieve the financial pressures that the university encounters (Harvard Business School 2). Meyer had a great desire to increase the spending rate so that the organization can meet its objectives without straining the available resources. Nevertheless, money has ...