Dean Hasler’s Position at the Haas School of Business

EXECUTIVE SUMMARY

Prior to the publication of the wall street journal article, 35 faculty and professors at the Haas School of Business were being paid extra, even though they were doing no extra work. The payments were made through a different program within the School at the request of the Dean. In total $648,000 was paid out in this manner. The university knew about this because of audit, however it did not take any significant action. The dean was not accused of benefitting personally and he was not reprimanded in anyway, nor was the case referred to law enforcement.

The decision was likely made to offer additional compensation in this manner due to weak controls in Berkeley’s accounting system. Using funds available for other purposes was the path of least resistance for the Dean to access this money and make the payments. It’s likely that the Dean had the help of at least one or two other staff members, as whoever issues payments and reconciles the books would have easily spotted a $648,000 discrepancy.

The Dean’s explanation was that these payments allowed him to give additional compensation to faculty where he otherwise could not have within the school’s existing budget. Haas School of Business paid on average 26% less than average, these payments closed that gap to 10%. The Dean felt that Berkeley’s long term reputation and therefore viability as a top tier program was at stake. Without attracting and keeping elite faculty Haas would erode in quality and slowly decline in the highly competitive rankings. Haas competes for elite faculty, and to draw elite students, with top tier, highly regarded, and well-endowed names such as Harvard School and Wharton

Given the competitive constraints the Haas faces, the Dean was in a very difficult spot. To keep a top ranking he would have to find a way to close the 25% percent pay gap between his highest paid faculty and the market level salaries they could pursue elsewhere. Misallocating funds from elsewhere in the school was the option he chose, and it turned out to be one of the least feasible options. It was unethical and could have led to legal action, it exposed accounting control flaws within Haas. Some better options could have included, asking the university for more budget in following years, asking the university to re-allocated the very same funds he re-allocating without permission, proposing tuition increases especially to in-state students who pay well below market price to attend Haas, asking for state subsidies as Berkeley is the flagship of the California University System.