In asset management, as in other endeavors, size really does matter.
Bigger is better. But growth in AUM drives growth in headcount and complexity; and that can overwhelm existing structures and challenge management.
A few weeks ago in "Crunch Time for the Harvard Endowment" we referred to HMC's hunt for a new "CIO" although, technically, the top job at HMC is "CEO."
In this niche that's often a distinction without much difference, and we tend to use "CIO" generically; but for Harvard there's a real challenge behind that equivocation.
A CEO, in proper corporate-speak, manages people, structure, and processes. A CIO, of course, develops and executes investment strategy to maximize returns.
The HMC board hopes to find a candidate who is both an outstanding investment strategist and a proven, effective manager - a CIO and a CEO.
Some major endowments have separate investment management companies reporting to their own boards. In addition to HMC they include Columbia's Columbia Investment Management Company, Stanford's SMC, Virginia's UVIMCO, Texas' UTIMCO, MIT's MITIMCo, Duke's DUMAC, the University of North Carolina’s UNCMC, and a few others.
At UTIMCO and UVIMCO, the boss has both the CEO and CIO titles. At MIT, Seth Alexander is styled "president." At SMC Robert Wallace is just CEO (they used to have a CIO as well). At CIMC Narv Narvakar is CEO, while Peter Holland is, technically, their CIO. Neal Triplett at DUMAC is "president and CIO." And at UNCMC Jonathon King is President and CEO. A rose by any other name...
But Harvard is unique among endowments not only in AUM, $37.6 billion as of June 30, 2015, but also in headcount. HMC has well over 200 employees, of whom about 60 are investment professionals, while none of the other major endowments have more than 70 total employees.
In that regard Harvard is a Gulliver among Lilliputians, and that fact complicate the search now in progress.
Classical organizational theory argues that management gets harder as a geometric function of headcount, not just arithmetic increase. The number of possible relationships, including conflicts, rivalries and miscommunications, increases much faster than headcount.