Ethical Perspective:

From an ethical perspective, the decision to cap the salaries of investment managers may be seen as a way to promote fairness and equity within the organization. It ensures that top earners are not taking an excessive share of the profits and that compensation is distributed more evenly among employees. However, from a utilitarian perspective, the decision may also be seen as limiting the incentives for high performers and potentially hindering the university's ability to attract and retain top talent in a competitive job market.

Likely Outcome:

The likely outcome of capping salaries was that top investment managers would likely seek opportunities elsewhere, where they could earn higher salaries and potentially achieve better performance results for the organization. This is because investment management is a competitive field, and top talent is likely to seek out environments that provide the best opportunities for growth and reward.

Better Handling the Situation:

The Harvard administration could have handled the situation better by adopting a more transparent and collaborative approach. Instead of unilaterally imposing salary caps, they could have engaged in open discussions with investment managers to understand their concerns and explore alternative solutions that would address fairness and equity while also considering the competitive nature of the industry. This could have involved setting performance$-$based incentives or implementing a tiered compensation system that rewards high performers while ensuring fairness for all employees.

Final answer: In summary, while the decision by Harvard University to cap the salaries of its investment managers may have been motivated by ethical considerations, the likely outcome of top managers leaving for other opportunities and the potential impact on the university's ability to attract and retain top talent suggest that a more nuanced and collaborative approach would have been preferable.