Theoretically, business school is about gaining new skills and insights into business, meeting new colleagues, and learning the intangibles of becoming a manager. In other words, everything that’s in a typical admissions brochure. In practice, business school is about the business of getting a new job. Traditionally, an MBA from a prestigious business school has been a path to improved career prospects and a sizeable jump in total compensation. During an economic boom, many graduates from top B-schools such as Harvard or Wharton could expect seven or more job offers with each offer valued at more than $100,000.
With the economic slowdown in U.S. now spreading to Europe, though, many career placement directors at leading B-schools such as Chicago are now predicting an across-the-board 20-25% reduction in MBA hiring, with some high technology companies such as Cisco placing an unofficial moratorium on hiring until 2003. Some economists are now predicting an extended worldwide recession, which will further dampen MBA recruiting efforts. As one Wall Street Journal article commented, “The recruiting forecast for MBA students this fall grows darker by the day.” Given this note of pessimism and the concern voiced by many Russian applicants, below are five tips that will bulletproof MBA applicants from the slowdown in business school recruiting.
UNDERSTAND THE “FLIGHT TO QUALITY” EFFECT
Too many applicants assume that receiving an MBA from a top-tier business school is an automatic entrée to high-paying jobs in the corporate sector. Yes, an MBA does prepare one for a challenging position at an elite investment banking, consulting, manufacturing, or information technology company. But there are many external factors that shape the recruiting cycle for MBA applicants- especially since many post-MBA positions are considered “entry level” positions that are easily eliminated in the name of “cost-cutting.” In the boom years, an average candidate from a top B-school might expect anywhere from 4-6 job offers, and even graduates of lower-ranked business schools could expect at least 1-2 solid offers from prestigious companies. When the economic cycle turns (SEE GRAPHIC), however, these offers suddenly disappear. In essence, the top business schools are able to “crowd out” lesser-ranked rivals, based on their clout and prestige with recruiters.
Graduates of the “blue chip” MBA programs have a pronounced advantage, since overall, there is always a “flight to quality” during economic downturns. Companies still need to recruit, and will turn to the biggest, most established B-schools. An easy way to estimate a business school’s quality is by looking at its recent career placement statistics- and especially scrutinize the number of students placed with the “elite” recruiting companies. Typically, these “elite” companies are defined as the leading multinational consulting companies and investment banks. Thus, a top-ranked program like Kellogg can boast of its tremendous track-record in placing graduates at consulting companies like McKinsey (39), Boston Consulting Group (19), and Bain (18) while Chicago can point to its demonstrated strength with Wall Street recruiters: Goldman Sachs (17), Lehman Brothers (21), and Merrill Lynch (17).
ANALYZE THE RESOURCES OF THE CAREER PLACEMENT OFFICE
With many companies looking to contain costs given variable profit forecasts for the next 6-18 months, Russian students should understand that, unfortunately, their citizenship does place them at a disadvantage in the recruiting process. If MBA jobs are a limited resource during a recession, and companies are looking to cut costs, then it means that hiring Russian candidates for a job in New York or London is something of a luxury. Moreover, the easy business decision is to simply repatriate any new hires back to Eastern Europe or Russia, where salaries are significantly lower than in the West. The Wall Street Journal recently profiled foreign MBA students who were offered consulting jobs only in their home countries at a total annual compensation of $10,000-$20,000—far below the now-mythical $100,000 figure some applicants expect after graduation.
In order to pre-empt the concerns of top recruiters, Russian applicants need to understand reasons for their disadvantage during the recruiting season. Within the US, foreign candidates are perceived as lacking knowledge of U.S. culture and fluency in English—two facts that are only compounded by the difficulties of obtaining H-1B visas for work in the USA. At some U.S. business schools, approximately 50% of recruiters absolutely refuse to meet with international students. Even recruiters that do meet with international students enter the recruiting cycle with their own biases. As one East Coast recruiter noted, “My policy is, if I can’t pronounce the name, I throw the resume away.”
Business schools that are dedicated to their foreign students will offer a number of resources to counteract these concerns - possibly including a dedicated career counselor for international students, special seminars on visa issues, and short sessions on topics like networking and even “accent modification.” Also check out the rankings for different career placement offices, including those given by both alumni and recruiters- these can indicate business schools that offer additional value. Or consider the most recent Wall Street Journal business school rankings, which are based solely on recruiter scores- resulting in some surprising findings. Stanford, usually considered a “Top 3” business school, fell to #45 when considered from a recruiting perspective. Of the top European B-schools, INSEAD was ranked #28, IMD #33, and London Business School #39.
FOCUS ON THE ALUMNI NETWORK
For many career placement offices, the alumni network is the single biggest factor in generating new opportunities for students that are relying on off-campus, rather than on-campus recruiting. Here, the Ivy League B-schools (Harvard, Dartmouth, Yale, Wharton, Columbia, Cornell) are nearly unparalleled for the depth, loyalty, and diversification of their alumni networks. The director of Yale’s career development office, in fact, notes that 60-80% of all new job opportunities not offered through on-campus recruiting derive from alumni connections. When comparing various rankings, then, consider the effect of a large alumni network.
Just being a large B-school, though, does not automatically mean that the alumni network is powerful. Of more importance is the existence of regular alumni networking events, the ability to access online alumni contact information, and the presence of alumni clubs in every major business center of the world. Importantly, business schools should have proof of their ability to place candidates internationally. For instance, while Dartmouth’s alumni network is among the strongest in the world from a loyalty perspective, it is limited to three major regions- New York, Boston, and San Francisco.
CONSIDER MACRO-LEVEL FACTORS THAT AFFECT RECRUITING
Finally, candidates should evaluate “macro-level” factors such as the size of the MBA program and the geographic location of the B-school. In general, size matters. Bigger B-schools have more established links with recruiters and more “muscle” to force recruiters to hire their graduates. Moreover, recruiters are relieved at the greater choice that they have in students and the opportunity to meet many of their hiring needs at only a handful of MBA programs. As one recruiter from Ford Motor commented, “There’s not an awful lot of sense to sending a cross-functional team out to a school to bring back one individual.”
Regarding geography, it is important to consider the economic base of the city or region where the B-school is located. If firms on Wall Street are cutting, it means that B-schools in the New York tri-state region such as Columbia or NYU Stern will experience a pullback in recruiting activity. If firms in Silicon Valley are cutting, it means that B-schools in California such as Stanford will experience a pinch in recruiting efforts. While it is true that these B-schools will likely experience a drop-off in recruiting activity, imagine the economic effect on an MBA program located out of these regions! Even highly-ranked B-schools in Tennessee or North Carolina will lose out in the race to place candidates with top Wall Street firms once an economic slowdown hits. In general, U.S. business schools in major urban locations such as New York, Chicago, San Francisco and Boston offer the greatest protection, due to their more diversified economic base and concentration of headquarters of the leading multinational companies.
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