MBA Recruiting, 2015-16: Ready, Set, Go

It's that time of the year at top business schools.  Recruiting season is about to be launched in full swing.

First- and second-year finance students must implement strategies they've devised to find the right job in the right sector at the right company. MBA graduates everywhere remember how recruiting is a full-time effort, a sixth course, an effort that requires massive amounts of time and worry.

The Consortium Finance Network, as part of its mission, hosted its fourth annual recruiting and interviewing webinar Nov. 5 for first-year Consortium students in finance.  Students from all 18 Consortium schools were invited to dial in to get advice from a panel of Consortium alumni in finance.

During the one-hour session, CFN hosts and panelists reviewed opportunities in several finance sectors (from investment banking to private equity) and provided step-by-step guidance on how students can sell themselves and convince prospective employees to extend an offer--for the summer or for full-time employment.

This year, in the webinar's second half-hour, CFN decided to focus on venture capital, private equity and financial entrepreneurship, partly because these sectors do not recruit formally on campus and because these sectors have abundant hurdles when MBA graduates try to get through the front doors.

CFN steering-committee members D-Lori Newsome-Pitts, Camilo Sandoval, and Tracy Williams organized and hosted the webinar.

Panelists included Consortium alumni Ed Torres of Lilly Ventures (Michigan MBA), Ben Pitts of MyFinancialAnswers (Virginia MBA), Eddie Galvan of Nomura (USC MBA), Mark Linao of Technicolor Ventures (Michigan MBA), Sinclair Ridley-Thomas of JMP Securities (USC MBA), and Enoch Karuiki of HIG (Dartmouth MBA).  (Karuiki and Galvan had participated in a previous CFN recruiting webinar and returned to volunteer their advice and experiences this year.) All panelists had thoughtful guidance and offered lessons learned from their own days in business school. They added special tips and encouragement, based too on their own few years inside the front doors and on the front lines.

Outlook, 2016

Webinar participants evaluated financial sectors and offered a rating outlook for employment in 2016 for interns and for long-term careers.  Opportunities are a function of many factors, including economic trends and cycles, companies' relationships with specific schools, companies' past success in hiring MBA graduates, and financial regulation.

Banks and other financial institutions' business opportunities are somewhat constrained or influenced by new regulation.  Limitations on balance sheet and leverage and new rules, for example, discourage banks from hiring in large numbers in sales and trading.

A "Positive" rating suggests major institutions in the sector project revenue growth and business opportunities that will likely require hiring ample numbers of MBA finance graduates to come on board in the next few years.

The following sectors were assigned "Positive" outlook ratings:

Financial technology (payments, processing, clearing, advisory)
Compliance and regulation
Risk management (credit, market and operations risks)
Asset management (all asset classes)
Private wealth management
Venture capital

Webinar hosts and panelists awarded a rating outlook of "Stable" for the following sectors:

Corporate treasury (financial management, non-financial institutions)
Investment banking (bulge-brackets and boutiques)
Corporate banking
Investment research (equity and credit)
Private equity
Community banking
Community development
Electronic markets (exchanges, market-makers)

Sectors receiving a "Negative" rating, based on constraints banks are experiencing and general performance over the past few years, include the following:

Hedge funds 
Sales and trading (at regulated institutions)

Galvan, an investment banker in the financial-sponsors group at Nomura, reminded students that within investment banking, certain industry groups are "hot."  There could be glowing opportunities in technology, health-care, energy and real-estate groups.

Torres of Lilly Ventures agreed that while the outlook in venture capital is as favorable as ever, the route to employment continues to be hard, unpredictable.  "Very few folks get hired by a VC firm right out of school," he said. The best way to land a good offer from a prestigious firm (like Kleiner Perkins or Sequoia), he suggested, is to have already racked up many years as a successful entrepreneur. "Been-there-done-that experience is what is attractive to VC firms."

Torres added, in venture capital, "It's not a recruiting process. It's a dating process."

Summer Goals

When an MBA student in finance wins an offer, another phase of hard work is about to begin. Student interns have less than 10 weeks to prove they can do the work, make contributions, and fit in. CFN panelists summarized the primary goals in an internship, which fall in many broad categories:

Networking
Technical skills
Industry knowledge
Work ethics
Firm culture
Clients
Diversity

MBA interns and graduates on a new job should show they have expert technical skills and industry knowledge and demonstrate it everyday.  If they haven't mastered the skills, they should prove they can learn quickly.

The summer is also a chance for them to observe the culture around them and decide whether the company, the company's diversity commitment and the industry are right for them.  Work ethics count for much, too, and MBA students will need to show they will work hard, produce, show up, be eager, and contribute.

As they become more closely linked to the outcome of deals or transactions, MBA associates will want to show their comfort and rapport with clients.

Of course, the ultimate goal is to win a full-time offer, even if the intern has decided the fit at the company is not favorable or the culture is not ideal. It's ideal to at least have the offer in the pocket when the first days of second year arrive.

Interview Road Map

CFN co-founder Sandoval reviewed CFN's road map to interviewing successfully.  He reminded students they should have a strategy set for the season and asked, "What is your story?" New recruits should know their story, know what they want, and polish the story. "Think about why you want to work (at a financial institution)," he said. " Don't miss any opportunity to discuss who you are."

CFN's road map is based on the MBA interviewee being able to express clearly (a) background, (b) interest, (c) drive, (d) capability, and (e) insight.

Galvan from Nomura said, "There are two different routes to investment banking.  The non-core school route and the core-school route."  Galvan had gone to a non-core school (USC-Marshall), a school not necessarily on the primary recruiting lists at top investment banks when he pursued and eventually earned a job offer at JPMorgan.

"Show active interest and the 'want-to-be-there'," he added.  Coming from a non-core school, "I became the guy from USC that everybody liked.  I don't get the technical interview if I don't show interest."

Karuiki from the venture-capital firm HIG said that the interview process is sometimes summarized by the recruit answering a series of why's:  Why do you want to be a banker? Why do you prefer and enjoy finance? While he was at Dartmouth-Tuck, his strategy was to combine his science background with his interests in finance. (He worked at UBS before eventually joining HIG.)

Ridley-Thomas, a recent USC-Marshall graduate, was able to secure an internship after his first year with the private-equity firm Oaktree Capital.  He said he connected with the right people before the interview process started and he "benefited from referrals," getting to know people who could recommend other people.

Linao, who worked at Amazon during his MBA summer, explained how he pursued working for a start-up when he began to look for full-time opportunities, but ended up in venture capital in the process.

Pitts, while at Virginia-Darden, was able to gain offers from firms like Lehman Brothers (before its demise) and Goldman Sachs, where he worked after graduation before founding his own private-wealth firm. "Do what is genuine to you," he advised MBA students.  "Don't get easily distracted from your own goals. Be true to yourself."

Mentors matter a lot, panelists said.  "Seek out the most senior people you can," Pitts added. In school, "you have to be at all the corporate social events."

Torres advised students, "During the interview process, focus not just on the 'what,' but also on the 'how,' too."  Interviewers, he said, will want to know whether MBA graduates know how markets, finance, products and companies work or how to get a job or task done.

Galvan said, "The (recruiting) process starts really early, so be prepared."

Linao, an associate in venture capital, said, "A lot of it (the process, getting an offer) is being lucky. You'll want to force serendipity."

Pitts, the entrepreneur, encouraged graduates to consider the daring route he took after a few years at Goldman.  He started his own firm that offers wealth-management solutions.  "People think being an entrepreneur is this mystical thing," he said. "I think it's about just doing it. Motivation, relationships, and just do do it. The actual risk is less than the perceived risk."

Ridley-Thomas said, "Get focused as quickly as possible. Be relentless."

Focus on Venture Capital

Sandoval led a special discussion on venture capital, explaining major principles of how a VC firm is organized, how it raises funds, how it invests in companies, and what goals it has in the short- and long-term.

For the benefit of MBA finance students, Karuiki explained the primary difference between venture capital and investment banking.  Investment bankers have a transactional approach. Bankers work from deal to deal and seek to close them as quickly as possible. Venture capitalists, he demonstrated, have a long-term approach with clients (4-5 years typically).  They have a sustained, high level of involvement and get involved closely with people issues and senior-management hiring.

Torres, who has spent over two decades years leading Eli Lilly's venture-capital unit, said venture capitalists spend enormous amounts of time immersed in the operations of the companies they invest in.  There is a different pace and timeline when considering a deal, investing in a deal and monitoring it.  Unlike investment banking, where deals are birthed and consummated in short order, in venture capital, Torres said, "It may take three months just to decide whether to work on a deal and six months to complete a deal.  It may take four, five, six years before we exit."

In venture capital, there are winners and loses, home runs and duds, whopping gains and occasionally embarrassing losses.  "You've got to have perspective," Torres said. Venture-capital firms look at countless possible investment opportunities before they invest. "You're looking for reasons to say no. We look at 100, 150 deals for every one we do."

He summed up, "In venture capital, we're looking for the jockey, the horse, and a large unmet need." Strong management, efficient operations, and an interesting, novel product.

Tracy Williams

See also:

CFN:  Recruiting Webinar, 2013
CFN:  Recruiting Webinar, 2012
CFN:  Recruiting Webinar, 2011
CFN:  MBA Job-Hunting:  No Need to Panic Yet, 2012
CFN:  MBAs:  Second-Year Dilemma, 2010
CFN:  Opportunities, 2015
CFN:  The Finance Resume' and Recruiters, 2014
CFN:  Summertime, Summer Internships, 2010

The Survey Says

GMAC shared the results this month of a global survey of MBA graduates 

GMAC is best known to MBA students and graduates for administering the GMAT, often a formidable hurdle when applicants decide to take two years off to immerse themselves in business school.  But the organization is more than a mere exam-process vehicle.  It is engaged, for example, in in-depth research in business education.

This month, it published the results of an extensive global survey to share what business-school graduates from around the world say they obtained from having earned an MBA degree.  What did they gain in terms of compensation, productive work experiences, and promotion paths toward the top? What were the most important skills they used in business experiences? What specific skills were important at various points in a long career?

Over 12,000 respondents replied to survey questions last fall.  They included MBA alumni from over 70 schools all over the globe, most of whom attended U.S. business schools, many in familiar two-year, full-time programs. Graduates from 1959-2014 were represented. Graduates in age from 25-75 were included. GMAC asked questions that encompass a multi-decade career and asked questions relevant to those just a year away from campus. It probed to determine whether business-school knowledge was more relevant in latter career stages than in the beginning. And it asked graduates whether or not certain courses are more important in senior corporate positions than in entry roles. 

Respondents attended a wide spectrum of business schools (which means a range of MBA experiences and curricula).  They included graduates of MBA executive programs, one-year programs, regional schools, and those brand-name elite schools with 3-5 times more applicants than spots for students (including Consortium schools).  The survey, hence, drew conclusions based on the input from, say, a septugenarian MBA graduate from a local business school in the 1960's, from 1990's graduates of prominent schools in Europe or from those who just stepped from the halls of, say, Dartmouth-Tuck or UCLA-Anderson a year or two ago.

But praise the organization's comprehensive efforts.  While the MBA evolves and adapts to the times, there is common ground for most MBA graduates. There are common experiences in school, common core courses, and a common immersion into factors (markets, finance, economics) that affect business performance.  The survey results suggest, for MBA's, there is long-term value. 

Survey Shortcomings?

Like all surveys, there are flaws or short-comings, even in the GMAC survey.  Graduates who are doing well professionally or have done well over many decades may be more eager to take the time to complete a long list of questions and share their stories of promise and good fortune and report their upward-sloping compensation ranges.  As well, measurements of "success," "accomplishment" or "senior management" benchmarks are often a function of personal experiences, values and objectives.

Furthermore, the good or bad fortune of graduates is influenced by other matters besides hard work, preparation, and business-school knowledge.  Notably, an indefinite number of factors unrelated to the MBA can explain "success," including the economy, an industry's product timeline, market timing and plain ole good luck, being in the right place at right time (or being at the right place, but in the wrong time, as many 2008-10 MBA graduates would attest). And even in 2015, bias, nepotism and old-school fraternal ties might come into play. 

Summarizing the Results

Yet like many surveys, there are some intriguing trends and worthwhile messages.  Some of them are highlighted here:

1.  The more senior they rise within an organization, the more likely MBA graduates will admit they use knowledge and skills obtained from business school. 

This suggests a notion many have stated all along--that MBA learning focuses on senior leadership, senior management, and global businesses. Business schools are often praised for teaching students to become sector leaders, business heads and chiefs of finance and marketing. 

But the same schools are often chastised for not reminding new graduates that the road toward the top will be long and hard, and years of dues-paying grunt work will likely precede end-of-career success at the top of the organization chart. 

Survey results show that as business-school graduates become more accomplished over time, they more readily acknowledged that the analytical and management skills they were exposed to as MBA students helped prepare them for current, senior roles.  A public-policy, real-estate or operations-research course might seem irrelevant to a first-year associate, but the head of Asia operations will more likely say exposure to those courses long ago helped. A second-year brand manager at a major consumer-products company may not appreciate her intermediate accounting course until she becomes a business-unit head responsible for a substantial balance sheet and bottom line. 

2.  Recent MBA graduates (more than older graduates), the survey suggests, say professional and alumni networks have helped propel their careers (win coveted job offers or get early promotions). 

Such sentiments might suggest the difficulties MBA graduates of the last decade have confronted, when financial crises, recessions, and massive restructuring across many industries meant graduates had to push beyond MBA credentials to find the best opportunities. Meanwhile, more experienced MBA alumni, established in their roles, may not need to rely as much on networks and contacts.

3.  The survey concludes that more experienced MBA graduates, especially those who have advanced to the highest rungs in organizations, are more likely to feel comfortable with taking risks in their careers.

They are more willing to embrace innovation and change, more willing to be pro-active in business strategy and more tolerant regarding risks of all kinds (financial risks, market risks, business risks and social risks). 

Many inferences can be drawn from the results, although not necessarily conclusively. Some will argue it's easier to take risks early in a career, when reputations have not yet been molded and when graduates have fewer family constraints and can start, stop and transition elsewhere without significant responsibility.  

But these survey results may imply: 

(a) Those who are the types who embrace and gravitate toward risk-taking, business execution, challenge and change are more likely to advance high in their industries, firms or companies. (They advanced because they were risk-taking.)

(b) Those who have reached those highest rungs also have the experience, confidence and financial resources to be able to take risks they may not have been able to when they were strivers still seeking to show competence. (The are risk-taking now because they have advanced.)

4.  For most of those who work in conventional corporate settings, there are few timeline short cuts to "C-suite" positions (CEO, CFO, chief marketing officer, chief information officer, chief risk officer, etc.). 

Survey results say it takes about 17 years of related work experience to reach the top of an organization, business unit or sector. The average age is 48, and the survey tells us something we already know well--that the officer in their C-suite slot is likely to be male.  

5.  Large numbers of MBA graduates today don't work for mega-corporations. They (about 12% of those surveyed) are entrepreneurs or are self-employed.  MBA entrepreneurs tended to be those in technology or products.  Those self-employed tended to be consultants. Vast amounts of the survey might have been irrelevant to them. The survey, nonetheless, allowed them to opine and reflect on their MBA degrees, as well.  

Many in this group describe themselves as being slightly less risk-taking than those in C-suite positions. 

That contrasts from popular notions that entrepreneurs and owners of their companies are those with unlimited courage, willing to tackle business and financial risks boldly.  Like others, they attribute parts of their success stories to business-school learning. They take risks, they acknowledged, but they are measured, calculated risks, especially because they are singularly responsible for employees and accountable to demanding lenders and investors (venture capitalists, banks, and funding backers who want a five-year payout).

6.  About 17% of survey respondents work in finance.

They survey shows that the oldest MBA alumni worked more prominently in finance (about 20% for graduates before 1990).  For later graduates, the global MBA workforce in finance has remained flat, notwithstanding the financial debacle of the late 2000's.

MBA graduates in greater numbers are  marching into technology and consulting (17% and 12%, respectively, over the last five years).  The most notable decline is the significant decrease in recent alumni (over the past five years) choosing government and non-profit positions. 

Those in finance, as expected, are working in financial centers around the world:  Singapore, Japan, New York, and London, e.g. 

7.  As alumni, what do MBA graduates want from their alma maters?  The survey shows they don't want to be harrassed too much about how much they aren't donating to their business schools.

Meanwhile, they prefer their schools offer alumni seminars in business strategy, business analysis, and data science.  They also want continuing access to career-development offices, alumni networking events, and more contact with professors on campus. 

Of the 12,000 graduates participating in the survey, about 70% graduated within the past 15 years and 70% are from the U.S.  About 69% were male, reflecting a surprisingly woeful lack of gender balance at the MBA level (and contributing to a scarcity of women who enter the pipeline from MBA associate to sector head).

Expanding the Survey?

The GMAC survey omitted many questions and topics it could have (or should have?) covered.  No doubt it needed to present a polished, easy-to-check-the-box list of questions, one for which there are discrete answers and which would not be time-consuming for survey-challenged executives. For the sake of efficiency, it avoided topics where responses are ambivalent or deserving far more than a multiple-choice selection.

The survey, for example, didn't provide breakdowns among some segments of alumni--women and under-represented minorities, for example, although there was ample categorization based on geographies and industries.

It would have been informative, for example, to review trends and signs of success among Latino graduates or to review the MBA skills women in senior roles saw as affording them a big advantage in pushing their careers. It could have provided hard data about trends among African-Americans in corporate hierarchies and compensation. And it could have confirmed whether the pipeline to senior leadership is dwindling or promising. 

The survey, too, didn't give alumni a chance to opine on the future of MBA education:  What should business schools focus on? How should courses be taught and in what format and timeline?  What should be in a first-year student's core? How much emphasis should schools put in online offerings, international experiences, operations and management topics, ethics, politics, and psychology?

GMAC is already doing research and sharing its finding on many of these topics.  The 2014 effort was likely about getting maximum participation from the largest number of respondents possible, from all over the world and from all ages and letting the data alone speak.

Tracy Williams

See also:

CFN:  MBA Opportunities in 2015
CFN: Who are the Most Satisfied Business School Alumni? 2011
CFN: Is the MBA Under Attack, Too? 2013
CFN: Mastering MBA Technical Skills, 2011
CFN:  The MBA:  Remaining Relevant, 2011

Radio Shack's Doomsday: No Surprise

Radio Shack filed for Chapter 11, and few were surprised.

RadioShack Corp. announced its bankruptcy in Feb., 2015.  And many investors and market analysts might have responded with a collective ho-hum or quietly sighed, "So what else is new?" "Could've told you so."

The company's stores are everywhere. The brand is familiar and known. And consumers, most of whom wouldn't admit it, may have visited the store once or twice in the past year, if only to purchase batteries or spare headphones or perhaps take a peek to see what the store possibly sells nowadays.

RadioShack may have had some store traffic. Not much. It ultimately failed because it was no longer a go-to, must-stop destination.

What ultimately happened and why? Was it a wayward, flawed strategy? Did it not keep pace with modern consumer electronics marketing? Was it too slow to embrace online commerce? Was it an organization flummoxed by confusing strategies, different looks and logos and faux-hip name changes (Recall the effort to promote the company as "the Shack").

Do the financials of the company over the past decade show a predestined path to bankruptcy?

Just three years ago, the company was profitable.  Sales had topped $4 billion, and the company reported $126 million in earnings (sufficient for a fairly good 17% return on equity), admirable numbers for a company, like all its peers in the industry, emerging from a financial crisis. The company still thought it was stable enough to pay a dividend.

Then it began to hit rock bottom quickly. By late 2014, a company capable of eclipsing $100 million in annual income was headed toward losses exceeding $400 million last year.

Blame it on Apple, the iPhone, Microsoft, Google, Android, Amazon and other technical companies that created a stream of cool products and sold them in their own stores or sold them briskly online.  Radio Shack, despite renovations and redesigns, couldn't offer the same dramatic store experience you get when you enter into the kingdom of Apple.

After 2011, revenues plunged quickly, and it couldn't push down costs as quickly while consumers stopped visiting its stores and buying product off its shelves--no matter how much it continued to promote its brand and encourage loyalty.  The large branch-store network (numbering over 4,000 sites) explains why costs couldn't decline as rapidly as sales. Fixed costs. The lights still had to be turned on, whether or not stores were selling radios, smart phones, TV's, RCA connectors, or batteries. Meanwhile inventory stockpiled.

In a sense, the company bled to its eventual demise. Three years ago, if an analyst weren't familiar with its product or brand (and the immense competition it faced), he might have regarded the company's financial numbers satisfactory:  Fair profit margins, a satisfactory return for investors, token dividend payments, and a balance sheet not mired with too much debt or inadequate levels of cash.

But once the downward trend in revenues snowballed, it was a matter of time. After 2011, revenues began a 5-10% decline steadily from quarter to quarter, like a pebble tumbling down a hill. Meanwhile, costs remained about the same. Decreased demand for product explains some of the sales downturn. But some of the decline in sales is also likely due to discounts on products that weren't offset by new store traffic. One employee told Bloomberg BusinessWeek that he felt customers entered a RadioShack store only after exhausted efforts in not being able to the same product at Best Buy.

Declining revenues meant losses. Losses meant declining cash flow and eventually cash deficits.  In 2010-11, the company had reasonable cash reserves (about $500-600 million), enough for emergencies, dividends and possible reinvestments.

When the losses piled up, it had to tap the cash box to meet expenses and pay vendors and suppliers and soothe lenders and debt investors.  Cash has now dwindled to less than $50 million. There is no book equity. Meanwhile, it hasn't been able to make a dent on what had years ago been a tolerable debt load. Debt-equity ratios of about 1-to-1 climbed to an unbearable 8-to-1, entirely because the losses wiped out what was once a solid equity base.

With the company running out of cash, with debt now becoming an onerous burden, with no confidence that revenue levels will ever top $4 billion again (arguably not even $3 billion), and with companies like Apple or Best Buy (which has had its own share of difficulties) expressing no interest in buying the operation, bankruptcy was the way it had to go.

Sometimes private-equity investors have stepped into situations like this, if they reasoned they could force massive restructuring, pare down the operations, sell stores, and squeeze positive cash flow from the enterprise for a few years. But even they shied away from this ailing company.

Some investors or operating companies saw value in RadioShack in its stores network, either in the store structures themselves or the real estate.  But they remained in the background until after the bankruptcy announcement. Sprint has expressed interest in buying over 1,500 of its stores, while the company in Chapter 11 will figure out what to do with more than 1,000 other stores (after it has shut the doors of several hundred others). Others have interested in the store fronts, and franchisees will be permitted to retain stores and use the brand.

But the 94-year-old company may not disappear into retailing history.  While creditors and bankruptcy trustees mull over the financial mess, some may see continuing value in the brand. Somebody might figure out a way for it to recapture old electronics glory or deduce there is small-time niche in selling.  Franchisees, especially those abroad, could keep the brand name alive. Whatever remains could be a small niche continuing to sell batteries, trinkets, and accessories to a loyal core customer base in selected pockets.

Or with companies like Apple and Microsoft offering "amazing" products and an elaborate, theatrical in-store experience that RadioShack will never replicate, should it just liquidate and close doors forever?

Equity investors, at least the old ones, will likely be wiped out. (The stock still trades, but no longer on the New York Stock Exchange and now over the counter.) If investors, lenders and trustees permit an orderly sell of assets, those who hold debt might have an opportunity to get satisfactory payouts, something better than nothing.

Blame it on bad management, bad strategy, or the misguided courage it had to dare to compete with the bigger boys. Some will say let's applaud RadioShack for lasting as long as it did.

Tracy Williams

See also:
CFN:  Who's Betting on Blackberry? 2013
CFN:  What Happened at JCPenney? 2013
CFN:  MFGlobal:  Too Small to Save, 2011
CFN:  Dark Days at Knight Capital, 2012

The Finance Resume' and Recruiters

A bank Vice President is tapped to be involved in recruiting new bankers for the upcoming year. The group plans to expand its business with new deal flow, new clients, new accounts, and perhaps a new office presence in London or Tokyo. The group must, therefore, expand the number of associates who analyze and rationalize deals, prepare presentations to clients, research markets and market trends, and explain the pros and cons of financial instruments.

She and others on her recruiting team are asked to review a handful of resumes' to determine who should be offered chances to interview in first rounds or who should be rewarded with "call backs" for further rounds.

For each resume', the team reviews, sizes up, summarizes and concludes in just a few minutes. What did they notice? What stood out? How can they decide who's worthy of more attention (and eventually an offer) from mere glimpses of resume' material that candidates took years to accumulate? What do they see? What do they look for? And what do they target on a page filled with words, recruiting jargon, and an array of experiences?

Or how does the candidate in finance (before the interview, before the laborious second and third rounds) make a resume' impression in just a few minutes?

Career advisers and MBA counselors like to refer to the "elevator speech,"  the 30 seconds a candidate might sell himself when he encounters a senior department head at a reception, after a meeting or, in fact, in the elevator.  On a resume', the candidate must sell himself to the recruiting team in a frightening flash.

If the role is in finance (corporate finance, banking, trading, investing, asset management, equity research, corporate banking, e.g.), in the midst of a list of highlights of candidates who, say, captained their debate teams, recruiting teams look quickly for clues that the candidate can do the work. First things first, does the candidate have first-rate technical skills? Can the candidate excel in the day-to-day requirements of the job of a job in finance?

In finance, for MBA's, that often means proving competence in accounting, corporate finance, financial analysis, and capital markets.  At some firms, it will mean proving competence in much more:  financial modeling, corporate firm valuation, and financial products.

Recruiting teams can't give a test to ascertain competence. (That can wait for second-round interviews.)  But they can look for familiar clues.  An MBA in finance, a CFA certification (even Level I passing), a CPA certification, and experience in banking and finance will be superb clues that the candidate can thrive in a world of numbers, spreadsheets, projections, forecasts, ratios, sensitivity analyses, and financial theory.

Sometimes listing specific courses (in an MBA course) will help, too.  Courses in intermediate corporate finance, intermediate accounting, options theory, mergers & acquisitions, derivatives markets and equity valuation will confirm competence.  If an MBA candidate has thrived in a course expounding on Black Scholes options theory or if the candidate has studied how FX currency markets are tied to interest-rate expectations, then recruiting teams will check with a plus.

There is no one way to promote technical skills and competence on a resume'.  They should be highlighted clearly and, if possible, headlined (not buried).  Recruiting teams must get over this hurdle before they begin to look for other qualities. The MBA student or graduate from Dartmouth-Tuck with a specialty in corporate finance, who studied corporate valuation, who worked previously at Lazard Freres, who has an engineering undergraduate degree, and who won prizes for stock-market valuation, will vault to the front lines in the eyes of prospective employers.

Unfortunately large numbers of candidates will meet these initial tests.  So finance professionals looking to hire will look for other qualities.  They then cast their eyes on clues that demonstrate productivity, professionalism, engagement, impact, creativity, and teamwork.  They ask:  What is there on the resume' that will show us that the candidate will get work done, can produce an enormous amount within tight deadlines, will show special insight and make useful recommendations, and represent the company in a professional way.

This exercise is more difficult for recruiting teams. Sometimes it requires a dissection of intangibles and qualities. If the candidate uses numbers to show priority or impact, employers must understand the context.  Still, on the resume', the candidate must maximize impression with specific experiences, good examples, and clarity.

Yes, clarity counts for much in reading resumes'.  Some of the best candidates hurt themselves because when they describe experiences, they retreat to fancy jargon or awkward (or erroneous) terminology.

Even the most qualified technical MBA's should showcase intangibles and special qualities on the resume'.  There is no formula, but they can ask themselves what examples and experiences will show impact, creativity, and productivity.

What hurts on the resume'?  Remember, the recruiting team is dissecting a lifetime of activities in a few minutes.  Tedium, detail, and illogical presentation of material slow down the reader.  Or they  distract the reader.  Unexplained, confusing descriptions of past experiences hamper the reader, too.  In an effort to upgrade experiences or embellish them, sometimes candidates end up describing gobbledygook. Simplicity and clarity work best.  If busy finance professionals can understand the experience immediately, there is another check plus.

Hyperbole hurts, too. Too often candidates slip and exaggerate past achievement, not realizing how the description sounds.  If the MBA student says he started a $100 million hedge fund at age 21, a fund that exceeded all benchmarks during years when many funds stumbled and closed, is that believable? Will recruiting teams apply a question mark, instead a check plus?

Recruiting professionals and career counselors will say resume' preparation also involves promoting a brand, becoming marketable, and showing ambition.  But first things first, the experienced recruiting teams at big banks and notable firms take a first-things-first approach:  Prove technical competence (from classes, courses, and previous work).  Prove impact, productivity, creativity and professionalism with crisp, simple descriptions of past experiences and past accomplishments. And then survive the second and third rounds.

Tracy Williams

See also:

CFN: MBA's Eye the Summer, 2014
CFN:  MBA Recruiting:  Working the Game Plan, 2013
CFN:  MBA Job Hunting:  No Need to Panic Yet, 2012
CFN:  First-year MBA's:  Internships and Recruiting, 2011

Wall Street's Favorite Business Schools

This is not an assessment of the ranking of business schools, although such rankings tend to be unveiled this time of the year when fall classes start.  This is about the MBA programs that tend to send large numbers of graduates into coveted positions in investment banking, corporate banking, sales & trading, capital markets, and equity research.

This is less about the schools' efforts to channel and push MBA students into certain directions.  For the most part, they don't.  Business schools don't shove students into banking and finance, although there are implied messages (based, for example, on the resources the school might devote to finance, finance instruction, and career-advisory services in finance).  Business schools certainly don't ignore benefactors, including sponsors that will include large banks and private-equity firms or alumni holding senior positions in finance. And schools do their best to cultivate close relationships with top institutions.

Business schools, for their part, facilitate a pathway into banking and finance, if large numbers of students prefer to go in that direction.

This is more about the major financial institutions and where they go to fill up the first-year slots in banking and finance.  What are the favorite schools (including those with ties to the Consortium) and why?

The careers website eFinancial Careers updated its list this month. It tries to list schools based on a calculated index, which of course will inevitably be biased or flawed. It acknowledges that.  But the exercise presents a valid picture.  It can tell MBA students and graduates from where major financial institutions (from Morgan Stanley to BNP Paribas) hire business-school graduates in financial centers in the U.S. and Europe. In other words, what are the top "target" schools, not necessarily the best schools, but the top schools where they have had success in steering graduates toward major positions in finance?

Some of that success is due to aggressive efforts by the financial institutions, including their recruiting programs and the relationships they establish and nurture at certain schools.  A lot of that success is influenced by the alumni employed at the bank or firm.  If a large number of senior and influential bankers at a certain bank went to Michigan-Ross, then it is likely the bank will continue to maintain a meaningful relationship that results in a high-frequency recruiting pipeline.  Another factor is the institution inferring that if past graduates of the school have performed well, then the bank should go back and get more of them.

This latest list includes the typical business schools known for corporate finance and investment management and for sending dozens of graduates to Wall Street every year. That includes Penn-Wharton, Columbia, and Chicago-Booth.  The list of 35 includes at least seven Consortium schools:  Yale, Cornell-Johnson, Dartmouth-Tuck, UCLA-Anderson, Michigan-Ross, NYU-Stern and Carnegie Mellon-Tepper.

But the list includes some surprises and perhaps some notable omissions.

Yale SOM, a Consortium school, with its history and tradition in general management and public administration, is third on the list.  The list suggests it is a more popular target among major banks than Harvard, Chicago or MIT--at least based on percentages and the school's success in its graduating landing the best banking positions.

Stanford is no. 8 on this list, even if the more popular notion is that its graduates tend to prefer entrepreneurship and technology. We don't observe many of its graduates heading to the East Coast to work for Citi or Deutsche Bank, but the school has an advantage in residing next door to some of the country's top venture-capital firms. The venture firms, if they choose to, can manage an open-door relationship with the business school just across the road.

Rice-Jones in Houston appears high on the list (14th), higher than even Michigan-Ross, Duke and Dartmouth, despite the well-documented record that Tuck sends large numbers into prominent slots at the top banks and finance firms.  And most would have thought that Texas, another Consortium school in Rice's region, which doesn't appear on the list, would be a more attractive finance target than Rice. 

Virginia-Darden and Indiana-Kelley, Consortium schools with prominent programs and graduates in finance, are not on the list.  Regional preferences among its graduates may explain that.  eFinancial doesn't claim to offer a perfect or a fair list. It reminds list-users that it attempts to capture what appears to be favorite target schools among favorite target banks.

Critics might dismiss one impactful bias about the list.  It opts to divide financial institutions into three tiers and gives more credit to schools with graduates who go to work at the top-tier banks (Goldman Sachs, Citi, JPMorgan, e.g.).  It, therefore, penalizes, schools with large numbers of alumni who work at such institutions as Credit Suisse, Barclays, RBS, Regions Financial, US Bancorp, Sun Trust, HSBC (not regarded as top-tier by these list-preparers) or work at the prominent boutique firms that, in some tallies, have seized some market share from the bulge-brackets.


Remember, this is a list, one that will be out-dated by next summer and one, like all others, should be examined with caution.  While it may be true that Bank of America and JPMorgan enjoy recruiting large numbers from NYU for corporate-finance roles, it doesn't mean a graduate from UNC-Kenan Flagler or Emory-Goizueta won't have a chance to gain an offer.

Tracy Williams

See also:
CFN: Who Are the Most Satisfied Business School Alumni? 2011
CFN:Yet Another Ranking of Business Schools?  2010
CFN:  Be Cautious with Business-School Rankings, 2009
CFN: UCLA--Going Out on Its Own? 2011
CFN:  Yale SOM Gets a New Look, 2014
CFN:  Georgetown Becomes the Consortium's Newest School, 2013 



 

Finance: Still a Popular Destination?

Almost a third of Tuck's grads went into finance

Take a peek at the latest statistics.  At many business schools, they're out and available. MBA graduates from the Class of 2013 have launched their post-business-school careers, and they haven’t avoided financial services as much as the popular impression suggests. 

True, countless thousands who've entered and finished graduate business school since the worst days of the crisis opted not to pursue banking, trading and investment management or other financial-services paths.  The industry has endured transformation of all kinds (regulation, business restrictions, non-stop restructuring, and souring popular sentiment).  And it’s true, too, the industry had become a turn-off to some smart students who in years past would have pursued investment banking without a thought.

In current times, the rewards, comforts and predictable career paths in finance are still uncertain. Don't forget, too, the knocks on jobs and roles that had once been perceived as  prestigious and awe-inspiring on the cocktail circuit.  Many MBA students at top schools, so goes popular sentiment, will likely prefer more humane, more constructive routes in a long business career.

But the statistics are out for recent business-school classes, and they suggest MBA students continue to flock to certain areas in financial services.  Finance will still attract those who are inherently interested in finance, those who have finance in their bones, so to speak. 

Perhaps the numbers are not surging as much as they were pre-2007, but they aren't insignificant.  Or  perhaps banks, investment managers, and trading firms are doubling down to make special efforts to present themselves more fashionably to students, describing career opportunities better, and promising easier lives on the work-life-balance front.   

However, perhaps the industry is more defined, better understood after all the years of restructuring and gearing up for an environment ensconced in new regulation.  Of course, some hard-core students, fascinated by markets, deals, transactions, and cash flows, will head toward finance despite what they hear, see or are told.

Compensation helps, too.  It continues to be one attraction.  Data and anecdotal evidence suggest financial institutions still pay well, even if the industry pulled back and rationalized (and reduced) compensation after the mid-2000’s splurge.

Let’s take a look at Dartmouth-Tuck, a Consortium school. Its career-advisory unit recently shared data for the most recent graduating class after it received a sufficient number of responses from departing students. Tuck is a good example, because it has an outstanding history preparing graduates for Wall Street, has attracted large numbers interested in finance since its early days, and has a reputable finance division.  

The Tuck data indicate consulting is the hot spot these days.  MBA graduates are flocking to what is referred in campus jargon as "MBB"--McKinsey, Bain and Booz. In Tuck's Class of 2013, consulting firms hired 27% of the class (and offered the highest amounts in compensation).  In all, 33% are working in consulting roles, including those working at non-consulting firms or working in the consulting arms of the big accounting firms (Ernst and Deloitte, e.g.)

For some MBA students, consulting offers an experience, similar to what they might have received at an investment bank. They get to do extensive research and analysis.  They get to study corporate strategy and make recommendations regarding growth, expansion, and acquisition. They participate in “live transactions” and prepare exhaustive presentations for clients. They travel around the country. 

They also get to have meaningful contact with clients and sit in meetings with clients' senior managers.  Some become experts in the industries of their clients. Hence, while consulting has always been a favorite first job for MBA students, consulting might be swiping a handful of those who a decade ago would have marched right into Goldman Sachs or Morgan Stanley (or Lehman Brothers, back then) at the first whiff of interest on the banks' part.

Yet the numbers going into finance haven’t dwindled that much. MBA graduates at top finance business schools like Tuck (and arguably NYU-Stern, Michigan-Ross, Virginia-Darden, all Consortium schools) are finding their ways back to Wall Street, but perhaps in a variety of roles.  About 30% of the Tuck Class of ’13 headed to financial institutions, and about 35% are working in finance functions. In investment banking, 14% of the class went to work there; 11% are working in classic investment-banking functions (equity or debt underwriting, M&A, client advisory, etc.)—numbers that don’t suggest a lack of interest in  this generation of students.

Tuck’s statistics, nonetheless, show a dearth of classmates headed into private equity and venture capital (only 2%).  The small percentage stands out because many go to business school with expressed interests (and great enthusiasm) about private equity and venture capital. The numbers might reflect the scarcity of opportunity in such a fiercely competitive segment and the unorthodox ways some of these firms recruit.  (Blackstone and Carlyle may recruit at top business schools across the country, but Silicon Valley venture-capital firms may recruit informally or prefer to recruit only from across the street at Stanford).

The latest statistics may also reflect the lack of opportunities on trading desks at big banks, which have had to scale back because of new regulation.  MBA graduates interested sales and trading nowadays don’t have the chance to work in structured career pathways at a Credit Suisse or JPMorgan and will likely look for opportunities, if they exist, at hedge funds, many of which struggled last year and may not be swarming business schools this year. Some students interested in sales and trading can seek similar opportunities at investment managers (Blackrock, e.g.).

Tuck’s statistics show first-year compensation in finance hasn’t fallen into a sinkhole. But the range is as wide as ever, partly because the impressive, mind-shaking salaries and bonuses have been paid out primarily at the bulge-bracket and boutique banks in financial centers (New York, Chicago, San Francisco), and not always at the smaller, regional institutions. 

Still, in a post-crisis era, compensation doesn’t seem to always drive MBA graduates’ career decisions. Indeed these are different times. MBA graduates know the time they spend at Bank of America, Aetna, or UBS right out of school won't last decades. Furthermore, they seek flexibility and a life on weekends or seek some comfort that when the next crisis occurs, they won’t appear on a bank’s long reduction-in-force list.

Tracy Williams

See also:

CFN:  Are MBA's turned off by investment banking? Oct-2012 CFN:  Who's headed into finance, 2012? June-2012 CFN:  MBA job-hunting: No need to panic yet, Feb-2012
CFN:  Who's headed into finance, 2013? June-2013
CFN:  MBA's: Eye on summer '14, Nov-2013
CFN:  Where do you want to work? Feb-2013
CFN:  Today's bulge brackets, Jan-2013
CFN:  Goldman tweaks the banking ladder, Sept-2012

Getting Pushed Backed, While "Leaning In"

Applicable to all under-represented groups?

So the topic that has made a torrent splash in the early weeks of 2013 is a new catch-phrase:  "Lean In," taken, of course, from Facebook COO's Sheryl Sandberg's new book of the same name. The book raced to the top of best-seller lists. The subject--how women can push (or propel?) themselves into the top echelons of business--is relevant. The advice and guidance are useful, although Sandberg acknowledges there are no quick fixes, no one special way to progress along the path, and certainly no assurances that every woman who "leans in" will one day find herself chair of the board.

Nonetheless, Sandberg determined it was time to put the issue back on the table and force companies and business leaders to assess where we are.  She advises women to seize control of their destinies, bang on the door and avoid waiting for it to open.

So next question. Are her advice and guidance relevant to other under-represented segments (URM) in business--Asians, Latinos and blacks? Does her message, including her instructions and urgings, apply to minority professionals? What happens when members of those groups dare to "lean in," ask for what they want, aspire to become senior business leaders and push for opportunity, promotions and adequate compensation? What happens when they "lean in," assert themselves, but then get pushed back, get pummeled or--even worse--outright ignored?  What happens if they are pushed back for not being patient or for being too vocal, too ironclad specific about what they seek in the next 10 years?

Let's now narrow this to minority professionals in financial services.  What happens if those from  URM, who thrive in, say, corporate finance, banking, trading, funds management, or equity research lean in and get pushed back? Get punched and knocked down in their efforts to seize a seat at the leadership table?

Career paths in finance are often rough, brutal--marked by periods of overwhelming workloads, evolving deadlines, demanding clients, mountainous risks, complex deals, blockbuster trades, tough decisions, and severe competition from other firms and from the colleague down the corridor. Many associates or vice presidents are aware it takes more than superior technical skills to get promoted, be rated highly, and win hard-fought pieces of the bonus pie. It takes stamina, perseverance, contacts, mentors, a thick skin, and bits of chance (lucky markets, lucky opportunities, and being in the right group or on the right team in good times).

So how do under-represented minorities in finance put themselves in settings where they can--more often than not--be in the right place in pivotal career moments?  How do they "lean in" to make sure they contribute to important client meetings, deals and projects--the deals and projects that get people noticed and put them on go-to lists of those who get to do bigger deals, manage bigger projects and oversee larger clients? 

Many minority professionals in finance and consulting already know the game; they have already seized half of it by enduring grueling recruiting processes and have earned treasured spots at firms like Goldman Sachs, McKinsey, Morgan Stanley or any of the notable private-equity firms, investment managers or hedge funds. Like many women in the same roles, they understand what it takes "lean in." They plotted ways to gain entrance into top schools.  They managed rigorous course loads in business schools and successfully navigated through numbing rounds of interviews.  They know what it takes to be aggressive, stand out, and grab opportunity when the doors open ever so slightly and briefly. 


Those who survive the pressures of doing deals, booking big trades, making investment decisions and meeting budget "lean in" in their roles of banker, trader, analyst, or researcher. They raise their hands to ask for plumb assignments, request to be put on innovative deals, and volunteer for special overseas roles. Always accessible and committed, they give up weekends, holidays and weekday evenings.

After a few years, they know it is critical to be on the inside of strategy sessions, senior management presentations, and any gathering to discuss ways to boost revenues or introduce new products and services.They find ways to nudge inside the doors where the biggest decisions are made.

But as they "lean in" and make exhausting commitments to the firm, the client, the deal, the portfolio and the business, many have not adroitly figured out what to do when they get "pushed back." Getting pushed back occurs more frequently than they expected. Often the push-back occurs for subjective, unfair reasons. Sometimes the push-back is blind-sided gesture on the part of a manager, colleague or management team.

Getting pushed back too frequently for inexplicable reasons leads to discouragement. It triggers floods of emotions and self-reflection:  What did I do wrong? What can I do to alter their perceptions of me? What more can I do to earn visible assignments or prove myself in a bigger role with significant responsibility? Why do they not recognize me when I raise my hand, make noise, stomp my feet and share my ideas for new products, clients and revenue growth?

Sometimes after such self-reflection, they find ways to rebound. Some learn the art of bouncing back and conjure the strength to rebound not once, but time and again. They take a different angle or approach, when they "lean in."  They respond to feedback. They return with an even better project idea, finance model, or client tactic. They re-commit to the team, deal, or firm. They find other mentors to toot their horns or help with a career strategy.

Unfortunately, getting pushed back too often leads to bewilderment and loss of energy and enthusiasm. Eventually it leads talented under-represented minorities (and women) to withdraw or recede while still on the job and ultimately to resign from the job itself. Bouncing back after leaning in and getting pushed back over and over becomes too draining, too stressful. 

How to bounce back from the push-back is usually the kind of guidance many mid-level finance professionals from under-represented groups (including women) crave:

When senior managers compose the deal team that will work on the billion-dollar underwriting for, yes, Sandberg's Facebook, how should they barge their way onto the team? When the team is being composed to advise Google, Eli Lily or John Deere on its next major acquisition, how do they ensure they are selected?

When a sector leader selects someone to lead a business group in London, Brazil or Tokyo, how do they win such a coveted assignment? When the institution rolls out a new product to a new client group in a different part of the country, how do they make sure they have a fair shot at the opportunity to lead the product campaign?

When they do extensive research, exquisite financial modeling or insightful analysis and come up with novel ways to assist a client or structure a financing, how do they ensure their voices are not silenced and their ideas not stolen?

As year-end approaches, when they review their accomplishments and contributions, how do they ensure in evaluation season their rankings or ratings won't slip, because they don't have champions or advocates on their behalf or because others diminish their contributions?

There is no formulaic solution to handle the "push-back."  Much depends on the environment, the firm culture, the immediate surroundings, management hierarchy and the financial state of the institution. Much also depends on personal goals and priorities (something Sandberg's book examines from cover to cover).  In all cases, it helps to reassess a situation, review those personal priorities, maintain confidence, and recommit to what is important. In some cases, it even helps to "lean on" others more experienced (not necessarily "lean in") who have traversed the same corporate routes and endured similar push-backs and setbacks.

Motivated and talented minorities and women lean in continually--every day, throughout the year, in every transaction, trade, client session, or discussion of risks, revenues, investments and new products.  They want to understand the best ways to thwart the "push-back." And they want encouragement and energy to rebound one more time with confidence that all the effort has a chance to pay off.

Tracy Williams

See also:

CFN:  Making Demands on Diversity, 2013
CFN:  Venture Capital Diversity Update, 2011
CFN:  MBA Diversity: A Constant Effort to Catch Up, 2012
CFN:  How Mentors Can Help, 2009
CFN:  Mentors:  Still Critical and Necessary, 2010
CFN:  Affinity Groups, 2011

Is the MBA under attack, too?

The MBA: Evolving and Adapting

Press reports in the past year have occasionally announced the dismal state of the law degree. They've shown the downward trends in law school applications and the widespread lack of opportunities for new law graduates. And there is a lively, fiery debate about what is and what should be a legal education. A law student spends three years in school and, after assuming huge debt loads and making boundless financial sacrifices, graduates into the great unknown.

Should she head for the dungeons of corporate law? Should he explore other channels (the public sector, e.g.), where limited opportunities for sustained employment exist? What should they do, when legal positions have dwindled in large numbers across the country in recent years? Should law schools take the lead in assisting their graduates? (Some have done just that in the past year, by hiring some of their own graduates or subsidizing them in their first-year jobs.) Should law schools spearhead a radical change in legal education by eliminating the third year of classes and permit students to launch careers with one less year of burdensome debt?

Law deans, judges, attorneys, prospective students and law professors are in the midst of a vigorous discussion about the future of the law degree and the roles and responsibilities law schools will have. (See Third-year Overhaul at NYU, Law Schools Worth the Money?)


Is the MBA similarly under attack and similarly encountering a dismal outlook? Are there similar declines in applications (to business school), decreasing opportunities across the board, and calls to contract two years of full-time business school into a fast-track, 10-12-month degree?

Or is this an apples-and-oranges debate?

Trends in applications and enrollment at law schools and business schools run along different, sometimes similar tracks. They are both affected by various factors--some the same, others very different.  While law schools experienced application declines over the past decade, business schools did so, too.  The recession and financial crisis had impact on both. Yet applications at some business schools began to rise a year or two after the peak crisis years of 2008-09, partly because some young professionals decided to try to "wait out" those years of turmoil in productive ways, by returning to school.

Both degrees are influenced by stark business factors. Banks, insurance companies, and hedge funds reduce staff quickly (and often rashly) when there is a decline in revenues, deal flow or clients. Law firms  experience a concurrent decline, too, and reduce staff or decide to hire fewer associates.  And reductions, lay-offs and bleak opportunities discourage prospects from applying to law and business schools. 

Both are influenced by the mind-boggling, irrational increases in tuition and fees.  Candidates for the MBA or JD will often have the interest, aptitude and time commitment. They will dream of coursework in legal theory, contracts, property, accounting, corporate finance or business policy. They will aspire to become partners in corporate law firms or consulting firms. But they can't rationalize the costs and the likely absorption of too much debt.  

But factors that influence financial institutions--like reform and regulation--might have a different kind of impact on law firms, which might step up to assist in regulatory compliance. Other factors--like a trend for companies to out-source basic legal chores to low-cost sites overseas-- have a detrimental impact on corporate law firms in the U.S.

Still, the swirl of nerves and a trace of panic that might be usurping some law deans doesn't yet seem to be doing the same in business schools. That might be partly due to the fact that business deans are accustomed to change and almost always encounter uncertainty about their purposes in the future.

MBA application trends at top schools slid significantly in the crisis years, but in the past year or so, there are fleeting signs of an upturn.  Consortium school UCLA, for example, had a 22% increase in MBA applications last year.  After a two-year decline, applications to Stanford Business School rose this year. (They fell below 7,000, but are approaching that magic threshold again.)

Two years ago, applications to Columbia Business School fell 19%--a cause for concern and something the school blamed on the languishing state of Wall Street, since the school has always had a bustling pipeline of MBAs going into banking and finance.  Yet applications rose 9% last year and seem to be on an upward trend again (above 6,000)--thanks in part to a more settled state on the Street. Applications at Consortium school Dartmouth have increased the past two years, and Consortium school Yale will likely boost applications above 3,000 as it moves into a new facility.

Recent reports show over 286,000 GMAT tests were scored last year--an 11% increase. That's partly attributed to the large number of foreign students interested in the MBA (16% increase).  In fact, only a third of the tests taken are from U.S.-based candidates, proving how the soaring interest from international students has helped to boost or sustain interest in the MBA.

However, a few other factors might explain why the MBA is not yet under attack any more than it has always been:

1.  Law schools, all of a sudden, find they must explore ways to reinvent themselves or redefine legal education.  Business schools, on the other hand, over the past two decades have routinely tried to reinvent, redefine and innovate--some more successfully than others, some more radically than others.  Many contend business schools still haven't kept up with the changing business times sufficiently, but few accuse them of not trying.

Witness the changes in curriculum and core courses at top schools every other year. Witness, too, how schools hopped at the chance to understand e-commerce and Internet businesses. Notice the grand push by the same schools to require international experience and courses in ethics, decision-making, and risk management. 

2.  Certain industry sectors still require the MBA degree as if it were a certification. They see specific value in the MBA and hire from the business-school pool routinely each year.  They include consulting, investment banking, and many firms in investment management, trading and research.  As long as Goldman Sachs and McKinsey thrive, it appears, they will a large batch of MBAs from top schools year after year to fill the ranks and to offset expected attrition. And as long as Goldman and McKinsey hire, others in the industry will follow suit. 

3.  Business schools try to respond to economic and business trends and to the voice of a large corporate constituency.  They listen to what business cycles suggest or what business leaders look for in a next generation of leaders.  They respond by revamping curriculum, introducing new courses in, say, entrepreneurship or international development, or by teaching the lessons learned from a recent crisis or marketing debacle. Some respond well; some respond inadequately, but most try.

4.  The influx of foreign students has changed the face of most top schools.  It's no longer unusual for top schools to have large numbers of students from India, China, Pakistan, Nigeria and Latin America.  They recruit internationals, and they have successfully rationalized the benefit of a diverse, world-oriented student body.

Foreign countries have been eager to send some high-potential junior managers to MBA schools like Virginia, Michigan or USC to learn from the gurus of management and finance--with hopes they will return to their home countries to fill the management gaps of a growing, developing economy.  Many have observed or written about China's obsession speed up economic develop by hiring trained middle managers to run an exploding (at least until recently) business growth. An MBA education, especially from a U.S.-based school, provides a solution or a quick fix.

If the topic is business schools and MBAs, there will always be debate about the relevance of MBA degrees and uncertainty about how schools encounter evolving business scenarios. Seldom a day goes by without a business-school dean grappling hard with how the school will adapt and fend itself from the factions who attack it.

Tracy Williams

See also:

CFN: The MBA--Remaining Relevant, 2011