January 24, 2011
By Erin Zlomek
With the MBA job market on the rebound, 2011 will likely bring good news, particularly for students seeking to enter consulting and financial services
"Parallel paths" is a phrase that 2011 Columbia University MBA candidate Elizabeth McCarthy knows well. It's the euphemism her school used last year to prepare students for the possibility of not immediately landing a job in their desired field. "I'm not sure everybody would admit to this, but there are some jobs that are sort of stepping-stone jobs," she says.
Her first choice, consulting, was one of the hardest-hit recruiting areas for new MBA hiring last year, according to a poll of 89 business schools conducted last spring by the MBA Career Services Council (CSC). So she made backup plans to look for positions in general management. As it turned out, she didn't need to. She landed a consulting internship at Bain & Co. last summer, which was followed by a full-time offer.
McCarthy's experience was the Class of 2011's writ small. Expecting the worst after an epic downturn in the market for MBA talent, many developed Plan Bs that new research suggests will end up being the road not taken. New MBA hiring picked up slightly in 2010 and is likely to increase again this year, with the traditional MBA magnet fields of financial services and consulting expected to make comebacks, according to the most recent MBA CSC data, released earlier this month.
Well Past the Bottom
Evidence of a rebound is everywhere. Seventy percent of business schools surveyed by the CSC in December said full-time MBA job postings were up. Employers are not shy about their intentions, either. The Graduate Management Admission Council, the organization that publishes the GMAT, polled 210 employers in November, and 64 percent said they plan to hire new MBAs in 2011 vs. 60 percent that said the same in the prior year. The percentage of employers likely to hire holders of new bachelor's degrees remained unchanged."It now appears that 2009 was likely the low point for us," says J. J. Cutler, deputy vice-dean for MBA admissions, financial aid, and career management at the University of Pennsylvania's Wharton School (Wharton Full-Time MBA Profile).
Class of 2011 MBAs are also likely to face less job competition than their 2010 counterparts, who were competing against 2009 graduates for a smaller pool of entry-level MBA positions, says Elena Bajic, chief executive of Ivy Exec, a recruiting company focused on MBA job placement.
When it comes to pay, this year's class may not see too much of an advantage compared with 2010 grads. Sixty-nine percent of employers polled by GMAC said they do not plan to increase starting salaries of new MBA hires over last year. Four percent said they would decrease salaries vs. six percent the prior year.
Positive Omens
Campus recruiting in consulting and financial services improved the most over last fall, according to the council's December data—a sign that bodes well for spring and summer job placements. About 65 percent of schools surveyed by the CSC reported an increase in recruiting by consulting firms, while nearly 60 percent reported an increase in financial services recruiting, the December data show.JPMorgan Chase has not reduced new MBA hiring levels and will search for talent at 20 to 25 schools this year vs. about 15 last year, says Joanna Moody, head of campus recruiting for the company's investment banking unit in North America.
While hiring in financial services is up—about 55 percent of schools responding to the CSC survey reported an increase this school year—the types of financial service jobs available appear to be shifting. "Within financial services, we're seeing wealth management as the booming sector," says Ivy Exec's Bajic.
Investment banking, one of the most popular destinations for many MBA graduates, seems to have lost some of its luster, with both job postings and candidate interest in that category on the Ivy Exec website having dropped off over the past year, she says.
"From what I've been hearing, for people who are interested in sales and trading at an investment bank, it's a pretty tough area right now to get into," says Mary Phillips, a first-year MBA student at the University of Chicago's Booth School of Business (Booth Full-Time MBA Profile), who is searching for summer internships in asset management.
A similar pattern was spotted at Wharton. "Students who came in and at one point said, I want to do investment banking, are maybe now looking at private equity or insurance," Wharton's Cutler says.
Real estate, manufacturing, and the nonprofit sector also showed "soft" recruiting in the fall, the MBA CSC data show.
Tech Keeps Expanding
At the MIT Sloan School of Management (Sloan Full-Time MBA Profile), the tech market helped make up for MBA jobs lost in finance from 2008 to 2010, says Jackie Wilbur, Sloan's senior director for career development.At MIT, 15 percent of its MBA grads went to investment banking and 19 percent to tech fields in 2008, compared with 11.5 percent and 20 percent, respectively, in 2010. Wilbur says the percentage of MBA grads entering tech may rise further, even as financial service hiring resumes, citing a recent uptick in capital flows to tech companies and the continued popularity of Sloan's Entrepreneurship and Innovation curricular track, which has a technology emphasis.
MIT is not alone in experiencing a boost in tech recruiting. Nearly 40 percent of the schools responding to the CSC survey reported an increase as well. On Ivyexec.com, the highest number of tech-related opportunities have been in product management and marketing, Bajic says.
One company that has become more successful at hiring new MBAs who otherwise might have gone into finance or consulting is the telecom giant AT&T. The company's associate director of university relations, Joanna Clark, says AT&T has gradually increased new MBA hires since 2007, funneling them into such expanding areas as cloud computing and e-commerce. For two leadership development programs designed primarily for MBAs, AT&T plans to hire 50 new master's degree candidates in 2011, about the same as it did in 2010, Clark says, adding that half those offers have already been made.
More Nontraditional MBAs
A trend Wharton's Cutler noticed during the hiring lull is that interest in nontraditional MBA fields surged, which could diversify the job landscape for years to come, he says. "We're seeing more companies coming to campus in industries such as clean tech and new media, industries that haven't had a history of coming to MBA schools as a place to get talent."Digital media and social enterprise have become popular MBA career choices at Columbia Business School (Columbia Full-Time MBA Profile), says Regina Resnick, assistant dean and managing director of the Career Management Center. MBA recruitment in pharmaceuticals, biotech, and health care also increased at most schools over last fall, the MBA CSC reported.
The shift toward nontraditional positions has changed MBA students' expectations regarding the timing of job offers. For example, 62 percent of MBA students had job offers before graduation in 2008, compared with 40 percent in 2010, GMAC reported. Even as the job market improves, both Cutler and Resnick say that figure may not go as high in the future, because employers of nontraditional MBAs tend to have later hiring schedules.
Zlomek is a reporter for Bloomberg Businessweek.
