Why MBA Means 'More Bitterness Ahead'

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First came the crash. Now come the ripples. At business schools around the country, 'tis the season for MBA recruiting. But for Wall Street wannabes who banked on school yielding a six-figure finance job, bitter reality is setting in. Offers from financial firms are slowing, as budgets get slashed and freezes take effect.

This year's recruiting season may feel longer, more competitive, and more painful for soon-to-be-minted MBAs than any in recent memory. Amid pervasive market uncertainty, admissions officers and students at business schools around the country say the recruiting climate has shifted noticeably, particularly in the financial sector. "Uncertainty is the buzzword," says Deanna M. Fuehne, Director of the Career Management Center at Rice University's Jones Graduate School of Management. "Consulting firms and banks are worried that clients may pull projects and deals. Company recruiters are worried about staff reductions. So it's become a game of 'wait and see.'"

"Firms are being more conservative," says Roxanne Hori, Assistant Dean and Director of the Career Management Center at Northwestern's Kellogg School of Management. "Nobody wants to be over head count." Hori says that higher retention of current employees — given the Wall Street climate — may mean less room for new recruits. As institutions wait out the Wall Street storm, they know many students will still be in the market for a job when spring comes around.

Fuehne and other administrators say many students are nervous, particularly those who have never faced a prolonged market decline. Andy Chan, Assistant Dean and Director of the Career Management Center at the Stanford Graduate School of Business, says he sees some students going through a kind of grief cycle, first coping with shock, then denial and disappointment. Many current MBA students graduated from college as the tech bubble was bursting, Chan points out, so they're frustrated at the prospect of once again graduating into a cold job market.

In between their first and second years of school, MBA candidates typically intern in the hopes of securing a promised position after graduation. But this year, more students than usual are in a holding pattern, even after successful internships. Firms want to see how the economy looks at year's end before committing to a new class of recruits. "There's likely to be more 'as-needed' hiring," says Regina Resnick, Assistant Dean at the Columbia Business School, where about half of the graduating class typically pursues employment in financial services, whether in venture capital, private equity, investment banking or something related.

Recruiting season typically heats up at the end of October, as smartly-dressed company reps fly in to dangle the big numbers that quickly lure spreadsheet-crunching MBAs onto the lower-rungs of their corporate ladders. And even in the current environment, some students are winning lucrative posts. At Rice, a student who fretted his full-time offer from Lehman Brothers would vaporize when the Barclays takeover was announced got a call that same day saying his offer would be honored. That's the exception, though, says Fuehne. "Many of our students who interned in banking did not receive offers."

Here are some other trends affecting MBA grads in the current climate for better or worse:
Opportunistic Recruiting MBA career advisers say smaller firms and boutique investment companies are taking advantage of Wall Street's weakness to try to snatch up the smartest young talent.
Geographic Retrenchment Some financial firms that do have slots to fill this fall will cut back on the number of schools they visit. Rather than covering all corners of the country, some firms are focusing on a smaller core group of schools. That may hurt schools further afield that ordinarily benefit from companies casting a wide net.
Heightened Competition As the financial recruiting process slows, students who had planned on working in finance are competing more aggressively for consulting and other positions.

Northwestern's Hori says the silver lining in the current climate is that many students are stepping back to reflect on whether they really want to follow the Wall Street herd even if recruiters do eventually come knocking. At Stanford, where 37% of business school students who graduated last year took finance-related jobs, many students are looking closely at non-finance companies recruiting on campus for the first time, including Facebook, Disney, and Sony. Resnick, Hori and leaders of other schools likewise report rising student interest in alternatives to finance, particularly in areas like social enterprise, energy, and health care.

Postscript: I'm witnessing the MBA scene firsthand this year as a second-year MBA fellowship student at the Columbia Business School. Even as my classmates relish their classes and the study-hard, play-hard nature of school, some sound concerned when the subject turns to their job hunt. At the Harvard Business School, a second-year MBA candidate recently posted a blog entry poking fun at the euphemisms business school students use to explain why one internship or another hasn't yielded a full-time offer. What they say is "There wasn't a cultural fit," or "I wouldn't have gone back anyway," blogger CS@HBS writes. But what they mean is "I didn't get an offer."