PricewaterhouseCoopers is one of the largest employers in the world for MBAs and consistently rates as an “employer of choice” among business graduates, but tighter competition for MBA talent inspired it to redesign its recruiting strategy this year and boost its salary offers. After several years of a down market, MBA hiring is back.
PricewaterhouseCoopers hit 15 business schools nationwide in 2005 with a full recruiting team, including alumni and partners who can talk to candidates in detail about the firm. The company has shaped its message around the idea that it is a “different destination” for MBAs.
“We emphasize that they will be working with the CEOs and CFOs of our client companies right away,” says Amy Van Kirk, national campus recruiting leader. “It’s more important than ever that we deliver the right message because of the heightened competition for candidates.”
In a 2005 survey conducted by the MBA Career Services Council, two-thirds of the MBA schools reported an increase over 2004 in the number of companies recruiting on campus. According to survey data from the Graduate Management Admission Council (GMAC), only 30 percent of MBA recruiters reported that the economy is weak and constraining their recruiting plans, well down from 69 percent in 2001.
Hiring newly minted MBAs is a cyclical event, with companies recruiting direct-from-industry candidates during a down economy and adding in new graduates when conditions improve. But the 2005 surge in MBA hiring may go beyond the normal cyclical flow. In recent months, Jackie Wilber, director of MBA career development at MIT’s Sloan School of Management, has seen a quantitative and a qualitative change in recruiting.
“The rate of change in business is accelerating and business competition is higher, so there is more pressure to recruit the best possible candidates,” Wilbur says. “This goes well beyond the pressures created by a good economy. Companies are moving the bar higher.”
Metrics for the Newly Minted
Recruiting new MBAs is still a campus event, with 82 percent of the companies using campus recruiting to meet candidates with MBAs this year, according to the GMAC survey, which reports responses from 1,691 corporate recruiters. More than 70 percent of Sloan’s new MBAs are recruited through school-facilitated activities, and almost 40 percent are recruited on campus. At the University of Pennsylvania’s Wharton School, more than 60 percent are recruited on campus.
Recruiters visited an average of 3.2 campuses to fill their MBA positions in 2005, up from an average of 2.6 campuses in 2004, according to GMAC. The largest companies hit an average of 12 schools. Average recruiting costs per new MBA hire are $12,073 this year. Half of the companies recruiting new MBAs are hiring for entry-level positions, 63 percent are recruiting for midlevel positions, 12 percent for senior-level positions and only 5 percent for executive positions.
The average starting salary for MBA graduates for 2005 is $78,040, with total cash compensation averaging $96,657, according to GMAC. At Sloan, the highest annual base salary offer for 2005 was $240,000. At Wharton, private equity firms recruited 2005 MBAs with base salary offers ranging up to $330,000. Median total compensation for Wharton grads was significantly more than $100,000 in most industries.
Seventy percent of Sloan’s class of 2005 received signing bonuses that averaged $18,000. The use of signing bonuses is driven by the industry and the company, not by the individual candidate, Wilber says. For PricewaterhouseCoopers, signing bonuses are a standard part of the deal.
Although PricewaterhouseCoopers and other companies found it necessary to boost starting offers this year, salaries for new MBAs dropped 10 percent to 15 percent during the 2001-2003 recession and slowdown and are still recovering from that decline. Still, base salary offers combined with annual bonuses, benefits and signing bonuses plus recruiting costs translate into a hefty price tag for talent.
Recruiting in the Stratosphere
Despite the large sums on the table, the top MBA candidates aren’t looking for money. Sloan’s MBA candidates uniformly put salary dead last when they list their most important factors in considering a job offer. “Students have an expectation that they will be compensated fairly, so salary is simply not a factor,” Wilber explains. “As long as the compensation package is in the ballpark, students look at other factors.”
It’s highly likely that the offers will be in the ballpark. MBA recruiters don’t work in a perfect labor market, but students and recruiters both have access to extensive information on the salaries commanded by MBAs at top schools. “All the top companies that are recruiting MBAs are fairly consistent with their salary offers,” Van Kirk notes.
Job content is the key factor in attracting MBAs, Van Kirk says. “Candidates are looking or a wide range of opportunities. And they want direct exposure to top people.” The Sloan candidates rank job content first, followed by job function, industry, corporate culture and growth potential.
Recruiting from the top of the MBA heap is a rarefied activity. The top recruiter at Sloan for the past decade is McKinsey, which scoops up an average of 30 Sloan MBAs each year, according to Wilber. But IBM, Boston Consulting Group, Goldman Sachs, Microsoft, Deutsche Bank, Pfizer and other top companies appear on the campus each year. This year, Apple recruited at Sloan and drew considerable interest because of its innovative new products.
“The recruiters who do well are those who take the time to craft a message that resonates with students,” Wilber says. “The message expresses growth potential, challenging work and an environment where other smart, ambitious people work.”
Although the message is important, the process may be more critical. “The most successful recruiters treat students as individuals, and their communications are consistent and timely,” Wilber reports. “They eliminate ambiguity. If they say they will call you tomorrow, they call you tomorrow. Recruiters fail when there is an absence of information and follow-up.”
While recruiters deliver lucrative jobs to the business schools, the schools provide a huge service through their long-term, detailed screening process. From the day a candidate applies for admission to the program right through to graduation, the top MBA schools conduct ongoing screening and evaluation, with information passed on to recruiters.
In the GMAC survey, employers reported that the highest proficiency they seek is in “ethical conduct,” but ethics is not part of the active conversation between recruiters and candidates at Sloan, according to Wilber. “Ethical conduct is assumed,” she says. “It’s also assumed that we have screened for intellectual capacity in our admissions process and in the program. Recruiters rely on us for this.”
Direct From Industry
Recruiters looking for MBAs already in the workforce face a more circuitous path. Some begin with niche job boards such as TheLadders.com, the New York City-based online job board for positions paying $100,000 or more. Seven thousand recruiters routinely troll the site for MBAs. More than 35 percent of the candidates available through the site have an MBA, and the vast majority have one to 15 years of experience as well. On December 17, the site will go live with a searchable database of more than half a million candidates in the $100,000-plus market.
“The recruiters using the site are roughly half corporate recruiters and half executive search firms, which is an accurate reflection of how companies hire candidates into $100,000-plus positions,” CEO Marc Cenedella says. “Once companies move into that salary range, they know they can’t use an entry-level HR coordinator to handle the hiring. They need a senior professional, either an in-house vice president of HR or vice president of staffing, or an out-of-house executive search consultant.”
On TheLadders.com, recruiters look for credentials that back up the experience, but they are most interested in what the candidate has been doing for the past three to five years. “The MBA is the icing on the cake,” Cenedella says. “There are few jobs that actually require a MBA outside of the realm of McKinsey and Goldman, but there are many where the company’s experience indicates that candidates with MBA skills may be the best fit.”
TheLadders.com uses strong messaging to weed out unsuitable candidates. It also tests a core sample of 100 résumés a week. “About 85 percent are right on target; 10 percent are $100,000 people, but there is an unrealistic expectation in their job goals; and 5 percent are garbage,” Cenedella says. “On a big, broad job board, if 10 percent of your résumés are good, you’re ecstatic. One recruiter who put a vice president position on Monster received 2,600 résumés and summarily threw half in the trash. On TheLadders.com, a typical job receives 15 applications.”
With the market for MBAs decidedly tighter than it was even a year ago, recruiters have a harder job and are likely to see tougher recruiting conditions well into 2006. Current unemployment rates for management, business and financial operations employees stood at a slim 2 percent in October 2005, down from 3.3 percent in January 2003, when the economic downturn touched off a freeze on management hiring, according to Bureau of Labor Statistics data.
With markets this tight and starting salaries so high, companies may increasingly turn to developing MBA talent within the organization through reimbursement and sponsorship programs. According to GMAC, 38 percent of companies reimburse or sponsor employees for full-time MBA programs, 63 percent support employees for part-time MBA programs, and 53 percent provide support for executive MBA programs. If you can’t buy MBAs, you can still make them.