How our U.S. Financial Crisis is affecting MBA's

Excerpted from WSJ.com...

"When Adrian Chan enrolled in an M.B.A. program at Hong Kong University of Science and Technology last year, he hoped to use the degree to jump industries, from information technology to investment banking.

Mr. Chan, who majored in finance in his M.B.A., pictured himself structuring derivatives or selling equities at a top-tier bank in his hometown of Hong Kong -- and earning a lot more than he did as a software developer in his past jobs at Amazon.com Inc., in Seattle, and Oanda Corp., in Toronto. Mr. Chan, who'll graduate in December into the worst financial-sector meltdown in recent history, is now perusing IT job ads.

"It's a much more competitive job market," he says. "The employers who are hiring want people with experience, and there's lots of experienced people who've lost their jobs and looking for work. For those of us switching careers, it's going to be much harder."

The fallout from the financial crisis is already starting to echo through the halls of the world's business schools. Students who had hoped for a finance career are looking elsewhere -- or bracing themselves for short-term work at much lower pay.

Admissions officers are starting to see a big jump in applications for full-time M.B.A. programs, as professionals faced with a soft job market look for ways to ride out the storm and burnish their résumés. Applications for executive M.B.A.s, which attract more senior executives whose employers typically pick up some or all of the tab, will likely drop: Companies are looking for ways to trim budgets as the global economy slows, and executive education is often seen as an extra that can go.

For most investment banks, new hires have been categorized as another "extra" that has to go, too. Many big banks have put on a hiring freeze and vowed to trim existing staff. That's likely to prompt some M.B.A. students to switch from a finance concentration to other areas, like marketing -- or at least recast their résumés to better target jobs in areas outside banking, M.B.A. professors say.

"It's early days, but even if we're not seeing that yet we will see more of it," says Jake Cohen, dean of Insead's M.B.A. program. "We had some students who had summer internships at places like Lehman, and those students are looking to switch to consulting or industry jobs." The French business school has campuses in Fontainebleau, outside Paris, and in Singapore. Insead's M.B.A. is a general management program that doesn't offer different majors.

That's not the case at HKUST -- and many M.B.A. students do take a finance concentration. Typically half the class winds up in jobs in Hong Kong's finance sector.

"We don't expect that this year, and we are warning our students that there will be a real tightening, whether temporary or not, and headcounts are being reduced at a lot of the big Western banks," says Steven DeKrey, HKUST's senior associate dean and M.B.A. program director. Mr. DeKrey, who's also the chairman of the American Chamber of Commerce in Hong Kong, says Amcham's members indicate that the hiring situation will get even grimmer, and nobody has any idea when it might improve. "Even the JP Morgans, the Morgan Stanleys, the real strong players who are on our board here, are not able to look too far out," says Mr. DeKrey.

There is one likely positive impact, educators say: Smart people who are usually snapped up by banks will wind up elsewhere in the economy, bringing a boost to other sectors.

"It'll break the hold that investment banks have on talent. The world's best investment banks traditionally take the best graduates from programs like ours," says Stephen Chambers, director of the M.B.A. and executive M.B.A. degrees at Oxford University's Saïd Business School. "I think one optimistic outcome is that the really brilliant people who used to go straight from Oxford to Lehman or Goldman are going to do something else interesting -- that might well be a microfinance initiative or an entrepreneurial venture or something completely different."

Others are likely to bring their new M.B.A. skills back to their old sector. Mr. Chan, who's doing the last few classes on a part-time basis, recently landed a six-week contract with Royal Bank of Scotland in Hong Kong. It's a rolling contract that could continue, but Mr. Chan has no idea where that will lead. RBS is one of the largest recipients of the U.K. government's bailout package, and executives there are widely expected to start trimming the organization.

The few full-time entry-level investment-banking jobs available in Hong Kong pay about 50% less than Mr. Chan had expected when he started his M.B.A. "Salary levels are coming down," he says. "If I do get a permanent job in banking, it'll be a pay drop for me." He's now going to cast the net wider and look for IT jobs as well.
The financial meltdown may be bad news for M.B.A. students, but it's good news, in part, for M.B.A. schools. Applications tend to rise sharply when economies lose steam.

"Given the job market is not so good, people say 'let me invest in myself for the next year or two,' " says Mr. Cohen, at Insead's Singapore campus. He expects applications for Insead's full-time M.B.A. program to go up by 25% this year.
One challenge facing M.B.A. students is funding: it's getting harder to get student loans in the U.S., where banks, hit by the credit squeeze, are lending less. Banks in other parts of the world are likely to follow suit as credit dries up world-wide."

Why MBA Means 'More Bitterness Ahead'

Excerpted from Time.com...

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."