Alysa Polkes winces at the punch line she’s endured like a recurring kick in the shins this year: What do B2B and B2C stand for on business-school campuses today? Despite the hype, Polkes says that “back-to-banking” and “back-to-consulting” are oversimplifications of a fascinating era in MBA recruiting.
“A student who would have worked at Homestore.com last year is not going to pursue corporate finance at Morgan Stanley this year,” says Polkes, director of the MBA career center at UCLA’s Anderson School of Management. “Most of the students heading into banking and consulting this year were never interested in dotcoms in the first place.”
Anderson is one of many American business schools monitoring seismic activity on the recruiting landscape. Fewer Internet startups are tapping business schools for interns and full-time employees this year, which is not shocking considering the dismal fates of Pets.com, Go.com, eToys, and countless other Internet pure plays in the past six months. And considering the 15,000 people who were laid off from Internet-related companies last month, it stands to reason that fewer students will pursue career opportunities at the dotcoms left standing.
The more shocking news is what’s not changing at places like the University of Chicago Graduate School of Business and Columbia Business School. According to Glen Sykes, director of the University of Chicago’s office of MBA career services, the class of 2000 pursued jobs in consulting and banking with more fervor than many previous classes. In the midst of last year’s dotcom euphoria, 34% of Chicago’s graduates entered investment banking, and another 32% entered consulting — the highest percentages in recent history. Likewise, the Wharton School of the University of Pennsylvania reports that 17% of last year’s graduates entered the high-tech field while more than 50% pursued careers in either banking or consulting.
“Last year, we saw a large number of students go the traditional route at established firms,” says Regina Resnick, director of career services at Columbia Business School, which placed more than half of its students in the financial-services industry last year. “I smile when people ask whether our students are returning to banking and consulting. Returning? They never left!”
However, high-tech and Internet companies did garner more interest on the West Coast last year. The Haas School of Business at UC Berkeley saw 25% of its 2000 graduates enter high-tech careers; the Stanford Graduate School of Business saw 24% of its students do the same.
Abby Scott, director of MBA career services at the Haas School, is quick to point out that the high-tech sector comprises large and small, dotcom and non-dotcom companies alike. In fact, the dotcom crisis has not curbed interest in the high-tech industry at large. Haas expects a majority of its 2001 graduates to remain in the tech-heavy Bay Area regardless of regional economic changes.
Though it’s fallen out of favor with venture capitalists and media critics, Silicon Valley remains ground zero for many second-year business-school students. Late last month, about 200 students from the Sloan School of Management at MIT traveled to northern California for the school’s annual Tech Trek — a weeklong research and recruiting trip that made stops at Silicon Valley stalwarts like Oracle, Sun, and Intel. Grace Webber, a second-year Sloan student who attended Tech Trek, says that her colleagues were most interested in visiting the less sexy, infrastructure companies that form the backbone of the Internet.
“The backlash is not against Silicon Valley,” Webber says. “The backlash is against startups — particularly e-retailers — that have neither a differentiated business model nor the leadership needed to dominate their market space. Today, students are looking to the high-tech companies that deliver the bandwidth, technology, and speed that makes the Internet tick.”
Indeed, Resnick expects Columbia students to gravitate toward high-tech jobs at more established companies in Silicon Valley and Silicon Alley this year. “The Internet is not going away,” she says. “High-tech recruiting will remain steady this year, but our students will turn their focus from content to conduit and from e-commerce to infrastructure.”
The Appeal of E-Divisions
The rise and fall of e-consulting shops like Viant, Scient, and Marchfirst has affected recruiting practices at mainstream firms like Deloitte & Touche and Accenture, says Resnick. MBAs frightened by the recent pink-slip frenzy, yet still interested in the high-tech sector, are flocking to well-known firms with new Internet-strategy divisions.
“An awful lot of graduating MBAs are asking to work on e-business projects within larger companies,” says Webber, who will accept one of several offers from consulting groups this winter. “As e-business issues become more prevalent at large consulting firms, students will gravitate toward that new sector.”
Don’t Call It a Comeback
Because they can predict hiring needs better than smaller tech companies, investment banks are often among the first employers to extend job offers. Though MBA acceptance rates are not yet available, Sykes expects more University of Chicago students to decide quickly to accept offers from firms they interned with last summer.
“There’s a certain degree of uneasiness on campus because the economy seems to be shifting,” Sykes says. “Firms are telling us that so far, they are experiencing a higher-than-normal acceptance rate from former interns. That’s clearly a sign of economic uneasiness from students.”
Sandra Buchanan, manager of university relations at J.P. Morgan & Co., is not so quick to credit economic anxiety for her company’s recent success at B-schools. Consolidation within the financial-services industry is opening up new, attractive opportunities for graduates looking to work at an industry powerhouse with locations and opportunities around the world.
Bad News for MBAs
MBAs are more anxious now than they were one year ago — and with good reason. Today’s graduates face stiff competition from each other and from scores of dotcom refugees.
“Many of our new competitors are MBAs who graduated a few years ago, joined a dotcom that recently collapsed, and now want to enter a new marketplace,” Webber says. “Those people who have been in the industry for a few years have an advantage because they hold a stronger and richer network of contacts in the industry.”
At Anderson, Polkes says that last year’s cockiness is being replaced with nervousness and apprehension as more employers warn the career center of scaled-down recruiting needs. Sykes says that the University of Chicago has doubled its number of interview workshops for students looking to get a leg up on other job seekers. And both schools are drowning in alums — former graduates who are looking for career help as they enter Act II of the new economy.
In addition, potential entrepreneurs are less likely to strike out on their own during these uncertain times. People at Columbia and Chicago say that more entrepreneurial students are launching their careers at big companies where they can cull contacts and hone their business plans for a few years.
“Many of our students interned for dotcoms last summer that no longer exist,” Polkes says of Anderson entrepreneurs. “Now those students are trying to figure out what they want to do when they grow up, and that’s not a desirable place to be in February of your second year of B-school.”
Good News for Recruiters
This year’s recruiting prognosis is not all gloom and doom. In fact, the silver lining is shining bright for companies that have regained the upper hand with potential recruits.
“The psychology of the marketplace is changing,” Resnick says. “Companies are reasserting themselves, and they are feeling more confident in their recruiting.”
During the past five years, many of these same companies have taken cues from smaller, nimbler startups and have improved their recruiting strategies for the long haul. For example, Buchanan says that J.P. Morgan has introduced casual dress, new compensation packages including stock options, and work-life balance initiatives designed to compete with similar programs at new-economy competitors.
In fact, Polkes says that many large companies are growing strong on dotcom failures. “I know many students who left a Nestlé or a General Mills to work for a dotcom,” she says. “Now they’re back at those companies, and it all happened within less than a year. Larger companies are having the last laugh: Those companies are welcoming back employees who are more technologically savvy now than they were when they left.”
Companies aren’t the only winners here. Webber suggests that the dotcom shakeout has cleared the job-search landscape for business-school students who had difficulty separating the champs from the chumps in years past. She says that a Darwinian effect has wiped the horizon clear of weak business models. “If a company is well-funded at this point in time and its competitors are piling up by the wayside,” she says, “you can feel more confident about joining the staff.”
Finally, Polkes says that students will benefit from harsher career competition. Like they say, If it doesn’t kill you, it makes you stronger.
“Last year, students weren’t thinking about long-term growth and development when evaluating opportunities from companies,” Polkes says. “Now the threat of a recession is forcing students to assess their skills, interests, and values, and to choose a job that will broaden their portfolio of skills over time.”