Finance: Still a Popular Destination?

Almost a third of Tuck's grads went into finance

Take a peek at the latest statistics.  At many business schools, they're out and available. MBA graduates from the Class of 2013 have launched their post-business-school careers, and they haven’t avoided financial services as much as the popular impression suggests. 

True, countless thousands who've entered and finished graduate business school since the worst days of the crisis opted not to pursue banking, trading and investment management or other financial-services paths.  The industry has endured transformation of all kinds (regulation, business restrictions, non-stop restructuring, and souring popular sentiment).  And it’s true, too, the industry had become a turn-off to some smart students who in years past would have pursued investment banking without a thought.

In current times, the rewards, comforts and predictable career paths in finance are still uncertain. Don't forget, too, the knocks on jobs and roles that had once been perceived as  prestigious and awe-inspiring on the cocktail circuit.  Many MBA students at top schools, so goes popular sentiment, will likely prefer more humane, more constructive routes in a long business career.

But the statistics are out for recent business-school classes, and they suggest MBA students continue to flock to certain areas in financial services.  Finance will still attract those who are inherently interested in finance, those who have finance in their bones, so to speak. 

Perhaps the numbers are not surging as much as they were pre-2007, but they aren't insignificant.  Or  perhaps banks, investment managers, and trading firms are doubling down to make special efforts to present themselves more fashionably to students, describing career opportunities better, and promising easier lives on the work-life-balance front.   

However, perhaps the industry is more defined, better understood after all the years of restructuring and gearing up for an environment ensconced in new regulation.  Of course, some hard-core students, fascinated by markets, deals, transactions, and cash flows, will head toward finance despite what they hear, see or are told.

Compensation helps, too.  It continues to be one attraction.  Data and anecdotal evidence suggest financial institutions still pay well, even if the industry pulled back and rationalized (and reduced) compensation after the mid-2000’s splurge.

Let’s take a look at Dartmouth-Tuck, a Consortium school. Its career-advisory unit recently shared data for the most recent graduating class after it received a sufficient number of responses from departing students. Tuck is a good example, because it has an outstanding history preparing graduates for Wall Street, has attracted large numbers interested in finance since its early days, and has a reputable finance division.  

The Tuck data indicate consulting is the hot spot these days.  MBA graduates are flocking to what is referred in campus jargon as "MBB"--McKinsey, Bain and Booz. In Tuck's Class of 2013, consulting firms hired 27% of the class (and offered the highest amounts in compensation).  In all, 33% are working in consulting roles, including those working at non-consulting firms or working in the consulting arms of the big accounting firms (Ernst and Deloitte, e.g.)

For some MBA students, consulting offers an experience, similar to what they might have received at an investment bank. They get to do extensive research and analysis.  They get to study corporate strategy and make recommendations regarding growth, expansion, and acquisition. They participate in “live transactions” and prepare exhaustive presentations for clients. They travel around the country. 

They also get to have meaningful contact with clients and sit in meetings with clients' senior managers.  Some become experts in the industries of their clients. Hence, while consulting has always been a favorite first job for MBA students, consulting might be swiping a handful of those who a decade ago would have marched right into Goldman Sachs or Morgan Stanley (or Lehman Brothers, back then) at the first whiff of interest on the banks' part.

Yet the numbers going into finance haven’t dwindled that much. MBA graduates at top finance business schools like Tuck (and arguably NYU-Stern, Michigan-Ross, Virginia-Darden, all Consortium schools) are finding their ways back to Wall Street, but perhaps in a variety of roles.  About 30% of the Tuck Class of ’13 headed to financial institutions, and about 35% are working in finance functions. In investment banking, 14% of the class went to work there; 11% are working in classic investment-banking functions (equity or debt underwriting, M&A, client advisory, etc.)—numbers that don’t suggest a lack of interest in  this generation of students.

Tuck’s statistics, nonetheless, show a dearth of classmates headed into private equity and venture capital (only 2%).  The small percentage stands out because many go to business school with expressed interests (and great enthusiasm) about private equity and venture capital. The numbers might reflect the scarcity of opportunity in such a fiercely competitive segment and the unorthodox ways some of these firms recruit.  (Blackstone and Carlyle may recruit at top business schools across the country, but Silicon Valley venture-capital firms may recruit informally or prefer to recruit only from across the street at Stanford).

The latest statistics may also reflect the lack of opportunities on trading desks at big banks, which have had to scale back because of new regulation.  MBA graduates interested sales and trading nowadays don’t have the chance to work in structured career pathways at a Credit Suisse or JPMorgan and will likely look for opportunities, if they exist, at hedge funds, many of which struggled last year and may not be swarming business schools this year. Some students interested in sales and trading can seek similar opportunities at investment managers (Blackrock, e.g.).

Tuck’s statistics show first-year compensation in finance hasn’t fallen into a sinkhole. But the range is as wide as ever, partly because the impressive, mind-shaking salaries and bonuses have been paid out primarily at the bulge-bracket and boutique banks in financial centers (New York, Chicago, San Francisco), and not always at the smaller, regional institutions. 

Still, in a post-crisis era, compensation doesn’t seem to always drive MBA graduates’ career decisions. Indeed these are different times. MBA graduates know the time they spend at Bank of America, Aetna, or UBS right out of school won't last decades. Furthermore, they seek flexibility and a life on weekends or seek some comfort that when the next crisis occurs, they won’t appear on a bank’s long reduction-in-force list.

Tracy Williams

See also:

CFN:  Are MBA's turned off by investment banking? Oct-2012 CFN:  Who's headed into finance, 2012? June-2012 CFN:  MBA job-hunting: No need to panic yet, Feb-2012
CFN:  Who's headed into finance, 2013? June-2013
CFN:  MBA's: Eye on summer '14, Nov-2013
CFN:  Where do you want to work? Feb-2013
CFN:  Today's bulge brackets, Jan-2013
CFN:  Goldman tweaks the banking ladder, Sept-2012

Yale SOM Gets a New Look

Yale SOM's Evans Hall opens up in January (NH Register photo)

Yale School of Management, one of the Consortium's 18 schools, is opening up a new campus facility, Evans Hall, in New Haven in mid-Jan., 2014.  The school will launch the new state-of-the-art building with receptions, lectures, presentations and celebrations of what has made Yale SOM special and unique among the panoply of business schools. The week's theme is "Leadership in an Increasingly Complex World."

The new campus will feature the marvels of business-school technology and covers 242,000 square feet, at a cost of $240 million, much of which was made possible by benefactor Edward Evans, who was an undergraduate student at Yale and later CEO of Macmillan, Inc., the publishing house. Besides interview rooms and three libraries, it will even have a student gym and entertainment space.

Yale's dean, Edward Snyder, migrated to Connecticut in 2011 from Chicago's Booth School of Business. In the midst of Chicago's Gothic maze, Booth is a modern, self-contained business school campus, the kind of campus Yale SOM students and faculty might have envied.  Once Snyder arrived in New Haven, he spearheaded the completion of a new campus, a new facility featuring the latest business-school bells and whistles. And his experience in helping to open Chicago's new doors no doubt got many SOM faculty, alumni and students excited about a new campus for Yale.

Building modern facilities is a frequent occurrence at top business schools.  They know that to attract top students, schools must pay attention to their physical being. Facilities, campus and amenities sometimes rank as high as innovative course offerings, curriculum, career placement and notable faculty when students decide whether or not to attend.  While Yale SOM attracted top students over the past decades, many alumni and school leaders felt that an impressive, separate campus was necessary to lure the student that might otherwise be more interested in attending Wharton or Harvard.

Yale and Chicago are certainly not the only schools with new campuses.  Stanford now has its new Knight Management Center, home to its business school since 2011, featuring courtyards, magical classroom technology, chic ambience and sunlit, outdoor cafe settings.  Wharton and Consortium school Michigan have also opened new campus facilities.

Yale SOM has had a colorful history. When it was launched in the mid-1970s, it wanted to be different from other schools. It offered a management-education mixture of the public and private sector.  The degree it certified upon its graduates then was the "MPPM"--a master's in public and private management, arguably a combination of the MPA and MBA degree. Graduates would be steered toward Morgan Stanley, the World Bank or Capitol Hill. At one point, the "O" in "SOM" stood for "Organization."

At times, alumni, recruiters, employers and other constituents interpreted the degree in many ways. And at times, new deans pushed the emphasis one way or the other. Eventually SOM settled on the MBA degree, and it has tweaked the definition of what that means from time to time. In its first three decades, Yale SOM didn't have a separate facility, but existed in a pleasant, neighborly network of "houses" on Yale's Hillhouse Ave.

The new Evans Hall reinforces the notion that Yale SOM has become a top business school in a classical way, although the school, more than many others, tends to walk and run to its own drumbeat by remaining small and enjoying experiments with new ways of instruction or new approaches to the MBA experience. Its integrated curriculum is its latest novel approach.

Yale joined the Consortium in 2008 and has graduated dozens of Consortium MBA's since then. 

Yale being Yale, the school and new facility will seek to fit in well with the rest of the Yale campus.  Evans Hall, with blue hues, courtyards and exquisitely selected artwork, wants to be identifiably Yale, circa 2014.

Tracy Williams

Fighting the Gender Fight at HBS

The pot is stirring at Harvard Business School

Harvard Business School made the front page of the New York Times last weekend.  It wasn't because one of its alumni is perched atop a Fortune 500 company or another announced a blockbuster merger with another mega-company.  It wasn't because one of its alumni is waging a ferocious shareholder campaign to take over a multinational company. And it wasn't because one of its alumni is the announced head of McKinsey, Goldman or Booz Allen.

It was because its dean and staff are fighting a fierce fight to change the culture of the school and make it more accepting of the growing number of women on campus. According to the article, women now comprise 40% of the students in the business school. But the culture still remains entrenched in male dominance--in case-study groups, in classroom discussions, in the assembling of secret societies ("Section X," one is supposedly called), and in seizing the highest-compensation opportunities after graduation (especially in private equity, venture capital, investment banking and consulting). The article points out how males at the school are better at "touching the money," finding easier pathways to lucrative job offers.

Harvard, in the article, is applauded for recent successes and progress. It highlights the efforts of Dean Nitin Nohria and his team of administrators, who want to spawn an environment where women can thrive. And they want to change attitudes and increase the number of women faculty.

In business school, class participation, the art of leading discussion and presenting ideas and arguments, can comprise much of the final grade in a course.  In many Harvard courses, participation, as subjective as it is assessed, can be as much as 50% of the final grade.  Harvard administrators want to change how professors assign participation grades, because aggressive, outspoken males in class--honed by aggressive styles from stints in banking and trading--dominate class discussions, outshine others, and dismiss input of females in class.  Harvard wants to change the classroom dialogue and the benchmarks by which students are evaluated.  They are even recommending women to attend sessions on how to raise their hands (highly, visibly and confidently) in class.

This revolution of sorts, a punishment of old, male conventions and traditions at Harvard, has been welcomed by many, but has caused uneasiness, discomfort in others. The Harvard administrators press on, aware that right now the impact is cast only on campus and that the current group of students are part of a grand experiment.

Frances Frei, one of the deans on staff in the business school, is the face of many of the changes, the one who has decided progress is possible by making "unapologetic" (her favorite word) moves and making things uncomfortable for the old guard.

The article highlights what most have speculated about HBS for years--that the experience of attending the school involves intense immersion inside the classroom, in case groups, and, perhaps most important, outside the classroom in networks, social interactions, and after-hours gatherings. Social success, social connections and even social match-making, it seems, count as much, if not more than, aptitude inside the classroom--in finance, marketing, accounting, and operations management.  Some students worry more about social dynamics than about basic principles of valuing a corporation.

That might be disconcerting to some, especially to those who deem themselves unconnected, disadvantaged, or without means or ties to the business elite. That might be fresh air to those with connections, special ties, and less of a knack for dissecting financial statements, cash flows, and volatile currencies.

That's not the way it should be, asserts HBS's current leadership. And the leadership has decided it will change the ways of the school even if it means making unpopular decisions, some of which have rankled many who knew Harvard better as a two-year fraternity for the sons of the elite.

Will HBS succeed? Will the experiment work? Or will it work on campus, but its impact will simmer once its 900 graduates march off to a resistant real world?

Harvard staffers are operating on an old premise for overhauling a culture. Making changes sometimes means inflicting discomfort and pain. Old ways, old patterns and old prejudices against women must be smashed, not just gingerly dealt with. Taking bold steps requires stirring the pot.  Not only is Harvard guiding female students on how to raise their hands in class, but it is monitoring the tone and flavor of discussion in class and evaluating professors on grade participation. It is even setting strict rules on the costumes women might wear or the parts they play at theme parties or end-of-year follies.

Harvard deans understand that changing Harvard won't mean sudden changes in hiring practices and the work environment at private-equity firms, venture capital firms, banks, trading floors and consulting firms. They hope for some eventual trickle-over impact.  They know what they do at Harvard will be watched and replicated at some business schools--at least those schools that have harbored similar cultures of marginalizing women. They know, too, that graduates today will one day become decision-makers, business chiefs and industry leaders in due course and could be influenced by values they adopted in school.

Has Harvard (not a Consortium school), however, addressed similar issues and a similar feeling of disenfranchisement among under-represented minorities on its Boston campus? Maybe not. Or not as vocally. Some among under-represented minority groups will avow they, too, sometimes feel excluded from social groups or closed, social societies on campus or feel uncomfortable raising their hands and presenting their views in classes filled with boisterous former investment bankers on the front row.

Harvard, or at least this group of deans running the business school these days, hopes that a plan that helps resolve gender issues is a plan that crosses boundaries and creates a culture that is a comfortable, conducive setting, so that everybody can thrive--not just brash former M&A bankers taking a two-year break from Wall Street. 

Tracy Williams

See also:

CFN:  Venture capital and Diversity, 2011
CFN: MBA Diversity:  A Constant Effort to Catch Up, 2012

Georgetown Becomes The Consortium's 18th

Consortium Gets DC Footprint

On deck is Georgetown's McDonough School of Business.

This week The Consortium selected Georgetown's business school as the 18th Consortium school. Georgetown will join the other schools formally in July and start admitting Consortium students in the fall, 2014. Consortium Executive Director Peter Aranda made the announcement June 24, marking The Consortium's first new school in three years. Over the past five years, besides Georgetown, The Consortium has added Cornell, Yale, and UCLA and invited back UC-Berkeley after it departed in the early 2000s. 

Georgetown follows the footsteps of other prominent business schools affiliated with The Consortium, including such schools as Emory, USC, Yale, Texas, Dartmouth, Wisconsin, and North Carolina. 

What does Georgetown bring to The Consortium table? It gives the organization an immediate footprint in the Washington, DC, area.  Consortium business schools, often known nationally as top schools by just about anybody who ranks, rates or evaluates MBA schools, are scattered about the country with imprints in major metropolitan areas (e.g., New York, Los Angeles, Atlanta) and with a presence in most regions in the U.S.  But The Consortium had not had a representative school in Washington. The closest business school is Virginia's Darden School.

That attractive location is another plus for a prospective MBA student. Strong MBA applicants have well-reasoned criteria when they choose among top schools.  They examine and choose schools based on course offerings and curriculum, based on a school's strength in certain concentrations (finance, marketing, international business, e.g.), based on faculty and staff they meet in the wooing process, and based on a general vibe, a comfort feeling they are well-suited for the school.

They also may select a school based on geography.  Most strong applicants visualize their lives after school and try to determine where they want to launch careers, where opportunities will be plentiful and where they want to reside over the next decade.  Opportunities and lifestyle in Atlanta will, therefore, make Emory's business school attractive. Opportunities in technology entrepreneurship and Silicon Valley will make UC-Berkeley attractive. The lure of the Midwest will drive Indiana and Wisconsin to the top of lists. For years, NYU has benefited from being a long stone's throw from Wall Street.


Opportunities in international business and Washington being at the crossroads of critical activity in business, law, and government service make Georgetown attractive.

Georgetown's McDonough School is now under the helm of Dean David Thomas, who arrived on campus within the past two years after a heralded career as a professor at Harvard Business School. His specialty there for two decades was organization behavior and human-resource management.  He has already made impressions along the Potomac. For example, taking advantage of the university's strengths in international business and affairs, the business school now requires first-year students to spend three weeks studying the "Structure of Global Industries," which provides a blueprint for students to study all aspects of business from a global perspective.

Thomas apparently also figured the school could do better in diversity initiatives, starting with the student body.  Georgetown hired Shari Hubert as associate dean of admission to increase diversity in applicants and matriculating students. Hubert, an MBA graduate from Harvard, has extensive experience in recruiting in positions she held at Citigroup, GE Capital, and the Peace Corps. Joining The Consortium was an appropriate next step for Thomas and Georgetown.

The McDonough School's MBA program is of modest size by most standards with about 250 students in a full-time MBA class--about the size of Dartmouth's Tuck, not as big as the programs at NYU or Michigan.  (The school has about 1,000 MBA students--including part-time and executive programs--and about 1,400 undergraduates.)

Otherwise, its profile is as familiar as those at other Consortium schools.  Students typically have about five years of work experience and are about 27-28 years old on average. About 1,800 prospects apply to the full-time program with admission rates hovering around 35%.  About 30% of recent classes are women. Also like other top schools, a significant percentage of graduates go into finance (28% in a recent year) and consulting (26%).

This bundle of advantages will now make for tough decisions for the prospective Consortium applicant, who--if she decides she wants to remain on the East Coast--must ponder choosing among rich business-school experiences at Virginia, North Carolina, and now Georgetown.

Tracy Williams

See also:

CFN:  Cornell Makes 15, 2009
CFN:  Welcome Back UC-Berkeley, 2010
CFN:  California Dreamin': UCLA Joins The Consortium, 2010
CFN:  Is the MBA Under Attack, 2013?
CFN:  The Global Imperative on Campus, 2012

Who's Headed into Finance in 2013?

Cornell attracts its share of Consortium finance MBAs

On your mark. Get set. This week, over 300 new Consortium students will launch their campaigns to earn an MBA by heading to New Orleans for the Consortium's 47th Orientation Program.  As in previous years, they will be engulfed by activity, events, recruiters, school staff, seminars, sponsors and celebratory gestures. For most of them, OP is a festive, uplifting time. They pause and take a week-long breath before embarking upon the frenetic pace of graduate business school. 

Among the new MBAs, who's headed into financial services in 2013?

How many among the 300-plus have expressed an interest in concentrating in finance at school or a career in financial services? As they take new twists and turns over the next two years, what do they aspire to do when graduation comes in 2015?

Let's consider the current environment.  The awful, dreadful financial crisis is receding into memory, although there is a haunting, lingering impact. The crisis and economic recession caused upheaval and changed the landscape at banks, broker/dealers, investment funds, insurance companies and private-equity firms.  Financial institutions are rushing to hire just as many experts in compliance, risk management, regulation and technology as they are in luring investment bankers, brokers, wealth managers, and traders.

With steady improvements in the economy  and with remarkable upturns in equity markets, this year's new MBA students won't need to whisper when they declare an interest in financial services. The job or role they dream of may actually exist in two years. Or the job or role may turn out to be something they never knew existed in their first days of a corporate-finance core course.

The new class of Consortium students, after the OP, will disperse and head off to 17 different Consortium business schools all across the country.  Of the total, over 130 have expressed some degree of interest in financial services, even if it is a tentative or preliminary interest. That number already suggests renewed confidence. In previous years, especially during the morale-plummeting crisis years, fewer than 100 dared to raise a hand to say they were interested in banking, trading or investment research.

Many of them, like other non-finance MBA students, are in career transition. Some are opting for finance after stints in other fields (non-profits, public service, engineering, or marketing).  Some are currently in banking or trading and will use the MBA (and what they learn in class) to leap from one segment to another (from, say, private banking to equity research).

No doubt they understand what they are about to take on.  They know this isn't the 1980s, when an MBA graduate Dartmouth could join Morgan Stanley's corporate-finance unit and plan to be there for 20-plus years and, with confidence, take steady, resolute steps to managing director.  They know it's possible Morgan Stanley may not exist (in the way we know it today) in 20 years. (Drexel Burnham, Bear Stearns, Salomon, and Lehman Brothers, favorite firms for MBAs in the 1980s, don't exist in 2013.)

They know they must plan a career in five-year segments. Even in finance, they know they must reinvent and rebrand themselves all the time and be willing to try something new when pushed against the wall. They know they must explore a variety of institutions, segments, roles, and options.  They know, too, the best opportunity may not be at Goldman or Citigroup, but could be at a regional investment fund, at a financial institution in Brazil or at a futures brokerage in Chicago.  If they don't know now, they will learn that roles in compliance, risk management and financial regulation are more valued by some banks than first-year jobs in M&A or on the currency desk.

MBA students in finance (including those at Consortium schools) tend to head to business schools with strengths in finance, where finance faculty are widely known and where finance recruiters swarm. They also head toward schools that already have a large concentration of students in finance. They want to be with others with similar aspirations or they don't want to be at a disadvantage. Like-minded students want to be with each other.

In this year's class, Cornell and NYU business schools will have the largest number of Consortium finance students. Michigan, Texas, Virginia, Yale and Indiana follow closely behind. These numbers are as expected, because these schools tend to support the largest numbers of Consortium students and some of them have historically attracted many students with an eye on Wall Street, banking, private equity, or investment management.

Students today, including Consortium students, are mindful to keep they must keep options open. When they are asked to indicate an interest before they start school, they will likely show many hands.  Many finance students will say they will pursue finance, plus something else. Often, that will be finance and consulting or finance and marketing.

Consortium students in the Class of '15 are similarly spreading their wings, while they have primary objectives. Over a dozen expressed an interest in venture capital and are likely aware of the difficulty in securing a position in a major venture firm, particularly one that resides on Sand Hill Road in Silicon Valley. Venture-capital firms hire MBAs from top schools and cherish candidates with strong technical experiences (and degrees), but are notably erratic in how they bring on whom they hire.

Another dozen or so are interested in investment banking. That wouldn't be unusual in any class. Despite the topsy-turvy world of investment banking (Who's laying off or reducing staff this week?), investment banking is still an important segment of finance, it will always be here, and there still remains the lure of working for such firms as Goldman Sachs, Lazard Freres, and JPMorgan.

Many more also say they will explore financial management, which captures areas from private banking and asset management to corporate finance at non-financial companies.  Others are interested in finance in specific industries:  real estate and energy, e.g.

The pairing of finance and consulting seems to be as popular as ever.  That might be a result of some students aiming for a particular firm experience (at, say, Goldman Sachs or Booz Allen or Blackstone), hopeful for an opportunity to have a prestigious, meaningful experience in their first few years and not necessarily loyal to a particular industry. Or they wish to be in an advisory function, which is what investment banking and consulting are about.

Not many expressed an interest in community banking, insurance, or financial brokerage.

Students willing to explore multiple concentrations also suggests a few more trends: (a) They know that the optimal dream job for an MBA graduate may not yet exist or is still in the making or (b) They may not yet be familiar with industry details to know they might be suitable for a certain segment. Many MBA candidates will learn over the next two years (or after they are hired by a financial institution) they are best suited for roles in risk management, audit, compliance or research.  The business-school experience is supposed to permit students to explore, get their feet wet in alien territory, and test new fields.

The daunting rat race of the recruiting process hastens the exploration effort, and that's unfortunate. It thrusts the new student into a boiling pot, where they must make career decisions overnight. Students declare where they will go to school in April or May, and by August, before they have sat through one marketing case study, they are swept into the helter-skelter pace of finding a summer internship.

For now, they get to explore, contemplate, and plan.

Tracy Williams

See also:

CFN:  Outlook for MBAs, 2013
CFN:  Consortium Orientation Program, NOLA-Bound, 2013
CFN:  Consortium Orientation Program, Minneapolis, 2012
CFN:  Consortium Orientation Program, 2011
CFN:  Consortium Orientation Program, Orlando, 2010
CFN:  Consortium Orientation Program, Charlotte, 2009

MBA Professors: Who's the Best?

NYU's Damodaran: Finance Pundit

Take any prominent business school, any of the schools recruiters and prospective applicants gush over. There is likely on campus a well-known, popular, favorite teacher, a campus legend who exudes business-school royalty. That professor would be the one whose course is in saturated demand and is a hot attraction.

That's the professor who has the knack for making corporate finance or economics lectures sparkle, who ignites the classroom with animated discussions of business decision-making, business strategy or financial maneuverings. She is the professor who delivers the lecture in operations research or derivative products with verve--an actress at the podium who explores a business-school case as if it were a movie script.


He would be the professor, an expert in his field, who commands in-depth knowledge in his subject, who has written tirelessly on the topic, and who is likely the industry's go-to source to explain to the public a financial trend, a theory of markets, a marketing ploy or the science of pricing goods. 

In finance, she would be the professor who transforms an intermediate accounting lecture into Broadway drama, successfully able to explain concepts of cost of capital or cost of goods sold with conviction and passion. And her students would get it.

In the world of business schools, lists abound everywhere: lists of top schools; lists of top places to study finance, marketing or non-profit management; lists of schools whose graduates have the highest starting salaries, and lists of schools most favored by recruiters.

There are now even lists of top professors.  How is it even possible to assess, rate and rank thousands of MBA professors across the country in an unbiased way? How do you assess fairly what it means to be a top professor? List-makers do it regardless, notwithstanding the subjective, whimsical nature of rankings.

Disregard for a moment the validity of rankings and lists. You might notice one name that tends to appear on many lists of top MBA professors, partly because he is indeed a highly respected professor. Or it's partly because he is popular with students, who fawn over his lectures and dive into his blog postings and writings. It's partly because they absorb his message and are stirred by it enough to jump into the dialogue. It's partly because of his masterly manner of communicating, an ability to explain finance in ways that are colorful, relevant and intriguing.

That professor would be Aswath Damarodan, a corporate finance professor at Consortium school NYU-Stern (who has likely taught dozens, if not hundreds of Consortium students over the years).  He has written several books on corporate finance, taught a generation of students at Stern, and, thanks to the the breadth and immediacy of the Internet, has blogged weekly on just about any finance topic he feels deserves his attention, insight and analysis. In a typical blog posting or essay, he explains the topic, provides analysis and shows trends, adds background, adds insight, and, as if he can't wait, offers a striking opinion. Sometimes it's an opinion that bites or hurts or certainly goes against popular discourse.

There are few finance topics he isn't afraid to address. His willingness to reach out to students (and alumni and just about anybody interested in finance), his eagerness to engage in dialogue with the public are likely a prime reason he appears on top-prof lists.

His blog postings, for sure, could be required reading for advanced students and even jaded investment bankers who might want to understand (big picture) the business they conduct (although his tone regarding investment bankers won't win fans from this crew).  His postings and explorations of ideas might help bankers and company CFOs understand whether the direction they are headed in  a deal is a path that benefits shareholders or a path that leads to financial doom.

In arguably the biggest corporate-finance headline of 2012 ("What should Apple do with its billions in cash?"), Damodaran gladly inserted his views, an analysis that would earn in buckets of fees if he were the mandated adviser.  Providing a fresh valuation of Apple shares, he conveys his blunt disappointment in Apple CEO Tim Cook: "I see Mr. Cook go from forum to forum, saying nothing of substance and wreaking havoc on the stock price almost every time he talks."

(This week, he updates his occasional analysis of the company, based on recent earnings, and he decides it is still safe to hold on to Apple stock, if you hold it. He had not yet analyzed the details of Apple's $17 billion debt offering, although he suggests accruing more debt could be a good thing at Apple.)

Damodaran has built his reputation and star power at Stern over 27 years.  He holds an MBA and Ph.D. from Consortium school UCLA.

The postings, his writings, and in-class discussions link finance theory and traditional analysis to current events, but he is not wedded to old theory.  For the most part, he tries to make sense of what's going on and then provide a passing point of view.

In early 2013, with gold markets headed for a free-fall, the professor stepped in to help students and his followers put some common sense around investing in gold. Damodaran, like many experienced investors (including guru Warren Buffet), wonders what's the big ado and fascination with gold as an investment, yet explains one or two cases where, in fact, investing in gold should be part of a balanced portfolio.

Damodaran won't hesitate to recommend the best way for a company to manage its balance sheet or shape its capital structure or the best strategy for buying back stock or paying a dividend. He didn't hesitate to declare that most large-scale acquisitions don't make sense in the long term.  Moreover, he says companies ought to do much of the deal or valuation analysis themselves and shouldn't rely too much on the conflicted advice from investment bankers.

Activist investors, such as those who have pursued an agenda with companies like Apple, JCPenney, and Herbalife, grab much of the publicity in the financial press. Some call for significant transformation in the company, whether in the board room or in production lines.  Some, well, hold companies hostage to get their agenda on the table, if only to trigger a quick short-term surge in the stock price.  Do they act against the objectives of long-term strategic investors?

Damodaran examined the question recently, weighed all sides, and decided in the end that the two groups don't act against the interests of the other.  Short-term activists, he argued, really look out for the interests of strategic investors.

Drama, flair, style and energy thrust teachers onto lists of best professors.  Damodaran, as former students would attest, has some of that, but his writings, teachings and spontaneous, well-reasoned observations about what surrounds him in the marketplace are what keeps him there.

Even the most astute MBA students in finance and those headed for cubicles at Morgan Stanley, Carlyle or Blackstone can praise his efforts to "break it all down" and tell the real story of what's going in financial markets. Consider his "Musings on Markets" a must-read for both first-year finance students and senior deal-doers.

Tracy Williams

See also:

CFN:  Most Popular Business School Professors, 2011
CFN:  Professors and the Global Imperative, 2012
CFN:  Most Satisfied MBA Alumni, 2011
 

Is the MBA under attack, too?

The MBA: Evolving and Adapting

Press reports in the past year have occasionally announced the dismal state of the law degree. They've shown the downward trends in law school applications and the widespread lack of opportunities for new law graduates. And there is a lively, fiery debate about what is and what should be a legal education. A law student spends three years in school and, after assuming huge debt loads and making boundless financial sacrifices, graduates into the great unknown.

Should she head for the dungeons of corporate law? Should he explore other channels (the public sector, e.g.), where limited opportunities for sustained employment exist? What should they do, when legal positions have dwindled in large numbers across the country in recent years? Should law schools take the lead in assisting their graduates? (Some have done just that in the past year, by hiring some of their own graduates or subsidizing them in their first-year jobs.) Should law schools spearhead a radical change in legal education by eliminating the third year of classes and permit students to launch careers with one less year of burdensome debt?

Law deans, judges, attorneys, prospective students and law professors are in the midst of a vigorous discussion about the future of the law degree and the roles and responsibilities law schools will have. (See Third-year Overhaul at NYU, Law Schools Worth the Money?)


Is the MBA similarly under attack and similarly encountering a dismal outlook? Are there similar declines in applications (to business school), decreasing opportunities across the board, and calls to contract two years of full-time business school into a fast-track, 10-12-month degree?

Or is this an apples-and-oranges debate?

Trends in applications and enrollment at law schools and business schools run along different, sometimes similar tracks. They are both affected by various factors--some the same, others very different.  While law schools experienced application declines over the past decade, business schools did so, too.  The recession and financial crisis had impact on both. Yet applications at some business schools began to rise a year or two after the peak crisis years of 2008-09, partly because some young professionals decided to try to "wait out" those years of turmoil in productive ways, by returning to school.

Both degrees are influenced by stark business factors. Banks, insurance companies, and hedge funds reduce staff quickly (and often rashly) when there is a decline in revenues, deal flow or clients. Law firms  experience a concurrent decline, too, and reduce staff or decide to hire fewer associates.  And reductions, lay-offs and bleak opportunities discourage prospects from applying to law and business schools. 

Both are influenced by the mind-boggling, irrational increases in tuition and fees.  Candidates for the MBA or JD will often have the interest, aptitude and time commitment. They will dream of coursework in legal theory, contracts, property, accounting, corporate finance or business policy. They will aspire to become partners in corporate law firms or consulting firms. But they can't rationalize the costs and the likely absorption of too much debt.  

But factors that influence financial institutions--like reform and regulation--might have a different kind of impact on law firms, which might step up to assist in regulatory compliance. Other factors--like a trend for companies to out-source basic legal chores to low-cost sites overseas-- have a detrimental impact on corporate law firms in the U.S.

Still, the swirl of nerves and a trace of panic that might be usurping some law deans doesn't yet seem to be doing the same in business schools. That might be partly due to the fact that business deans are accustomed to change and almost always encounter uncertainty about their purposes in the future.

MBA application trends at top schools slid significantly in the crisis years, but in the past year or so, there are fleeting signs of an upturn.  Consortium school UCLA, for example, had a 22% increase in MBA applications last year.  After a two-year decline, applications to Stanford Business School rose this year. (They fell below 7,000, but are approaching that magic threshold again.)

Two years ago, applications to Columbia Business School fell 19%--a cause for concern and something the school blamed on the languishing state of Wall Street, since the school has always had a bustling pipeline of MBAs going into banking and finance.  Yet applications rose 9% last year and seem to be on an upward trend again (above 6,000)--thanks in part to a more settled state on the Street. Applications at Consortium school Dartmouth have increased the past two years, and Consortium school Yale will likely boost applications above 3,000 as it moves into a new facility.

Recent reports show over 286,000 GMAT tests were scored last year--an 11% increase. That's partly attributed to the large number of foreign students interested in the MBA (16% increase).  In fact, only a third of the tests taken are from U.S.-based candidates, proving how the soaring interest from international students has helped to boost or sustain interest in the MBA.

However, a few other factors might explain why the MBA is not yet under attack any more than it has always been:

1.  Law schools, all of a sudden, find they must explore ways to reinvent themselves or redefine legal education.  Business schools, on the other hand, over the past two decades have routinely tried to reinvent, redefine and innovate--some more successfully than others, some more radically than others.  Many contend business schools still haven't kept up with the changing business times sufficiently, but few accuse them of not trying.

Witness the changes in curriculum and core courses at top schools every other year. Witness, too, how schools hopped at the chance to understand e-commerce and Internet businesses. Notice the grand push by the same schools to require international experience and courses in ethics, decision-making, and risk management. 

2.  Certain industry sectors still require the MBA degree as if it were a certification. They see specific value in the MBA and hire from the business-school pool routinely each year.  They include consulting, investment banking, and many firms in investment management, trading and research.  As long as Goldman Sachs and McKinsey thrive, it appears, they will a large batch of MBAs from top schools year after year to fill the ranks and to offset expected attrition. And as long as Goldman and McKinsey hire, others in the industry will follow suit. 

3.  Business schools try to respond to economic and business trends and to the voice of a large corporate constituency.  They listen to what business cycles suggest or what business leaders look for in a next generation of leaders.  They respond by revamping curriculum, introducing new courses in, say, entrepreneurship or international development, or by teaching the lessons learned from a recent crisis or marketing debacle. Some respond well; some respond inadequately, but most try.

4.  The influx of foreign students has changed the face of most top schools.  It's no longer unusual for top schools to have large numbers of students from India, China, Pakistan, Nigeria and Latin America.  They recruit internationals, and they have successfully rationalized the benefit of a diverse, world-oriented student body.

Foreign countries have been eager to send some high-potential junior managers to MBA schools like Virginia, Michigan or USC to learn from the gurus of management and finance--with hopes they will return to their home countries to fill the management gaps of a growing, developing economy.  Many have observed or written about China's obsession speed up economic develop by hiring trained middle managers to run an exploding (at least until recently) business growth. An MBA education, especially from a U.S.-based school, provides a solution or a quick fix.

If the topic is business schools and MBAs, there will always be debate about the relevance of MBA degrees and uncertainty about how schools encounter evolving business scenarios. Seldom a day goes by without a business-school dean grappling hard with how the school will adapt and fend itself from the factions who attack it.

Tracy Williams

See also:

CFN: The MBA--Remaining Relevant, 2011

On Campus: Midterms and Beyond

USC-Marshall (above) announces a new "MBV" program

Across the country at top business schools, MBA students keep a watchful eye on all that's necessary to secure summer internships and full-time jobs.  It requires hard, steadfast work these days to secure work. But through it all, they keep an eye on yet another ball--midterms now, final exams later. It's a task of terror to attempt to pile on 6-8 weeks of intermediate corporate finance into a few days.

On campus these days, including at the Consortium 17, students scramble to find jobs for 2013, ponder the presidential election in the days to come, rush off to case-group meetings, and bury themselves in cubicles to study for an exam in advanced accounting. The pulse is steady, even as many try not to worry too much about what will or won't happen by next summer.

Choices and Challenges

In between normal academic chores, Dartmouth (Tuck) MBA students found an interesting guest on campus two weeks ago, as part of the school's ethics program. Tuck hosts a "Choices and Challenges" series of speakers in the ethics program.  It invites guests (experts, experienced managers, or alumni) to study, analyze and ponder tricky issues of ethics in business--from managing clients, employees and business units to managing portfolios, investing in new businesses and doing deals.

Andrew Fastow, the former CFO of Enron, came to Hanover (N. H.) to discuss what the current generation of MBA students might learn from the frauds and misrepresentations of the 1990s high-flying energy company, Enron.  Fastow paid his dues by spending five years in prison. Now comes the time to share lessons learned and morals unearthed from years of Enron financial chicanery.

Fastow, who, too, has an MBA (from Northwestern), talked to students about deceitful off-balance-sheet transactions Enron employed. "I used loopholes in the rules," he said, "to get around the principles of of rules."  He spoke to students also about "degrees of fraud," how fraud is not always committed in obvious ways, but in the way of incremental decisions and steps. 

Rankings Hoopla

Business-school rankings, as just about every MBA student or dean knows, can be useful, but they can be dangerous, tricky and misleading. And among the dozen or so institutions and publications that present lists, which one (or ones) are most authoritative?  Sometimes they can be inconsistent and wrong. Yes, list-compilers make errors, perhaps more frequently than they admit.  The Economist magazine this month presented its list of the world's top business schools.  Some Consortium schools, including UC-Berkeley and NYU-Stern, appeared on the list.  The magazine, however, made an odd, somewhat embarrassing mistake with two other Consortium schools.

When the list first appeared, it placed Virginia-Darden no. 2, followed by Dartmouth-Tuck at no. 3--astounding achievements for both schools, when measured against business schools around the globe.  However, shortly afterward, to its own chagrin, the magazine was forced to announce an egg-in-the-face correction. It had made an error. Its list was not what it meant.  Dartmouth was supposed to be no. 2, and Virginia no. 3--probably an insignificant switch in a list of outstanding, prominent schools, but an embarrassment for the publication and a cause of wonder at Dartmouth, Virginia and perhaps all top schools.

Does this mean that such lists are wreaked with more than a few errors, inaccuracies and misrepresentations? ("Degrees of fraud," as Fastow would say.)  Have there been cases in the past when list-producers have made errors, but were too embarrassed to announce a correction and decided to correct the error in another list the following year?

And which list to believe, use, discard, ignore or shrug off? Recent lists, for example, show the top school with the best faculty was Carnegie Mellon (Tepper) (by The Economist) and UC-Berkeley (by the Princeton Review).

An MBA for Vets

How about a new degree certification? The MBV.  USC-Marshall this fall announced a new master's in business for veterans, essentially an MBA program geared for armed-forces veterans.  The program starts in the fall, 2013. Plans call for a one-year, intensified program to leverage the experiences of verterans and to enhance leadership and organizational skills they gained in the services.
 
Trends in Apps

Business schools everywhere experienced application declines in the past year and are bracing more for declines in the coming admission season.  The reasons have been hashed, explored and analyzed.  Schools haven't concluded yet whether declines are a momentary dip or part of a new long-term trend (declines falling to a stable plateau). 

One school, Cornell-Johnson, thinks declines may be due to factors beyond the sentiments of twenty-somethings and factors beyond tuition costs and employment uncertainties. Avoiding declines can be overcome, it says, by novel approaches to recruiting. Cornell reports its applications the past year were up 17%; revamped recruiting strategies have helped, it contends.

First of all, it has improved recruiting efficiencies--staging joint recruiting programs and presentations with other top schools.  Second, it says applications increased because of aggressive efforts to reach out to under-represented minorities and international students in Asia and Latin America.  Now in 2012-13, Cornell waits to see if this is a one-year spark or part of a welcome long-term trend in attracting top students to Ithaca.

Tracy Williams

See also:

CFN:  On Campus:  Getting Back to School, 2012
CFN:  On Campus:  No Summertime Slowdown, 2011
CFN:  On Campus:  Admission Season, 2011
CFN:  On Campus: What's Up? What's New? 2011
CFN:  On Campus:  Getting an Offer! 2011
CFN:  On Campus:  Never Enough Time, 2009
CFN:  On Campus:  Ready to Seize Opportunity, 2009
CFN:  On Campus:  Countdown to Summer, 2010
CFN:  On Campus:  Spring Fever, 2009
CFN:  On Campus:  Recruiting, a Sixth Course, 2009

On Campus: Getting Back to School

Yale SOM's new campus: One year away

In late August, there's always a vibrancy on the campuses at business schools (including the Consortium 17) across the country as they prepare for the fall sessions.  New MBA students arrive on campus--wide-eyed, anxious, and excited about new experiences, new classmates and the challenges of in-depth study of finance, accounting, marketing, policy and recruiting.  Second-year students arrive after the intensity of summer internships (and with full-time offers for the fortunate ones), ready to resume studies in cherished, more interesting electives after the core courses are done. 

Professors and deans get excited, too, as they are buoyed by the interests, eagerness and dreams of students. Always there is electricity during the early days of school in the fall, until students drift into an October grind, when it's time to ward off the pressures of upcoming midterms and recruiting chores.

But for now, it's August, and there are new faces and bundles of energy. New MBA Consortium students at Cornell have already touched down on campus and begun orientation.  Its MBA Class of 2014 comprises 40 Consortium students; 17 have expressed an interest in finance or financial services.

During its first week, all Cornell first-year students were treated to a riveting keynote address from management consultant Frans Johansson, who spoke on "The Intersection."  Johansson told the MBA first-years that business careers, ideas or projects accelerate or take off when they reach a certain "intersection," where "unexpected ideas," diverse people, and "cross-thinking" merge.

He encouraged students to recognize those "intersections," leverage them and take advantage of them--as if to say students should recognize when they are in that right place at that right time or at least should capitalize on the influx of diverse ideas, diverse people and special situations when they are in the right moment.

Last week the New York Times reviewed Yale's efforts to stand out from the business-school pack. Yale's new dean Edward Snyder comes armed with ideas, a plan and a new building. Dean Snyder  left Chicago's Booth School to venture into New Haven, likely enticed by the odd-ball heritage of Yale and its experimental approaches to business-school education.  Since its mid-1970s founding, Yale SOM has always been a business-school maverick or has always been perceived that way, even after it changed its degree from an MPPM (master's in public and private management) to an MBA years ago.

If other top schools are careful and methodical about education overhaul, Yale SOM has traditionally taken risks and tried new approaches.  Most recently, it instituted a novel "integrated curriculum" for first-year students. It wanted to destroy the pillared approach, where finance types keep to themselves and operations and marketing types remain in their own domain.  Hence, all courses attempt to address concepts or issues, for example, in finance, marketing, operations, employees, shareholders, management, social responsibility and global impact. The new approach is apparently working, as it launches its seventh year this fall.

Yale SOM also counts down the days when everybody in the school can move into its brand-new campus (Evans Hall) next year.

NYU-Stern recently announced a new degree--not to replace the MBA, but to recognize the crucial importance of data mining and data management in business.  This fall it introduces the MS in business analytics within the Stern business school.  Some MBAs will contemplate supplementing their degrees with this new one-year program, although Stern didn't announce such a joint-degree program.  The program recognized the mammoth amount of data available to business managers and helps business managers learn how to use it to an advantage. It also helps students and managers use statistics and quantitative analysis to form business strategy, make decisions, and manage revenues, profits, costs and balance sheets.

The new degree will take a four-prong approach to analytics:  (a) mining data, (b) interpreting it, (c) modeling and (d) visualization.

The arrival of fall also brings on a flood of media-related business-school rankings.  The rankings are widely dreaded, often criticized, usually questionable, always controversial, wildly varied, and sometimes puzzling.  But everybody takes a peek at them--from first-year students, applicants, professors, recruiters, and, yes, deans.  With so many lists and rankings, there may no longer be one authoritative list. 

If readers don't take them too seriously, some rankings can be amusing or at least can highlight special strengths of certain schools.  Advanced Trading, a website and publication focused on sophisticated and complex trading (including high-frequency trading and global markets), provided its list (not a ranking) of the top 10 "Quant Schools," the top business schools for quantitative research and trading analytics.  Four Consortium schools made the list: Carnegie Mellon, Cornell, UC-Berkeley, and NYU.  The list was based on a survey of senior Wall Street managers and traders, hedge-fund managers and others.

DiversityComm, Inc. regularly provides lists of companies, organizations and schools that emphasize or promote diversity. This summer, it offers a list of the top MBA schools for African-American students. Its criteria revolved around each school's outreach and accessibility to black applicants, students and graduates. It's no surprise 15 of the 17 Consortium schools made the list (all the Consortium schools, except Emory and Wisconsin).

Tracy Williams

See also:

 CFN:  Composing the Class of 2014
CFN:  Rankings: Take a Peek, but Be Cautious--2009
CFN:  Yet Another Ranking of Business Schools--2010 
CFN:  Gearing up for the Fall, 2009 

MBA Diversity: A Constant Effort to Catch Up

For the past three decades, top business schools have hustled every way they can to improve levels of diversity on their campuses. They have aggressively recruited under-represented minorities (URM) and women. They have participated in pipeline programs like the Consortium. They have sponsored scholarships and funded fellowships.

But two weeks ago, a Wall Street Journal article suggested that for many schools it's a one-step-forward, two-steps-back effort. Graduate business schools from Harvard and Stanford to the Consortium 17 have made praiseworthy progress among some segments (Asians, internationals), but insubstantial progress in others.

"While many top programs boast that ethnic or racial minorities comprise a quarter or more of their student bodies," the Journal's Melissa Korn wrote, "most of that population is Asian-American, a group that is statistically overrepresented at business schools when compared with their proportion of the U.S. population at large." Among blacks, Hispanics and Native Americans, the numbers are still low, she reported, "a sign, some say, that b-schools have much more work to do to attract students."

So what's the trend? In what statistical rut are business schools mired? At some schools, why have there been disappointing trends in URM applications?

The Journal reports that many of the top schools promote proudly the fact that in recent years in any given class, minorities make up over 25 percent (over 30 percent at many schools). Yet for under-represented minorities (excluding Asian-Americans), the percentages hover near 10 percent and below with little discernible improvement over the past several years.

The Journal and others, therefore, refer to "degrees of diversity."  Certain ethnic groups, nationalities, and geographies are well-represented. Other groups are not.

Take a peek at recent numbers.  Almost all top-tier business schools provide updates and class profiles and report the information in a similar manner, which makes for fair comparisons. Some schools, such as Yale and NYU, report the percentages of both minorities and under-represented minorities.  Minorities (U.S. residents only) comprise 25% of last year's first-year class at Yale (SOM). Under-represented minorities (blacks, Hispanics and Native Americans), however, consisted of only 7% of the class.  At NYU, the percentages were 34% and 16%, respectively. 

Consortium CEO Peter Aranda was interviewed in an accompanying Journal article about the same topic and challenge.  "(Business schools) have a role in preparing future business leaders to succeed in the environment we live in, where someday soon everyone will be a minority," he told the Journal's Korn. "One of the things that troubles me about the MBA curriculum is that it pays attention to diversity from an employment perspective only. We need to look at diversity as a strategic initiative. How do we develop goods and services for niche markets? How do we communicate through marketing vehicles that resonate with those communities?"


The original article touched nerves and attracted a flood of comments, many from anonymous readers making careless, insensitive statements regarding the value of diversity. Some readers harshly criticized business schools for bothering to make it priority.  Some respondents swore off diversity and wished people would stop the discussion or apparent obsession. Aranda explained why businesses must care.

The deans of the same prominent business schools might admit among themselves that a whining chorus of anti-diversity makes it harder to improve statistics. Many in this chorus prefer business schools to admit solely on the basis of GMAT and GPA scores and let the numbers and percentages fall where they may. To their credit, the schools' admissions offices remain steadfast in their effort to "compose" a class of excellence, competence, diversity and variety.

The diversity challenge also incorporates business schools' ongoing struggle to ensure women are sufficiently represented on campus. Whether it is women or URM, some schools see progress in some years only to see a sudden, inexplicable downturn in other years. Many schools are not quite sure whether success is a 50-50 male-female ratio or success is ensuring the percentage of women never falls below 30%.  At UCLA, NYU, Dartmouth and Yale (all Consortium schools), women comprised at least 33% of recent classes. At Harvard, 40%; at Columbia, 35%.

What are the ongoing problems and challenges for business schools? Why has there been this statistical rut among URM? What can business schools do to encourage more applications?


1.  Convincing URM of the value of an MBA. MBA candidates must address a list of introspective questions before they launch the long process to apply and get admitted to a top school: Do I need an MBA? How I can use it to reach certain professional goals or achieve success in business? Can I pursue the same goals without it or with other degrees or certifications (JD, CPA, MS, or CFA)?  Can I gain similar knowledge in other ways (other graduate courses, part-time programs, online programs, in-house corporate training)?

Business schools seek to convince women and those from URM that the MBA has long-term (or life-time) value and is worth every bit of pain it takes to apply, get in and get out. Sometimes schools stumble and fail to get candidates to apply. The numbers show it, as applications from URM groups haven't increased significantly over the years. Moreover, all candidates (especially those from URM) wrestle with other troubling factors (salary loss, opportunity costs, relocation, getting reacquainted to rigorous academic study), factors that undermine any value they determine the MBA has.


2.  Convincing URM there will be opportunities after graduation and a fair chance to pursue them. Most candidates who apply to top schools understand the difficulties of getting admitted, the chores in preparing and submitting applications, and the tough course load.  Applying to Dartmouth, Chicago, Northwestern, Stanford or Virginia business schools is an exhaustive process, although programs such as the Consortium and MLT make the process easier. Applicants study for the GMATs, arrange for recommendations from reluctant bosses, write a batch of essays about their career visions, and arrange for interviews, knowing the chances for admission at top schools is slim.

They know, too, business school at Michigan, Virginia, Dartmouth or Yale will be hard. The hours are long. Students have little down time. They don't know, however, if the hard work, time, strain and perseverance will pay off.

Those in URM groups don't want guarantees that an MBA from Cornell will win them six-figure entry-level spots at Merrill Lynch or McKinsey; they usually just want assurance there is a fair chance and reasonable opportunity that two solid years immersed in school will lead to something promising.  Pursuing an MBA involves taking a risk. Candidates assess that risk in the same way they might assess an investment opportunity. If they perceive (as some minorities do in some industries, such as private equity, venture capital or hedge funds) they won't have a fair chance or they won't be able to establish contacts within those networks to earn a spot, then they will be less likely to apply.

This phenomenon is especially important when current economic times induce doubt in the minds of many who consider an MBA at top school:  Why pursue the degree, when the chances of getting a job at Merrill Lynch, McKinsey, BlackRock or Blackstone are remote? Why pursue the MBA if I'm told it takes special ties and connections to get on board at Kleiner Perkins or Booz Allen? Or if I get the job, will a topsy-turvy economy force me out a year later?

3.  Convincing URM that the sacrifices and costs are indeed worth it (or can be offset by fellowships or long-term rewards). The costs to attend a top school are exorbitant. Add to that the two years of salary, bonus and possible advancement the student won't accrue, while she is away from current employment. There, too, will likely be relocation, time away from family, and a lingering anxiety that they might have made a wrong decision. 

For some, especially among URM groups, the costs (tuition, living expenses, and travel) are too much. They can't make the numbers make sense. Why, they may ask, should I pursue an MBA at Harvard, if I must move a thousand miles to Boston, find a place to live, and spend over $70,000 and then be engulfed in scrambling to pay back student loans for decades to come? Many outstanding URM candidates curtail all efforts to apply right at the moment they assess costs. The sacrifices and costs can't be rationalized.

Business schools and pipeline programs such as the Consortium, Toigo, and MLT have done an outstanding job over the past three decades helping candidates overcome financial hurdles--especially by providing fellowships, scholarships or other forms of financial aid.  Often, believe it or not, many in URM groups are not even aware of this assistance and candidate support.  Business schools perhaps can do a better job explaining to candidates how going to Emory, Carnegie Mellon or Chicago is affordable.

4.  Convincing URM there will be realistic chances to advance far in business.  Some justify the time in school and appreciate the contacts, knowledge, networks, and experiences during those two years. Some are confident they will do well and find lucrative entry-level opportunities once they get to where they want to go.

But many may have doubts about their chances to get far beyond entry levels, get promoted, be fairly recognized and advance to high rungs in an organization.  If I get into Virginia or Michigan, they perhaps ask, and if I am fortunate to gain an offer in private equity, corporate finance, venture capital, or real-estate development, will I have fair chance to advance to the top--become a principal, partner, senior vice president, chief financial officer, or part owner? Should I bother, if I know the chances for advancement to the top are remote?

5.  Convincing URM there are others like them who have succeeded.  Often blacks, Hispanics, women and Native Americans gain confidence in their ability to advance when they see others like them achieve. If Hispanics and women are scattered at the highest levels at the most reputable consulting firms and banks, then Hispanic and women applicants would be encouraged to pursue graduate school--if they know others with similar backgrounds are there.

In some industries or segments of finance, women and minorities have advanced to the highest levels of management, but often at a slow, sluggish pace. Still, some women and URM have quietly ascended to less-visible, yet important roles as sector heads, corporate-function heads, subsidiary heads, or substantial contributors to business goals, deals, transactions, acquisitions, and new products.  Potential candidates are aware of these achievements, but not as much as they should, at least sufficiently enough to be confident they can follow right behind.

6.  Most of all, convincing URM they have the ability and aptitude.  They hear and read about the suffocating workloads of students in top schools (the courses, the problem sets, the cases, the group discussions, the projects, and the exams). Sometimes they fear they lack ability and time-management skills to thrive in school. Often they have the academic breadth, experiences and backgrounds to do well, but aren't confident enough they can handle the work and time pressures. Hence, they shy away from applying.

Other factors may also have an effect on the number of candidates from URM groups and women.

1.  International students.  While business schools eagerly pursue diversity, they also pursue international students. They are devoting time and resources to both efforts. Notice the numbers in recent years of students from India, Europe and China. Schools sell themselves to prospects, recruiters and other professors and deans on the basis of diversity, geography and foreign flavor.  In a recent year, at UCLA, NYU, Dartmouth, Yale, Wharton, Columbia, and Harvard business schools, foreigners comprised at least 32% at each school. While schools are pounding the pavement to increase the numbers of women and URM, they are also criss-crossing the globe to admit international candidates.

2. The lure of other professions.  There remains the possibility that lagging growth in applications among women and URM is due to the attractiveness of other professions. Business, finance, marketing and the uncertainties or whims of corporate life may be less attractive to some than, say, positions in government, education, non-profit activity, medicine, or law. A financial crisis in recent years certainly has discouraged some candidates from pursuing careers in banking, finance, and capital markets.

The admissions offices at business schools at times feel they are panting while climbing a steep uphill path. They continue their efforts, nonetheless. They are rewarded when they observe the thrilling success stories of the women, blacks, and Hispanics who do find their ways into the corridors of Cornell, Carnegie Mellon, Wisconsin, Indiana, Michigan or USC.

They applaud themselves (and the pipeline programs that climb side by side with them) when they learn their URM applicants-turned-students go on to become campus leaders and eventually outstanding deal-doers at Morgan Stanley, investment researchers at BlackRock, financial managers at American Express, business managers at John Deere, managing directors at Goldman Sachs, CFO at Eli Lily, or president of a blazing new start-up.

Tracy Williams

See also:
1.  CFN:  Diversity and Venture Capital, 2011
2.  CFN:  Diversity, Top 50, 2012