Standing Out Among the Outstanding: MBA Schools

An animated discussion rang out in one of the auditoriums on the Microsoft campus in Redmond Thursday, June 18th. The panel of three diverse and knowledgeable guests was assembled by "Africans at Microsoft." The subject, however, broadly applies to anyone considering an MBA who is seeking guidance and, at times, assurance.

Hear the event here: http://www.mbapodcaster.com/MBA_MoreInfo/BizSchoolPanelMicrosoft.asp?iEpisode=74

The full title of the event, the 2nd Annual MBA Panel, is Standing out among the outstanding: Recession, Competition, and Business School Admissions. Moderator Chika Ekeji asked the panel for changes they've seen as a result of the current economic crisis. Scott Shrum, the Director of MBA Admissions Research at Veritas Prep, says the surge in applications to MBA schools has dropped away because of the lack of financing available. It's become, Scott says, a "lost season.." The desire is there among would-be MBA applicants, but the money isn't.

Bryan Tomlinson, one of two experts-in-our-midst, along with Edward Gali, both representing the University of Washington, home to the Michael G. Foster School of Business, added that it's "tough out there." Later in the conversation, Bryan said that the classes of 2005 and 2006 didn't build up their networks -- they didn't need to. But the class of 2009 are great networkers, and that will serve them well over time.

Barbara Thomas, President and CEO of the National Black MBA Association, offered her tips for networking to the Microsoft employees gathered in the room and on the conference line. Barbara says she collects about 100 business cards every week, writing on the back of the cards where she met the people and what she said to them. She follows up with notes every six months.

To the issue of improving your candidacy, Cassandra Pittman, Assistant Director of Marketing at INSEAD, frankly told the potential MBA candidates that they shouldn't be preparing for the more narrow role of being accepted at a choice school. Instead, they should be living a dynamic life, focused on what they are interested in, their true passions. She suggested they take some math to prep, but also travel, explore their passions, and meet a lot of people.

While I heard anxiety trip in the voices of the potential students who asked questions at the mic, the answers supplied by the panelists were even, honest, and provocative. The take-away from the panel follow your unique passions and network!

Glocap Search on Jobs in Private Equity

It's a given that the finance industry is not the easiest place to find a job at the moment. For our next MBA Podcaster story, we're investigating what kinds of salaries those few MBA grads lucky enough to land a job in investment banking, consulting, or private equity can command. How is the recession affecting MBA grads' salaries in these sectors?

Last week I talked with Brian Korb, a Partner at Glocap Search, a recruiting firm focused mainly on alternative assets. Korb heads up Glocap's Private Equity practice. Glocap recently published the 2009 Private Equity Compensation Report, which provides data on base salaries and bonuses paid to professionals at later-stage private equity firms (buyout/growth equity funds), early-stage venture capital firms and private equity funds.

"What drives compensation is the caliber and pedigree of the candidate you're going after, and what you can afford to pay," Korb said. So where is compensation going? Up until this year, according to Korb, it had been a very hot market, but once the market's growth slowed down, compensation's growth slowed too. So compensation growth in private equity, anyway, is flat. But compensation hasn't necessarily shrunk, either.

Korb said what's changed, overall, is the variance in compensation for the top performers vs. the good and mid-level performers. Top performers, quite simply, can still get the high salaries and even bonuses, but bonuses are flat or shrinking for less-than-stellar job performances at a fund or firm.

"Ultimately, there's less hiring," Korb said. Compensation offers are going out to fewer people. But he said those grads who do get the top jobs are still getting the salaries in private equity, and the shrinking pool of bonuses is going to top performers in any given firm.

In investment banking, bonuses are down by 25 to 50%, Korb said, but if there are bonuses to be had, the top-tier performers are the ones who will be taking them. There's a silver lining to TARP restrictions on bonuses, too, Korb said: Some banks are raising base compensation to make up for restricted bonuses.

The other thing happening is salaries are increasing more slowly, Korb said: "The annual raises and salary bumps have flattened out."

So how does an MBA grad land a job in private equity in this economy? Korb said his clients have always strongly preferred, if not required, a candidate to have private equity experience before business school. Korb advises this year's MBA grads, even those who have that previous experience, not to rest on their laurels. Successful candidates will have to be able to prove in concrete terms that they can add value to a fund. Korb said his clients tell him, "We're always interested in someone who can bring a lot of value."

Check back with us soon for the full show on finance salaries for MBA grads.

(Updated! Listen to the completed show here: http://www.mbapodcaster.com/MBA_MoreInfo/MBA-Salaries-Investment-Banking.asp?iEpisode=81)

Payscale Crunches MBA Compensation Numbers

I talked today with a REALLY smart guy for an upcoming show on MBA salaries in investment banking, private equity, venture capital and consulting.

Al Lee, whose background is in high-energy physics, is the Director of Quantitative Analysis for PayScale, an online compensation data collection firm. His job is to find out why people get paid what they're paid. Business Week recently commissioned Payscale to look at how the school from which you got your MBA affects your compensation over 5, 10, 15 and 20 years. It's fascinating stuff, and not as predictable as you might think.

For the upcoming show, though, I asked Al Lee how pay for MBA grads in those areas of finance traditionally higher-paid but hard-hit by the economic downturn -- investment banking, private equity, venture capital -- have been affected by the economic downturn. Lee said the data shows that while there are fewer overall jobs to be had, and while perks like starting bonuses have shrunk or disappeared, pay has not actually gone down, or if it has, it's only by a couple percent.

Lee said companies don't want the cheap person; they still want the high-quality person, and they are still going to pay very close to pre-recession salaries for the right person, who's likely to do well for them for 3 years, 5 years, or more. The reality of the recession is that these companies are making far fewer new hires.

Lee said graduating into this down economy might not have much affect on an MBA grad's overall earnings over the course of their career. Their career trajectory may not be as direct, he said -- all but the very best are unlikely to go straight into a job on Wall Street -- but Lee thinks if you manage your career differently, say, by starting at a mid-sized regional bank and proving yourself, then gradually moving toward the Wall Street job, you can still find work in high-finance and get paid almost as much as you would have pre-recession.

You'll hear from Al in our upcoming Salaries in Finance podcast.