Influx of young MBA students worries top US business schools (from www.ft.com)
By Rebecca Knight
Published: September 14 2006 03:00 | Last updated: September 14 2006 03:00
Melissa King, a freshly minted college graduate, is 22 years old and has never worked in a full-time job in her life. This autumn, she started her first year at the Massachussetts Institute of Technology's Sloan School of Business.
Ms King, who earned her undergraduate degree in chemical engineering at Rice University, says she did not think twice about applying to business school despite her lack of work experience.
"Once I decided that I wanted my MBA, I figured, why wait?" she says. "A lot of people say, 'You don't have any real-world experience', but I disagree. Your whole life is a real-world experience."
Ms King is part of a growing trend at top business schools around the US, where the incoming crop of MBA candidates is younger and less professionally seasoned than in recent years. "I consider it a huge advantage because I can listen to and learn from all my classmates who have had a lot of work experience," she says.
While Ms King does not consider her lack of work experience a liability, there is a concern among some business school leaders and recruiters that once these new untested MBAs graduate, they may be met with scepticism in the corporate world.
"The model does not help them a whole lot," says John Fernandes, the president of the Association to Advance Collegiate Schools of Business (AACSB). "If they are purely academic, businesses will see them as bright but not ready to manage at that point. There's a building of managerial acumen that comes with experience."
At big investment banks, for instance, new MBA graduates are typically hired at the associate level and expected to lead a team of analysts. "It is not so much that there is a magic number of years in terms of work experience but, for a new hire to be brought in at the associate level, you need that person to be plug-and-play with a certain level of maturity, poise and seasoning," said Danielle Domingue, a recruiter at JP Morgan Chase.
Another concern is that these inexperienced MBAs may have difficulty finding jobs in certain industries, according to Thomas Caleel, director of admissions at Wharton. He has noticed this trend with Wharton's submatriculants - undergraduates at the University of Pennsylvania who immediately go on to enrol at the business school.
"There are some industries - like consulting - that are very client-facing and where age matters," he says. "But there are other industries - hedge funds, investment banking - where companies are looking for young, bright, aggressive talent."
These new MBAs also will not make as much money, at least initially, as their counterparts who have a fuller work history, according to Mr Fernandes. "They're a lot less costly to businesses: their starting salary will be about half of what an MBA with four years of prior work experience will get."
The average starting salary of a new MBA was $92,360 (�72,700, �49,220) last year, according to research from the Graduate Management Admission Council. Two-thirds of job offers to MBAs in 2006 also came with signing bonuses that averaged $17,603.
But according to some business school officials, recruiters might seek out these new MBAs precisely because they have no work experience. They come with no professional baggage and are therefore more malleable and better able to adapt to a new company culture.
Derrick Bolton, assistant dean and director of MBA admissions at Stanford, says he has noticed that the inexperienced MBAs have certain qualities in the classroom that will translate well to the business world. "They are unburdened by assumptions," he says. "They're willing to ask the question that enlightens everyone."
Copyright The Financial Times Limited 2006
By Rebecca Knight
Published: September 14 2006 03:00 | Last updated: September 14 2006 03:00
Melissa King, a freshly minted college graduate, is 22 years old and has never worked in a full-time job in her life. This autumn, she started her first year at the Massachussetts Institute of Technology's Sloan School of Business.
Ms King, who earned her undergraduate degree in chemical engineering at Rice University, says she did not think twice about applying to business school despite her lack of work experience.
"Once I decided that I wanted my MBA, I figured, why wait?" she says. "A lot of people say, 'You don't have any real-world experience', but I disagree. Your whole life is a real-world experience."
Ms King is part of a growing trend at top business schools around the US, where the incoming crop of MBA candidates is younger and less professionally seasoned than in recent years. "I consider it a huge advantage because I can listen to and learn from all my classmates who have had a lot of work experience," she says.
While Ms King does not consider her lack of work experience a liability, there is a concern among some business school leaders and recruiters that once these new untested MBAs graduate, they may be met with scepticism in the corporate world.
"The model does not help them a whole lot," says John Fernandes, the president of the Association to Advance Collegiate Schools of Business (AACSB). "If they are purely academic, businesses will see them as bright but not ready to manage at that point. There's a building of managerial acumen that comes with experience."
At big investment banks, for instance, new MBA graduates are typically hired at the associate level and expected to lead a team of analysts. "It is not so much that there is a magic number of years in terms of work experience but, for a new hire to be brought in at the associate level, you need that person to be plug-and-play with a certain level of maturity, poise and seasoning," said Danielle Domingue, a recruiter at JP Morgan Chase.
Another concern is that these inexperienced MBAs may have difficulty finding jobs in certain industries, according to Thomas Caleel, director of admissions at Wharton. He has noticed this trend with Wharton's submatriculants - undergraduates at the University of Pennsylvania who immediately go on to enrol at the business school.
"There are some industries - like consulting - that are very client-facing and where age matters," he says. "But there are other industries - hedge funds, investment banking - where companies are looking for young, bright, aggressive talent."
These new MBAs also will not make as much money, at least initially, as their counterparts who have a fuller work history, according to Mr Fernandes. "They're a lot less costly to businesses: their starting salary will be about half of what an MBA with four years of prior work experience will get."
The average starting salary of a new MBA was $92,360 (�72,700, �49,220) last year, according to research from the Graduate Management Admission Council. Two-thirds of job offers to MBAs in 2006 also came with signing bonuses that averaged $17,603.
But according to some business school officials, recruiters might seek out these new MBAs precisely because they have no work experience. They come with no professional baggage and are therefore more malleable and better able to adapt to a new company culture.
Derrick Bolton, assistant dean and director of MBA admissions at Stanford, says he has noticed that the inexperienced MBAs have certain qualities in the classroom that will translate well to the business world. "They are unburdened by assumptions," he says. "They're willing to ask the question that enlightens everyone."
Copyright The Financial Times Limited 2006