Industrial companies have traditionally favoured hiring “second-hand” MBAs – those who have cut their teeth in banking or management consultancy and want to move on. Now, this is changing.
In spite of recent concerns in the business school world that MBA degrees do not teach students skills that companies need, recruiters are increasingly giving the professional services firms a run for their money when it comes to recruiting newly minted MBAs directly from business school. These days companies such as BP, BT, Google, Pepsico, Samsung and Shell are names as familiar on the business school campus as investment banks and management consultancies.
The sea change came with the classes that graduated in 2002 and 2003. Following the terrorist attacks in the US and subsequent economic uncertainty, management consultancies and bankers slashed staff numbers and stayed away from business schools. Industrial companies saw their chance.
The numbers tell the story. At London Business School, for example, only 15 per cent of recruiters were in industry in 2001, but by 2003 that figure had tripled to 45 per cent. Last year saw it fall to 33 per cent.
In addition to those corporate recruiters who began recruiting in 2002, the past three years has also seen a new breed of recruiter looking for future leaders. As a result, on-campus recruiter figures are on the up.
At the Kellogg School at Northwestern University, for example, nearly 250 organisations recruited on campus at Evanston this year, says Roxanne Hori, assistant dean and director of the Kellogg career management centre. “It’s crazy,” she adds.
At the Haas school at Berkeley it is a similar story. Abby Scott, career services director, reports that there were
23 per cent more recruiters on campus this year than last.
At the Tuck school at Dartmouth College, at least half of the on-campus recruiters were corporate, says Becky Joffrey. “It’s striking how many more companies came to Tuck rather than professional service firms,” she says.
However, corporate recruiters face problems competing with the professional service firms. First, says Diane Morgan, head of career development at LBS, many corporate jobs need filling as soon as they fall vacant, not as part of an annual intake. And as professional service firms start hiring in September for appointments the following summer, corporate recruiters often miss the boat.
Nor do corporate recruiters have the recruitment budgets that the McKinseys and Goldman Sachs of the world can boast.
However, corporate recruiters are becoming much more savvy. Peter Abery, programme director of the Future Leadership Programme at BT (see left) says the company has learnt a lot since the programme started two years ago. “The time to be on campus in the US is in September,” he says. This year BT will be there.
BT is not the only company recently to commence an MBA recruitment programme. In the past two years, Ericsson and Nike have introduced MBA recruitment programmes in Europe, says Katty Ooms, director of MBA admissions and career services at IMD, where 70 per cent of the graduates enter the corporate world.
Certain industries are proving particularly popular this year, notably the energy sector, where MBAs aspire to work in alternative energy. “This category is very, very hot,” says Ms Scott.
Those companies that are successful with this approach mimic the professional service firms, searching through “face books” and bringing in teams of recruiters to select the candidates they like. They often have assessment centres and invite their chosen candidates to two or three-day events at the company. “These recruiters are becoming much more professional,” says Ms Ooms.
Interestingly, a growing number of corporate recruiters have set up fast-track leadership programmes for MBAs. Such programmes promise students the chance to move quickly to executive positions and it is a policy that is proving popular with participants, says Ms Hori at Kellogg. The idea of getting into a company and leading it “still resonates”, she says.
Ms Joffrey says that, in the past, MBAs would go to management consultancy because they believed they could then enter a corporation at a higher level. Fast-track development programmes now ensure that corporate recruits can get to the top just as rapidly. In 2006 and 2007, Tuck graduates went into such programmes at companies including Bausch & Lomb, Nissan, PepsiCo and Monster Worldwide.
The task for business school recruitment directors is to match the right graduate with the right corporate recruiter, the latter often having different requirements from the professional service recruiter. In particular, says Ms Joffrey, industrial corporations often look for candidates with previous commercial experience, such as in sales or operations. They also seek those who have excelled in their previous career, irrespective of sector or function, as well as candidates who are willing to travel and work across the globe.
Corporate recruiters have also learnt that they have to pay competitive salaries, says Ms Joffrey. “Finally, companies have matched the ante of professional service firms.” A graduate entering a marketing role in the late 1990s would get a starting salary of $70,000. Today, someone going into a leadership development programme would earn $130,000.
If nothing else, these salaries show that those who predicted the demise of the MBA may well have got it wrong.
In at the deep end: a new recruit gets hands-on with BT’s transformation
At his first day at work after getting his MBA, Emmanuel Lebaut was called into the chief executive’s office and given a project that would help change the way the company operated. It was a degree of visibility, he says, which most MBAs crave but never see in the traditional bank or consulting firm.
Mr Lebaut had been recruited by BT OneIT, the IT and technology arm of telecoms group BT, to be one of the first members of the company’s Future Leadership Programme. That was in 2005. Less than two years later, BT has recruited 54 MBAs to the team and has become one of the most visible corporate recruiters in the top cadre of US and European business schools.
A Frenchman and an engineering graduate, Mr Lebaut says he had never intended to work for BT when he graduated from his two-year degree at London Business School. But during his programme he had focused on change management and had been won over by the vast programme for transformation that was planned at BT.
“BT is changing itself radically, to adapt in advance to what it sees happening in the future,” Mr Lebaut says. “It is quite rare that you get such a scale of change in such a large company.”
The change programme was first implemented in OneIT, but groups from the programme are now working for all divisions within BT. Although 14 of the 54-strong team have moved on to work in other areas of BT, none have left the company, says Peter Abery, programme director of the Future Leadership Programme.
Typically, MBAs will see a project through to implementation, Mr Lebaut says. “We don’t do the nice pack of slides and then drop it over the wall for someone else. We run with it.”