Fewer companies will hire recent MBA graduates this year, and salaries in fields such as technology, finance and manufacturing will stagnate or even decline, a new study finds.
objectively, the summer of 2008 was an unfavorable period for students who had just graduated from an MBA to venture into the job market. The US Federal Reserve (or fed) slashed interest rates, CEOs were reluctant to hire, and people started talking about a “recession”. Unfortunately, for the classes of students who graduated from an MBA in 2009, these findings were only the tip of the iceberg.
This year, students will embark on a job market in which the unemployment rate is at its highest in 16 years, where coveted jobs in banking and finance have soared after the Economic decline has given way to a full-scale financial crisis, and the job picture is looking much bleaker for MBA graduates than it did a few months ago. While many companies are still planning to hire them, new research reveals that many more have hiring plans that stray from certainty, and for the first time since internet companies went bankrupt, it may be that, on the whole, the salaries of young graduates are stagnating, and even falling in certain areas.
According to Brian Hall, who will graduate with an MBA from the University of Michigan’s Ross School of Management next spring, the trend in the current economic situation is one of “cautious optimism.” Last summer, the 27-year-old student who has taken a dual degree in music and management, completed an internship at Steinway & Sons (LVB), and although the legendary piano manufacturer initially told him about the creation of a new position for him once he graduated, the company ultimately broke its word. For now, Hall has a few recruiting opportunities from prospective employers, but most of the companies he contacts are unwilling to commit until their financial situation stabilizes. One of the problems is that the economy seems to fluctuate almost from day to day. “Tomorrow, a salary statement will be broadcast, and believe me: I will watch the show via webcast. Hall said.
If the news is good? “I’ll be on the phone with the recruiter. Even though many MBA graduates no longer have a choice when it comes to job offers, they are still indispensable in the job market. According to a survey conducted by the Graduate Management Admission Council (in French, le Conseil d’Admission des Diplômés en Gestion), 59% of employers said they would hire or are likely to hire at least a few new MBA graduates in 2009. However, one in four employers said they would not hire or plan to hire this year. This finding contrasts sharply with that of 2008, when only 17% of employers revealed that they did not plan to hire MBA graduates.
According to the study’s predictions, the average starting salary of recent MBA graduates is likely to remain at or below 2008 levels: a departure from the annual salary increases usually awarded to graduates MBAs had to anticipate. In all, half of the employers announced that the salaries of management graduates would be stable, while 35% of them planned to grant higher salaries and 15% said that these salaries would decrease or have not changed. not expressed. In sectors such as high tech, finance and accounting, and manufacturing, more than half of companies are not considering any wage changes, while in energy, health, and non-profit and government sectors,
According to Steve Gross, a compensation analyst for the research firm Mercer Consulting, the stagnation in wages is probably the result of the “disruption” of the supply and demand market by the reduction of the workforce. Employer retention rates are the highest they’ve been in years, and Gross says companies are considering minding their business before they start recruiting “new mouths to feed.” Although 2010 will likely be a better year for MBA students, it’s hard to say until the economy stabilizes. “There is nothing on the horizon at the moment,” he adds.
Nonetheless, the salary freeze expected this year may turn out to be an improvement on that which resulted from the recession in 2001, when compensation for MBA graduates fell and then stabilized for several years, says Jackie Wilbur, director of the career development service at the Massachusetts Institute of Technology (in English: MIT – Massachusetts Institute of Technology).
In Wilbur’s words, the decline this year, in terms of hiring and recruiting MIT graduates, and in terms of the salaries awarded to them, is “literally half as serious.” She estimates that in approximately half of the classes preparing students for a degree in 2009, jobs are already waiting for students after they graduate, about the same as 2008. But Regina Resnick, assistant dean and director of MBA careers at Columbia’s School of Management, finds that a lot of good and bad things can happen in the months to come. “It is still too early to make estimates,” she announces. If I have learned one lesson, it is that the trend can be reversed, in one direction or the other. » one way or the other. » one way or the other. »
A CHANGE IN THE RULES OF THE GAME
For some recruiters, the economic decline could have a silver lining. Companies that have not been affected by the recession as much as others have a group of graduates who are not as sensitive to business location or bonus gratification as they once were. In addition, companies that can’t prevent talent from drying up will see long-term benefits coming their way, says Steve Canale, head of recruiting for General Electric (GE) Group. Although GE’s hiring numbers are expected to decline this year, the company will continue to hire new MBA graduates, he said. What has changed is the fact that more MBA graduates hired by GE will come from the group’s expanded class of interns: indeed, they assimilate their knowledge faster and have a better memory. We find the same scenario at Deutsche Bank (DB). According to Kristina Peters, regional manager of the bank’s graduate recruitment department, the number of hires is “slightly” decreasing, and most full-time jobs are going to former interns.
This means that an even greater number of students whose internships have not led to a full-time employment contract are under pressure…and there are many of them. On campus, directors of career services find that there are fewer companies making the effort to award full-time employment contracts on campus, while more companies are using online recruiting sites or other methods. At the Anderson School of Management at the University of California, Los Angeles (UCLA – University of California Los Angeles), on-campus student recruitment fell about 24% from last year, reports Eric Mokover, Associate Dean of the School’s Employment Initiatives Department. In parallel, assignment to full-time positions (a recruitment method that does not require travel) increased by almost 13%. In addition, the school acquired a videoconferencing system worth $12,000, thus making it easier for recruiters to make virtual contact with potential people to hire, at a price relatively low.
So far, Mokover has estimated that approximately one-third of the 2009 MBA class at UCLA has a job opportunity after graduation. This rate is considerably lower than that seen in January 2008, a recurring theme in business schools this year. It is to be hoped that companies will begin to provide positions once the economic situation improves and the number of offers stabilizes, but students would be wrong to count on this. Mokover warns us of the risk of “paralysis” that the recession can cause, stressing that students cannot just twiddle their thumbs while waiting for things to improve.
“Don’t expect someone else to do it for you,” he advises. You must use all possible resources: solicit your school, the university where you graduated, your family contacts, your former employer, your friends, your lovers, your animals… all your relations. Whatever the price to pay.