QS MBA-TRENDS AFFECTING EMPLOYER ATTITUDES

TRENDS AFFECTING EMPLOYER ATTITUDES

2.1 Globalisation Globalisation is making the MBA market continually more dynamic.

As more and more business schools increase the international diversity of their students, they become ever more attractive to employers in the global marketplace. The BRIC economies - Brazil, Russia, China and India - have really begun to make their mark on MBA recruiting in recent years. Salaries in these regions may be lower than in developed regions, but many MBAs are interested in working in these countries, believing that entrepreneurial opportunities outstrip those in developed regions. Central and Eastern Europe, Germany, Spain, Australia and South-East Asia are among areas of the world not traditionally associated with MBA hiring on a large scale. The strong performance of some of these regions in the employer preference tables indicates how they are now fertile ground for seeking MBA hires. QS’ prediction that MBA recruiting in parts of Asia, Latin America and Central Europe will soon start catching up with the more mature US and Western European markets still stands.

In 2007, we have had to increase the number of schools featured from the Asia-Pacific region, reflecting their growing importance amongst international employers who are targeting the Asia region for growth and are turning increasingly to Asian business schools to meet this resource need. In 2008 we have had to add business schools from Africa and Middle East as the region seeks more MBAs as it attempts to catch up with the West. We are already seeing the previously predicted strong business schools emerging from these regions and we expect this trend to continue and many more employers to become active.

2.2 Salary equalisation

The reputation of elite schools stands them in good stead around the world. The research confirms that there are 15 - 20 schools in both North America and Europe of which almost all international employers are aware and would favour for MBA hiring. These schools feature on the priority lists of a high proportion of respondents. However, in negotiation, the high salaries demanded by graduates of these schools deter many smaller firms. There is a differential in salary levels between elite schools and strong local schools and this is helping to sustain demand for graduates from a wide number of institutions. As a consequence of high salary demands from the MBAs at top schools, employers may turn to strong local schools. Regional and local North American employers reported an average starting salary of US$89,700; Western European employers US$97,400 (outstripping North America for the first time); Eastern European employers US$63,200; Asia Pacific employers US$71,400 and Latin American employers US$69,800. It is also true that the elite schools have limited numbers of places and therefore competition for entry is tough. Many good candidates therefore decide to study at less well-known schools and to undertake a proactive job search. Employers may visit schools selectively, but they will review CVs of candidates from almost any school. Strong candidates at smaller schools are helping to build the reputations of these schools as evidenced by the new schools appearing in the employer preference tables across the world. There are strong local business schools emerging in Canada, Germany, Russia, Australia, China, Japan and several other countries that may soon start to challenge the existing incumbents.

2.3 The downswing in the business cycle

The TopMBA.com Recruitment & Salary Report 2008 provides extensive details of the boom in MBA hiring up to and including Summer 2008. The MBA market has shown itself to be cyclical. Employer demand for full-time MBA hires fell back each year from 2001 to 2003 as the telecoms, media, consulting and banking sectors shrank their employment numbers and cut back on new hiring. A strong recovery commenced in 2004 and by 2008 we saw MBA demand at record levels, exceeding the 2000 dotcom boom. This growth reflected aggressive hiring by consultancies and banks, and the increasing geographic spread of MBA employers in all sectors. September 2008 witnessed the collapse of Lehman Brothers which was the turning point for economic and MBA recruiting growth around the world. There is uncertainty amongst employers in terms of MBA hiring plans for the near future. Most experienced HR managers will not change their views of the schools they would prefer to recruit from. The issue in 2009 is whether they will be authorised to continue to recruit at levels similar to previous years. We anticipate a fairly sharp decline in MBA demand in certain Western markets like USA, UK, Spain and France, but we may see continued growth in demand in developing markets like China, India and Middle East which are intent on catching up with their Western counterparts and whose governments and employers see business-trained managers as a pre-requisite for future economic prosperity.

2.4 Small is beautiful

Many small and medium-sized companies founded in the last decade by entrepreneurial MBAs have been hiring the current class at affordable salaries. It is too soon to say whether this trend will continue, as MBA salaries begin to rise again. Feedback from career services in particular suggests that alumni hiring remains an important source of new job opportunities for MBA graduates.These small businesses are lending dynamism to the current MBA hiring market. Ever more MBA alumni are returning to hire new MBAs in order to give their businesses the professional management skills necessary to progress to the next stage. In compiling this research, the researchers have benefited from access to Global-Workplace (www.global-workplace.com) that provides a recruitment platform for alumni seeking to hire from international business schools, or themselves seeking to be hired.