The credit crunch and the MBA application spike. US MBAs take cover

“Despite the softening economy, the placement rate for our 2008 graduates is on par with last year's graduates,” confirms Allyson Moore, Director of the Career Development Office at the Yale School of Management. “Historically, more than 50% of our graduating students have accepted full-time offers in the financial services industry, and it remains the top field of interest. However, this year our students enjoyed particular success in Consulting, with nearly one-quarter of our 2008 graduates entering the industry compared to 14% last year.”

Indeed, most consultancies are still hiring MBAs in comparable numbers to the period before the subprime crisis hit. Many felt that they cut back too severely during the last downturn seven years ago, and they are wary of making the same mistake again this time round.
Learning lessons

Companies learned lessons during the 2001 downturn, but so did MBA programs. “As the economy tightens further, MBA career services offices will continue to innovate to ensure that students are well equipped to compete in this highly competitive labor market. The Yale School of Management has frequent conversations with recruiters and a clear sense of how the upcoming belt-tightening will affect our students,” Moore explains. “We expect the investment banks to rely heavily on converting their top performing interns into full-time hires, which will likely impact their on-campus full-time recruiting efforts this fall. However, last year, 100% of our first-year students who worked as summer associates for investment banks returned to campus with full-time offers so we remain optimistic about the upcoming recruiting season.”

On the applications side, things are looking up as increasing numbers of students take advantage of a ‘break’ in their careers to get an MBA, and the profile of candidates is broadening at the same time. Mae Jennifer Shores, Director of MBA Admissions at UCLA’s Anderson School of Management, says: "Not only are applications at UCLA increasing, fuelled in part by changes in the US and world economies, but the diversity of students applying to business school is widening. We find more individuals in the pipeline with backgrounds in government, not-for-profit firms, and international agencies. The MBA is no longer seen as primarily a degree for those who wish to pursue careers in investment banking, consulting, and consumer goods or manufacturing. Rather, the MBA is now recognized as a degree that provides a breadth of skills that are applicable to virtually any career, including those dedicated to social entrepreneurship."

“The credit crunch hasn't had the same impact on Canadian hiring that it did in the US job market and we've been fortunate that our 2008 placement rate has continued to track ahead of the results for our May 2007 class, a group that achieved a placement rate of 92%. We've heard from a small number of candidates that the credit crunch has influenced their MBA decision, but most candidates instead use personal factors like the desire to switch careers, or develop a new skill-set as primary motivators to pursue an MBA," says Niki Healey, Director of MBA Admissions & Recruitment at the Richard Ivey School of Business, in London, Ontario. .

"Employment of MBAs is an expensive proposition for corporations," says Richard E. Sorensen, chair of the board at the accrediting agency AACSB International, confirms. "When the economy slows, MBA recruitment is an area where companies cut back. However, here in the United States, the number of recruiters on campus over the past two to three years has been increasing."

Many career offices agree that students in recent years have become savvier and more flexible in choosing their post-graduate careers. This, along with re-doubled efforts at career offices, has reduced the effect of the credit crunch on recruiting. Ann Richards, at the Johnson School at Cornell says: “We had a good employment recruiting year, for both internships and full time employment, but the economy seems to be slowing. This means students may have to put a little more effort into their job search for the coming year. Many schools, including the Johnson School are encouraging their new students to begin Career Leader, a career counseling and self assessment program, before orientation, so they can hit the ground running when companies arrive on campus this fall.”

Sources: topmba.com