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AND NOW, EXTREME RECRUITINGDespite the global crisis, the struggle to hire top MBAs is as fierce as ever--for nowThe stock market is plummeting. The worldwide financial crisis deepens by the day. Corporate profits are slumping as companies from Gillette to 3M to Hewlett-Packard struggle with the double whammy of sharply lowered demand and a higher dollar. And the finance industry--which hired 35% of all MBA graduates in the Class of '98--has been particularly hard hit, with the worst yet to come. Given the carnage, you might think that the booming market seen in recent years for newly minted MBAs is collapsing as well. But so far, you'd be wrong. Despite growing fears that the global financial turmoil could push the U.S. economy into layoffs and recession, corporate recruiters say that for now, the battle to hire top-quality MBAs remains as tough and competitive as ever. And make no mistake about it: It is a battle. Spend a day with Catherine H. Baker, vice-president in charge of worldwide recruiting at Mercer Management Consulting Inc., and that much is clear. Sure, as she and her team of Mercer MBAs head for a Sept. 22 presentation to first- and second-year students at the Wharton School, they're riding a Metroliner from Washington, D.C., to Philadelphia, rather than a warship. And they're using cell phones instead of two-way radios. But there's no doubt that the Wharton trip is the first shot in a long campaign for what continue to be some of the most sought-after trophies of the late 1990s: graduating MBAs. RARE SKILLS. The reason is simple. Thanks to a tight job market for top managers in recent years, most of the leverage in the job-search mating dance has shifted from recruiters to students. The average member of the Class of 1998 at BUSINESS WEEK's top 25 B-schools boasted 3.2 job offers, up from 2.3 in 1992. The median starting salary-plus-bonus rose to $91,560 this year, up 19% from two years ago. That doesn't include extras--ranging from free rent to stock options to tuition paybacks--worth a median $19,860. ''The competition for MBAs has definitely quickened,'' says David L. Reed, director of global recruiting at Andersen Consulting. ''It's as fierce as I've ever seen it.'' He and others say that there is little reason to expect change, despite the global gloom and doom. In part, that's because companies are very happy with the skills today's MBAs possess. They have a rare mix of financial, technical, and communications skills that companies have trouble finding in engineers or other degree holders. Many companies are also still recovering from the disasters created when they downsized in the mid-1990s, firing far more middle managers than they should have. They vow not to repeat the error by cutting hiring too drastically. As costly as MBAs are, they're still cheaper than they will be later, when things improve. ''You're making a long-term investment,'' says Peter D. Kiernan, co-head of the recruiting committee at Goldman, Sachs & Co. and co-chair of the communicaTions, media, and entertainment banking group. ''It's an illusion to think you can cut back now and be in a strong position when the markets begin to recover.'' That's why most recruiters say they're sticking to their hiring plans for the Class of 1999. At the moment, however, it's a painless pledge. Most don't have to decide how many to hire until it's time to extend offers--which won't happen for a few months. In the meantime, there's little reason to call off the endless rounds of meeting with students that begin anew every Fall. Indeed, thanks to the intense rivalry between the consulting and investment-banking firms, things look no different on the front lines than they've looked all year. The two fields pay the most, and--no surprise here--hire the most MBAs. In the Class of 1998, 63.3% chose one of the two industries. ''We're all going after the same talent,'' says Baker, ''so we're having to be more competitive.'' That has made Baker's job even tougher, because Mercer's name is not as hallowed as that of rivals Boston Consulting Group or McKinsey & Co. To compete, Mercer has developed a strategy that resembles a brand-awareness campaign, complete with pitches aimed at different ''sales channels''--otherwise known as alums, students, and faculty--and a host of tactics that range from sending birthday cards and getting faculty to use books written by Mercer consultants, to the obligatory multimedia presentation. Baker also targets students, using far more sophisticated tools than Mercer did in the past. After parsing data showing that MBAs first hired as summer associates do better at the company than those hired after B-school, for example, she now works extra hard to get first-year students to take summer internships. ''The old days of putting brochures out and buying enough shrimp and champagne to seduce [students] are gone,'' she says. Not that such tactics can be ignored, however. For schools and recruiters alike, the rush begins in the fall, when scores of companies hurry to the campus to peddle their charms. Recruiters ask placement directors to set up meetings early, before students start to burn out. At Duke University's J.B. Fuqua School of Business, frantic recruiters began calling at 7 a.m. on Apr. 15, the day the fall interview schedule opened. Within five business days, 240 companies had been scheduled. CLASS ACTION. That's why one preemptive tactic is gaining favor: getting to students through the sales pitch that's not really a pitch. Jeffrey D. Weedman, Procter & Gamble Co.'s licensing manager for corporate new ventures and the head of its recruiting at University of California at Los Angeles' John E. Anderson B-school, comes to school each winter to teach a case study on P&G to all first-year marketing classes, giving students a better glimpse of the P&G culture than a 45-minute meet-and-greet. Because recruiters only get a little time for official recruiting, some are now also holding meetings on broader subjects in which high-level execs present their firms' ideas--and drum their brands into the minds of young MBAs. But getting in the door early and often is only the first phase of the fight. Some recruiters have also begun extending offers as quickly as possible in the fall in hopes of keeping targets from succumbing to later temptations. Sweeteners sometimes used by consultants and banks include tuition reimbursement for second-year students who sign early. ''It's being used as an exploding bonus to preempt the competition,'' says Peter E. Veruki, director of career planning and placement at Vanderbilt University's Owen Graduate School of Management. Yet there's not a lot of proof that such tactics have worked--at least for the Class of '98. Recruiters say their ''yields''--the number of acceptances relative to offers--dropped as students sat back and played it cool. ''I was playing Let's Make a Deal,'' says Porter F. Erisman, a recent grad of Northwestern's J.L. Kellogg Graduate School of Management. ''In most years, you have to turn down door No.1 and No.2, and then you get the grand prize. This time it was like doors No.9, 10, and 11.'' Adding to the intensity was the increase in the number of students who rejected Corporate America for small startups and entrepreneurial ventures. Although the numbers remain small overall--4.5% in the top 25 schools--there were particularly large clusters at West Coast schools, where many students headed for Silicon Valley. ''In one week, I saw the CEO of Morgan Stanley and the next week, a 24-year-old who started his own company,'' says Sheung L. Li, a recent Stanford graduate who turned down five offers before starting his own job search, landing at 3Com Corp. as a line manager. ''On one hand, I can wait 15 years and be [the CEO guy],'' he says. ''On the other hand, I can be the guy who's four years younger than I am.'' Even the most selective firms had trouble: Goldman Sachs got acceptances from only 40% of its Stanford offers, relative to 80% at other top schools. CHINA CARD. The frothy competition also led others to bend the rules to land top candidates. After Kellogg's Erisman rejected an offer from his summer employer, Kraft Foods Inc., Kraft asked him his plans. When he said he was going to China--job or no job--Kraft abandoned its practice of only hiring new MBAs for North American jobs. Soon Erisman met the head of Kraft's Greater China office, and he is now an assistant product manager there. ''The economy helped me,'' says Erisman. ''Kraft didn't get the [MBAs] they expected in North America, so they bent over backward.'' Will good times soon end? Already, the economic gyrations may have made some students think harder before rejecting offers for next summer. ''The students sitting on offers from investment banks who may last year have been pretty cocky and taken their time are thinking about signing on,'' says Daniel R. Nagy, Fuqua's assistant dean for MBA programs. Indeed, despite the insistence on Wall Street and elsewhere that no hiring slowdown is coming, some nervousness is beginning to permeate B-school campuses. Past history suggests that the investment banks are the first to slow hiring when economic problems hit. Although no recruiters have canceled any campus visits set for this fall, Nagy says, ''daily, we hold our breath.'' He thinks if companies do cut back, they'll do so mainly at schools further down the list. For now, however, recruiters are soldiering on--and both students and their B-schools hope they'll continue the onslaught.
By Jennifer Reingold in Philadelphia RELATED ITEMS
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Updated Oct. 8, 1998 by bwwebmaster
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