Watching the financial crisis unfold over the last year, I was struck by how utterly tone-deaf the financial-services industry has become to the sentiments of an enraged public. Junior analysts and senior managing directors alike seem to be genuinely perplexed by why their industry is being ambushed about their compensation, lending practices, and political lobbying. However, Wall Street's obliviousness serves as a cautionary tale for MBA applicants, students, and even alumni.
As a former investment banker, I experienced firsthand how an insular and self-referential culture could lead to a warped sense of reality.
Take the yearend bonuses as an example. To many bankers, the bonus isn't just a dollar figure, but a symbol of their entire self-worth. Simply put, it is their sole way of keeping score vs. their finance peers. As such, from the fresh-faced Ivy League graduates to the managing directors and partners, it is unacceptable to tell anyone within the firm (or anyone else save your family) that you are "satisfied" with your bonus.
As a result, the crestfallen banker does not feel strange for complaining about his $1.1 million bonus because a less-deserving colleague received $1.11 million. And when an enraged public attacks them for taking gigantic bonuses as layoffs ravage the middle class, they fail to understand why. After all, that banker has spent virtually every waking hour benchmarking himself against other finance professionals. They fashion themselves as Masters of the Universe without realizing that they've turned into Marie Antoinettes.
Lack of Empathy
The Wall Street culture becomes so self-referential that investment bankers assume everyone else shares the same level of hypercompetitiveness, nihilism, and preoccupation with money as they do. This insularity makes it very difficult for many in the industry to truly empathize because they genuinely see themselves as aristocrats to a plebeian mass simply because they make more money. That sense of oblivious elitism and earnest belief in their capital "I" importance is what feeds the public anger—not jealousy.
So now the public wants blood. "Off with their heads," they say, with taxes, fees, fines, regulation, and even imprisonment being the modern equivalent of the guillotine. The attacks only serve to feed the "poor me" syndrome on Wall Street, which in turn further infuriates the public.
Business schools are experiencing a similar (albeit less hostile) reproach—with countless articles lambasting the degree program, making some students and administrators feel ambushed and confused.
When responding to fair or unfair criticism from others, the worst thing MBA students and administrators can do is to follow Wall Street's example by circling the wagons. Instead, taking the temperature down on both sides starts with a willingness to understand, on an emotional and subjective level, why someone would feel that way. Without having true empathy or compassion for others from different socioeconomic backgrounds, no amount of rational explanation or justification will be heard.
Simply put, MBAs need to be fully aware that not everyone shares the same values, priorities, or points of view. Everyone wants higher pay, a more prestigious job, and a cushy standard of living—but not everyone values these things to the same degree that many MBA students do. That does not make the premium that MBAs place on these values better or worse, wrong or right—just different from the value assigned to them by people in other professions.
B-Schools' Illusion of Diversity
This blind spot stems from a false sense of diversity within the MBA classroom—the McKinsey consultant in Kenya and the American P&G (PG) brand manager have more in common than either of them do to the autoworker at a Ford (F) assembly plant or the goat herder in rural Namibia. Like the Marie Antoinettes on Wall Street, MBAs are more prone to developing a huge blind spot when it comes to feeling true kinship with people from different socioeconomic backgrounds. Students may even volunteer at local charities, but some may still develop contempt for those they see as beneath them. It's more a question of attitude, not merely exposure.
Another way for students to avoid becoming cocooned is to make a concerted effort to seek out and participate in activities where there are virtually no other MBAs. There is a tremendous amount of herd mentality in business school. One of the most negative by-products of a collaborative and team-oriented environment is the tremendous peer pressure to conform—what classes to take, what career choices to value, where to live, and so forth.
Why is all of this so important? Because chances are, most if not all working professionals will have to start over in a completely new career at least a few times in their lives (once every 10 to 20 years), whether they are MBAs or former Wall Streeters. The more cocooned one is, the harder it will be to make those nonlinear transitions beyond the business or corporate world.