Changing of the Guard

For New Dean, Weaning NYU from Wall Street Won't Be Easy


Dean Peter Henry, a former college athlete and Rhodes scholar, wants students at New York University's Stern School of Business (Stern Full-Time MBA Profile) to feel like basketball heroes. "An alum recently told me that his Stern experience had him feeling like he hit a winning half-court shot in March Madness," says Henry. "I want every student who comes to Stern to feel like he or she hit a winning half-court shot in March Madness."

But Henry, a former Stanford professor of economics who took the reins at Stern on Jan. 15, has his work cut out for him. Best known for its connections to nearby Wall Street and the finance industry, Stern was hit particularly hard by the economic crisis. With the battered investment-banking industry no longer a sure bet, or even a distant dream, for many graduating MBAs, the pressure is on to transform Stern from a "finance school" into something else entirely: a top-tier B-school that produces a diversified graduating class destined for jobs in a variety of industries, not just one. Henry says career placement was his top priority before he even officially took over the deanship.

Few schools are as dependent on a single industry as Stern is on finance, and few schools have paid a steeper price. In 2007, before the collapse of Bear Stearns and Lehman Brothers, 44% of the class entered investment banking, the most lucrative of fields for Stern's graduates. By 2008, the number had dwindled to 37%, and by 2009 it was down to 32%. In all, 18% of Stern's 2009 graduating class lacked a job offer three months after graduation, up from 8% in 2008, one of the biggest increases in unemployed grads among top-ranked B-schools. Yet even as late into the financial crisis as 2009, nearly half the Stern graduating class was still pursuing careers in financial services, followed by consulting with 17% and consumer products with 12%.

Twofold Challenge

Changing that class profile won't be easy. Kip Harrell, president of the MBA Career Services Council, says any dean attempting to wean a B-school off a single, troubled industry faces a twofold challenge: getting career services to develop recruiting relationships in new industries and making the academic changes necessary to produce the kinds of graduates that the new industries want. The former can be solved by adding resources or redirecting existing ones, he says; the latter will be far more difficult, potentially involving new faculty, new courses, and other changes. "It's a great challenge," says Harrell, vice-president for professional and career management at Thunderbird (Thunderbird Full-Time MBA Profile). "To go from a 'finance' school to an 'everything' school, getting the faculty is going to be the bigger change management issue."

For their part, Stern students say they welcome such a shift. Marisa Forte, a first-year student at Stern, was laid off from a finance job before entering business school. "I loved working on Wall Street, but I'm looking at other options, too," she says. In fact, she encourages the new dean and her classmates to think about the role they play in the broader economy, and adds that many of her classmates are also looking outside of finance for work. Andrew Chang, a first-year student in the full-time MBA program, was drawn to Stern for its reputation in media and entertainment circles. As a digital media entrepreneur before business school, he wants to join this field when graduating. He has already snagged a spring internship at DashMob.com, a startup that delivers discounts at local businesses. Chang plans to explore other opportunities, too. "In the first semester, I changed careers every week," he says. And second-year student Shawn Khazzam says he would like Henry and others to see this place and time as an opportunity to strengthen ties with other recruiters, including those in consulting.

Henry moved to the U.S. from Jamaica in 1978, when he was 9 years old. The first place he lived when he arrived was New York. Although he didn't stay long, he knows enough not to openly choose between the Jets and Giants and risk alienating half the city. He knows how to assimilate and adjust to new cultures, and he wants Stern students to do the same. This is, in fact, part of his plan for helping them take advantage of career opportunities. Henry tells the story of a CEO of a Fortune 500 company who once told him that he knew emerging economies would be the best place to grow his company, but he was terrified of sending employees because they lacked the skills needed to operate in that environment. "At Stern we want to create leaders who say it is a corporate imperative that we train people who are as comfortable in the Middle East as they are in Manhattan," says Henry, whose research is focused on the impact of economic reform on emerging economies.

Global Perspective

He expects Stern students to look far beyond Manhattan, and the finance and media industries that surround their Greenwich Village campus, for the opportunities of the future. Until now, they mostly haven't: 85% of the class of 2009 took jobs in North America after graduation, and the vast majority of them settled in the Northeast. Although Henry stops short of saying that Stern students will start taking more jobs abroad, he says they will be at the forefront of thought and business leadership practices in the global economy. "As an economist, I don't try to direct or project," he says. "Let's train the best people and see where the opportunities arise."

But a global perspective alone won't help Stern students. Good training is reliant on good teachers. Henry says he's inheriting one of the best business school faculties in the world, and he points to the swiftness with which professors at Stern were able to address the economic crisis, both inside the classroom and out. They've been at the forefront of discussions on the causes and remedies of the crisis, and they published a book, Restoring Financial Stability: How to Repair a Failed System, something other schools could not have done as quickly, he adds. Having connections to these professors and learning about the crisis from them will help position Stern students for future careers, says Henry.

Almost as critical as the faculty in Henry's opinion are the alumni. He has already met with alumni in the San Francisco Bay Area and will be meeting with alumni in Washington, D.C. Getting those in D.C. involved in showing current students the role public policy plays in the private sector is important to Henry, who led a review of international lending agencies, including the World Bank, for President Barack Obama's transition team. "What our D.C. alums bring is understanding the way in which policy and business interact," says Henry. "What we learn from the crisis is that the relationship isn't always a positive one, and we need to find ways to get our students thinking about how business and public policy can interact in a way that is mutually beneficial and produces good outcomes rather than bad outcomes."

"Strengths Beyond Finance"

The vision Henry has for the Stern School and how to overcome the challenge of career placement in particular is far from concrete in these first few weeks on the job, but one trend is emerging. He seems keen on proving the point that Stern students can do more than finance and that they should consider careers outside of Wall Street—from those in public policy and emerging markets to more traditional roles in sectors such as marketing and media and entertainment. "When most people think of Michael Jordan, they just think about the fact that he scored 30 points per game. People don't realize he made the all-NBA defensive team many times," says Henry. "Just like Michael Jordan was a great defensive player, we at Stern have strengths beyond finance."

No one, however, believes that Stern will simply cut out Wall Street firms altogether. Henry says he will continue to strengthen relationships with Wall Street and the finance sector in general. But, in the past decade, the school has branched out considerably, developing relationships with recruiters in a variety of industries including media and entertainment and entrepreneurship, says Thomas Cooley, former dean of Stern and the Paganelli-Bull Professor of Economics. "Stern will always tilt slightly toward Wall Street, but then again most business schools do," adds Cooley.

This isn't the first time the school has faced such a challenge. At the start of the new century, says Cooley, everyone wanted to be a dot-com millionaire, and Goldman Sachs (GS) of all places was having a tough time filling interview slots. "That time taught us the value of having in-depth career counseling," says Cooley. "People need to have a plan." As a result of the dot-com bust, which left many MBAs without a job, Stern created the Career Center for Working Professionals (CCWP), which helps alumni at any stage of their careers look for new opportunities. The school has been able to help people in the latest financial crisis, too, reminds Henry.

Post-Crisis Economy—and Job Market

So, the world will be watching to see if Stern can still find jobs for graduates in a post-crisis economy, one where investment banking is not the sure thing it once was. Henry says he is an eternal optimist. As the son of two scientists, and himself an economist, he says he is analytical by nature, and his is not a blind faith. "We are at a critical point in the global economy. Our alums are going to be crucial in helping us engage in a way that generates the kind of environment where people move from this reactive kind of stance to a stance that says, 'Let's think about the world as it might yet be,' " says Henry. "Let's imagine what the possibilities are for our students and the kind of world we might create with a broad-based view, and drawing on alumni and faculty and learning to think and act in an integrative kind of way."

Then again, depending on future events, all these ideas could get thrown out the window in favor of something else entirely. "Whatever you think the world is right now," says Cooley, "hold on because it can change very quickly." Students, meanwhile, are holding their collective breath, waiting to see if their half-court shots make it in the basket.

Francesca_dimeglio
Di Meglio is a reporter for Businessweek.com in Fort Lee, N.J.

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