For business school students, 2011 was an eventful year, even if most major events represented the continuation of trends that have been developing for some time. The B-school job market continued its recovery, the cyclical nature of MBA admissions brought down applications to full-time programs, and both schools and students continued to struggle with financial problems that include higher tuition costs and reductions in state aid.
At the same time, students who might have considered careers in the B-school staples of consulting or investment banking began gravitating toward jobs in the nonprofit and education fields. Many more took matters into their own hands by launching startups.
What follows is a rundown of the 10 most important business school stories of 2011.
TOP SCHOOLS EARN THEIR KEEP
It’s no secret that earning an MBA will boost your salary and earning potential. It’s one of the main reasons people choose to pursue the degree. But how much is an MBA worth over the span of a 20-year career, and does school matter in terms of compensation? The answers are: an average of $2.4 million in base pay and bonuses—and yes, school matters. Based on data collected by PayScale, we discovered in June that grads from such top programs as Harvard, Chicago, and Wharton will make nearly $1 million more over the span of two decades than graduates of lesser-ranked programs will. Location and industry are the two main differentiating factors when it comes to pay, with schools that send the most grads into finance positions on Wall Street faring best. The top B-school for career earning: Harvard Business School, whose grads earned about $3.6 million over the 20-year period.
UNCONVENTIONAL JOBS MORE POPULAR
Finance and consulting are no longer the careers synonymous with MBAs. Sure, both industries still grab large chunks of students, but their grip is lessening as jobs at start-ups, nonprofits, government agencies, and social-enterprise ventures rally in popularity. The shift is driven by students, says J. J. Cutler, who was Wharton’s deputy vice-dean for MBA admissions, financial aid, and career management when we spoke to him in April. “Part of this is a reaction to the financial crisis, part of it is a generational shift, part of it is that they are coming from much more diverse backgrounds,” he told us. Groupon, Zynga, and Teach For America are some of the employers attracting MBAs these days. And the student organization Net Impact reports that it has sent a stream of MBA talent to agencies such as the U.S. National Parks Service and the Chicago Public Schools system.
FULL-TIME APPLICATIONS ARE DOWN
The past year may rank as one of the easiest in recent memory for getting into business programs, as many would-be applicants held off submitting applications because of lingering economic uncertainty. Two-year, full-time MBA programs were hit hardest, with two-thirds of them reporting decreases in applications for 2011, according to a survey published this fall by the Graduate Management Admission Council. The trend was seen at many of the nation’s leading MBA programs, with 21 of the top 30 full-time MBA programs reporting declines in application volume this year, compared with 2010, according to data collected by Bloomberg Businessweek. Applications sank at seven of the top 10 business schools, including Harvard and Chicago, but Stanford experienced the biggest dip in application volume—an 8 percent decline from 2010. Part-time and executive programs fared better; more than half reported that application volume was either up or flat, the GMAC report noted. Specialized master’s programs seem to have fared best, with a number of master’s programs in accounting, management, and finance reporting sizable increases in applications.
B-SCHOOL JOB MARKET RECOVERS
Nearly all students enter business school with the same goal: to land a job better than the one they had before. This year, that dream was within reach of more MBAs than it has been for a long time. Many schools reported that after a mild uptick in hiring in 2010, MBA job placement was finally approaching pre-recession hiring levels and that salaries had increased for the first time since the crisis struck. “It now appears that 2009 was likely the low point for us,” said Wharton’s Cutler, when asked in January about job prospects for 2011 grads. The average job placement rate among our top 30 ranked schools increased to about 92.3 percent this year, up from 87.5 percent last year.
MBA ENTREPRENEURSHIP TAKES OFF
Entrepreneurship remained a hot topic in B-schools this year, with more schools offering courses and concentrations in the area. To keep up with the trend, Bloomberg Businessweek continued its periodic series on B-school start-ups, with each story focusing on a company launched by MBAs or undergraduate business school grads. In every case, company founders were able to take advantage of lessons they had learned in B-school—as well as advice from professors and other administrators—to get their ventures up and running. Among the companies featured this year was a hair-care line targeted at women of color, a sportswear line offering a basketball sneaker that helps you jump higher, and a website that connects people who are related through academic circles and are looking to list or rent short-term apartments.
Business School Entrepreneurs
B-School Startups: The Birth of Morphology
B-School Startups: Block Six Looks to Score
B-School Startups: Connecting with the Poken
B-School Startups: Click for Handy Cooking Cues
B-School Startups: Jump a Little Higher
B-School Startups: A New Lending Option in NOLA
B-School Startups: Arabic Made Easy
B-School Startups Q&A: Tea and Honey Blends
B-School Startups: Subletting with iCircl
CHEATING TAKES CENTER STAGE
For business students, 2011 may be remembered as the year of the academic short cut, with students at several schools embroiled in cheating and plagiarism controversies. At Penn State’s Smeal College of Business, the admissions team discovered that 29 MBA applicants used for their application essays entire sentences and paragraphs from published sources, without attribution. The incident inspired Admissions Director Carrie Marcinkevage to start using a new service offered by Turnitin that evaluates admissions essays for signs of possible plagiarism. From 10 to 20 business schools have since signed up for the service, including UCLA’s Anderson School of Management and the Wake Forest Schools of Business. At NYU’s Stern School of Business, a computer science professor discovered that 22 students had cheated on a class assignment in his undergraduate business class. And at Duke University, the site of a major cheating scandal at the Fuqua School of Business in 2007, two-thirds of an undergraduate class on behavioral economics at the Trinity College of Arts & Sciences—unwitting subjects in an experiment—clicked on a link in an e-mail that promised answers to last year’s final exam. Of those who were reminded of the school’s honor code in an accompanying note, 41 percent clicked on the link anyway.
Penn State Cracks Down on Plagiarism
Live Chat: Admissions Essay Plagiarism
MBA Admissions Directors Tackle Plagiarism
NYU Undergrads Accused of Plagiarism
Cheating: The Experts Weigh In
Duke’s Cheating Problem
GLOBAL MBA LANDSCAPE SHIFTS
The international landscape for graduate education continued to shift in 2011. Applications from foreign applicants to U.S. business schools—particularly from China and the Middle East—reached levels not seen since before the economic crisis triggered visa and financing issues that made it difficult for many foreign students to study in the U.S. Dozens of business schools have seen an uptick in applications from China, particularly from females looking to get ahead in their country’s booming economy. At some U.S. schools, Chinese women now make up more than two-thirds of the applicant pool for master’s programs. While East Asian applicants flock to U.S. schools, Europeans are taking the opposite tack, choosing to forgo U.S. schools in favor of shorter (and therefore cheaper) business programs closer to home. Only about a third of European GMAT test takers sent their scores to U.S. schools in 2010, down from half in 2006. Meanwhile, international students heading to the U.K. for MBAs have reason to worry. Starting in April, new visa rules will give them far less time to find jobs before they must leave the country.
AN EMBA DYNASTY ENDS
There was a surprise when the biennial Executive MBA ranking was released in November: Northwestern University’s Kellogg School of Management wasn’t at the top. This marked the first time since the ranking’s inception in 1992 that Kellogg did not hold the No. 1 position. Instead, the top spot was claimed by the University of Chicago’s Booth School of Business, whose grads experienced an average salary increase of nearly $50,000 upon completing the program, compared to an average of $40,000 for graduates of all executive programs. The shake-up comes at a time when fewer students are receiving tuition support from their employers. Only 19 percent of respondents to this year’s EMBA survey were completely funded by employers, down from 32 percent in 2007. This change has pushed many students to demand career-services support that has not historically been offered to EMBAs.
B-SCHOOLS FINE-TUNE THE CURRICULUM
Long-time staples of the business school experience such as case studies and summer orientation were treated with head-to-toe makeovers. At Carnegie Mellon University’s Tepper School of Business, many students kissed August goodbye as orientation grew to four weeks, from two, in order to cover a series of introductions and refresher courses. Students and professors alike got glimpses of what future business case studies might look like as standard-issue stapled packets began to morph to tablet formats. And the curriculum at a handful of B-schools was altered in order to cram a variety of courses on business fundamentals into the fall semester. The schools referred to the trend as “front-loading;” faculty members expect the change will better prepare students for internship interviews.
FINANCIAL PROBLEMS TAKE THEIR TOLL
Students, especially those attending public universities, were hit hard this fall by hefty tuition increases. The cost of a public college education is up more than 8 percent this year as public institutions run out of ways to slash costs and state governments are pressed to balance budgets. Some states have been hit harder than others: California, Washington, and Arizona all posted double-digit percentage increases in tuition this fall. As public schools grapple with budget cuts—at least 25 states have made substantial cuts in funding for state colleges and universities this fall—some are seeking innovative ways to raise additional revenue, with many hoping out-of-state students will make up the shortfall. Pubic universities from California to Colorado have started aggressively recruiting out-of-state students, sending recruiters to feeder states, giving students breaks on out-of-state fees, and launching advertising campaigns. Another way schools are looking to counter state budget cuts is by asking students, particular those in majors like business and engineering, to pay more for their classes than students pursuing other majors do, a practice known as differential tuition. In the last decade, its use has accelerated; 92 of the 162 public research universities in the U.S. now have at least one undergraduate program with differential tuition. The University of Virginia’s McIntire School of Commerce, one of the nation’s top-ranked undergraduate business programs, is one of the latest schools to jump on the trend, introducing for the first time this year differential tuition for business majors, and some MBA programs are considering a similar strategy. As the cost of attending business school skyrockets, graduate business students are increasingly looking to their families to help them pay for it. The number of prospective students who said they plan to ask their parents for financial help doubled from 2003 to 2007, approaching nearly 40 percent in 2010, according to a 2011 survey by the Graduate Management Admission Council.