Following the aftermath of the financial crisis, the global jobs industry is on a roll. Thanks to better performing economies and closer ties between business schools and MBA employers, the tide appears to be turning.
A deep pool of graduate talent has drawn top companies to campus for years, and there has been a pick-up in MBA hiring. However, not all regions have always enjoyed such encouraging demand for business education.
There has been a slump in U.S schools’ demand and an even bigger drop in applications for programs in the Asia Pacific region. European schools reported a similar decline in demand for full-time one-year MBA programs last year, on a par with 2012.
Competition in the MBA jobs market is hotter too. Giant, billion-dollar industries such as healthcare, which are becoming more popular, are also harder to get into. U.S employers are forecast to hire undergraduates in higher numbers and some schools are sending their MBA graduates into fewer finance jobs – the traditional bastion of MBA hiring.
But MBA pay has picked up since the credit crunch, up to a high of 12 per cent. Today’s graduates can expect to receive more than the MBA classes of 2005 did.
The potential financial rewards of business education are becoming ever greater. A bevvy of new online-based, flexible and executive programs have appeared on the scene, attempting to capture the new breed of full-time working student.
Now, reports confirm that business school alumni see their degrees as essential to obtaining employment. The vast majority of graduate business school alumni (83 per cent) from the classes of 1959-2013 report their graduate management degrees were essential for landing jobs, says the Graduate Management Admissions Council.
“You'll have heard how bad the competition is,” said Rajat, who switched from IT to management consulting after obtaining an MBA from Lancaster. “But Lancaster has done wonders for me. I had no consulting experience at all; all I had on my CV were my three MBA projects.”
The PwC consultant is adamant that an MBA gave him the confidence to make the career transition. And with competition rife at the firm, an MBA differentiated him from his peers, Rajat said.
“If two people are in the same role in the same firm, and are both performing well, how do you differentiate between them? That's where education steps in,” he said.
Soft skills obtained at business school are also rated as crucial for the next generation of executives. According to GMAC, who surveyed 21,000 alumni, soft skills account for three of the five top skills MBAs use every day on the job, while interpersonal skills are the most frequently used.
“Employers often value soft skills such as management, leadership and team working as highly as functional understanding, quantitative ability or analytical skills,” said Anthea Milnes, Head of Marketing for Graduate Programmes at Cranfield School of Management.
Top-quality business education is notoriously expensive. In the States, MBA education can cross the $100,000 mark for one year of study alone. Some online-based UK programs are also considered premium in price, despite the rise of free, distance-taught courses.
But if graduates strike gold in the employment mine, it will be worth it. MBAs can recoup their losses within a year of graduation, if the latest employment figures are to be believed.
And a high of 94 per cent of those surveyed in GMAC’s report also rate their graduate management education as offering good to outstanding value, compared to its total monetary cost.
“Prior to joining Goldman Sachs in 2006 I worked like hell to try to get into any investment bank on Wall Street. And I was told at that point that I needed an MBA from a top-tier school to get credentials,” said Alex Figueroa, a 2010 MBA graduate from Dartmouth Tuck.
Alex says that an MBA can be beneficial when it comes to banking a job at Goldman Sachs, the leading investment bank, and in his case, he believes it would have been harder to have landed his job without one.
The figures might confirm his view. 89 per cent of business school graduates from the classes of 2010-2013 work for an employer, while 5 per cent are self-employed.
In Alex’s case, finance is still an ever popular choice. The biggest crop (26 per cent) of the most recent cohorts are in the finance/accounting sectors, followed by marketing and sales (21 per cent).
Consulting remains popular, but less so – 15 per cent of graduates now work in the function.
The rewards can be enormous, because employers are prepared to pay big for senior-level MBAs. In the U.S, the median base salary for senior-level graduates surveyed by GMAC was $122,000. Executive’s pay went higher to $175,000.
That dwarfs the $101,093 median starting salaries for European graduates GMAC reported last November, the highest in the world at the time.
The colossal earnings MBAs in the West get are at the expense of some Asia Pacific and south-western European countries, however. Senior-level Indian graduates receive just $40,000, while those in Portugal, for example, fare slightly better at $81,525 but are still a long way behind North America, according to GMAC’s data.
The largest senior-level salaries are being netted in Switzerland, at nearly $180,000 per year, according to GMAC.
For business schools, employment figures have become an increasingly important part of its initial offering. Initiatives have been launched to bring careers departments closer to frontline managers. The Association of Business Schools also published a report that highlighted the need to design more practice into courses.
“The application of classroom knowledge in group assignments and projects for companies helps embed learning in skills and capabilities,” said Dr Sionade Robinson, Associate Dean of MBA Programmes at Cass Business School.
Graduates would agree. In spite of the rocky employment road of yesteryear, 91 per cent of those who graduated between 2010 and 2013 said that given the choice again, they would still have pursued their degree. And 95 per cent of alumni GMAC surveyed said they would recommend their program to others.
What’s more, 77 per cent found their degrees financially rewarding, according to GMAC, and 77 per cent of business school alumni give financially to their alma mater, believing that their school proved valuable.
“It's a pre-conceived notion in your head that an MBA allows you to add more value to your career,” added Rajat.
However, the boom won’t last forever. As the management consultants at PwC London will tell you, the clock is always ticking towards a denouement.