PE vs. PC at Harvard Business School

by John A. Byrne on

Several high-performing private equity and financial stars were dumbfounded and perplexed to find themselves rejected or waitlisted when Harvard Business School released its round one decisions last Tuesday, Dec. 14th.

Had they been following the public remarks of Harvard’s new dean, Nitin Nohria, they may have gotten wind of their fate.

Just two months ago, Nohira was making what he thought was an important point about Harvard’s MBA students on a National Pubic Radio show in Boston. “People think we only turn out MBAs who become consultants and investment bankers,” said Nohria, “but the reality is that we have people who go to work in social enterprise and in small business. What people want of us are leaders who can contribute to all these different types of organizations in society.”

Tom Ashbrook, the talk show host of WBUR’s On Point, quickly interrupted the dean. “That’s great and it sounds sweet,” he sarcastically told Nohira, “but more than half of your grads go into consulting and finance.” Ashbrook then went on to quote the school’s own career services statistics to prove his point.

Nohria changed the topic, but it now looks as if he didn’t forget the conversation. When Harvard notified applicants in its first admissions round whether they would be accepted for HBS’ Class of 2013, some of the most highly qualified applicants from investment banking, private equity and other finance sectors were turned down for admission or put on waitlists.

For admission consultants and others who read Harvard’s tea leaves, the feeling is that Nohria is changing the profile of the traditional HBS class. Several admissions consultants say the school appears to be favoring a more diverse set of applicants from healthcare, the military, the government, and non-profits over those from such financial powerhouses as Goldman Sachs, KKR, and Blackstone.

The possible reason: to increase the odds that a higher percentage of future MBAs go into a more diverse range of job opportunities, including more politically correct fields such as social enterprise, entrepreneurship, and health care.

Deirdre Leopold, Harvard’s director of admissions and financial aid, may have been preparing candidates for the shift when she sent an unusual email to all interviewed applicants a day before the official notification. In that email on Monday, she explained that the diversity of Harvard’s class was more important than the quality of the candidates in the admission process. “If my job were to rank order candidates from high to low in order of individual strength, whatever that might mean, different decisions might be made,” she conceded.

Typically, as much as a third of Harvard’s entering class comes to the school with finance backgrounds. In the Class of 2012, for example, a total of 32% of the students worked in financial services, investment banking, asset management, private equity and venture capital. The next largest industry background is consulting, accounting for 22% of the class.

Sandy Kreisberg, founder of HBSGURU.COM, and an admissions consultant in Boston, says that based on his database of clients, which includes more than 50 applicants who were interviewed for round one at HBS, it was the worst year on record for private equity and investment banking superstars, especially from firms such as Blackstone, KKR, Carlyle and Bain Capital. Applicants from those organizations often have acceptance rates near 100 percent, says Kreisberg, but in the first round many were below 50%. “It’s a small but obsessively-followed cohort,” he added.

Another admissions consultant based in New York with four first round HBS clients all with financial or consulting backgrounds said that two were rejected outright while another two were put on the waitlist. Added yet another consultant, who did not want to be identified, “I have heard from some of our clients that their friends especially those in the New York finance world (including many at the very top firms) were surprised to not be admitted.”

“This move away from the powerhouse PE firms is either a one-hundred year ‘drought,’ as it were, or the visible hand of new policies hinted at by Dean Nohria in his public remarks,” says consultant Kreisberg. “My bet is the visible hand. Cutting back on White Bread Boy PE stars IS in line with Harvard President Drew Faust’s own PC jihads and Nohria seems a Faust type. She hired him.”

Asked to comment, Leopold said by email, “Delivering a class with as much diversity as possible – with a common bond of high academic achievement and potential – has always been the promise we make to our students.

“In our classroom, students learn from each other as well as from the faculty so diversity isn’t just a “photo op,” it’s the bedrock of our pedagogy,” Leopold added. “It’s simplistic to assume that the place where young people worked for a few years is the only – or most important – “tag” that they wear in our application process. Speculation notwithstanding, it’s not the way our process works.”

  • http://steamcatapult.com/ Dave

    It would be ironic if most of the admits from social enterprise and other non-finance, non-consulting backgrounds end up going into finance and consulting when they graduate.

  • Mike

    Stupid question: PC = Politically Correct in this context? Thanks.

  • Arthur Dullsworthy

    they will

  • Bruce

    Yeah. They probably will.

  • Vik

    my guess is, most of them will. A minority few believe that they dont really need MBAs for social agendas or entrep. plans but others like to think of a consulting background as a strong foundation, arguably so, for an entrep. plan in the future.
    Can’t say the same for financial services though.

  • ready gaga

    Ironically Harvard is contributing towards both financial and consulting industry by leaving candidates from these 2 industries out of the school while they keep admitting those ‘social heroes who wana make the world a better place’ into the school and convert them into consultants and IB subsequently.

  • Jay

    Scene from Departed enacted by Stanford’s Adcom (Poets) as Sgt. Dignam & Capt Queennan and Harvard adcom (Quants who appear to be Poets) as Billy Costigan

    Stanford Capt. Oliver Queenan
    → So, do you have an idea of what we do here, my section?

    Harvard Ofcr. William M. ‘Billy’ Costigan Jr. (Leonardo DiCaprio)
    → Sir yes sir, I have an idea sir.

    Stanford Det. SSgt. Dignam
    → Whoa whoa whoa. Let’s say you have no idea and leave it at that okay? No idea. Zip. None. If you had an idea about what we do, we would not be good at what we do, would we? We would be quants. You calling us quants?

    The question is do you wanna be a poet or do you wanna appear to be a poet?
    (when you face a loaded bonus check…… whats the difference?)

  • Sarah

    Interestingly, all of these “social heroes” who have just been admitted to HBS because they weren’t Goldman/Private Equity people only went into non-profits and other sectors because they couldn’t get a job at the top Wall Street firms. Post-HBS, what do you think the chances are that they all finally pursue their dream jobs on wall street? Well done, Nitan Nohria…

  • C__

    gotta say, this seems to be true based on my limited data points – I went to a top-3 school and 8 of my friends applied in R1 – all had stellar profiles: 2 years banking/consulting + 2 years in “brand name” PE – only 1 got into HBS. I wonder if its also a function of HBS going after younger applicants, as PE people tend to have 4 years of work experience? Either way, Wharton should be salivating… frankly, I’ve been more impressed by the HBS rejects this year than the admits.

  • A.J.

    John – I just tried to leave a comment here about another article I saw about this same issue on Fortune.com (Bankers Don’t Fret: Harvard Biz School Still Loves You). Not sure if the comment went thru. Some of my friends in finance used him, and his distinct perspective seemed to work well for them in Round 1. Just wanted to throw it out there.

  • question

    Question: what is PC?

  • http://poetsandquants.com/members/jbyrne/ John A. Byrne

    PC is the acronym for politically correct. Which is what is considered culturally acceptable.

  • fullofit

    you want people who have excelled at what they do, and these people from the top financial firms are THE best even with the cutthroat Wall Street culture and they’re still not good enough? whoa…
    I should quit my job and go work in peace corp or something…

  • http://Na wharton_class2013

    Yeah all those PE and IB superstars ended up in Wharton, 40% of my cohort comes from PE. Thanks HBS and good luck placing those social superstars!!!

    HBS is only going to cannibalize students from HKS…

  • PEApp

    Sandy has this changed in the most recent round?

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