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The Real Reason New MBAs Want to Work For Goldman Sachs

Maybe it’s not all about the Benjamins for MBAs…at least not at first.

That was the key finding from a paper recently accepted in the Strategic Management Journal. According to the paper, which was co-authored by Wharton Associate Professor Matthew Bidwell, MBA graduates are looking for something far more elusive than high pay, benefits, and training in a first job.

They want prestige.

In the study, Bidwell and his colleagues wanted to understand how reputation compared with enticements like compensation. According to their hypothesis, the “top talent flocks to firms with better reputations.” To test this premise, they chose the investment banking sector since, as the Harvard Business Review notes, there’s a “clear hierarchy of firms and because a firm’s place in that pecking order is readily quantifiable via surveys on websites like Vault.com.”

Turns out, Bidwell and crew were correct. But here’s why: According to Bidwell’s polling, “the extent to which firm reputation would help with future employability” ranked as the #1 reason why graduates chose particular employers. As Bidwell tells the Harvard Business Review, “When people are thinking about jobs, it isn’t benefits, flex time, or pay. It’s how it will position you for the next step of your career.”

And employers are certainly capitalizing on this trend, according to Bidwell. The top firms get “the best people, and you don’t have to pay as much as you should early on because they want the stamp of ‘Goldman Sachs.’”

In other words, MBAs are shorting themselves in the short-term in hopes of making it up over the long-term. And not necessarily with the Goldman Sachs of the world. “These companies are attractive to join because they’re attractive to leave,” says Bidwell. “They effectively make a person’s next career step more valuable.” What’s more, employers benefit from this arrangement.”You bring in people young, you don’t pay them much, and you get a lot of value out of them.” And once they leave? “There’s never a shortage of new grads willing to step in to continue the cycle,” adds Bidwell.

But don’t apply these findings to every industry, cautions Bidwell. The Harvard Business Review cites tech companies as one segment where prestige may not “necessarily flow from size, or novelty, or any other easy-to-predict variable.” Instead, it may stem from coolness. “Do you want to work for Google and Apple because they’re at the top of the tree,” asks Bidwell. “Or is it actually better to go work for a really cool start-up?”

Source: Harvard Business Review