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Elite MBA Hiring Unequal, But Changing

Lauren Rivera, an associate professor at Northwestern's Kellogg School of Management

Lauren Rivera, an associate professor at Northwestern’s Kellogg School of Management

People often ask Lauren Rivera, Kellogg professor and author of Pedigree: How Elite Students Get Elite Jobs, what has changed since her book was published last year. Her answer: A great deal, and not so much.

Pedigree details how, despite the American belief in upward mobility, those from more affluent backgrounds often get the best and highest-paying entry-level jobs at the top investment banks, law firms, and consulting firms. Rivera went behind the scenes — including embedding herself for nine months in the recruitment arm of an elite professional services firm — to show how decision makers often subscribe to the dangerous concept of “cultural fit,” the idea that like-minded employees are the best employees.

“When done carefully,” Rivera wrote in an oped for The New York Times following the publication of Pedigree, “selecting new workers this way can make organizations more productive and profitable. But cultural fit has morphed into a far more nebulous and potentially dangerous concept. It has shifted from systematic analysis of who will thrive in a given workplace to snap judgments by managers about who they’d rather hang out with. In the process, fit has become a catchall used to justify hiring people who are similar to decision makers and rejecting people who are not.”

AFTER RECESSION, POTENTIAL FOR DISCRIMINATION ‘GOES UP’

Rivera shows that at the top-tier firms that hire from the top-tier schools — and often only from the top-tier schools, a problem in itself — decision makers’ ideas about talent are entrenched in social class. Class, gender, and race biases are ingrained in the hiring process, she writes, challenging the view of college and the job market as equalizers where anyone with ability who works hard can get ahead.

Much of Rivera’s research for Pedigree was conducted before the Great Recession of 2008. So what did economic calamity change in the world of corporate hiring? On the surface, it would be easy to conclude: not much.

“People often ask me, ‘What’s different?’ First and foremost, the financial crisis happened right as I was wrapping up the research,” Rivera, an associate professor of management and operations, tells Poets&Quants. “I kept contact with some of my original informants and had a lot of conversations with people in the industries, and the consensus is that the financial crisis actually didn’t eliminate a lot of the unequal outcomes and the potential for inequality that I detail in the book.

“One might expect that when the labor market tightened and there were fewer jobs, that you would see people really going out of their way to sign up the highest-quality talent — but in fact we know from all the literature that when labor markets become more competitive, as they did in the financial crisis because firms were simply hiring fewer people, the potential for discrimination goes up.”

‘THE WORLD EVOLVES’ 

In the paperback edition of her book released earlier this year, Rivera added an afterword that addressed changes in the industry since the book was published. Some of them are positive, she says.

“The world evolves, and some of the developments that have taken place are very heartening,” Rivera says, citing Goldman Sachs’ effort to temper their on-campus recruiting program which “we know can really result in some maladaptive outcomes and some inequitable ones.” That, she says, is one step in the right direction. Another is a general improvement in awareness of discrimination in the hiring process, and that more candidates without “pedigree” should be on firms’ radar.

“But some of the things that I documented in the book, such as selecting on cultural fit, looking exclusively at a set number of schools, those problems actually intensified in the immediate aftermath of the financial crisis, so you actually get more of it — especially when it comes to class inequality in that time period — than you would see in a period that was characterizeded by greater opportunities.”

Some firms went out of business altogether in the wake of the recession. Many weathered the storm by hiring less. And some of the big law firms employed a different strategy: They kept hiring, but without work for new hires to do, they had to get creative. “They had to come up with ways to continue to hire from some universities to maintain positive school relationships, because they didn’t want to basically burn bridges when the economy picked back up,” Rivera says. “What do you do when you don’t necessarily have the work for everybody? Some firms created fellowship programs where they were paying the people they hired to delay working or go work in a public service organization for a year, or go to flight school or follow their dream, and there would be a job waiting for them. That was a way to continue hiring even though they didn’t necessarily have work to justify all of the new hires that they made.”

TECH MAKES ITS MOVE

Then there’s the impact of public opinion. After the recession, people started to have a negative perception of investment banks — remember Occupy Wall Street? — and top talent took notice. One industry was poised to take advantage: tech.

“Tech firms really capitalized on that ill feeling and presented themselves as a real contrast to that,” says Rivera, citing the work of Amy Binder, the University of California-San Diego professor who has studied how people think about tech careers in comparison to Wall Street careers. “The slogan ‘Do No Evil’ became popular during that time to refer to tech versus Wall Street. Part of it has to do with very real developments in tech and in the expansion of certain companies and the push for on-campus recruitment. Consulting and investment banking are still attractive options, but tech has definitely changed the landscape in a lot of ways.”

Pragmatism was also a factor: There weren’t a lot of jobs in professional service firms going around in the wake of the economic downturn, with the possible exception of hedge funds, Rivera says. “But now tech has become a more desirable career, whether people are going to work for Google or Facebook or whether they are going to work for a startup. It has opened up more doors,” she says.

People are still going to management consulting firms in particular in large numbers from elite business schools and elite undergraduate programs, she says, but things have changed: “They’re no longer the only game in town.”

FOLLOW-UP WOULD LOOK AT MORE ELITE OCCUPATIONS

Following the publication of Pedigree, Rivera stayed in touch with her contacts in the large firms and has since strategized and brainstormed with several on ways to make their hiring process both more effective and more equitable. She says she’s gotten a lot of feedback that has been encouraging, “and I think the general consensus is, these are processes that people feel around them in the hiring process every single day but they haven’t thought critically about how they could impact the quality of talent or larger issues of inequality.”

A follow-up, should she write one, would likely include a wider array of elite occupations — “but that is 10 years of field work for a different point in my life!”

Meanwhile, Rivera’s work finds its way into her classroom at Kellogg, first in the pre-term before fall quarter and in spring 2017 when she will helm Leadership and Organization, a core MBA class. “It’s my favorite class,” she says. “We’ll do a day on issues surrounding diversity and that’s where I really bring in a lot of my research.”

DON’T MISS 2015 BEST 40 UNDER 40 PROFESSORS: LAUREN RIVERA, KELLOGG SCHOOL and THIS YEAR’S MBA JOB MARKET BETTER THAN EVER