Ever since the Great Recession hit in 2008, the big financial service firms have hired fewer and fewer MBA graduates from the elite business schools. The biggest proof point might well be the newest employment report from Columbia Business School, long a primary MBA route to some of the best jobs on Wall Street.
Columbia is now reporting that nearly as many of its MBA graduates this year went into consulting as they did finance. On an industry basis, Columbia says that 34.5% of the Class of 2018 accepted jobs in consulting versus 35.9% in finance. The difference was even smaller when the school reported the same stats by function, which would include consulting and financial jobs in corporations outside those specific industries, with 38.1% going into consulting vs. 38.8% in finance.
The swing toward consulting at a school well known for its strength in finance was fueled by a record 62 hires along by McKinsey & Co., up from 55 a year ealirer. In fact, McKinsey alone hired more of Columbia’s MBAs this year than the seven biggest financial firms combined. Goldman Sachs (15), Morgan Stanley (14), Citi (11), JP Morgan Chase (10), Credit Suisse (7), and Bank of America Merrill Lynch (5). Five consulting firms—McKinsey, Bain (28), BCG (28), PwC Strategy& (26), and Deloitte (24)—all hired more than any single financial services firm this year (see table of major CBS employers over the years).
TOTAL MEDIAN COMPENSATION AT COLUMBIA THIS YEAR: $147,000
McKinsey, moreover, has been Columbia’s single bigger MBA employer for at least the past six years. But the prestigious global consulting giant has never employed as many as 62 CBS graduates in a single year. Only four years ago in 2012 McKinsey employed 33 Columbia MBAs.
Without more of those highly lucrative finance jobs in the totals, Columbia saw total median compensation to its MBAs remain essentially flat at $147,000 versus $146,645 a year earlier. Still, a ten-year perspective of MBA pay at CBS shows that this year’s class reached a new record in starting compensation (see table below).
The total comp number includes median base salary of $125,000, unchanged from last year, median sign-on bonuses of $25,000, received by 66.3% of the class, and median other guaranteed compensation of $25,000, reported by 21.8% of the students. The total compensation number is a conservative estimate because it does not include tuition reimbursement, relocation compensation, carry, or nonguaranteed performance bonuses. The school said its overall compensation numbers excludes 105 students who returned to their sponsoring employers and 31 other students who either bought or started their own companies.
Almost improbably, the stalled level of total pay allowed this year’s graduating class at the University of Michigan’s Ross School of Business to land jobs with slightly greater median compensation of $150,606. Stanford University’s Graduate School of Business this year reported total median comp of $179,346, while Harvard Business School’s Class of 2016 reached total median pay of $163,827.
HIGHEST REPORTED STARTING SALARY: $325,000 FOR A HEDGE FUND JOB
Still, there were some very big pay days for many Columbia graduates who ventured into finance. The highest reported salary of $325,000 went to an MBA who landed a job with a hedge fund, but there was a $280,000 starting salary for a graduate who went into private equity, a $275,000 starting salary for another MBA who gained a job in investment management, and a $200,000-a-year salary for a graduate who went into real estate.
Indeed, some of the sign-on bonsues were sky high as well. One MBA reported a $300,000 signing bonus in investment management, a $227,000 in general management, a $190,000 sign-on for a job in buy-side/sell-side research, and even a $170,000 signing bonus for a Columbia MBA who joined a consulting firm.
At many peer schools, the growth of MBA jobs in both consulting and technology have tended to offset the decline in employment opportunities in finance. But Columbia’s 2016 employment report shows that the booming technology industry has barely made a dent in MBA hiring at the school. This year, for example, tech hires totaled just 8.1% of the class, compared to 13% at Wharton, 16% at the University of Chicago’s Booth School of Business, 19% at both Harvard Business School and Duke University’s Fuqua School of Business, 22% at Northwestern University’s Kellogg School of Management, and 33% at Stanford University’s Graduate School of Business.