Companies have reduced their MBAs hiring dramatically in 2020, rescinding and renegotiating offers, reducing internships, and leaving vacancies unfilled — a not-unexpected consequence of an unprecedented global health crisis and economic contraction. Poets&Quants has covered this phenomenon more closely than any media outlet; see two of many examples here and here. But MBAs fretting about their job prospects now have data that suggests the bad times may end with this disruptive, chaotic year.
The Graduate Management Admission Council released its 2020 Corporate Recruiters Survey today (September 21), and the annual trove of data on MBA hiring shows that while companies continue to play defense as the coronavirus heads toward its eighth month, they are optimistic about renewed levels of recruitment in 2021. Before the upheaval of Covid-19, 92% of firms stated their intention to hire MBAs in 2020, a number that dipped by a historic amount to 77% in post-COVID sampling. Now, GMAC reports, the data show that nearly 90% plan to hire MBAs in the new year.
In other words, back to normal. Almost.
“Everything is so uncertain, but our projections based on what recruiters are thinking at this point of time show optimism for MBA hiring in 2021,” Rahul Choudaha, GMAC’s director of industry insights and research communications, tells P&Q.
RECRUITERS READY ‘TO SCOOP UP THE BEST TALENT IF THINGS START PICKING UP’
Last year’s GMAC’s Corporate Recruiters Survey, conducted in spring 2019, found that demand for MBAs would remain high throughout 2019 and that MBAs were pulling in — and were likely to continue pulling in — record pay. This year’s survey was on track to report similar findings as GMAC wrapped up its data collection in March. Then — chaos. Choudaha, who joined GMAC that month, says that he and his team recognized the need to go back to phones if they wanted more relevant insights about the economic impacts of Covid-19 across hiring and salary trends.
The new numbers — collected in what GMAC calls Wave II — took more time to gather and delayed the release of the survey for about two months. But they were worth it, Choudaha says, providing deeper perspective on the skills employers are looking for as organizations continue to grapple with economic downturn. In particular, GMAC found that even amid the disruption of a global pandemic, the skills that MBAs bring to the table remain highly valued.
“When the world is all going upside down in such a short period of time, having the level of confidence in these skills of the graduates shows something about the belief that when things stabilize, when things start recovering, recruiters are ready to bring the talent back into their hiring pool,” he says. “So that level of confidence was something of a surprise and also an interesting finding from this report, and related to the optimism for 2021.
“Recruiters are seeing that, OK, yes, today and now and in the next few weeks and months, things are very unstable. We still don’t know how this will unfold, but they want to be primed up. They want to be ready as things take the shape for recovery. They don’t want to be the last one to look for the talent because as we know, the pre COVID world was pretty much the full employment world. So this is a time for them to really scoop up the best talent if things start picking up.”
Will a resumption of normal MBA recruitment levels mean hiring 2020 graduates who may still be out of work next year?
“Great question,” Choudaha says. “In the research, we did not directly capture that element. And so this would be my conjecture, but we can see that there is a great research in terms of demand and supply of the talent. So if there is a carryover of talent from this graduating class and some of them may still be available for the next class, or maybe looking for a more optimum fit for their career next year, there will be possibly a better supply of talent.
“And on the other side, we found one skillset that stood out as one that is expected to be more sought-after next year: the ability to adapt to technological disruption. And what that shows is that some of the talent from this class will be picked up, but it also could be that the skillsets with the new class — because of the new learning models, new environment, new context — will make them also very promising. So there are pros and cons to it that won’t be one universal scenario for a grad, but I would say that, OK, there’s a big reset of demand and supply coming in for the next year.”
ABOUT THOSE SKILLS
GMAC’s annual survey was conducted this year in partnership with MBA Career Services & Employer Alliance, the European Foundation for Management Development, and Highered. In the survey, a total of 135 business schools worldwide registered for Wave I, which was fielded between February 17 and March 17. Because of the initial survey closing right at the onset of the Covid-19 pandemic, GMAC fielded a second wave of the survey that ran from June 17 to July 17. All schools and employers participating in Wave I were invited to participate in Wave II. An additional 12 business schools registered.
A total of 232 employers responded to Wave II of the Corporate Recruiters Survey, “significantly fewer respondents than the 712 recruiters responding to the initial Wave I survey,” GMAC says in a news release, with several likely factors to blame including “continuing uncertainty posed by Covid-19 which may have prompted several recruiters to abstain from responding.” Those who did respond, however, provided a vivid snapshot of the overall estimation of MBAs’ value. To sum up: Employers still love what MBAs bring to the table. Before Covid-19, 90% of respondents indicated they were highly confident or confident about the ability of B-schools to prepare students for success in their organization. That figure held steady at 87% in surveying performed this summer, “highlighting the attractiveness of MBA degree holders and their ability to perform in times of transition and change,” GMAC reports.
“Talent in an organization is vital to growth and a firm’s ability to innovate, a reality in any environment,” says Jay Nibbe, GMAC board member and global vice chair for markets at EY. “The skills highlighted in this report represent significant competitive differentiation when it comes to a company’s ability to compete and create value in the marketplace, and they become even more important amid turmoil and constant change.”
Adds Choudaha: “GMAC’s research shows that even as the pandemic resets the global economy and job market, the confidence of corporate recruiters in the skills and abilities of graduate management talent is strong. This aligns with 2021’s robust MBA hiring projections as organizations plan for their recovery in a post-Covid world, which demands meta-skills integral to managerial talents such as versatility and strategic thinking.”
Sangeet Chowfla, GMAC’s president and CEO, agrees with Choudaha that corporations and schools alike see Covid-19 as a catalyst that is making better MBAs.
“When thinking about the skills and experience required to help organizations and industries rebuild after an event like Covid-19, it makes sense that employers are expressing a desire to hire more MBA and business master’s graduates,” says Sangeet Chowfla, president and CEO of GMAC. “The world was changing rapidly even before the current pandemic and while Covid-19 has brought with it perhaps unprecedented challenges across every sector, B-school classrooms have long been preparing MBA students for a dynamic and often uncertain environment. Employers place a premium on that kind of talent and perspective.”
SALARY TRENDS: MEDIAN COMPENSATION DROPS BY $10K
Compensation, meanwhile, is “under pressure at all levels,” GMAC reports, as companies focus on sustainability and as talent demand and supply “shifts in favor of employers.”
For those members of the Class of 2020 fortunate enough to secure employment, most recruiters say they intend to honor their organization’s compensation promises; only a minority of respondents say they will reduce salaries, benefits, or bonuses of those already hired. Nevertheless, the compensation premium commanded by business management graduates has fallen. Pre-Covid, the median salary of MBA degree-holders was $115,000, which is still 75% more than those with only a bachelor’s degree; however, that figure decreased to $105,000 in post-Covid surveying. GMAC reports that the compensation premium is even more apparent for Fortune 100 companies and the big-three industries of hire for MBA graduates: consulting, finance, and technology. For example, at $145,000, the median salary of MBAs in the consulting industry is twice that of bachelor’s-degree holders as indicated in data collected prior to March 17. At $115K median for both finance and tech, the premium is less pronounced but still undeniable.
“For salary, what we can see is that based on recruiters’ projections for now, it is looking pretty stable,” Choudaha says. “Wave I to Wave II, there has been a decline for MBAs in terms of the median salary from $115,000 to $105,000. So there is clearly a decline for MBA base salary within this year.” GMAC did not ask for salary projections in 2021, he adds.
GMAC plans a webinar October 1 with industry experts to discuss its report and the implications for business schools and employers.