In terms of recruitment, salary, and hopefulness for the future, 2021 represents a new day for MBAs.
That’s the inescapable conclusion from the latest survey data released today (June 30) by the Graduate Management Admission Council. GMAC’s annual Corporate Recruiter Survey shows big-time rebounds in hiring and salary projections for Class of 2021 MBAs compared to their predecessors who graduated during last year’s coronavirus pandemic, as well as a spike in overall confidence in the value proposition of the degree. Across the board, holders of other graduate business degrees stand to gain in job and salary prospects, too.
Coronavirus did not, it seems, conquer the MBA.
“From the projections for the hiring and the segments of what the recruiters are saying, the data shows that there is a return to pre-pandemic levels,” says Rahul Choudaha, GMAC’s director of industry insights & research communications. “And that indicates that while Covid has turned the world upside down, the demand for graduate management talent is rebounding at a much faster pace than anticipated previously.”
9 IN 10 CORPORATE RECRUITERS PLAN TO HIRE MBAs — A RETURN TO 2019 LEVELS
GMAC has conducted its Corporate Recruiter Survey since 2001. This year the poll — administered in partnership with the Association of MBAs, the European Foundation for Management Development, MBA Career Services & Employer Alliance, and career services offices at participating graduate business schools worldwide — received 529 responses between February 25 and March 31. It found that corporate recruiters project a robust demand for business school graduates, with 9 in 10 expecting demand to increase or remain stable in the next five years. Meanwhile, a higher proportion of recruiters in 2021 (37%) expect the demand to increase than that in the previous year (30%), with more than half of European recruiters (54%) sharing such a view compared to their Asian (32%) and American (34%) counterparts.
Sangeet Chowfla, president and CEO of GMAC, notes that since 2010 the proportion of surveyed recruiters planning to hire MBA graduates has grown significantly, particularly in Europe, where the percentage jumped from 44% in 2010 to nearly twice as much (86%) in 2021; and in the United States, where it grew from 56% to 94%, a 68% increase.
“As corporations recover from the pandemic and rebuild their workforces, it is no surprise that business school graduates ― with their leadership and managerial skills in high demand ― are specially strengthened in their value proposition as an employee and uniquely positioned to meet today’s economic challenges,” Chowfla says.
Before the pandemic, 92% of recruiters indicated they were planning to hire MBA graduates in 2020; Covid-19 changed all that. Because of the pandemic, the actual hiring of MBA graduates, at 80%, was much lower. But now GMAC has found that the proportion of recruiters planning to hire MBAs in 2021 (91%) returning to the same level as pre-pandemic 2020 (92%). The MBA hiring projections exhibit strength across key regions and industries — for example, 95% of the recruiters in the consulting sector, an industry in most demand by MBA graduates, are projecting to hire them, in a reversal from the 2020 actual hiring of 76%.
MBA MEDIAN SALARY RETURNS TO PRE-PANDEMIC LEVEL: $115K
GMAC’s data tracks with other recent polls, including its own from last year, which showed high levels of optimism for 2021 after the calamity of 2020. In early June, Poets&Quants reported on a survey by Training The Street of more than 450 first- and second-year MBA students across the United States that showed nearly 80% were “very” or “somewhat” confident about landing a good job — in stark contrast to last year at the same time, when just 43% expressed confidence about their employment prospects and 57% said they were very or somewhat pessimistic. This year, only 9% of those surveyed by Training the Street said they were dissatisfied with their job offers.
“I would say that in the context of how the economic recovery has surprised many presently, for sure, there has been a strong rebound across the board in many of the sectors, including the ones which were very seriously hurt — hospitality, travel and so on,” Choudaha says. “But we are seeing a promising rebound, and the demand for talent will be, I think, a part of the rebuilding process for many organizations.”
High demand equals high premiums. This is what a full rebound looks like: In 2020, the projected MBA median salary reached an all-time high of $115,000 before Covid-19 hit, causing the median to drop to $105,000 three months into the pandemic. GMAC’s new survey shows that the median MBA salary for 2021 is projected to recover to its pre-pandemic 2020 level of $115,000 — which translates to a 77% advantage over those with a bachelor’s degree ($65,000) and 53% edge over those hired directly from industry ($75,000). “This salary premium,” GMAC writes, “shows that investing in an MBA credential continues to pay off over the time, helping an MBA graduate earn $3 million more in his or her lifetime than someone holding only a bachelor’s degree.”
Says Choudaha: “Organizations are rebuilding themselves for this new context of operating in the post-pandemic world where technology integration is much, much higher. Also, the nature of work itself changing, which means creating lot more opportunities for consulting organizations and many of the places where MBA candidates and other business degree graduates are very much in demand.”
TECH SECTOR EMBRACES THE MBA
Some high-profile corners of the tech world have famously been antipathetic to the MBA, or been portrayed that way, but the fact remains: After consulting and finance, tech is a solid third place in the MBA employment landscape, and has been for years. If the findings of GMAC’s latest survey are any guide (and they are), tech likely will be a sought-after destination for elite MBAs for years to come.
GMAC found demand for MBA graduates by the technology industry is anticipated to increase by 10 percentage points in 2021 compared to pre-pandemic 2020, with 96% of tech recruiters projecting to hire MBA graduates in 2021. That’s a level of demand for MBA talent greater than the previous three years. “The data also show that two in three (68%) recruiters in the technology sector agree that leaders in their organizations tend to have a graduate business school education — an increase of 11 percentage points from 2020 (57%),” GMAC reports.
“Technology companies are placing a high value on leaders who are not just technically skilled, but also have strong strategic, interpersonal, communication and decision-making skills, as well as an understanding of the importance of diversity and inclusion and sustainability in their organizations,” says Peter Johnson, assistant dean of UC-Berkeley’s Haas School of Business. “These will be critical to driving organizational growth and innovation. These core skills represent the signature business schools are imbuing in graduates from their MBA and business master’s programs.”
The myth of tech antipathy toward MBAs is fading, Rahul Choudaha says, as the industry matures.
“There has been a narrative prior to this externally in some of the media conversations, that technology sector may not need MBAs, may not need business graduates,” he says. “And that may have been the situation at that point of time, when many of the roles were very technical in nature. But as the organizations which in five years, six years ago were smaller-scale organizations, now they are in the top corporates in the top hundred lists of many of the rankings of the organizations around the world. What that means is that the skill and the scope of the technology sector has really reframed and shifted from when technology was considered to be a startup, scale-up kind of organization to these mature corporate organizations, which need a level of responsiveness and flexibility. That’s the shift and that’s why we are seeing the demand for talent in technology sector increased.”
A WORD OF CAUTION
Recruitment numbers for MBAs are very positive, and so are the projections for master in management, master of accounting, master of finance, and master of data analytics degree holders. The effect of the pandemic on graduate business education seems to be fading, and rapidly. But Choudaha warns that adaptation and flexibility remain paramount in the face of unknown future challenges.
“There’s a big word of caution, which applies not only for the demand for project management talent, but also for the economy: the uncertainty persists,” he says. “And there are ways by which the organizations continuing to monitor and hedge themselves. And likewise, business schools are monitoring and adapting themselves to the changing situation. So the word of caution to be looked for is the continuing need for adaptation and continuing need for being flexible, so that you can be more responsive to these changing situations.
“But it’s a good direction, the sector is moving and recovering.”