The base pay of newly minted Harvard MBAs continues to rise. Where they’re going after graduation is changing, however:
A near-record 29% of Harvard’s class of 2012 headed into the still-booming consulting industry, according to the school’s employment statistics. That’s a full five percentage points higher than the year-earlier class of Harvard MBAs and nearly matches the record 30% of graduates who chose consulting in 2003.
Grads entering the financial services industry, on the other hand, slipped by four percentage points to 35%, compared to 39% for the class of 2011. Ever since 2008, when 45% of Harvard’s graduating class went into finance, the numbers have been declining, largely the result of cutbacks on Wall Street and at other large financial institutions. The biggest hit was in investment management jobs, which attracted only 4% of this year’s class, versus 12% of the class of 2011. Investment banking jobs for Harvard MBAs fell to 7%, from 10% a year earlier.
Not all finance jobs were down. At 15% of the entire class, Harvard MBAs who took private equity jobs hit a new record. Last year, 14% of the class of 2011 headed for jobs in PE, up from 9% a year earlier and the highest since 2006, when 13% of the class took PE and leveraged buyout jobs.
The lowest median salaries were in government and the non-profit world. Harvard MBAs who entered those two fields reported median starting salaries of $90,000 — 50% lower than MBAs who went into consulting — with no signing bonuses or other guaranteed compensation. Harvard said about 3% of the class of 2012 went into the non-profit and government sectors, up from 2% last year but still well down from 6% in 2010 and one of the lowest recorded percentages in the past 10 years.
I prefer the 1980s version: “Disposable handguns.”
(And now we’ll see who was reading what back in the day….)
What was the percentage of graduates becoming involved in IT before the dot com bubble burst? Maybe we can develop a new model for forecasting asset bubbles.
Based on the statistics, the title should read “Consulting” not PE.
In any event, here are some sobering thoughts. The capital allocation of pension funds, endowments etc to “alternative classes” which means PE, forest lands etc is half what it was in about 2005 or 2006. It is forecast that the number of PE managers will fall by 2/3rds. Billion dollar funds are out. They are raising 40% of what they used to.
Manufacturing oriented, small company and operating oriented PE funds are “in.”. Hey, that’s us!!
But in ain’t that easy. Harvard MBAs are nice, but they are freshly minted and fresh faced mushes. Smart folks. But you don’t just waltz in and optimize widget makers or source and cut deals.
Here are the backgrounds of our partners: 1) aeronautical engineering/consulting/serial CEO and business owner. Over 60 yrs old. 2) business degree/serial CEO and business owner. Late 50s. 3) MBA/investment banking in M&A/ over 20 years in PE. Late 50s. And then of course me. Engineer and in industry for 7 years/small business operator/LBO financing/MBA and 15 years PE. Early-Mid 50s.
What do you think happens when we send our team of 2-3 of these folks out see a 60 year old bootstrap business owner, and tell him or her how a transaction is going to work, vs a Harvard MBA?
These Harvard MBAs are going to cut their teeth, work their fannys off and hopefully learn the ropes. It will be interesting to see what the state of the PE world is when they actually are in a position to do something meaningfully in PE. Mr Dodd and Mr Frank and Mr Obama are working hard to wreck the business.
PS – Just a point of order. The term PE sits at the top of the chart. The three branches are venture capital, leveraged buyout (mostly growth oriented these days) and turnarounds. Commentators don’t seem to even understand the correct terminology, as evidenced in the quotation, much less how it really works.
@Drew
You can generally count on people to not know what they’re talking about. It’s what sets us apart from wombats.
It’s what sets us apart from wombats.
I don’t know about that. I’ve had a wombat expound to me on the awfulness of the french defense at length, despite his having no clue about the strategic and tactical strength of Black having a Bishop on e6.
@Icepick
Was it Freddie? That’s the same wombat who screwed Jimmy Carter into saying he loved Polish women.
Nah, it was Jon. He edits KingPin now.
And was that a wombat? I thought it was a rabbit.