They say that when one door closes another door opens. Certainly the current crisis in the financial markets is having a real impact on business schools at both the entrance door and the exit.
On the admissions side, GMAC is reporting a 22% increase in international test taker registrations for the GMAT admissions test. At many of the top business schools applicant numbers are approaching record levels. Northwestern's Kellogg School is reporting a 22% increase in applications so far this year, whilst Spain's ESADE Business School, amongst the top ranked business schools in Europe is seeing a similar increase in applicant volume.
Camila de Wit is the Director of Admissions and Career Services at ESADE. She explains that "demand for the MBA is strong, with growth across the board outside of Western Europe. One of the reasons the top business schools attract so many candidates is that these same top schools attract the best recruiters. In the current market that is very reassuring."
At least part of the reason for the stampede into MBA programs is the increasing demand for the qualification in the fast growing economies of India and China. However there?s no doubt that it?s also being prompted by a feeling that a business school could be a good place to wait out the bad times for a couple of years. Peter Rafferty at Belgium's Vlerick Leuven Gent Management School explains ?It?s a consistent pattern in the MBA market. When the economy slows down the opportunity cost of going to business school is lower. And for a general management MBA like Vlerick we are still seeing great employment opportunities. Despite the financial crisis companies are thinking about succession planning, the IT and biotech cluster around Brussels is bullish, the class that has just graduated is reporting a healthy increase in salary and benefits".
Shock waves through MBA career services
However, the collapse of MBA recruitment heavyweights Lehman Brothers and Merrill Lynch and the overall contraction in financial services is sending shock waves through other MBA career services and affecting the hopes of the recently graduated classes, particularly in the US.
We have been here before of course. In 2001 the burst of the internet bubble encouraged many young professionals to return to school to get their MBA. In fact a chart plotting the Dow Jones of the last 20 years and applicant numbers to business school would show a strong correlation, with MBA applicant numbers lagging by perhaps 12 to 18 months. Which suggests that demand for business school may also tail off in a year or so, certainly if an extended recession leads potential applicants to question the job prospects of graduating MBAs.
But schools seem to have learned the lessons of six years ago, when the Class of '02 graduated to a very challenging job market. Rose Martinelli, the vivacious Associate Dean of Admissions at Chicago GSB comments in her Blog how the school's resources, reputation, alumni and student body are holding strong. "The day after Lehman Brothers announced it would file for bankruptcy-court protection, our career office had already made personal calls to all of our alumni from the 2008 class (and before) who worked at the firm. By Friday, our career-office representatives and Deputy Dean of the Full-Time program flew to New York to have dinner with the Lehman 2008 graduates to help them figure out a plan with help from our alumni. Our career services team is ready and able to meet any demand from our students and alumni."
One sector that is expected to pick up some of the slack from frustrated would-be investment bankers is consulting. For Aurélie Lelièvre at McKinsey & Co. there is an on-going search for talented MBA graduates. Interviewed at HEC Paris, one of the company's core target schools, her comments reflect McKinsey's continued commitment to recruit top talent. "We encourage integrating and developing the best talent in our offices all over the world."
Whatever the current economic turmoil, not everyone agrees that there is a correlation between the stock market and applicant numbers to business school. The Admissions Director at Stanford GSB, Derrick Bolton, commented that demographics are a much bigger factor. It is true that the sizeable Millennial generation in the US, and the vast number of young professionals in countries such as India are stimulating overall demand for the MBA.
So where does this leave candidates hoping to start their MBA next year? Is the competition to secure a place at a top business school going to be so intense this year that it might be better to wait? Judith Hodara, Admissions Director at the Wharton School is still very encouraging, despite the increased volume, but points out the importance of clearly conveying your motivation for doing an MBA . "The competition for admission to Wharton continues to be robust; we are always thinking about and exited to learn about talented, motivated students who are incredibly self aware. We do want to get to know the full picture of the applicants; such a high percentage of those who apply are academically admissible. Those that stand out are those that are able to express to us where they are in the path to the MBA; what are the decisions that have led them to consider Wharton, and how do they see themselves becoming valued members of our community, both as students and beyond?"
This enthusiasm is shared by HEC Paris, who are unique in offering the opportunity to receive pre-application feedback on your potential as a participant in the HEC MBA programme by submitting a Candidate Profile. This is a free service that takes about 30 minutes to complete, and helps you assess your chances of admission before you begin the full application. Explains Claire Lecoq, MBA programme Director, "The skills you gain at HEC will enable you to easily and rapidly adapt to the increasingly unpredictableworld of international business. Your application should, therefore, reflect a desire and ability to succeed in such an environment."
Her other advice to candidates for HEC or another highly selective programme is straightforward, and worth heeding. "Apply early to increase your chances of admission."
Matt Symonds is an internationally recognised business and graduate school expert, consulting to the world’s top business schools. He is a bestselling author, and has written for and contributed to many of the world’s leading publications. He was Co-Founder of the QS World MBA Tour.