Last fall an intense competition swept a half-dozen U.S. college campuses. Four-person teams of undergraduate business majors battled to generate the biggest returns -- using "fantasy funds," not real money. It was all part of a "portfolio challenge" game designed by Merrill Lynch Inc. (MER) to help identify young talent for analyst jobs. Winners pocketed $9,000 in cash prizes and other giveaways. More important, the finalists nabbed a coveted place at the top of Merrill's callback list.
Such games might seem unusual to anyone who graduated from college more than a few years ago. But in the increasingly competitive war for fresh talent, a small group of companies including Merrill, PricewaterhouseCoopers, L'Or?al, and others is changing the rules. A growing economy and the need to ramp up hiring quickly and cheaply have spurred recruiters to bypass MBA programs and hire the bulk of their new people straight out of college.
At Merrill Lynch, undergraduate recruiting has increased 20% to 25% annually in three years, and the company is devising innovative ways to build up the pipeline. The firm expects to hire about 300 undergraduates in the U.S. this school year alone, according to WetFeet Inc., a San Francisco research outfit. By identifying the best undergraduates early, managers can see if they're a good fit and make offers long before rivals do. At Merrill, three out of four summer interns will receive full-time offers, a practice that benefits prospective employees. "Having an internship lets you hit the ground running," says Anne Osmun, a Harvard University grad who joined Merrill's investment banking unit in July.
It's an increasingly common strategy. In 2004-05, according to BusinessWeek's survey of corporate recruiters, 28% of new entry-level hires were former interns, up from 26% the year before, and one out of four reported that at least half of all new hires came from the intern pool. What sets Merrill apart is its willingness to hire younger interns, including freshmen. Says Elton Ndoma-Ogar, head of diversity campus recruiting: "We're trying to build relationships earlier and turn these young people into professionals."
To that end, the company is reaching out to prospects via alumni networks and school clubs. It's also beefing up its Web presence and marketing with details about the company and employee benefits. Allison Pavlick, 21, a junior at Pennsylvania State University's Smeal College of Business who is interning at Merrill this summer, was sold by the company's family-friendly policies. Says Pavlick: "That was a plus for me."
When making offers, Merrill uses an approach tailored to Generation Y: It mails benefits enrollment packages to new hires and their parents in hopes the materials will prompt a discussion about the company's benefits and ultimately lead to a deal. New hires get up to two years of training. And most go to work as analysts from day one. "They're not making copies and delivering mail," says Connie Thanasoulis-Cerrachio, director for U.S. campus recruiting. "They're rolling up their sleeves and making deals."
Merrill's approach is the exception today, but it might not be for long, especially if the economy remains strong and demand for talent grows. That puts career-minded undergrads in a coveted position: the driver's seat.
By Bremen Leak, with Lindsey Gerdes in New York