Companies get a jump on hiring top talent if they take the long view: Pounce when rivals are holding back
Any good strategist knows the best time to pounce is when your adversary is reeling. With that in mind, the 2008-09 MBA recruiting season should be prime time for recruiters who have been frustrated by hot competition for top MBAs—if they are willing to be smart about it.
We all know the frustrations of "normal" companies trying to attract top-notch MBA talent that get outbid by the "body shops"—investment banks, consulting firms, and private equity outfits.
But here is 2009's open secret: Consulting firms and investment banks are cutting back their hiring plans. (Private equity already cut back last year.) According to Maryellen Lamb of Wharton's MBA Career Management Center, her office has already received calls from investment banks canceling this fall's interview schedules. The banks said some offers would be made, but they would be much harder to come by, since the banks and their ilk have already filled large portions of their downsized 2009 need with returning interns.
Furthermore, your other campus competition is also likely to pull back, if history is any guide. In the 2001-02 recession, the nationwide portion of MBAs with four or more offers fell from 28% to just 7%. And, the portion who received just one rose from 27% to 48%.
Look at the Whole Candidate
"True" you say, "but aren't you forgetting two things? First, there is a reason for that cutback. Other companies are suffering as well. This is the time we can least afford those expensive MBAs. And, second, MBAs are notorious for job-hopping. Won't they just leave us for their precious consulting firms as soon as the job market improves?"
Here's what I say: Recalculate the value of the positions you normally hire MBAs to fill. Let's assume that you have already correctly calculated their value in normal times—and frankly, the positions are simply not as valuable in a recession. Issue resolved, right? No. That calculation was myopic. It assumed that the only relevant skills that an MBA has are a subset of the skills you normally hire for. What about that MBA's other skills? What else have students learned that might be valuable to your company, even temporarily?
At Wharton, an MBA "major" consists of only five credit units beyond the core courses, out of a total of up to 21 course credit units. An MBA with a marketing "major" will have taken three courses in operations and information management, four in general management, and three in accounting. At Emory University's Goizueta Business School (where I teach), an MBA student can use as little as three of his or her elective courses to obtain a major— with the remaining 21 courses devoted to other areas of study. So, the thought process of a smart recruiter should be: "The MBA I normally hire is not worth the price if he or she only does the job I would normally hire for. So, how large is the value-to-price gap, and what else might I have him or her do temporarily that would fill that gap before we migrate him or her to the normal position?"
For example, could a new hire put operations learning to work, and improve the efficiency of the plant? Or use finance knowledge to take a fresh look at how your company handles the accounts receivables and payables? Frankly, most legal departments have never been examined with a strategic eye—might there be some dead wood there? Use your imagination. It should not be too hard to find areas where a good look can save the company $50,000 or $75,000—and that's enough to cover the cost of most MBAs for six months. Task the MBA with finding the money in three months, and congratulate yourself for making a profit.
Hopping Too Fast?
Will MBAs leave their first job when the economy turns around? Yes, probably half will, if past trends hold. But a smart recruiter knows to focus on finding the other half. Sound obvious? It isn't. Most don't. Few recruiters have a system for even attempting to sort "future leavers" from "long-term players." Go ask your human resource department what validated tools they have for predicting later turnover that you can use during the recruiting process. The tools exist. (And if your particular HR department is unaware of any, that suggests an addition to the MBA "special projects list" mentioned above.)
The average recruiter will follow a lemming strategy—hire more when the highest-paying firms are hiring most and pull back when they are pulling back. The smarter recruiters will look one level deeper, to see if a contrarian approach might yield better results.
And the smartest recruiters? They will look deeper, too. But, they will also have one more trick up their sleeve—the honors undergraduate students. McKinsey recruiter Bob Bonner said in a University of Pennsylvania student publication: "We can pay them less, they work harder, they got better grades in the same classes, and they're easier to mold."
So, don't just shut down recruiting like your adversaries. Think at a level deeper. That's what a good strategist would do.