During a sunny day last spring on the leafy Bloomington campus of Indiana University's Kelley School of Business, Dean Daniel C. Smith struck up a conversation with a visiting recruiter from General Mills, one of Kelley's top MBA employers. The talk quickly turned to Kelley's low African American and Hispanic enrollment numbers: At a combined 5%, they were among the very worst in BusinessWeek's Top 30 U.S. MBA Programs. Enough was enough, the recruiter said: "Diversify within three years, or we'll start recruiting elsewhere."
As prominent B-schools struggle to attract African Americans and Hispanics—groups traditionally underrepresented in MBA programs—threats like that have become commonplace. But just as rising minority populations in the U.S. have made hiring a multi-ethnic workforce a business imperative for many companies, the percentage of African American and Hispanic graduate students majoring in business has dropped to 29%—the lowest level since 2003, according to the Council of Graduate Schools. So companies are scrambling to recruit minority MBA graduates and urging schools to produce more. "Our staff should mirror our customer base," says Cenona Taveras, a diversity manager at Procter & Gamble. "And our customer base is getting more diverse."
In the past year, recruiters from P&G, General Mills, Kraft, and Kimberly-Clark have pushed for more minority MBAs—and for good reason. On average, African American and Hispanic students make up just 9.5% of U.S. residents enrolled at BusinessWeek's Top 30 B-schools. At some programs—including those at the University of Chicago Booth School of Business and Cornell University—the figures are even lower; 7.7% and 7%, respectively.
It's not that B-schools aren't trying. Indiana, Northwestern University, and others have made special efforts. The Yale School of Management's Pre-MBA Leadership Program offers a two-week crash course for minority juniors, seniors, and recent college graduates. Some companies are contributing guidance, internships, and scholarship money. Last year, for example, Kimberly Clark pledged nearly $25,000 toward a minority student's tuition at the Wisconsin School of Business. "We're not facing this alone," says Indiana's Smith.
Why are minority MBAs on the endangered list? The problem is complex. Prominent African American and Hispanic business role models are scarce—law and medicine attract most top students of color— so minority MBA applications have been dwindling. In the business world, minorities with the most MBA potential are in such high demand that there's little incentive for them to attend B-school; the dream jobs may already lie within their reach. Diversity-starved companies further complicate matters by steering African American and Hispanic employees away from B-school, where it's feared they'll succumb to offers from rival recruiters with "sweet siren songs," says Stacey Kole, Chicago's deputy dean for the full-time MBA program.
Companies unquestionably benefit from expanding their minority work force, even if they haven't yet figured out how to do it. "You get a whole new perspective," says Carmen Williams, 28, an African American MBA employed at Barclays Capital. "There needs to be more of that."