The Best B Schools

Wharton may be tops--again--but this year, every grad is golden

Quit while you're ahead. It's not the most complex principle you might learn in B-school, but it's the final lesson Thomas P. Gerrity, dean of the University of Pennsylvania's Wharton School, is giving his students. After once again leading Wharton to the No.1 spot in BUSINESS WEEK's ranking of the best B-schools--a spot it has held since 1994--he has decided it's time to turn over the reins. On Oct. 6, Gerrity, 57, announced plans to step down at the end of the current school term after nine years as dean in order to spend more time with his family. "I've seen too many people stay on too long," he says. "There's something about turnover which involves renewal and rebirth."

Of course, longevity has its advantages as well. The runner-up in our ranking, Northwestern University's J.L. Kellogg School of Management, is led by Donald P. Jacobs, who has been dean since 1975--not long after many membersof the Class of 1998 were born. The 71-year-old Jacobs, whose school monopolized the top ranking from 1988-92, has no intentions of passing the baton. "Someone's gonna have to fire me," he jokes. "The reality is that I really enjoy this job." This year, Kellogg bounced back to No.2 from No.3 in 1996, thanks largely to an improved ranking from grads who lauded its balance between academics and other activities. It unseated the University of Michigan, which suffered a two-place drop in its ranking from recruiters, and fell to fourth place overall.

Rounding out the top was this year's No.3, the University of Chicago, which made a U-turn after its dramatic slip to No.8 in 1996. Chicago's recovery came as it turned itself inside out to regain the support of its students and recruiters, who voted it most improved. It wasn't the only one to make a big leap. Cornell University's Johnson Graduate School of Management vaulted 10 spots, to No.8, thanks to an new curriculum and an administration more inclusive of students.

Elsewhere, too, there was plenty of movement--as frequently down as up. Harvard's B-school fell a notch, to fifth, largely because student satisfaction slumped. One big problem: controversy over the administration's handling of an alleged sexual harassment incident between students. Stanford University fell two spots, to ninth, due in part to the ire of recruiters frustrated because students abandoned them for tiny Silicon Valley startups. The University of Virginia's Darden School--the leader in student satisfaction in 1996--plummeted from No.5 to No.11 as the Class of 1998 complained about the workload and the ability of the placement office to prepare them for job interviews. And this time around, there were four new members of the top 25--the University of Maryland's Robert H. Smith B-School, the University of Wisconsin at Madison, Purdue University's Krannert School of Graduate Management, and the University of Southern California's Marshall B-school. Falling out of the top 25: the B-schools at Southern Methodist University, Vanderbilt University, Thunderbird (American Graduate School of International Management), and the University of Rochester.

Unlike other rankings projects, BUSINESS WEEK takes the customer's point of view to rate the quality of business education. We believe the best results come from asking students and the companies that hire them to rate their experiences. So we sent extensive questionnaires to 9,598 graduating MBAs at 61 schools--our largest survey ever--as well as to 350 companies that actively recruit. We heard back from 6,020 students and 259 companies.

SAVVIER STUDENTS. Graduates--who judge only their own schools--were asked to give their views on such issues as teaching quality, program content, and career placement. Recruiters were asked to assess the skills of the students and rank B-schools on their overall quality and the success rate of graduates in their organizations. Since startups or companies without experience recruiting at different schools aren't included in our survey, schools that are sending a higher percentage of students into entrepreneurial ventures could be affected. Both polls were combined to produce the list.

But whatever quibbles members of the Class of 1998 may have had individually, they didn't have a lot to complain about overall. Many members marveled that they were among the luckiest group of MBAs ever to come out of school. Indeed, a suddenly shaky economy has begun to worry those still on campus. "If the market tanks, will they hire one-third [as many] people?" wonders Cesar R. Conde, a second-year Wharton student. "I hope to God not."

For those who finished school in the spring of '98, an MBA from an elite B-school was a sizzling commodity--a golden ticket into a world of six-figure salaries and jobs with real responsibility. The booming economy and the need for experienced managers led recruiters in our survey to hire 10,348 MBAs, up 28% from 1996, the last time we conducted the survey. They would have hired even more if they could have. Grads in our list averaged 3.2 job offers. Competition sent salaries soaring: The median pay package (salary, bonus, and extras such as stock options or moving expenses) at the top 25 hit $111,420, up 19% from 1996. Another telling figure: Median pay topped $100,000 at 18 of the top 25--vs. 5 two years ago.

But soaring demand is only one reason for those salaries. Today's B-schoolers have more work experience--an average of 3.9 years for this fall's incoming class--so recruiters expect them to contribute from Day One. "You have a much savvier individual, with more maturity and more experience" than a few years ago, says Maury Hanigan, CEO of Hanigan Consulting Group in New York, which helps companies recruit MBAs.

Just as important, students are better prepared for the real world. As competition has stiffened, schools have become far more responsive to students' needs. Students report that schools often turn on a dime to upgrade facilities or remove poor teachers and that they are now included in such decisions as a dean search or curriculum change. And thanks to student demands, almost every B-school has devoted more resources to classes on technology and entrepreneurship. A few examples: Massachusetts Institute of Technology's Entrepreneurship center, launched in 1996, now houses the fastest-growing track at the Sloan B-school--new-product and venture development. And at the University of California at Berkeley's Haas B-school, one of the hottest electives is a "Trends in Technology" course.

Add it all up, and it's hardly surprising that applications hit an all-time high of 89,031 for the current class--up 10% from just two years ago, thanks largely to a surge in international applications. Given the economy's troubles, some worry that the numbers of foreign students may drop, as the relative cost of U.S. B-school increases. Yet B-school can be countercyclical, drawing those who would like to sit out a sour job market, so domestic applications could rise.

No matter which way things go, it's a good bet that plenty of applications will land on the desk of Robert J. Alig, director of admissions and financial aid at Wharton. This year alone, applications for the school's 765 spaces rose 14%, to a record 8,313. It has been a crazy whirlwind for Alig: His office conducted 6,000 interviews last year and some 1,000 "why deny" meetings, in which rejected students get feedback on what they need to do to try again.

FINE-TUNING. That frenzy is in large part a result of the culture created by Gerrity. Wharton is a place where continuous improvement is a reality rather than an empty phrase reeking of consultant-speak. While recent moves haven't been nearly as radical as the curriculum overhaul of the early 1990s, an endless fine-tuning keeps students and faculty excited. "What has clearly emerged is a healthy, organic process that's growing in strength," says Gerrity.

Among the small but integral changes made recently at Wharton and cited by the Class of '98 were two new majors--one in technological innovation and another called ITSE (information systems, technology, strategy, and economics). Students also liked e-Talk, an electronic chat group created for admitted students this year that resulted in the formation of friendships, living arrangements, and even a rock band before anyone hit campus. Other changes included a fourth upgrade of the school's intranet, an interactive online alumni directory that will go live this fall, and a course-bidding system that allows students to signal which classes are their top priority. It also helps the school allocate resources more efficiently.

None of these achievements was seen as particularly revolutionary. At Wharton, they're normal improvements expected to outlive their usefulness. "We were always meeting with different people" in both the faculty and the administration, says recent grad Kavita R. Shah, "so there was constant feedback and cross-checks." Recruiters were plenty satisfied, too, citing a unique combination of breadth and depth. "You get the most for your dollar with a Wharton student," says Paula Goodman, vice-president and senior recruiter at Citibank. "They're just specialized enough but just general enough. If there are extenuating circumstances, the Wharton student is best able to just go with the flow."

While not all schools share Wharton's track record, a few took leaps forward after dropping in our rankings the last time around. The University of Chicago and Cornell's Johnson school were two that bounced back. After student dissatisfaction sent Chicago tumbling five spots in 1996, the school went through a serious bout of navel-gazing. The result: Virtually everything but the faculty, which remains a key strength, got a wholesale makeover. "I think it's fair to say that we just swept out the old," says Dean Robert S. Hamada.

TEAMWORK. To improve communications, Hamada created a deputy dean position to focus on the needs of full-time students. A cash prize now goes to the most effective member of the administrative staff--voted on by students. Hamada also added a bit more emphasis on communications and teamwork to the core analytic skills for which Chicago is famous. Similar efforts went into regaining favor with recruiters, who slammed the placement office in 1996. Hamada brought in a new staff and added such amenities as valet parking and a concierge desk. He also set up an "account manager" system in which staffers work with specific industries to ensure that recruiters get the assistance they need.

The efforts paid off. Recruiters voted the students most improved, and students raved about Chicago's ability to keep academics first and still listen to students. "The administration was extremely flexible and responsive to students' needs," says '98 grad Lori Brazil Gery. "And everyone was really interested in teaching. There are a lot of new young professors that made a great impression on the students."

Similarly broad changes took place at Cornell, which has undergone a revival under Dean Robert J. Swieringa, who came on in 1997. Students gave high marks to a revamped core curriculum they designed together with faculty. Cornell also added marketing and consulting versions of the school's "immersion" manufacturing course, in which students can spend the second semester of their first year on one class. "[The administration] came through for us with everything," says recent grad W. Daniel Alvarez. Most remarkable was that big changes got made after less than a year. "We asked for more immersion courses, and they told us it would take two years. We said that wasn't good enough, so they did it faster."

It's a lesson that MIT's Sloan School of Management may soon have to learn. Poor marks from both students and recruiters have dropped the school from No.9 to No.15. Students felt that professors hadn't integrated the curriculum very well and that the school was not very responsive in meeting the demand for electives. Some of the grumbling related to fewer corporate finance choices in one semester, resulting in excess demand for the class taught by Jeremy C. Stein, one of the school's most popular faculty members. Students asked for more options, but the school wasn't able to solve the problem. "I can't clone him," sighs Interim Dean Richard L. Schmalensee, who has added more corporate finance courses.

Sloan didn't fare much better with recruiters, who continue to rave about Sloanies' technology skills but grew frustrated when many spurned them for more entrepreneurial jobs. That doesn't much faze Schmalensee: "If there's one thing you want to be unhappy about," he says, "it's when you hear `I tried to hire your students and couldn't."'

CAMARADERIE. Virginia's Darden School also came under fire. While students continued to laud the accessible faculty and the innovative curriculum that integrates core courses, the "boot camp" feel of the first year left many feeling exhausted and unprepared for their job interviews. "The first-year workload is too much," says one student, "and hurts those people needing to spend a significant amount of time in the job search process." Grads also complained about a placement office in transition. New Dean Edward A. Snyder acknowledged that the course load is demanding but says it better prepares students for real life. The school has added a unit on career development to the orientation process.

Happier students were to be found across the country at the University of California at Los Angeles' John E. Anderson Graduate School of Management. The school got the best overall scores from graduates in the poll. Despite being located in a huge metropolitan area with plenty of distractions, the camaraderie and committed teachers left students feeling that they had gotten a lot more than a piece of paper when they left. "This is a small community within a sprawling one," says Dominique Litmaath River, a recent grad. "By Thursday [of each week], everyone always had 20 E-mails from [others] sailing at the marina, going to the movies, or hiking." The students shared both good times and stressful ones. "People were totally unselfish," says Spencer Cutter, a '98 grad. "They E-mailed their notes to the whole class. If 10 people wanted a job at J.P. Morgan and they were hiring two, theY would share information." Happy campers, the MBAs of 1998. Here's hoping that the real world treats them as well as B-school did.

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