Storm Clouds on the Job Hunt Horizon

While most recruiters are still seeking MBAs despite a shaky economy, many B-school students are hedging their bets and accepting early offers

The classrooms at Carnegie Mellon's Tepper School of Business New York branch were bustling last week, filled with nearly a dozen recruiters pursuing their annual hunt for second-year MBA students. Students dressed in suits nervously filed in and out of the rooms, clutching their résumés and interview schedules as they met with representatives from Bear Stearns (BSC), Bank of America (BAC), and Citigroup (C), among others.

The scene was no different from other recruiting events of recent years, but students admitted to feeling on edge. Some said that the recent news of layoffs at major banks—due to fallout from the mortgage lending crisis and the growing fear of a recession (BusinessWeek, 9/18/07)—was already having an impact on their job search. A handful of firms, including Morgan Stanley (MS) and Deutsche Bank (DB), had recently canceled second-year recruiting events at Carnegie Mellon's Pittsburgh campus, heightening students' anxiety.

"I definitely feel that the job opportunities are a little bit less now than last year," said Danny Fang, a second-year, dual-degree MBA student who had come to New York to interview for trading positions at banks. "A lot of the students, the ones still looking for jobs, are pretty anxious."

Rocky Recruiting Season

On the surface, the fall recruiting season appears on par with last year at most MBA programs. But recruiters and students said they are aware that, given the shaky state of the economy, it could change at any moment. They are waiting to see if the recent fallout from the subprime mortgage crisis will trickle down to MBA campuses and ultimately have an impact on students' chances at obtaining full-time job and internship offers.

"I think we have to be sensitive to it and recognize that there are warnings on the horizon," said Edmund Hughes, director of career management at Tulane University's Freeman School of Business, a school that places many of its students in financial trading jobs in New York and Houston.

There is already some early indication that some sectors will be affected in coming months. Recruiters in areas including real estate and structured finance have hinted they might be cutting back the number of offers they make to full-time students this year, career services directors said.

Affected Sectors

For example, at University of North Carolina at Chapel Hill's Kenan-Flagler Business School—which has a concentration in real estate—recruiters from residential development firms like Centex (CTX), Pulte Homes (PHM), and Toll Brothers (TOL) have chosen not to come to campus this fall. In the past, these firms hired a number of Kenan-Flagler students for internships and full-time jobs, said Mindy Storrie, UNC's interim director of the career management center. Most have likely backed off of hiring this year because of the downturn in the housing market, though commercial firms are still recruiting, she said.

"Some [residential firms] have decided to hire in smaller numbers and some have declined to come in to interview students," Storrie said.

There also may be fewer jobs in the banking sector for students this recruiting season, said Jonathan Masland, senior associate director of the career development office at Dartmouth College's Tuck School of Business. Fewer bank analysts are heading to private equity firms after this summer's credit turmoil, which has a ripple effect on MBA hiring, Masland said.

"There are fewer full-time roles for MBAs because some of these are now being filled by the promotion of an analyst into an associate role, where in the past these people left and went to private equity firms," Masland said.

Unchanged Recruitment Strategy

Still, recruiters in the financial services industry—at least for now—said they are proceeding as usual with their plans to hire MBA students for internships and summer jobs, despite it being the worst year ever for layoffs in the U.S. financial-services industry (BusinessWeek, 10/23/07). Even investment banks such as Bear Stearns (BusinessWeek, 10/11/2007), which announced on Oct. 29 that it was cutting 300 jobs in various business units, said they have not changed their recruitment strategy.

"For students in MBA programs who are concerned that banks might be pulling back, our message is: We are here on campus, we're interviewing, and we have positions that we are hiring for," said Tom Labadie, Bear Stearns' director of university relations. Labadie declined to give out specific numbers of how many students the company planned to hire this year.

Career Services Skepticism

Despite the upbeat message from recruiters, career services directors are looking at the recruiting landscape with a skeptical eye. Most have booked the usual round of recruiters for on-campus interviews in January and February, but said they realize companies could choose to back out at the last minute or make last-minute revisions in their hiring goals.

"We worry about, if instead of hiring a pool of 20 for an internship or a particular class, are they going to hire 10 people instead. Or, if they were going to hire three positions, and it goes to one," said Patricia Phillips, executive director of the career management office at University of Rochester's Simon Business School. "Those are some of the things we anticipate might happen."

Playing It Safe

With uncertainty lingering, some second-year students are choosing to play it safe and not risk the fall recruiting process, said Tuck's Masland. Instead, a larger proportion of students this fall are accepting full-time job offers from their summer internship employers. "There is more anxiety among students and one big change has been that they have accepted their offers a lot quicker," Masland said. "I think that might have impacted the level of second-year recruiting."

Some students are accepting job offers so early on in the process that some recruiters who visited campus this month found themselves sitting in empty interview rooms, said Karin Ash, director of the career management center at Cornell University's Johnson Graduate School of Management. "To the contrary of what I would expect, quite a few companies are coming to campus and we cannot fill their schedules because so many students have offers and are not interviewing," Ash said.

However not all students are in that position. Students who haven't yet secured full-time jobs, like Carnegie Mellon's Fang, said they are strategizing ways to ensure they don't get shut out of the job market. Fang said he is broadening his job search beyond banks, and is interviewing at pharmaceutical and technology firms as well.

"I think everyone is being more aggressive. I'm definitely trying to map out a little plan for myself, so if plan a doesn't work out, I can go to plan B," he said. "It just becomes a lot more difficult now."

Before it's here, it's on the Bloomberg Terminal.