Top B-School Stories of 2010Alison Damast and Francesca Di Meglio
For business schools, 2010 was a year of uncertainty, thanks mostly to the lingering effects of the recession.
On the hiring front, recruiters were hesitant to make employment commitments out of fear that positions promised to MBA grads wouldn't exist upon graduation. With fewer companies coming to campus, soon-to-be MBA grads were forced to look for jobs in industries and functions they probably wouldn't have considered in a better hiring market. As the year went on, hiring started to rebound slightly, but MBA job placements for the Class of 2010 three months after graduation were nowhere near pre-recession levels.
In admissions, some MBA programs saw big declines in applications because the economy was indeed improving and people were reluctant to give up their jobs and return to school. U.S. business schools started to lose their grip on the MBA market to competitors overseas. As a result, some North American programs turned their attention to planning programs in India, while Asian MBA programs began recruiting more students from the U.S. and Europe. Also on the admissions front, the administrator of the Graduate Management Admission Test (GMAT), the primary gatekeeper for entry into B-school, said the test would soon be getting a makeover.
Three elite B-schools hired new deans, two schools announced major curriculum overhauls, and Bloomberg Businessweek unveiled the results of its latest ranking of full-time MBA programs. It was a busy year.
The following B-school stories, the top 10 of 2010 on Businessweek.com, give you a taste of the year that was in the world of management education.
MBA Job Placement: The MBA job market began to recover this year from one of the most dismal hiring seasons in recent history, with 2010 MBA graduates finding it slightly easier to land jobs than their 2009 counterparts. While placement rates bounced back from recession-era lows, many schools were still a long way off from their more robust placement levels of 2007. However, a surge in late spring and summer hiring helped MBA graduates find their footing in the job market. In 2010, about 12 percent of graduates at Bloomberg Businessweek's 30 top-ranked U.S. full-time MBA programs were still without a job three months after graduation, an improvement from 2009, when more than one in five students were jobless. Salaries were flat or down at the majority of schools,
with fewer students receiving signing bonuses in 2010 and more flocking to small or midsize regional firms. All signs suggest 2011 will be a better year for MBA graduates, with early reports trickling in that more recruiters are hiring students from summer internships, coming to campus, and advertising positions on school job boards.
New Deans: For Northwestern's Kellogg, Harvard, and Chicago Booth, 2010 was the year of the dean search, as each embarked on a quest to find a new leader. Kellogg was the first to complete its search. On Mar. 30, the school announced that Sally Blount, a Kellogg grad who was most recently dean of the undergraduate college and vice-dean of New York University's Stern School of Business, would succeed Dipak Jain as dean. Blount, known as a master fundraiser and globally focused innovator, took office in July. Shortly after Blount's hiring, Harvard Business School stayed in-house, naming management professor Nitin Nohria dean of that iconic institution. Nohria, a specialist in both leadership and ethics, was one of the early supporters of a professional code of conduct for MBAs. Nohria was a popular choice among recent alumni, with the HBS Class of 2009 even creating a "Nohria for Dean" website to show support. Nohria took office on July 1. Then, in late July, after months of speculation, Sunil Kumar was named dean of Chicago Booth. Kumar, most recently an operations management professor at Stanford's Graduate School of Business, replaces Ted Snyder as leader of the top-ranked MBA program. Kumar officially takes office on Jan. 1.
B-School Applications: The boom in MBA applications, brought on by the economic crisis that began in 2008, slowed significantly in 2010. Of the top 30 full-time U.S. MBA programs surveyed in the summer, 10 reported declines in application volume averaging 6.1 percent. Among them were University of Pennsylvania's Wharton School, which was down 9 percent; UC-Berkeley's Haas School of Business, down 11 percent; and Cornell's Johnson Graduate School of Management, down 12 percent. Although some schools reduced their application fees and saw an uptick in volume, they were the exception and not the rule. Schools with a global reach were buoyed by increased interest in MBA programs among international applicants. Still, many were left wondering if business school applications had peaked.
B-School Globalization: A booming economy and an uptick in the number of high-quality business schools put Asia's management education scene in the spotlight in 2010. In July, four leading Asian business schools said they were banding together to attract more students from the U.S., Canada, and Europe. In India, a handful of leading North American B-schools and universities are looking to have a more permanent presence in the region by establishing campuses and creating degree programs. Duke's Fuqua School of Business and York University's Schulich School of Business are among the schools that this year announced they are hoping to open sprawling state-of-the-art campuses in India, pending passage of a law that would permit foreign universities to establish their own campuses on Indian soil. Meanwhile, ambitious Chinese students are increasingly forgoing a Western MBA and opting for a degree from one of the top Chinese business schools. And institutions in the U.S., Europe, and Asia are turning their attention to Africa, setting up research centers, programs, and campuses there.
Changes to the GMAT: The GMAT, the most popular test used to screen applicants for MBA programs, will soon be undergoing its biggest transformation in more than a decade. In June, the Graduate Management Admission Council, which administers the exam, announced plans to introduce a new section in 2012 that will test the advanced reasoning and analytical skills that students use in business school classrooms. It will have an audio component and replace one of the two writing sections of the current exam. The change comes as the GMAT faces increased competition from Educational Testing Service, which has convinced hundreds of business schools to accept the Graduate Record Examination (GRE) for admission in the past two years. ETS also has plans under way to unveil a revised version of the GRE next year with new features and questions designed with business schools in mind. The battle between the two testing giants is still unfolding, but a recent survey by Kaplan Test Prep showed a clear preference for the GMAT among applicants.
Curriculum Overhauls: Two of Bloomberg Businessweek's 30 top-ranked U.S. full-time MBA programs—Wharton and Haas—announced major curriculum updates this year. The Wharton overhaul, which will be rolled out in 2012, is one of the more ambitious curriculum revamps in nearly two decades for the school. Students will have more flexibility in choosing their classes, many of which will have a new emphasis on leadership, ethics, globalization, and soft skills. As an added bonus, Wharton graduates will be able to take an executive education course free of charge once every seven years, the first top business school to offer this. At Haas, the new curriculum launched this fall emphasizes problem-solving, critical thinking, and creativity. Two existing core classes were restructured, and the school has added coaching sessions and workshops on leadership skills. Meanwhile, the University of Virginia's Darden School of Business has begun tinkering with its own full-time MBA curriculum. In 2010, Darden introduced 18 new features, including small seminars, coaching, and changing the schedule of first-year courses to flow more smoothly with recruiting events and student club activities.
Admission Essay Ghostwriters: It comes as no surprise that MBA applicants hire admissions consultants to help them get into B-school. What is surprising, however, is that some B-school wannabes are hiring companies to write entire admissions essays for them. Blake Reynolds, owner of Perfect Words in New York, and David Burton, general manager of Essaywriter in Leeds, England, told Bloomberg Businessweek in the fall that their companies, for a fee, have written application essays that MBA candidates may have passed off as their own work. Reynolds said his writing has helped people get into top business schools including Harvard, Kellogg, and Columbia Business School. While the essay writers defended their work as being helpful to qualified candidates who were busy or faced language barriers, the business schools were not amused. Harvard called the use of ghostwritten essays "unethical," while Kellogg issued a statement reminding applicants they are supposed to only turn in original work.
Public Schools and Budget Cuts: Public universities had a rocky year in 2010, hit by a combination of deep state budget cuts and the aftershocks of the recession. The severe cutbacks come at an inconvenient time for many schools, with demand for public universities and colleges surging nationwide as families look for more affordable options for college. With insufficient state funds, dozens of public schools resorted to laying off hundreds of employees, raising tuition by a double-digit percentage, reducing financial aid, and capping enrollment. The University of Washington raised tuition by 14 percent, while the University of Montana considered a four-day workweek, just a few of the austerity measures schools were forced to consider. The severity of the cutbacks was somewhat offset by an infusion of federal stimulus funding. But with that cash expected to run out by the 2012 fiscal year and states expected to continue slashing budgets, financial relief is still a long way off for many schools. A recovery is not expected to kick in for many schools until at least 2013 or 2014, according to a recent report from Moody's Investors Service (MCO).
Best B-Schools 2010: For the third consecutive time, Chicago's Booth School of Business took top honors in Bloomberg Businessweek's biennial ranking of top full-time MBA programs in the U.S., while France's INSEAD captured the top spot in the international ranking for the first time since 2002. On the U.S. list, Harvard, Wharton, Kellogg, and Stanford rounded out the top five, and four newcomers also made the list. Minnesota and Michigan State both moved up from the second tier, while Rice University and Texas A&M were ranked for the first time.
The Return on a College Degree: Ever heard the saying "A college degree is worth a million bucks"? In June, Bloomberg Businessweek partnered with PayScale, a Seattle-based company that collects wage information, to determine the true value of a college degree. PayScale examined pay reports from 1.4 million graduates of U.S. colleges and universities with no advanced degrees to calculate the return on investment, or ROI, of an undergraduate degree from more than 500 schools. The results were surprising. For starters, the study showed the value of a college degree might be closer to $400,000 over 30 years and varies depending on where you studied and the school's graduation rate. There were only 17 schools in the study where grads can out-earn a high school graduate by $1.2 million over the 30-year period. MIT, with a 30-year ROI of $1.7 million, topped the list of schools in the survey. Private universities dominated the high end of the list, but public schools proved to be a better value. Colleges and universities with strong engineering and science programs did better than others because people who enter those fields usually have lucrative jobs. The upshot: College grads fared better than high school grads, but the majority of them would have been even better off if they had invested their college fund in the stock market 30 years ago.