Chicago Man Rescuing Yale Business Ranking Prompts AnxietyOliver Staley
When Marion McCollom Hampton graduated from the Yale School of Management in 1982, the program didn’t grant business degrees and she didn’t want one. Its mission was to train leaders of all sorts, not just executives, she said.
Yale “was not your father’s business school,” said Hampton, 61, who works as an adviser to family-owned companies. “When the school was founded, it had an absolutely unique niche in the management-school world.”
Yale SOM opened in 1976 with a focus on grooming leaders in government and philanthropy. Now the school is preparing to take on Harvard Business School and the Wharton School with a new $222 million building and new dean -- Edward “Ted” Snyder, who previously led the University of Chicago’s top-ranked business school. As Yale’s business school sheds its outsider status, alumni and former faculty worry that it risks losing its unique qualities just when the business world needs them most.
“I’m not sure that the changes that are being made now are going to produce the sort of graduate who is going to use that management and business knowledge to make a difference in the world,” said Hampton, who turned down the opportunity to convert her management degree to an MBA. “To make it just another business school, to me, is a shame.”
Snyder, 58, who took the helm in July, was hired by Yale University President Richard Levin to help raise the business school to the levels of Yale’s top-ranked schools of law and medicine. Snyder, who led Chicago’s Booth School of Business for a decade and the University of Virginia’s business school before that, said Yale can improve without giving up the public-mindedness that sets it apart.
Yale SOM trains its graduates to understand the complicated relationships between business, government and society, Snyder said in an interview in his New Haven, Connecticut, office.
“The world is facing extraordinarily big issues,” Snyder said. “Leaders have to be aware of what’s going on. Obviously they need to be competent in solving business problems but they need to be in tune with this extraordinarily important layer of complexity.”
Snyder said his mission is to tell the world what Yale graduates can offer.
“We’ve got some great people here who can help the world solve some big problems,” he said.
Snyder said he loves competition -- he set a Colby College record in the triple jump in 1972 -- and he’s determined to boost Yale SOM’s rankings. He wants it to be one of the top five U.S. business schools in a decade, he said.
Yale’s full-time MBA program is ranked 21st by Bloomberg Businessweek compared with first for Chicago, second for Harvard and third for Wharton. Yale graduates’ median base salary was $100,000 for the class of 2011, trailing the $120,000 earned by business school graduates at Harvard and Wharton.
While Yale has produced prominent executives like Indra Nooyi, chief executive officer of PepsiCo Inc. and a 1980 graduate, it’s escaped the notoriety of high-profile alumni winding up in prison, such as Harvard’s Jeffrey Skilling, former CEO of Enron Corp., and Wharton’s Raj Rajaratnam, a hedge fund manager convicted of insider trading.
Snyder won’t try to impose his ideology on Yale faculty, which would be “suicidal,” said Steven Kaplan, a finance and entrepreneurship professor at Chicago Booth. Instead, he’ll boost the school by identifying its strengths and selling them to potential students and donors, Kaplan said.
“SOM has a lot more potential than it has currently reached,” Kaplan said. Snyder “has to figure out how to position the school and he’ll market that externally.”
Nonprofit, Government Jobs
Yale didn’t offer a masters degree in business administration until 1999, and didn’t phase out its masters of public and private management until after 2001. While most graduates take jobs in private industry, 10 percent work for nonprofit organizations and government, compared with 3 percent of graduates at Harvard Business School and 1 percent at Wharton.
In the wake of the financial crisis, Harvard Business School appointed Nitin Nohria as dean in 2010. Nohria, who has written about ethics, says business students should take a professional oath of conduct. Harvard also introduced a leadership course designed to immerse students in real-world experiences. In 2010, Wharton, part of the University of Pennsylvania, said it would overhaul its curriculum with a new focus on ethics and on global issues.
Yale SOM was at the forefront of introducing those ideas to business education and should continue to be a leader, said William Donaldson, former chairman of the U.S. Securities and Exchange Commission and the first dean of Yale SOM.
Advancing the Cause
“There’s a lot of criticisms of business school in general, as perpetuators of what’s going on that’s bad in business,” Donaldson said. “Yale has a position where it can really advance the cause, because it’s Yale and because of the history of the school.”
Snyder will be boosted by a new 242,000 square-foot building, designed by Norman Foster and set to open in 2013, which will allow the school to add more students and faculty. Snyder plans to expand international programs, which he said lag behind those of other business schools and the rest of the university.
He also wants Yale to bolster its reputation with corporate recruiters from top companies. Already, the school is placing more graduates at businesses such as Barclays Plc, Goldman Sachs and McKinsey & Co. than in years past, Snyder said.
“The numbers aren’t huge -- they’re going from zeros, ones, twos and threes to fours and fives and sixes -- but it makes a huge difference for the school going forward,” Snyder said. “We’re never going to be a big core school for McKinsey but are we going to be an accepted source of high-quality talent? We don’t want that question to come up.”
Barclays went from hiring two graduates from the class of 2010 to seven from the class of 2012, according to the company.
“The thing that really stands out is teamwork,” said Tara Udut, Barclays Capital’s head of campus recruiting for the Americas. “It’s part of the overall culture there.”
Alumni worry that to climb in the rankings, Yale SOM will reorient itself around the world of finance and Wall Street, said Chris LaFarge, who graduated in 1980.
“The rankings are distorting a business school’s ability to do something outside of the box,” said LaFarge, CEO of MedicaMetrix Inc., a medical-device company in Wayland, Massachusetts. “Yale should be able to get away with it because it’s Yale.”
‘Points of Pride’
While rankings don’t tell the whole story about business schools, they can attract more applicants and please graduates, said David Schmittlein, dean of the Sloan School of Management at Massachusetts Institute of Technology.
“Rankings can be points of pride with alumni and the feelings alumni hold for the school are important,” Schmittlein said.
Students and faculty will also look to Snyder to provide stability at an institution that has had little of it, going through 10 deans in its short history.
While the Wharton School was founded in 1881 and Harvard Business School in 1908, Yale University’s faculty and administration resisted for decades alumni efforts to start a school they saw as at odds with its humanistic values.
Under Kingman Brewster, Yale’s president from 1963 to 1977, that resistance began to crumble as the university put more emphasis on social sciences, including the study of economics and organizational behavior. The college received a bequest of $15 million from the estate of Frederick Beinecke, who died in 1971. Most of the money was directed to the founding of a new school for the study of management.
‘New and Different’
Brewster was adamant that Yale wouldn’t start a business school, said Victor Vroom, who was then chairman of the department of administrative sciences and a member of the committee charged with developing the new school.
“It’s got to be different,” Brewster told the committee, according to Vroom, 78, who still teaches at Yale. “We can’t copy Wharton, we can’t copy Harvard. It has to be new and different.”
The school, originally named the School of Organization and Management, was intended to educate managers for government, nonprofit companies and business and drew some of its curriculum from Yale departments that focused on human behavior, said Donaldson, the first dean. They even considered bringing in professors from the divinity school to teach ethics, he said.
In its early years, Yale SOM attracted students who might have otherwise considered studying law or government, Donaldson said.
“It was for a different sort of cat,” said Ned Lamont, a Connecticut entrepreneur and former U.S. Senate candidate who graduated in 1980. “I was on a different track and I loved the SOM message.”
Much of that spirit ended abruptly in October 1988, when Dean Michael Levine and Yale President Benno Schmidt decided to turn SOM into a traditional business school, eliminating faculty and departments they viewed as nonessential.
“They really gutted the school and made it more into a Chicago, Michigan place, more of a finance and accounting place,” LaFarge said.
Students and alumni were furious at the unilateral decisions, and hired a plane to tow a banner denouncing the moves over the university’s graduation. It took a decade for the school to regain its equilibrium.
$300 Million Gift
Snyder, who earned his Ph.D. in economics from Chicago in 1984, served as the dean of the Darden School of Business at Virginia from 1998 to 2001 before returning to run Chicago. While at Chicago, he secured a record $300 million gift from David Booth, co-CEO and chairman of Dimensional Fund Advisors LP, an Austin, Texas-based asset-management firm.
Snyder also helped found the Milton Friedman Institute, a research center named after the Nobel prize-winning economist noted for his free-market philosophy and revered by conservatives. It’s now called the Becker Friedman Institute for Research in Economics.
Snyder’s background made him a surprising choice for Yale, said David Thomas, dean of Georgetown University’s business school who received his Ph.D. in organizational behavior from Yale in 1986. Graduates of Yale SOM wondered if a free-market advocate would be a good fit, he said.
“That’s the question that’s on some people’s minds,” Thomas said.
Snyder said that while he believes in laissez-faire principles, he recognizes the interconnectedness of business and governments.
“Governments are playing a bigger role and market economies are evolving very differently,” he said.
Snyder’s success at Chicago resulted from his ability to manage relationships, said Robert Topel, a professor at Chicago Booth who is writing an economics paper with Snyder. Snyder can massage the egos of “prima donna” professors, defend the business school’s interests to the university president and cultivate donors, Topel said.
“He’s extraordinarily good at communicating what it is we do and defending what we do and marketing what we do and looking the donor straight in the eye and saying ‘Can I have some money?’” Topel said.
So far, Snyder has shown a willingness to bolster the school without forcing changes, said Jeffrey Sonnenfeld, a senior associate dean who studies CEO leadership.
“He’s been one of the best bosses I’ve ever had,” Sonnenfeld said. “He’s come in with no grandiosity. He has ambition institutionally for the school and absolutely no ego personally.”
Tom Taft, a 1985 graduate, said the school will continue to produce socially conscious graduates no matter who is in charge.
A fifth-generation Yale graduate and the great-grandson of William Howard Taft, the 27th U.S. president, Taft said the spirit of the school survived the Levine era.
“Despite efforts to turn the school into Wharton, there’s an inherent DNA in SOM that makes it a real special place,” Taft said. “Regardless of the administration, it’s going to be a place where students come in and walk out with a picture that the world is a bigger place.”