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Forecast: MBA Hiring Up Again

By Jane Porter
originally posted December 5, 2006 at Business Week

Demand continues to rise for newly minted MBAs, with large jumps in the manufacturing and service sectors. How long will this trend last?

The hiring of MBA graduates is surging this academic year, with employers expecting to bring in 22.1% more MBA grads in 2007 than they did in 2006, according to a survey of companies across the country. An improved economy, business growth and employee retirement all contribute to this escalating demand for newly minted MBAs, says Andrea Koncz, employment information manager for the National Association of Colleges and Employers (NACE). And with growing industries comes growing competition to attract the best and brightest.

At JP Morgan (JPM), hiring of MBAs is up between 10 and 15% this year, according to recruiter Danielle Domingue. The picture for MBAs is much rosier than it was in 2002, when having more than one job offer was considered a luxury. Today, says Domingue, it's not unusual to see MBA students sitting on six different offers. "It's very much a students' market and not an employers' market right now," she says.

And the growth won't slow down after this year. General Electric (GE), which is hiring up to 10% more MBAs than last year, expects to see another 10% increase for the class of 2008, says Steve Canale, manager of recruiting and staffing.

Who's Hiring?

The largest jump in hiring is expected to come in manufacturing. In 2007, manufacturers anticipate they will increase their MBA hires by 32.4%, the highest jump among industries according to the NACE survey, which was released Nov. 30. At GE, the increase in numbers comes mainly from engineering and sales and marketing, fields particularly critical for expanding companies.

Service industry hiring of MBAs is projected to be up 15.4%, the survey reported, while average base salaries for all areas is expected to be $73,645. With benefits, the average compensation package for a 2006-07 MBA is projected to be $94,277. Those figures are little changed over the past few years, the group said. (see BusinessWeek.com, 5/30/06, "Puffed-Up Paychecks" ).

An increase in hiring may be good for graduates and growing industries, but a number of challenges arise when MBAs become a hot commodity. With more jobs than qualified candidates, the scramble to recruit diverse employees is growing. Deloitte & Touche this year, for the first time, hired a recruiter focused specifically on diversity to face this very challenge.

Appealing to MBAs

"Companies are becoming more competitive given a smaller supply" of the employee pool, says Kaplan Mobray, U.S. Diversity Recruiting Leader at Deloitte. With under-represented minority enrollment as low as 6% at BusinessWeek 's top 30 B-schools (see BusinessWeek.com, 10/23/06, "The Best B-Schools of 2006" ), attracting diverse employees is hard enough. But with candidates sitting on a handful of job offers, attracting the most talented, most diverse employees becomes a double challenge for companies (see BusinessWeek.com, 8/9/06, "Attracting Gay MBAs" ).

Still, recruiters are cautious about increasing the number of MBAs they take in, especially in case the market dynamics change in the near future. "You don't want to hire up and fire down," says Domingue. "Everyone is looking at: Well, what if the market cools?"

But despite anxiety, recruiters agree that hiring hasn't been so good since 2000, and the plethora of jobs is pushing companies to offer meatier, more involved responsibilities than they normally would in a cooler job market. "It's definitely the war for talent we talked about in the late '90s and 2000," says Domingue. "It's the 'War for Talent II.'"

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