Time to MBA?

6 February 2007

2 minute read

Thinking of doing an MBA? Investment banks are substantially increasing the number of MBA graduates they're hiring. Pay is commensurately generous.

Morgan Stanley is increasing its number of London MBA hires from 28 in 2006 to 50 this year, and Goldman Sachs is upping its European MBA intake by 30%. Business schools say banks have a more formidable presence on campus.

"The competition for students has definitely heated up on last year - and particularly in financial services," says Graham Hastie, head of the careers service at London Business School. "It's happened a couple of weeks earlier than it usually does - each bank is trying to get in there first."

With banks' profits higher than ever last year, enthusiasm for MBA recruits is symptomatic of optimism about the future. "It's a natural phenomenon," says Ros Hillard, a member of the campus recruitment team at Goldman Sachs. "Whenever there are buoyant markets, a whole set of new opportunities will open to people."

Organisations like Deutsche Bank have begun recruiting MBAs into Dubai for the first time this year. Others are set to follow in 2008.

Banks' recruiters say the standard pay packet for a first-year associate - the level at which MBA graduates typically join an investment bank - is typically 100k+. This includes a starting salary of 60k, a signing bonus of 25k, plus an end of year bonus of 25k.

However, some MBAs are paid substantially more. Logan Naidu, a consultant at recruitment firm Cornell Parternship, says he recently placed a first-year MBA with a sign-on bonus of 60k.

Last year's end of year salary survey from search firm Options Group suggested first-year associates in London earn an average base salary of 65k, with bonuses averaging 100k to 150k.

AUTHOReFinancialCareers UK

Insider Comment

Ju
Justin
8 February 2007
I've often read articles from various sources extolling the virtues of acquiring an MBA, and most of them are peppered with starting salaries and signing on bonuses that seem quite impressive, but none of them give you an idea of the age range of the people who are obtaining the MBAs.
10-15 years ago nobody would have done an MBA without some kind of experience in the workforce, in fact most MBAs (and some still do) required that successful applicants were able to demonstrate work experience they could call on to help them with their studies and research.
That approach seems to have been flung out the window in the past 5 years, largely at the prompting of the American universities, the same ones that brought the MBA to such critical prominence in the hiring circus. Now it seems that most MBA students have gone straight from their bachelor degrees to their MBA studies with barely a gap year's pause between them.
It always made me wonder why banks were so keen to hire these conveyor belt delivered employees who had purely technical and theoretical knowledge but absolutely no idea of their place in the working world of investment banking, no practical knowledge or experience that hadn't been gained from case studies or cursory glances at the real world.
In fact working in banks it's been noticeable that a majority of these fresh graduates are next to useless for the first 2 years of their careers as they are bereft of factual hands-on knowledge and ability and seemingly have no idea where to find them. Some don't even seem concerned that they lack this vital information, quite happy to ride the coat-tails of their more experienced colleagues who have gained this knowledge and seem reluctant to dirty their Associate hands.
The other noticeable problem with MBAs is the homogeneity of the graduates and their thought processes, decision making and modeling. It seems regardless of their backgrounds or which school they received their MBA education they largely have the same approach to problem solving, which is surprising for banks who continually bang on about diversity, individuality and their innovative approaches to client and customer requirements.
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