Over the past year and a half, a number of reports have been released that sparked concern among the graduates and students of MBA programs. The finance, tech and consultancy sectors on which many MBAs set their sights appear to be struggling, and the job market lacks the abundance promised just a few years ago.
You might be wondering what this means for you as a new or incoming MBA. To help you get to grips with it all, here is a guide on what is going on with the job market, why it’s all happening, and what this means for your MBA.
What Happened To The Classes of 2023?
To understand the hiring market this year, we must first zoom out a bit, casting our minds back to the Classes of 2023.
Shortly after the COVID-19 pandemic, the sectors into which MBAs streamed post graduation boomed. Tech companies doubled in size as remote work rocketed, and consultancies hired en masse to prop up struggling teams, laden with work as their clients were forced to restructure. Positions in 2021 and 2022 for freshly minted MBAs were plenty; but it was not to last.
What goes up must, as always, come down. The boom ended, and 2022-2023 saw mass layoffs across the tech industry, drops in venture funding at both growth and late stage and brakes slammed on for consultancy firms’ hiring. The MBA Classes of 2023 found themselves at the epicentre of a drastically changing market, sending out applications to firms that were in the midst of layoffs and salary freezes.
Hiring rates dropped. The top 10 employers of new MBA graduates decreased their new grad hiring by 61% in 2023 compared to 2022, and the results hit schools such as Yale SOM, Dartmouth Tuck, and Duke Fuqua, the latter of which reported an employment rate of 93% in 2023 compared to its 98% rate of 2022. Harvard Business School reported that in 2023, 86% of its most recent MBA class received employment offers, compared to the rates of 95% in 2022 and 96% in 2021. Amidst the 2008 crash, for comparison, roughly 80% of Harvard MBAs graduated with an offer (down from 92% the previous year).
A slight caveat here: it is important to keep these statistics in perspective. Certainly, there is a drop in hiring rates, but (to take Duke for an example) 93% of students are still being hired. This is by no means a small proportion! Silver linings persisted too: Brian Ruggiero, associate dean for careers at NYU Stern, cited great results for the 2023 graduates, including the “highest ever mean total compensation at $201,727.”
Placement Statistics From Clear Admit
The placement data that we collect here at Clear Admit can help shed some light on these trends. Comparing our charts on school placement of grads in the finance sectors in 2023 and 2022, little to no change can be seen for many of the schools. For the top three schools, over 35% were placed in a finance job in both cohorts. The same is true for the consultancy industry, where the 2023 cohort chart shows only small decreases in placements compared to the 2022 cohort.
The tech industry placement rates, however, tell a different story, with “fifteen of the 23 business schools” reporting “a decline in MBA graduates accepting tech industry jobs” from the Classes of 2022 to the Classes of 2023, mirroring the staff cuts occurring across Big Tech firms post pandemic.
What can this data tell us, when considered alongside the hiring rates discussed for the Classes of 2023? The first thing, of course, is that there is an identifiable dip in hiring in the tech firms. The second, is that (despite market changes) top schools are still placing similar numbers of grads in similar numbers of jobs. The third is slightly trickier, but hints at a slight discrepancy between stories of hiring difficulties and reported placement rates. To understand this third conclusion, we must look into the practice of delayed start dates.
Delayed Start Dates
For many of the Classes of 2023, promising job offers were later edited to include delayed start dates. Big firms continued to hire grads as usual, but delayed their start dates by months at a time – a practice which perhaps explains the disconnect between some reported hiring figures and the stories of lengthy waits for jobs.
Delayed start dates were particularly present in consultancy firms, with McKinsey & Co. and Bain & Co. both reported to be pushing start dates back for months at a time, in some cases even paying dividends to ensure graduates didn’t look for other jobs in the meantime. MBA 360 Admissions described the practice to the Financial Times as an adoption of the “wait and see” approach, with companies reluctant to commit to the new hires in an unpredictable economic environment.
What Does This All Mean For The Classes of 2024?
The economic and hiring disruption faced by the Classes of 2023 has formed the foundation of the job market into which the Classes of 2024 have been launched. Employment is expected to take longer than usual after graduating, and the Wall Street Journal has reported lower job openings in fields, such as banking and software development, when compared to last year. The three month post-grad milestone guarantees less security than before, with 20% of Harvard Business School graduates still looking for work at this point (up from 8% in 2021), 13% at Massachusetts Institute of Technology’s Sloan School of Management (up from 5% in 2021) and 18% at Stanford’s Graduate School of Business (up from 9% in 2021).
Postponed start dates are rife, and the situation has been exacerbated by the backlog of late onboards for the Classes of 2023. For Bain and BCG, some start dates will be pushed back to the start of 2025; for EY Parthenon predicted dates are later still, and West Munroe has even rescinded some of its job offers.
It’s not all doom and gloom by any means – those delayed start dates can even offer fantastic opportunities to their students. The dividends of delayed 2023 hires are back in force, with some companies offering comprehensive and creative packages to allow their waiting hires to make the most of their time off. Bain, for example, is offering incoming hires a monthly stipend to work at one of their not-for-profit clients, or to join a language immersion program, or even to take a temporary role at another company while they wait.
What Does This Mean For Your MBA?
Changes are certainly occurring in the job market. With companies downsizing, hiring freezes common and the fallout of last year’s delayed start dates kicking consequences down the line into 2025, some degree of concern is understandable.
In times like these, it’s important to remind ourselves of why the MBA is such a valuable path to take, and of the reasons why it was chosen in the first place. We need to ask ourselves – what is the value of an MBA in a tough climate?
Firstly, an MBA will help you stand out to future employers – full stop. Graduates who used the economic downturn of 2008 or of the pandemic to complete an MBA found that it placed them in a stronger position compared to other candidates when jobs were available once more. Things may take longer to fall into place than predicted, but the skills and experience you have gained are going nowhere.
Secondly, an MBA builds you a network. The people you meet and work with during your MBA will prove invaluable throughout your entire career, not just at the initial job search.
Finally, an MBA fosters creativity, flexibility and resilience in its students. Many may enter business school with plans for top jobs in finance or consultancy, but feel inspired instead to explore alternative routes or begin their own business. Exposed to a world of different businesses and well-versed on the challenges that need to be overcome, MBAs learn business resilience and flexibility along the way and interact with real world examples that accelerate the value they can bring to a challenging job market.
The Takeaway
If you’re entering the job market this year, think like the graduates of 2008, who speak highly of the determination, flexibility and focus they learned from their job search. Remind yourself of the skills you are building, the networks you have created and the likelihood that the market will bounce back. If you’re offered a delayed start date, make the most of it! Students across the Classes of 2024 are doing just that, with Stanford GSB reporting higher numbers of graduates exploring roles in early-stage companies, opportunities abroad and even their own ventures. Ensure that you build a Plan B that gets you excited, stay open minded, and view the challenges presented to you as opportunities.
