Friday, August 3, 2007

The Age Conundrum

One of the common themes I hear from applicants these days is why schools are going younger. I don't necessarily agree with it, but I understand why they're doing it.

Here's some of the reasons why:


THE MBA, JD or MD?

Historically, the MBA was the ugly sister of the big three professional graduate programs at most universities. The top science graduates tended to go to medical school, whereas the top liberal arts graduates tended to go to law school. And while this is certainly changing, it still holds true for many of the best and brightest college seniors. Using GPA as a crude proxy for "raw potential", the incoming GPAs for students at the top medical programs and law schools is around 3.7 - 3.9. For the top business schools, it's around 3.4 - 3.6. In other words, the top med/law schools are full of "A" average students, while the top business schools are filled with "B" average students.

You may think that comparing business, law and medicine is silly. And in some ways it is. But here's an interesting stat to consider:

The average age at matriculation for many of the top med and law programs is 24-25. If most people enter college at 18 or 19, they graduate by the time they're 22 or 23. Unlike the prior generation (1990s and earlier), folks aren't going straight into med or law school anymore - but are taking a break from school for a few years before going back (and the kind of kid with a 3.9 GPA and a super high LSAT/MCAT isn't going to be working as a greeter at the local Wal-Mart, but is likely to find some interesting work). Visit any top law or med school, and you'll likely find that a good number of these students already have 1 - 3 years work experience. For example, at schools like Harvard or Stanford Law, the majority (54 and 69% respectively) did not go straight from undergrad.

So business schools know that these college graduates are ripe for the picking. Since at least half of the kinds of people who get into these top law or med programs aren't fresh college grads (but have a few years work experience), they want to encourage these kinds of people who wouldn't normally consider business school to apply. They want to be competing for the "best and brightest" that normally would be applying to law or med school - which only increases the caliber of applicants and therefore the caliber of incoming students.


THE US MINORITY FACTOR

Going younger also may have an impact of attracting more high caliber US minority applicants. Traditionally, minorities in the US have seen medicine and law as the primary means for social and economic mobility. In other words, whether you're Asian, Hispanic or African-American, it's the one thing that can make your parents beaming proud. Law and medicine within most US minority communities still holds a certain cachet that a business career doesn't yet hold (even to this day, although that is changing).

Why it holds cachet comes down to opportunity. Law and medicine has always been perceived to be more meritocratic than the business world - they are professional services professions that are less hierarchal compared to the "traditional" business world of patronage, "relationships" and bureaucracy. Traditionally, business careers (particularly big business, Wall Street, etc.) have been an upper crust white man's world. Business isn't about merit. It's about money, power and contacts. Prior to the 1980s (or some say even 1990s), graduating with an MBA didn't grant you the same access to the business world that a white male would've had - particularly on Wall Street or in the executive suites in virtually any industry (or whether you'd be groomed for upper management) except for perhaps the technology sector. Corporate America has certainly made progress in the last 20 years, but these deep-seeded attitudes with the US minority communities of what professions hold "cachet" that go back generations don't change easily or overnight - even though today, an African-American male wouldn't be out of place at Goldman Sachs. Reality can often change much faster than the perceptions of that reality.

More often than not, the overachieving US minority guy or gal is therefore more likely to go to law or medicine than to business. And for business schools to boost (or maintain) enrollment (particularly with rumors that minority applications have decreased in the last few years) of US minorities, it has to go after the minorities who are considering medicine or law - to encourage them to consider a business career, and apply for an MBA instead.

So the hope is, by going younger, the natural byproduct will be an increase (or maintenance) of applications from US minorities.


WOMEN, THE GLASS CEILING AND THE BIOLOGICAL CLOCK

Unlike their medical or law school counterparts, business schools have had a tougher time attracting women applicants. While around half the med or law students are now women, only one-third of business schools are women (or less at some schools). Some of the main obstacles that discourage women from applying for an MBA are:

(1) The glass ceiling - while the global workplace has become far more diverse in terms of ethnicity and nationality, it's still largely a man's world at the top. Women aren't dumb. They see so much of the business world as an old boys club (but now with some more color). The glass ceiling is even more extreme outside of North America (curiously, with the exception of China, where everyone is too preoccupied with making money that they don't care whether you're a guy, girl, hermaphodite, etc. so long as there's quick money to be made). Not surprisingly, the overwhelming majority of women in an MBA classroom are either from the US or China. Compared to law or medicine, why bother getting a business degree if you have to work in a profession that stacks the cards against you?

(2) Biological clock - with the average ages creeping up to the late 20s and early 30s, women become discouraged from applying because it happens to coincide with family planning considerations. Most working women tend to have children in their late 20s and early 30s, so it makes less sense to go back to school, only to go straight into a maternity leave situation right after business school (and particularly in a profession such as business which isn't friendly to women anyhow as mentioned above). Encourage women in their early to mid-20s to apply, and the calculus makes a bit more sense, as it gives women the opportunity to work for a couple of years post-MBA before having children.

Business schools can't do much about the glass ceiling as mentioned in (1) nor can they do a whole lot to bring about better gender parity amongst international applicants, but they can at least try to encourage more North American women to apply. Not only does going younger help with "biological clock" considerations, it allows the business schools to dip into the pool of high caliber women applicants who would be considering law or med school.

That's one of the reasons why business schools are touring undergraduate campuses and making a push to seek out "early career candidates" - to plant that seed in these college juniors and seniors that an MBA is also a possibility sooner than you think, particularly amongst women and minorities.


RECRUITERS WANT YOUNG MEAT


Particularly at top schools, two-thirds of the class goes into financial services and management consulting. Both these sectors employ MBAs starting at a relatively junior level in the organization. Given the nature of these jobs, they want them young and single. It's harder to attract a married 33 year old to investment banking and have him/her excited about working 80 -100 hour weeks. It's harder to attract this same person to maintain the hectic travel schedule of a consultant. Sure, there are some that will do it, but many at that stage in life won't or will do so more reluctantly than a young and single guy/gal who can afford to put his/her personal life a distant second. Again, this is two-thirds of the class (including HBS and Stanford).

And let's face it. Younger people are easier to exploit and manipulate. It's easier for a manager to ask a 27-year old single person to go the extra mile, come in on a weekend to do "non-essential but helpful" work. It's harder to do that to a 33 or 35 year old parent with kids - because he/she won't fall for that kind of BS, or the manager will feel too guilty to even ask.

Financial services and consulting will continue to be major MBA feeders - because they are the only sectors that will consistently hire armies of MBAs to staff their deals and projects.

And as a result, these two sectors tend to be the primary benchmark for MBA starting salaries - which then factors into some of the rankings and let's face it - the perceived "prestige" of the program. In other words, MBA recruiters tend to benchmark their pay packages based on what the banks and consulting firms are paying - and not the other way around.

So for business schools, it pays to go younger.


PRODUCT DIFFERENTIATION


As early as fifteen years ago, most business school students had around 2 - 3 years experience. Twenty-five years ago, most went straight from college. The average ages and years of post-college work experience climbed steadily in the last fifteen years, and largely went unchecked.

Remember that business schools also run very lucrative executive programs and part-time programs. Call it product differentiation. The closer the applicant profiles are to the executive MBA programs, the harder it is for business schools to justify why they can charge a huge premium for the executive program.

Also, the full-time MBA (at least in the business school's view) was designed for those early in their careers. The overwhelming majority of post-MBA jobs are not executive or senior management positions. Most are junior to middle management positions.

For business schools, they want to position the full-time MBA as a program designed for young professionals looking for a early boost in their budding careers, as opposed to an insurance policy for a risk-averse bureaucrat trapped in a profession they want desperately out of.


THE IRONY OF IT ALL


The irony of business schools "going young" is that they are going after one piece of the pie while ignoring a potentially larger piece that is only growing.

As an admissions consultant, I don't see a decrease in older applicants enquiring about MBA programs and "switching into business". In fact, it seems to be increasing.

Unlike prior generations, we don't live in a world of linear career paths anymore. And given how accelerated everything is these days, it's safe to say that most people will hit a plateau or peak within 5-15 years in a career. The 20-year career path for most people is dead -- it's more like 10 year cycles. So that means college graduates these days should expect to switch careers about 3 - 5 times in their lifetime - a huge change from the prior generation where 1 - 2 careers in a lifetime was the norm.

And these career switches likely won't be linear. With the way so many career paths are structured these days, your knowledge, skillset and contacts quickly become obselete. Or the job is so demanding that you are destined to burn out within 10 years. Once you hit a plateau where you don't think you can do much more or move up the chain any further, you have the choice of either staying in that plateau, or finding something else to do. And most probably won't have a choice. So chances are, it means having to (and wanting to) start over. Being able to reinvent yourself and your career(s) every decade or so.

The investment banker in his 30s who then opens a restaurant in his 40s, and then becomes a school principal in his 50s, and then a writer in his 60s. The corporate marketing professional in his 20s who goes back to med school to become a doctor in his 30s, who then becomes a realtor in his 50s. The actor in his 30s who goes back to law school to become a lawyer in his 40s, who then starts a business in his 50s. The CEO of a telecom company in his 50s who starts a shrimp farming venture in his late 50s.

In many ways, business schools have to think beyond the MBA if they want to truly stay relevant. Because there will be plenty of highly accomplished 30, 40 and 50-year olds in the future who will be looking to start over on their 2nd, 3rd or even 4th careers. And this group will dwarf the early 20-somethings looking to dive into their first careers.

4 comments:

Tanuviel said...

Very interesting article. I am a 39 yo professional that feel exactly like you describe: got a MS in my late 20s, had a great career in Human Resources Management in the last 10 years and now I feel like I am stuck. I lost most of my enthusiasm in the field of HR and I would like to find a new professional "passion" to do something with the next 20-30 years of working life in front of me. I am considering going back to school, for a full time MBA and concentrate in new field. In my spare time a like to play around with stocks and financial investments so one option could be to focus in investment management.

KISHORE K. KOMORAVOLU said...

a terrific post ... was a good analysis ...

dark^helmet said...

excellent post... i thought your analysis of the demographic trends to be very insightful.

Derek said...

The investment banker in his 30s .....this paragraph is very interesting. How much of the population (or at least the MBA sub population) do you think has drastic career moves such as this.

In reality, I can't really see myself doing the same thing for much more than 10 years at a time without shifting gears to something different. Interesting to see that many others have similar thoughts