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Harvard MBAs' Salaries Rise as Goldman, Banks Boost Hiring
By: Brian K. Sullivan in Boston and Patrick Cole in New York
November 7, 2005, Bloomberg News
Nov. 7 (Bloomberg) -- The compensation of recent business school graduates from Harvard, Dartmouth and Stanford rose at least 9.5 percent from a year earlier, fueled by increased hiring at investment banks and consulting firms.
The average compensation of June graduates of Harvard Business School's Master of Business Administration program increased 11 percent to $174,580, spokesman Jim Aisner said. For MBAs from Stanford University's Graduate School of Business in California, the average totaled $149,913, up 9.5 percent. Graduates of Dartmouth College's Tuck School of Business received $150,000, a jump of more than 15 percent.
``We got all the way back to bubble-level'' salaries last year, Dean Paul Danos of Tuck, in Hanover, New Hampshire, said, referring to the rapid expansion of Internet companies in the late 1990s. ``I was surprised at how fast that happened.''
New York-based Goldman Sachs Group Inc., this year's No. 1 mergers adviser, and PricewaterhouseCoopers LLP, the world's largest accounting firm, are among employers hiring more MBAs as business shifted focus to expansion from cost cutting. Companies also are getting a boost from an accelerating U.S. economy, which grew at a 3.8 percent annual rate in the third quarter.
``Banking and consulting are back in full swing after several years of hiatus,'' said Sheryle Dirks, 38, director of the Career Management Center at the Fuqua School of Business at Duke University in Durham, North Carolina.
Acceleration
Northwestern University's Kellogg School of Management said 32 percent of its 610 graduates joined consulting firms, an increase from 27 percent in 2004. About 11 percent received offers from investment banks, up from 8 percent, Roxanne Hori, assistant dean and director of career management at the Evanston, Illinois, school said.
Goldman awarded compensation of about $140,000 to its ``Class of 2005'' hires, Edith Hunt, Goldman's managing director in charge of recruiting and human resources, said in a telephone interview. The amount included a base salary of $115,000 that was 35 percent higher than the $85,000 given in 2004.
About 60 percent of the more than 100 students Goldman hired had worked as summer interns.
``We appear to have more students with offers from their summer employers,'' said Regina Resnick, assistant dean and director of career services at Columbia Business School in New York.
Resurrection
PricewaterhouseCoopers may hire more MBAs than last year for its consulting unit, Amy Van Kirk, U.S. campus recruitment director, said in an interview. She declined to give figures. The New York firm recruits students at 15 programs in the U.S., including Harvard and Washington University in St. Louis.
MBA degree programs suffered a drop in applications after the stock market began a three-year descent in 2000, Tuck's Danos said. Students applied to fewer schools as declining salaries at graduation failed to give the hoped-for return amid rising tuition.
``The downturn that began in 2001, 2002, hit the MBA world particularly hard because the bubble was a very MBA-intensive phenomena,'' said Tim Butler, 54, director of Harvard's career development office.
Harvard, in Cambridge, Massachusetts, charges $37,500 a year for tuition. With other fees, housing expenses and food, the total cost to a student climbs to $66,110. Yale, in New Haven, Connecticut, charges $58,015, including $36,800 for tuition and $12,500 for room, board and other mandatory fees.
National Growth
Nationwide, the mean base salary of MBA graduates is about $88,626, a $10,000 gain from a year ago, according to a survey of 5,829 students at 129 schools by the Graduate Management Admission Council, the McLean, Virginia, organization that administers the GMAT test.
In 2000, the mean salary reached $84,005, then fell to $77,486 in 2002.
Among other top business schools, the mean salary and bonus package of Massachusetts Institute of Technology's Sloan School of Management in Cambridge, Massachusetts, was $118,000. That doesn't account for other compensation, such as relocation expenses and tuition reimbursement that other schools may include.
The median base salary for Yale School of Management graduates who went into investment banking was $95,000, up from $85,000 in 2004, said Coleen Singer, career development office director. Signing bonuses rose 17 percent to $30,000.
Recruiters Return
This fall, the number of recruiters on business school campuses rose. At MIT Sloan, they increased by 20 percent from last year, said Jackie Wilbur, executive director of the career development office.
There are 17 more employers at Yale seeking second-year students, Singer said.
Kellogg has recruiters visiting from private equity firms, technology companies and videogame makers, including Activision Inc., Electronic Arts Inc. and Google Inc., the world's most- used Internet search engine, Hori said.
Large salaries also are reviving interest in MBA programs, as potential students see a better return on their investment. Tuck has had as much as a 40 percent increase in early admission applications for its 240 slots this year, Danos said.
``It is definitely an improving climate,'' Butler said. ``The economy is growing and the demand for MBAs is growing along with it.''
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