In this episode of Business Casual, the hosts discuss a GMAC report indicating a sharp decline in U.S. employer interest in hiring international MBA graduates in 2024, with projections dropping from 40% to 16%. The hosts speculate that election uncertainties and the potential return of restrictive policies under Trump might be influencing these figures. Despite this, they note positive hiring trends in Western Europe and parts of Asia, suggesting resilience in global MBA employment markets. 

The conversation emphasizes the value of an MBA in providing versatile skills and a strong network, preparing graduates for a variety of future challenges and reinforcing the degree’s long-term benefits amidst economic fluctuations.

Episode Transcript

[00:00:04.370] – John

Well, hello, everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast with my co-host, Caroline Diarte Edwards and Maria Wich-Vila. Maria, as you all know, is the founder of Application Lab, and Caroline is the former Managing Director of Admissions at INSEAD and the co-founder of Fortuna Admissions. There’s some news out from GMAC, that’s a Graduate Management Admission Council, that isn’t necessarily great news. Essentially, it’s a survey of employers in the US, and it shows that employers expect to hire dramatically fewer international B-School grads. The actual numbers are shocking, frankly. According to the latest survey by GMAC, just 16%, one-six % of US employers had definite plans to hire internationally in 2024, compared to 40% that hired candidates in 2023. Now, there could be a bunch of reasons for this. One is just the fact that we’re in a presidential election year in the US, and there’s a certain amount of uncertainty that comes with that. One of the candidates in this presidential election is someone who had previously been President and discouraged a lot of international hires and cracked down on a lot of non-US people who even came to study in the US.

[00:01:43.620] – John

I remember that when Trump was President, in fact, schools were telling me that their international students didn’t even want to go on global immersions for fear that they would have difficulty coming back into the US and completing their MBA programs. So I I wonder if some of this survey result is a reflection of the uncertainty in the marketplace over whether Trump could get reelected in the US, and there would be a clamp down on essentially immigrant hires. Caroline, what do you think?

[00:02:19.240] – Caroline

Yes, I agree. And it’s a precipitous drop, right? So 40 % to 16 % is really very dramatic. So that does suggest that it’s something quite specific that’s happening right now rather than just a shift in a longer term trend. So I agree. I think there’s concern about the election. We saw it last time when we had the Trump presidency that there was a negative impact on business schools, and for example, that there was a drop in international applications to US business schools. And so I think that recruiters are concerned about what is going to happen. And so of considering that they’ll be holding fire on international recruitment. Of course, the picture might have changed a little bit since the survey was done, because I think a few months ago, there was an assumption that Trump was on a role and looks all set to win the election, and that’s obviously changed in the last few weeks. And so it’s still up for grabs. It’s still going to be an extremely close election, but it looks like Trump is in a less well-positioned than he was was a few weeks back and perhaps when this survey was done.

[00:03:33.110] – Caroline

So how things pan out may be actually quite different from what this survey suggests. So I would urge some caution on over interpreting these results, and international students shouldn’t be too concerned about dramatic change right yet for the time being, because we really don’t know how things are going to pan out, and it looks like there’s a decent chance that the Democrats might win, and therefore, the climate would not be so negative for international students and international MBA students seeking employment in the US.

[00:04:11.870] – John

Yeah, that’s definitely true. I think that’s a really good point, Caroline, because no doubt this survey was out in the field when everyone assumed there’d be a Biden versus Trump contest, and Biden was flailing and declining in the polls, and Trump was resurgent. And there’s been a complete reversal of that after Biden decided not to, in fact, take his party’s nomination in the US. It’s a pretty decent survey. It includes responses from 931 company recruiters, 931 company recruiters from 38 different countries. It’s global as well because only 51% of the companies are from the global Fortune 500, and they are from 38 different countries overall. One of the positive spots about this survey is Western Europe. International grads hiring is up in Western Europe, and that’s a good sign for sure. Maria, what do you make of that?

[00:05:25.800] – Maria

Yeah, I think that as other parts of the world, as their perhaps some of their industries start changing. The industries are changing in every country. Perhaps some of these Western Europe and also I think the Asian countries also had a pretty marked increase. Maybe as they try to incorporate more diverse perspectives into their workforces. Who knows, maybe there could also be a demographic influence in certain parts of Asia where perhaps the domestic population might be decreasing, and so they may be more open to bringing in talent from other countries to help them bridge these gaps. As their economies and as their businesses are changing and as perhaps their natural born demographics are decreasing. I think that there may be a more openness to bringing in international talent, which I think is great news for people who do want to have that international flexibility in their careers.

[00:06:24.560] – John

Yeah, true. The other thing is, well, even today, I had a call from the Economist. The Economist, and the journalist was exploring whether it’s the perennial story as the MBA is fading because the questions were largely about employment of MBAs. We know that in the last recruiting season, not the one that has not yet been reported on. Most schools reported that fewer percentages of their graduates had jobs three months after graduation. It wasn’t a dramatic decline, but it was a decline nonetheless. This survey actually shows that most employers plan to at least maintain their hiring efforts despite whatever concerns they may have over a potential recession, politics, or inflation. It found that more than a quarter of employers are expected to increase their hiring of business graduates with particular demand for the MBA and industry-experienced candidates. The survey found that some 79% of companies overall hired as many or more MBAs as expected in 2023 and planned to hire at least that many in 2024. Overall, the market still remains strong, and we do know that up and down the US economy, despite lesser hiring by consulting firms and tech firms who both tended to overhire for a little while, there are labor shortages all over the in the US.

[00:08:01.760] – John

One of the interesting things throughout the survey is that the strongest demand were for those with management data analytics and business analytics degrees. Nearly a third of employers planned to expand their hiring of data and business analytics talent in 2024. When you look at the employment reports for specialized degrees in business analytics, you find 100% employment within three years of graduation and 95 plus % at graduation. Those grads are very much in demand. What’s your sense of the overall market and what you’ve heard? I mean, the economist is looking at this from the perspective that jobs are drying up for MBAs. I don’t think that’s true. Caroline, what do you think?

[00:08:53.800] – Caroline

I agree. I mean, this data does suggest that there will be fairly stable recruitment, I think, next year. The largest chunk of the employers were saying that they were planning to maintain their recruitment, right? And then a similar size group said that their employment might contract, and their similar number said that their employment projections were going to increase. Those The two extremes seem to balance each other out. To me, it looks like recruitment will be fairly stable next year. I don’t think that there is a contraction. I’m very encouraged to see outside of US, at least, the increase in demand for international candidates, because, of course, that’s good news for schools like INSEAD and London Business School, because that’s exactly the type of profile that they are feeding into the market. Those schools are all about international mobility and providing a platform for students to go and work in markets outside of their home country. And so the fact that employers are signaling that they intend to expand that type of recruitment in Europe, in Asia, that’s really positive. It may be that there has been a bit of a… I think during the pandemic, there was less international mobility.

[00:10:11.700] – Caroline

And so it may be that they’re playing catch up a bit now after a few years of not having hired as many candidates for that international experience. I think that globally, the outlook is pretty positive, but perhaps more of a stable picture in the US.

[00:10:28.780] – John

The other thing is, I think candidates should not allow the natural ups and downs of economic cycles and uncertainty in the economy to affect their decision on whether or not to pursue an MBA. I mean, the truth is you enter an MBA program or you start considering one, it’s anywhere from an 18-month to 24-month journey before you start it. Then if you’re in a one-year program, you have another year to go before you graduate into a marketplace. If you’re in a two-year program, you obviously have two years. So you’re almost looking at a four-year cycle for a two-year program. There’s no way to time that to have the best possible economy that you graduate into. Maria, I’m sure you would just say, Hey, this is interesting. But the truth is, if you want to take advantage of an MBA experience and you want to solidify your career and learn things and meet people that are going to help you throughout your life, it doesn’t matter whether your economy is going up and down because that’s what the economy does, right?

[00:11:34.570] – Maria

Yeah, I think, as we’ve said many times here, your career is a marathon, not a sprint. These fluctuations up and down, I mean, there are people who graduated in 2008 during that financial crisis or after the tech boom and bust cycle in the early 2000s when that initial internet fervor and bubble popped. I mean, these ups and downs have been part of the world we live in, and I suspect they will just… The frequency and amplitude might start increasing as there’s more and more uncertainty thrown into the world with each year, it seems. I think the idea is like, look, we don’t know where the economy is going to be when you graduate in two or three years, depending on if you’re applying now and you’re enrolling in a year and then so on and so forth. I would not try to time. When people We’ll talk about buying stocks, for example. The pundits often say, Don’t try to time the market, just get into the market. I think the same thing probably applies here, where it’s just go for it. Even if that first job out of business school might not be the job you were hoping for or exactly what you were looking for, you’ve still got another 20 or 30 years of your career in which things do tend to even out and come to a certain equilibrium, even if at first you start off a bit behind from where you wanted to be.

[00:13:04.560] – Maria

It’s the same argument for when we talk about how much it costs to get the degree and then how much loans you have to take if you don’t get a scholarship It’s the same idea here. If you’re doing this, it’s because you understand the value that this degree and this experience gives you over the long term. I would think about that and not freak out.

[00:13:28.560] – John

The other oddity, of is that when the economy declines and there is a recession or simply it’s slowed down, we know what happens to application volume. People apply to business school because application volume is countercyclical to the economy. When things go down, applications go up. The reason is simple. People find that opportunities in front of them in terms of promotions and additional raises tend to get diminished in a downturn. So they They get a little frustrated and they start thinking about longer term possibilities for themselves and go to graduate school. Same is true if the economy is down and you actually get laid off. It may be an opportune time for you to say, Okay, you know what? This is a really good time for me to go and get an advanced degree in business to give me a little insurance in the future and to maybe make a transition into some other new field. Then when that happens, of course, there’s greater competition at the best schools to get a seating the classroom. You just can’t time this, ideally, to take advantage of when there are fewer applicants and there’s less competition to get into a school and timing it so that the economy is on all full cylinders and you have multiple job offers at very generous salary offers.

[00:15:00.140] – John

It’s just not impossible to time. I also think, and it is what I always say, and I’m sure the two of you would agree, the world has not become simpler. Things are not easier. They’re more competitive than ever. The need for advanced education and business and management and skills that new jobs require is at all time record levels. I mean, there’s nothing that’s gotten easier in business and in competition that would suggest that you don’t need an advanced degree in business or management. With big trends coming like AI and the impact that’s going to have on whether or not, essentially, computer algorithms will do the jobs of white-collar workers, the more insurance you have, the more skill you have, the more network you are, the better off you’re going to be. I would think that, Caroline, you would agree with that, Yes, absolutely.

[00:16:01.890] – Caroline

An MBA prepares you for so many different possible roles, right? That’s one of the wonderful things about going to business school is that it gives you an incredible foundation to tackle pretty much any challenge in business. And so it gives people the ability to reinvent themselves, not just right after graduating, but five years, 10 years, 20 years down the line. And in an uncertain world, where who knows what the jobs will be in five years or 10 years and how the economy will be looking, it’s an incredible asset to have that education that gives you the skills, that you have the ability and also the confidence to tackle something completely new and a great network of people who are ready to support you. Every career has ups and downs, right? So at some point for any MBA graduate, as we’ve discussed in the past, things might not go as planned as expected. Having an incredible network to support you as well is in many ways a great safety in the net to have for your career.

[00:17:11.040] – John

Yeah, exactly. And even though last year, and I’m talking about 2023, not this year as graduates, which is probably roughly the same. The trend was that smaller percentages of MBAs had job offers three months after graduation. So For example, you look at Kellogg, back in 2022, 99% of the class had job offers after three months. Last year, it was 24.5. Across the board, you’re seeing that thing. At Yale, it was 96.1% had job offers three months after graduation in 2022. Then last year, it was down to 91.5. These are still all impressive numbers. And I think also what they reflect is something that people don’t tend to talk about, but it’s true that I think this new generation is less likely, not in its entirety, but a higher percentage of MBA graduates today are less interested in the mainstream MBA jobs at a McKinsey Bain, BCG, Goldman Sachs, Citi, Morgan Stanley, Microsoft, Google, IBM, Procter and Gamble, Pepsi, than they were earlier. More of them are looking for opportunities in early-stage companies, in startups, and even in non-business fields like health care, which increasingly require business skills, the government, or even the nonprofit sector, because the MBA has become more of an all-purpose degree.

[00:19:02.370] – John

Those jobs, including the most lucrative MBA jobs in venture capital, private equity, hedge funds that pay the most money, are not jobs where employers hire MBAs by the bucket loads. Those are one-z, two-z searches or independent searches for MBAs that take a little bit longer time. I think you’re also seeing some noise in these employment stats that are slightly declining at schools. It’s a function of different career choices being made by a new generation of people. Maria, you buy that?

[00:19:46.240] – Maria

Absolutely. I think that the current batch of MBA students, this generation, a couple of things. I think they’re looking more for work-life balance. It’s not necessarily perhaps about maximizing your salary at all costs to perhaps your health or stress levels, et cetera. I also think that this generation has grown up in a fundamentally more volatile time. If they’re roughly, say, 27, 28, 29 years old right now, they Their childhood involved some of these big swings and shocks to the global economy that we’ve seen. Perhaps they’re more comfortable with that volatility extending into their career plans. By that, I mean, some of these employers that you mentioned before, like the Proctors and Gambles, et cetera, those jobs would offer not guaranteed employment for life, of course, but certainly as close to something like that as you could get. The trade-off would be that you would not have this exponential growth. That was the trade-off you made. I think that this is what we’re seeing, maybe perhaps an attitudinal shift in the generation that is graduating now, just given the circumstances under which they grew up and how exciting some of these rapidly growing technologies can be.

[00:21:04.910] – Maria

I don’t blame them for wanting to perhaps get in on the ground floor of that, an opportunity like that, even if it means perhaps a nontraditional job search or having to hold out to find that employer fit, et cetera.

[00:21:17.360] – John

You’re right about this whole issue of a work-life balance. I’m always from a generation where I didn’t even think about work-life balance because I thought, I’m coming out of school, I want to I want to work my butt off. I want to learn as much as I can. It’s not going to be hard for me because I’m loving it. This is my passion. I want to work with people who are super competitive and smart because you play with the smartest most competitive people, and it makes you better. But younger people today, maybe also having seen how the great recession impacted their parents, and in many cases, seeing what little loyalty any company has had to their employees through this period and beyond. I mean, this is a trend that’s really happened in the ’80s when there were massive layoffs of people who had long been loyal to their companies. We’re talking about white-collar workers may have fed this sense that, Okay, look, I saw how hard my parents work. I saw what happened to them in the Great Recession. That’s not going to be me. I’m not going to be a slave to a company and work those 70, 80-hour weeks that are worked at McKinsey and Goldman Sachs.

[00:22:37.570] – John

I want a work-life balance right out of school. Now, how realistic that is, I don’t even want to talk about how realistic that is in today’s world, where the demands on people are so high and we’re all leashed to equipment that allows us not to separate from our job, or the truth of the matter is that work Work-Life balance is something you achieve over a lifetime. There are times when you’re going to be completely focused on being a new parent, on being a great spouse or a great son or a daughter. Then there are other times when you’re going to be almost completely devoted to your work because it’s an important project, there’s a deadline, and a lot of people are depending on it. I remember when I was at a fast company, we did the cover Balances Bunk because basically, you can’t achieve work-life balance in any given period in your life because the demands on you from any place in your life, personal or professional, change dramatically from time to time. But over your lifetime, over your career, you seek that. But today’s generation seems to want to out the gate, and there’s no question about that.

[00:23:47.450] – John

There’s also, while I was looking at some data recently on some of the contradictions with what Gen Z folks want, they want tremendous freedom in their job, and yet they want to be told what to Now, I’ll figure that one out. Well, Caroline, you have a bunch of young ones who will soon be entering the workforce before you know it. I mean, I know they’re going to college soon and all that thing, but they probably have very different attitudes than even the students graduating right now.

[00:24:23.710] – Caroline

Yeah. No, I definitely see some of those trends in my own children. So let’s see how it all pans out. Let’s see if they can get the work-life balance and do incredibly well in their careers.

[00:24:36.940] – John

And more appropriately, you probably have seen these trends in the applicants that you helped get into school.

[00:24:42.560] – Caroline

Yes, that’s true. But I think that the subset of young professionals that apply to business school and those who are applying to the very top business schools are those who are very driven, who are often quite competitive, and they have to be to get where they are, because if they’re applying to Harvard Business School or London Business School, et cetera, then it’s a self-selecting group. And so to be ambitious enough to pursue that path, then they have typically done very well in their careers. And so I don’t see many slouches amongst those applying to these top schools.

[00:25:21.230] – John

Which circles back to our question about employment. It’s why I think so many companies still want to hire MBA grads from great schools because they know it’s a subset of the employment market. It’s people who are smart, who are ambitious, who are competitive, and who are going to deliver the goods because they want to achieve. I’m sure you saw this in spades over at Harvard with your classmates, Maria. Back then, and if you were to walk into a classroom today, probably the same thing.

[00:25:57.760] – Maria

Absolutely. These are people who are driven to change the world. I do also see, though, some people who are coming from those very high competitive pressure cooker environments who are going to business school precisely to leave that or to at least, maybe not right away, but to at least forge a path for themselves where perhaps they don’t have to make as many of those trade offs. I mean, obviously, there are different strokes for different folks. But I do think that anecdotally, I’ve definitely heard that there’s a lot less interest in, say, investment banking, which used to be one of the top jobs you could get. A big reason why I think the investment banking, the shine, it’s less lustrous and shiny than it used to be, is in part because you hear these horror stories about the working hours and the toll that it takes. Of course, you can’t make a blanket statement, but I think when we talk about why are some of perhaps these graduates, when they are not employed at graduation, and if they are… Some of them are not employed by choice. They want to be employed, they just aren’t. But I do think that some of them are perhaps holding out for that perfect offer.

[00:27:04.380] – Maria

If we’re talking about that, I think in some cases, that’s what it might be. People are issuing the traditional on-campus recruitment in search of some an alternative path?

[00:27:16.660] – John

Yeah, I remember a few years ago, we did a story based on a survey of over 1,500 current and recently graduated MBAs. We asked them about their jobs. MBAs who worked at Goldman Sachs averaged 86 hours a week of work. Now, think about the 86 hours at Goldman Sachs. Mckinsey, 72 hours. Strategy Anne, another consultant for 63 hours, BCG, 63 hours a week. Bain, 58 hours a week. Amazon, 54 hours a week. The 40-hour work week, forget about it if you’re an MBA, unless you work for City Corp. City Group, broadly, the MBAs who work there were averaging 40 hours a week of work. I think that’s an aberration or a statistical quirk. But clearly, MBAs from the top schools are still choosing some of these jobs, even if a fewer percentage of them are than in the past, and the demands are great. But so is the demand for these graduates just because they’re hardworking, they’re ambitious, they’re smart, they’re well-trained, they’re network, and you hire them and they can immediately contribute. You don’t have to wait six months to a year or more before you’re getting a return on your money if you’re an employer, and people know that.

[00:28:52.030] – John

There you have it. Don’t let this latest GMAC report discourage you if you’re an international applicant or a domestic one for that matter. There are cycles, they go up and down, and we do think that the uncertainty of the election is a big factor in the results of this survey. MBA is still a great investment, still a great way to advance your career, still a great way to gift yourself with a generous investment in who you are and who you want to be. Hey, thanks for listening. This is John Byrne with Poets and Quants.