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QS TopMBA.com Salary & Recruitment Trends 2009 Report

Nunzio Quacquarelli MA Cambridge, MBA Wharton Ben Sowter BSc Nottingham Susan Gatuguta MA Nottingham


QS TopMBA.com Salary & Recruitment Trends

Index of Figures Regional distribution of responding recruiters 2009 ......................................................................................... 8 Recruiter response by industry 2009 .................................................................................................................. 8 Examples of responding employers by region ..................................................................................................... 9 Percentage change in MBA opportunities by industry sector worldwide in 2009 ...................................10 Percentage change in MBA opportunities by industry sector worldwide in 2009 ...................................12 Employment opportunities by region 2008-2010 .............................................................................................13 Recruiter responsibility by region ........................................................................................................................16 Functional roles offered to MBAs ........................................................................................................................20 Preferred levels of experience of MBAs .............................................................................................................21 Key MBA skills: importance vs. satisfaction ........................................................................................................21 MBA salaries by region 2009 .................................................................................................................................22 Average salaries in US & Europe 1999-2009 ($) ..............................................................................................22 MBA salaries Western Europe & North America 1996-2009 ($) .................................................................23 MBA earnings by sector - Western Europe & North America 2009 ($).....................................................24 MBA salaries across regions 1999-2009 ($) ......................................................................................................25 MBA salaries US & Canada by sector 2009 ($) ................................................................................................27 Average salaries: Asia Pacific 2009 ($) .................................................................................................................28

QS Quacquarelli Symonds Ltd 1 Tranley Mews Fleet Road London NW3 2DG United Kingdom

The entire content of this publication is protected by international copyright. All rights reserved. No part of this publication may be copied or reproduced in any form without the prior written permission of the publisher. Tables and charts may not be reworked or presented in any other form without written permission from the publishers and excerpts, tables or charts must be sourced: QS TopMBA.com International Recruiter Survey 2009.

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Contents

Introduction ..................................................................................................................................................................4 Who will be interested in the survey? ........................................................................................................4 1. Methodology, sample and scope ..........................................................................................................................5 2. Key findings ...............................................................................................................................................................6 3. Demographics of recruiter response..................................................................................................................8 4. Long-term MBA recruitment trends ................................................................................................................10 MBA demand tied to the strength of the global economy ..................................................................10 5. Short-term MBA recruitment trends 2009 .....................................................................................................12 Demand for MBAs.........................................................................................................................................12 Demand for MBAs by region ......................................................................................................................12 Demand for MBAs by sector ......................................................................................................................16 Functional roles ..............................................................................................................................................20 Experience levels ...........................................................................................................................................21 Skills ..................................................................................................................................................................21 6. MBA salaries and compensation ........................................................................................................................22 Overview and global trends 2009 ............................................................................................................22 Salaries and bonus ........................................................................................................................................23 Bonuses ............................................................................................................................................................24 Strategies for MBA salary analysis .............................................................................................................25 Regional review of MBA salaries ................................................................................................................26 Appendix I: Participating recruiters .......................................................................................................................30

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

Introduction Since 1990, QS Intelligence Unit, in collaboration with TopMBA.com, has conducted an annual survey of MBA employers worldwide to determine trends in international salaries and recruitment.

The 2009 International Recruiter Survey is as extensive as ever and presents an unrivalled overview of the world MBA recruitment market. Complete responses were received from 743 companies (619) ((489)) (comparative figures for 2008 are shown in brackets throughout the report and in some instances double brackets are used to denote results from 2007) in 34 (32) ((35)) different countries. This represents approximately twice the response level of the Business Week Employer MBA survey and includes five times the number of non-US respondents than any other MBA recruitment survey.

Who will be interested in the survey? This research will be of interest to all who follow the international MBA and recruitment market. It will help three groups in particular to make informed strategic decisions:

• Companies and agencies that recruit MBAs National and international recruiters will find the survey useful in managing human resource policies, such as whether to determine salaries globally or locally, and to benchmark their salaries against peer institutions. • Business school administrators and career services offices worldwide MBA program administrators and career services professionals will find the survey valuable for providing guidance to students and managing relationships with recruiters. • Current and future MBA graduates MBAs can use the research to determine which industries and geographies to pursue in their job search, and to help negotiate an optimum compensation package.

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1. Methodology, sample and scope The TopMBA.com International Recruiter Survey, from QS Intelligence Unit, collects primary data on the state of the recruitment market and predictions of future trends from recruiters in general industry, consulting, financial services, and technology. The data includes specific analyses by sector, geography, and year. Time-trend analysis and sector/regional variations have been incorporated into this final report. Unlike many surveys, the QS research does not rely on MBA graduates to report their earnings, but obtains the information direct from the employers who hire them. Each respondent is designated as responsible for MBA recruiting within his/her company as a whole or division. They are asked to identify their geographical responsibilities, confirming whether they recruit locally in their domestic market, regionally, or globally. QS further differentiates its research by the objectivity of its position as a third party operating between recruiters and business schools, by virtue of the long established contacts with recruiters who are willing to share information with QS, and by the bank of data on MBA recruitment and remuneration built up over the last 18 years which allows meaningful trends to be identified over time. QS operates the website www.global-workplace.com which provides career opportunities and networking facilities exclusively for member business schools. Over 100 business schools and 800 employers subscribe to QS Global-Workplace (and QS TopMBA Careers).

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

2. Key findings 2009 is that year that many MBA students and Careers Officers have expressed sighs of relief, as the impact of the global recession has been much lighter than expected. And as Dr Simon Taylor of Judge Business School says, “once we have got over the credit crunch, the prospect is for strong long-term growth in demand for MBAs.” At the start of the year, the threat of a global economic depression akin to the 1930s had MBAs in a panic about job prospects. The reality is that graduating MBAs have fared relatively well in this job market, benefiting from the global and sector flexibility afforded by the MBA qualification. In addition, MBA salaries seem to be holding firm, another consequence of strong residual demand. The effects of quantitative easing and bank bailouts has been to protect one of the primary sectors for MBA hiring – financial services – resulting in hiring levels well above even the most optimistic forecasts at the start of the year. Optimism amongst Directors of large companies has also resulted in a counter-cyclical growth in demand for consultancy work in major business and financial centres – hence the second vital sector for MBA hiring has also fared relatively well in this downturn. Within many parts of the world, particularly in the USA, industrial and technology companies have been badly affected by the sharp contraction in global trade caused by the credit squeeze and we are seeing significant reductions in domestic US demand for MBAs as a consequence. It remains unclear whether this contraction in global trade has now bottomed out, but MBA hiring in the industrial and technology sectors remain closely correlated with global trade and GDP growth. The continued high growth rates in economies like China and India, are feeding directly into buoyant demand for MBAs in these regions, which is spreading throughout the North Asia and South East Asia region MBA demand worldwide this year will be only slightly below 2008 record levels. The TopMBA.com Index of MBA Recruiting shows an overall -5% (11%) decline in demand for MBAs in 2009. The decline is concentrated in financial services which show a -10% (0%) fall in hiring levels. The consulting sector defies the recession, to growing MBA demand by 3% (-4%). By contrast MBA demand in general industry is flat (9%), and demand in the technology sector has grown by just 1% (0%).

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The forecasts for 2010 remain cautious, with recruiters anticipating overall MBA demand to remain at 2009 levels. In particular, financial services expects to increase MBA demand by 5% next year and the consulting sector expects demand to be very similar to this year. Technology expects a -5% fall and general industry also expects a reduction in demand by -6%. These trends suggest a lagged effect from the recession impacting on hiring forecasts and we expect the actual 2010 hiring trends to be slightly more positive than this. What is clear is that MBA demand is no longer concentrated on North America, which in fact is showing declines in MBA hiring, but is moving towards emerging markets in Asia, Middle East and Central Europe where high GDP growth rates are fuelling an MBA hiring boom. Furthermore, employers are looking for much more experienced candidates than in the past. Our 2009 research reveals a sharp drop in employer demand for MBAs with less than 3 years of experience and a sharp increase in demand for MBAs with over five years of experience. In particular, leadership, communication, interpersonal and strategic thinking skills are at a premium, with less and less emphasis being placed on the technical skills taught by business schools. The outlook for MBA salaries seems to be stabilising overall, after several years of strong growth, but there is little evidence of downward pressure. The average MBA salary reported by MBA employers in the USA and Western Europe is $91,500, compared to $53,300 in Latin America, $55,000 in Asia and $49,560 in Eastern Europe. Responses were received from across the globe. 32% (30%) of employer respondents were based in Western Europe, 22% (40%) were based in North America, 25% (17%) in Asia-Pacific (North and South East), 14% (8%) in Eastern Europe, Middle East and Africa, and 10% (5%) of respondents were based in Latin America. This breadth of response provides detailed insights into MBA recruiting patterns across the globe. Responding recruiters span a wide spectrum of industries, which is consistent with the profile and range of recruiters at most top business schools. Financial services and consulting make up the largest source of respondents followed by technology, industry, banking and consumer goods. Respondents from the recruitment consulting industry are kept separate although they have a bias towards financial services and consulting recruitment.


In US dollar terms, average salaries on offer in North America are level with the previous year. On a country by country basis, MBA salaries in Asia and Latin America are also comparable with the previous year. European MBA salaries have shown a drop, but this can be explained by exchange rate movements – when reported in Euros, MBA salaries in the Western Europe have also remained stable year on year.

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

3. Demographics of recruiter response Responses were received from across the globe. 32% (30%) of employer respondents were based in Western Europe, 22% (40%) were based in North America, 25% (17%) in Asia Pacific (North and South East), 14% (8%) in Eastern Europe, Middle East and Africa, and 10% (5%) of respondents were based in Latin America. Regional distribution of responding recruiters 2009

Source: QS TopMBA.com International Recruiter Survey 2009

Recruiter Response by industry 2009

Source: QS TopMBA.com International Recruiter Survey 2009

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This breadth of response provides detailed insights into MBA recruiting patterns across the globe. Responding recruiters span a wide spectrum of industries, which is consistent with the profile and range of recruiters at most top business schools. Financial services and consulting make up the largest source of respondents followed by technology, industry, banking and consumer goods. Respondents from the recruitment consulting industry are kept separate although they have a bias towards financial services and consulting recruitment. 743 employers responded to the survey in 2009, compared to 619 in 2008. All employers that responded to the survey are guaranteed confidentiality for the components of their individual responses, except for any open-ended feedback they have chosen to provide on the value of an MBA or concerns with MBA hires. For some tables in this report – for example satisfaction with MBA skills - we look at responses from employers for each of the last three years. Tables identifying short-term trends reflect the responses in 2009 only. The following table gives a snapshot of some of the organisations that took part in the survey across the world. A more comprehensive list can be found in the Appendix at the end of this document.


Examples of responding employers by region

Asia Pacific

Europe

Consulting

Finance

Industry

Ernst & Young

OCBC Bank

Global Fortune China Ltd Bloomberg

Watson Wyatt

Citigroup

Rio Tinto

Dell

LEK Consulting

KPMG

Johnson and Johnson

LG Electronics

Bain & Co.

Fortis

ExxonMobil

Hewlett-Packard

AT Kearney

Goldman Sachs

BP

ORACLE

Deloitte Consulting

Barclays Capital

Nike

SAP

Scotiabank

Asturer

Compuserman

Ernst & Young

Bradesco

Johnson & Johnson

Baufest

Deloitte Consulting

Banco Santander

Procter & Gamble

INBio

PricewaterhouseCoopers Bank of America

Ingersoll Rand

Avaya

Booz Allen Hamilton

Merrill Lynch

PPG

IBM

IBM Consulting

JP Morgan Chase

3M

Intel

Latin America Bain & Co.

US & Canada

Technology

Source: QS TopMBA.com International Recruiter Survey 2009

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

4. Long-term MBA recruitment trends MBA demand tied to the strength of the global economy The MBA (Master of Business Administration) is a graduate management degree, which prepares professionals for management responsibility. It is one of the best-known degrees in the world, with more people taking it than any other postgraduate course. Deciding to take an MBA is a crucial step in an individual’s career. MBA demand amongst employers is cyclical and is tied to the strength of the global economy. In recent years, a growing number of companies around the world have seen a top MBA as an essential management entry-level qualification. Without an MBA, it is almost impossible to become an analyst at a leading investment bank, or a senior consultant at a top consultancy. On recent trends, it is also becoming common for business development and technology managers to take an MBA to help reach the next step in their career. As a consequence more and more highly-motivated young people are looking to an MBA to achieve rapid career progression, or the geographic and functional flexibility

offered by an MBA qualification, further fuelling the demand amongst employers. Figure 4 shows the long-term trend in MBA hiring worldwide, by sector. Consulting and financial services will account for 50% of MBA hires at many schools. Additionally, the absolute number of MBAs hired into the consulting sector has trebled since 2003, whilst demand in financial services and general industry have doubled since 2003. These are remarkable trends demonstrating the growing acceptance of MBAs as priority hires by companies around the world. For the purpose of simplification, this survey groups together as ‘general industry’; manufacturing, logistics, chemicals, automotive, FMCG etc. This sector does not achieve the same publicity as consulting and financial services, but it is steadily increasing the numbers of MBAs it absorbs each year. As more and more companies are competing globally, this trend is expected to continue. In recent history, MBA demand has moved in line with global economic growth. From 1994-2001, worldwide demand for MBAs grew at an average of 15% CAGR. This growth was spread across all the major continents and benefited

Percentage change in MBA opportunities by industry sector worldwide in 2009

Source: QS TopMBA.com International Recruiter Survey 2009

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graduates from all of the world’s top 100 business schools. Recession in the USA, however, and slow growth in major economies as far apart as Germany and Japan, took their toll from 2002-2004 and demand for MBAs fell by around 20% from 2000-2003. In this period, on-campus company visits fell significantly and many MBA students had to resort to off-campus job searches and networking amongst alumni. From 2005-2008 we witnessed resurgence in MBA employer demand, far exceeding previous levels. The 2009 recession has proven to be relatively benign for MBAs compared to the 2001-2003 recession. Only time will tell if we are at a watershed.

TopMBA.com Index of MBA Recruiting shows an overall -5% (11%) decline in demand for MBAs in 2009. The decline is concentrated in financial services, which shows a -10% (0%) fall in hiring levels. The consulting sector defies the recession, growing MBA demand by 3% (-4%). By contrast MBA demand in general industry is flat (9%), and in the technology sector has grown by just 1% (0%).

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

5. Short-term MBA recruitment trends 2009 Demand for MBAs The forecasts for 2010 remain cautious, with recruiters anticipating overall MBA demand to remain at 2009 levels. In particular, financial services expects to increase MBA demand by 5% next year and the consulting sector expects demand to be very similar to this year. Technology expects a -5% fall and general industry also expects a reduction in demand by -6%. These trends suggest a lagged effect from the recession impacting on hiring forecasts and we expect the actual 2010 hiring trends to be slightly more positive than this. Percentage change in MBA opportunities by industry sector worldwide in 2009

It is necessary to express words of caution. A recession as seen between 2001 and 2004 is not in the cards, but with continued falling house prices, a growing deficit in the USA, and rising energy costs, a continued fall in MBA demand in North America in 2010 remains a possibility. This uncertainty is reflected in fewer MBA employers in North America responding to this year’s survey. Chris Higgins at Wharton cautions “MBA candidates need to remain flexible about their career aspirations.” He adds “I started working at Wharton in April 2001, just in time to experience the dot.com and consulting crash. Demand for MBAs has been great in recent times, but it is cyclical and you never know what is around the corner.” Some young professionals try to time their MBA so that they graduate in time to benefit from the next boom. Experience suggests that such forecasting is difficult and the best time to take an MBA is when one feels ready personally, irrespective of economic conditions. An MBA should be viewed with a long-term career perspective.

Demand for MBAs by region US & Canada

Source: QS TopMBA.com International Recruiter Survey 2009

QS Global-Workplace (www.global-workplace.com), a jobs and careers site operated by QS on behalf of many of the world’s top business schools saw 8,950 (10,277) new MBA jobs added to the site in the twelve months August 2008 to July 2009. Of these, the most popular sectors were; 26% were in Financial Services, 19% in IT, 18% in Consulting and 10% in High tech. Dan Beaudry of QS Global-Workplace says, “...the big demand for MBAs in recent years has come from the service sector – banks and consultancies – not just the big name firms, but also many smaller organisations. In 2009, lesserknown MBA recruiters have picked up some of the slack as financial services demand has dropped off. But North America has been severely affected in this recession, particularly demand for international students. Many of them have sought employment in other countries where their prospects are better.”

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In the USA, MBAs most struggling to find work have been those with little or no work experience, those looking for a major career change or international students who cannot find a corporate sponsor. Boston University feared only 50% of graduates would be in employment three months after graduation this year, but the reality is that over 85% have found employment, says Hayden Estrada, Associate Dean. In the USA, the largest MBA employment market, recruitment into financial services is expected to show a strong recovery in 2010, consulting should remain buoyant, but demand in industry and technology is still looking vulnerable, as companies take time to shake off the effects of the contraction in global trade, according to the TopMBA.com Recruiter Survey. Dan Beaudry, who manages employer relations for QS TopMBA and Global-Workplace in the USA, reports that “Demand for MBAs in the US was badly affected in 2009, with many MBA employers re-assessing their MBA hiring needs downwards.” He adds “The outlook for 2010 is better and we do not expect many more drastic cuts. If consumer demand picks up and confidence returns, employers might re-assess their plans upwards during the spring. But


Employment opportunities by region 2008-2010

Source: QS TopMBA.com International Recruiter Survey 2009

MBAs graduating in North America in summer 2010 need to be prepared for a long and challenging job search.” The outlook for improved MBA hiring into financial services is good. Most banks have repaid or are repaying government loans enabling them to resume competitive hiring and trading practices. Some hiring managers are expecting to see more recruiting into M&A departments, anticipating a resumption of takeovers by corporate America. Industrial and technology employers remain cautious about MBA hiring in 2010. Cost savings are still the order of the day. As a result, many industrial companies are looking outside the top-tier schools in order to find the MBAs who match their skill requirements at a competitive salary. Mesha Mott of Mead Westvaco USA observes “Depending upon the universities and the skills sets required, salary requirements may be misaligned with what the candidates actually bring to the table. This usually is a function of both school/reputation of program and skill set of hires.” For many candidates, entry to a top-tier US business school channels them into a banking or consulting career post-MBA in order to pay back the fees, as well as natural peer-pressure to get the ‘best job’. A growing number of candidates are actively looking for specialist smaller

schools which can better match their career aspirations. This requires a more thorough self-assessment prior to the MBA, a thorough school search and a reduced reliance on overall rankings. It is still a challenge for foreign students to obtain H1 visas to stay and work in the US, though recent evidence confirms that as the labour market tightens, recruiters are finding ways to hire the people they really want. The Director of the Career Service at Wharton comments, “Over 60% of Wharton’s international students accepted full-time positions in the United States.” At UC Irvine, Tom Kozicki reports that 90% of their international students obtained work permits to stay and work in Southern California, but a handful of students were unable to stay beyond their F1 visa which allows a year of work experience in the USA after an MBA. Dan Beaudry of QS Global-Workplace provides further insight “H-1B visas are at a premium in the US. Not only are there fewer jobs overall, but new TARP regulations are making it more of a challenge for some companies to hire H-1B employees. Unfortunately, a lot of these companies have been traditional large recruiters of MBAs.”

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

Latin America MBA career opportunities within Latin America are becoming more plentiful and the region has bucked the trend during the recent downturn. In the past, Latin America has been a relatively inactive region for MBA recruitment, with most Latin American MBAs choosing to study and work abroad in Europe or North America, but this is changing. Brazil, in particular is a vibrant economy offering many opportunities for MBAs in banking, energy, natural resources and consulting. Because of the need for internationally minded leaders, Latin American companies are now reaching out to US, Spanish and other European schools to pick up the talented nationals choosing to study overseas. Vanessa Matemoros of INBio in Costa Rica says “For specific positions like managers... we prefer MBAs. Interpersonal skills count a lot, and not just the MBA qualification.” Alejandra Herrera of Asturer, Mexico looks for MBAs who “have great potential to grow in to leaders within the organisation.” “There is definite movement in the market” confirms the Director at IE Business School’s career management centre. Many European banks now own the major Latin American banks and they actively recruit MBAs, as do consultancies and major industrial companies. The biggest such recruiters are BBVA and Banco Santander, which have emerged as regional banking leaders in Latin America, though HSBC is not far behind. In particular, the Mexican market is very strong, but we are seeing a region-wide improvement. Salary remains a big issue. Yogesh Chavda of Procter & Gamble Venezuela sees MBA recruiting as “an opportunity to gain people with the right level of maturity”, but is often thwarted because “[salary] expectations are too high.” At present there remains a big differential between MBA salaries paid by international companies and those offered by local employers.

Western Europe MBA hiring in Europe has certainly been affected by the recession. William Davila of IE Business School confirms “weakness in demand in financial services is affecting MBA placement figures. But non-financial recruiting is strong and many companies are taking advantage of the banking cutbacks to hire top talent.” Phillipa Hain of London Business School agrees that “MBAs have to be more flexible

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and look beyond finance. Our Career Services team is playing a crucial role in re-directing MBAs towards other career opportunities. Coca Cola, Rolls Royce and the Clinton Foundation are amongst some of the companies attending our industry career fair for MBAs.” The European market has been helped by ongoing strong demand in the consultancy sector. William Platt, a partner in charge of MBA recruiting at BCG observes “2009 will actually be a strong year for us and we have hired 50% more MBAs than in 2008 in London and have increased MBA hiring globally. In general we hire from the top European and US business schools and we are looking to hire from more UK schools as they attract better and better people from around the world.” 2009 has been a dreadful year for MBA hiring within financial services. Nevertheless, the financial centres of London and Frankfurt are recovering quickly as bank profits begin to boom once again. Barclays is amongst the banks who are upgrading their MBA hiring targets. Many European banks have strengthened their capital/asset ratios and are now highly liquid and looking for talented traders to make good use of all the cheap government money available in the system. Susan Haddon of Merrill Lynch in London says “MBAs bring a diverse skill set to the organisation from their studies and previous work experience. Furthermore they provide us with languages that are required in individual business areas and teams and tend to be more business conscious. MBAs are very focused on their next career step and are very thorough in their approach to working for the right organisation.” In Western Europe, the UK remains a strong employment market for MBAs, who are particularly advantaged by the Tier 1 Programme; the visa regime that is favourable to MBAs of almost any nationality. At the current £/US dollar exchange rate, the UK is now paying the highest salaries for MBAs worldwide. The German economy is usually the engine of MBA demand in Western Europe. Strong demand for German goods in Asia, in particular, has fuelled a demand for Asian MBAs to join German companies. Likewise, many service companies are desperate to recruit German MBAs to serve their successful German clients. 2009 has not been a great year, but employers in Germany are amongst the most optimistic of a speedy recovery. There is little evidence of resurgent demand for MBAs in France, despite President Sarkozy’s promise to revitalise


the industrial sector. Tamsin O’Bryen of Sodexo reflects the continuing scepticism of some French employers towards MBAs when she says “While the level of learning of MBAs is good and gives a strong insight into the organisation, I think MBA schools need to be more careful in managing their students expectations. A lot believe that the certificate makes them a natural leader but that is not the case all of the time. An MBA doesn’t act like a magic wand!” Spain and Italy are also sluggish but have growing numbers of financial companies regularly recruiting MBAs, as well as a growing consulting industry and remain somewhat immune to the credit crunch. However, their export industries are suffering from the strong Euro.

Eastern Europe Several Central European countries are becoming hot spots for MBA recruiting. The hottest country is Russia. With growing international ambitions, many Russian companies are seeking MBAs to open up new markets, in energy, raw materials, manufacturing and financial services. After a sharp correction in late 2008, Russian employers suggest MBA recruiting is very much back on the agenda. There are also many consultants in finance gravitating towards Russia. Aleksey Elizarov of LC Community Consulting in Moscow says “The basic motive for choosing MBAs is [a young professional’s] readiness to answer strategic questions for our clients.” Kazakhstan and Azerbaijan are oil economies which are encouraging their local young professionals to study for an MBA. They are also encouraging state-backed companies to recruit more MBAs, both local and international. Good Czech or Hungarian candidates are highly sought after, but mainly outside their home country. Bulgaria and Romania have small domestic demand for MBAs, but increasingly EU recruiters are hiring these nationals who now hold EU citizenship.

Asia Pacific In parts of Asia, the picture is positively rosy. Demand for MBAs in China and India are at record levels. Demand is so strong that the Municipality of Shanghai has funded the launch of its own local business school – Shanghai Advanced Centre for Finance - to compete with other local schools like CEIBS and Cheung Kong Business School. Employers in China could not find enough Chinese MBAs returning from US and European business schools, spurring the local government into action. And it’s not just China

where demand is hot. Edward Hyun, Director - Business Development for American Express Global Network Services Asia, reports strong demand for international MBA hiring to meet pipeline leadership needs throughout the Asia region. He comments “MBAs bring the maturity, business and cultural awareness as well as the leadership skills to take our company forward. Even during difficult economic conditions we remain committed to our MBA hiring program, not just in Asia but around the world.” MBA demand is shifting away from developed economies towards emerging markets, and particularly Asia. Without doubt, the TopMBA.com International Recruiter Survey is reflecting the emergence of more and more Asian companies seeking MBAs – they now represent 25% of total respondents, up from just 10% in 2003. These employers are willing to hire from local business schools at relatively low salary levels, but most Asian employers are still committed to hiring from top North American, European and Australian business schools and are often willing to pay the higher salaries expected by graduates of those schools. The rise of an elite cadre of Asian business schools is underway, but will probably take another ten years to be fully established. In Asia, the MBA is becoming more in vogue. Asian candidates are amongst the highest GMAT scorers in the world, and are focused on developing excellent technical skills often at the expense of integrating fully in the social aspects of the MBA. But Asian recruiters are looking for ambitious, well-rounded MBAs. Amy Low of Visa International in Singapore says “MBAs bring an intellect, fresh approach and strong determination to excel in their delivery.” China is the hottest market. “More and more MBAs are joining Chinese companies from international MBA programs and Asian MBA programs,” says Michael Yang, General Marketing Manager, Motorola (China). “I think the attraction for these MBAs is not the starting salary, but the growing opportunity.” Amy Chong of EQT Partners in Hong Kong says “MBAs bring commercial acumen and international experience” to the China-based employers. Korea and Japan are well-developed MBA markets. Jay Kang of Maekyung Business Newspaper in Korea observes “the large companies in Korea, like LG, Samsung and Hyundi, have recruited MBAs for many years. However there is a large unmet demand amongst mid-sized Korean companies who wish to employ MBAs but do not know how to go about this. Demand for internationally-minded MBAs amongst mid-sized Asian companies is extensive. Sei-Woong Yoon, an MBA alumnus from IMD and CEO of Overture Korea, says “a top MBA is a gateway to an

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

international career for a young Asian. Before I took my MBA, I worked in advertising in Korea and had a totally domestic focus. Since my MBA, I worked with Saatchi & Saatchi in London, became a COO of Yahoo in Asia and now run Overture. My whole international managerial perspective was shaped by my MBA. Today I think such a global perspective is even more important.” T. Takenouchi of Copernicus Associates in Japan agrees . “We favour the many MBA holders who have an international perspective, strong interpersonal skills, as well as a good understanding of Marketing, Finance, or Strategic Planning.”

still account for relatively few MBA opportunities, and recruiters in such organisations have reported only limited plans for an increase in MBA hiring.

Middle East & Africa

Similarly, European recruiters make up 33% of our sample, but a massive 70% of these recruiters also have some responsibility for recruiting globally or in North America, Asia or Latin America (only 30% are purely domestic focused).

The Middle East is likely to be a hot spot for MBA recruiting as economies like Saudi Arabia, United Arab Emirates, Qatar and Kuwait try to steer their economies away from a dependency on oil towards becoming knowledge economies. Dr Abdulkader Alfantookh, Vice-Minister of Higher Education in Saudi Arabia says “We are still in the early stages of becoming a knowledge economy, but Saudi Arabia is investing in scholarships for 40,000 students a year to study undergraduate, Masters and MBA degrees overseas. And we expect them to bring their knowledge back to companies within Saudi.”

However, this data potentially underestimates the actual number of opportunities in certain regions. For example, many MBAs in Asia, Latin America and Eastern Europe are hired through head offices in the US or Western Europe. Although 23% of responding recruiters are based in North America, the chart reveals that 31% of these recruiters have some responsibility for recruiting globally or in Europe, Asia or Latin America (52% are purely domestic focused).

The predominance of MBA recruiter headquarters in the US and Western Europe sheds light on the continued popularity of US and European business schools. International MBAs at these schools benefit from proximity to these headquarters and being able to meet such recruiters on campus before graduation. Recruiter responsibility by region

By contrast, MBA demand in Africa is subdued. Meryll Folb of Standard Bank of South Africa observes “salary is a big barrier for African employers.”

Global vs. local employers More and more companies are global in their operations without ties to any one region. Many of these companies have recruiters with global responsibility for hiring MBAs. This year, 22% of North American recruiters responding to our survey had global responsibility for MBA hiring. 35% of European recruiters had global responsibility for MBA recruiting – more than in previous years. These global recruiters include strategy consulting firms, investment banks, pharmaceuticals, and a small number of companies in most other sectors. In addition, many recruiters headquartered in one location have responsibility for a region elsewhere. These regional and global recruiters tend to pay higher salaries and recruit larger numbers of MBAs than local employers. Figure 6 shows the growth in number of MBA opportunities. Regional and global MBA employers headquartered in the US and Europe is fuelling the growth in demand worldwide. Local companies in Asia and Latin America

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Source: QS TopMBA.com International Recruiter Survey 2009

Demand for MBAs by sector Consulting “The great thing about an MBA education is the tool kit it provides. Quality MBAs could not be better matched to the


needs of the consulting industry. We can draw upon the full range of their knowledge as we allocate them to different types of client assignments. They have the knowledge and confidence to hit the ground running, utilising both their hard skills and their well-developed interpersonal skills, which are so important in our client facing business” says James Platt, Partner in charge of MBA hiring at Boston Consulting Group in London. The consulting industry had been growing at phenomenal rates for the last 20 years, becoming a $100 billion industry. Traditionally cyclical by nature, the consulting industry has defied the current recession and continued to grow. Platt confirms “We have been growing at double digit rates since 2003 and we expect that to continue for the foreseeable future. We expect companies to continue to require organisational change as a result of the recession and then strategic support as they enter the recovery phase. The constraint on our growth will be our ability to hire good people of the right quality. MBAs will continue to be crucial to our growth.” Responses to the TopMBA.com International Recruiter Survey suggest that larger strategy consulting recruiters are actively seeking many new people in 2009. In addition, the professional services, technology and outsourcing firms are re-staffing their strategy departments. KPMG, Ernst & Young and Cap Gemini are all actively expanding their business advisory/business consultancy division. Forecasts for 2010 are slightly more cautious, with demand still expected to be above 2008 levels, but perhaps not growing (or perhaps contracting slightly) if the economic recovery is not sustained. QS Global-Workplace (www.global-workplace.com), the career platform for global professionals, including the community for 50 top business schools around the world, has seen the number of jobs listed on its site grow throughout the past three years. Dan Beaudry from Global-Workplace says, “In 2008/9, over 1,000 consulting jobs were listed on the site. Consulting job listings feature all the major consulting firms as well as many smaller firms.” Virtually all of the leading firms are hiring MBAs. In particular, the big strategy players like McKinsey, BCG, Accenture, Bain, Booz Allen, and Roland Berger are recruiting actively. Accenture and IBM Consulting are large players in outsource consulting projects and expect continued growth in this activity as companies look to reduce costs. For this type of consulting, Sej Butler of IBM UK looks for “specific pre-MBA skills - either deep industry and process

knowledge or knowledge of solution areas.” There is evidence that these consulting firms are struggling to source sufficient MBAs for their developing economy practices, in particular in China. The growing number of corporate IT consultancies is creating growth in MBA demand. For example, Siemens Management Consulting was an early mover from manufacturing into technology consulting and business outsourcing. Dell is building up its business consulting division, which will gain further momentum with the acquisition of Perot Systems. Hewlett-Packard’s acquisition of EDS and the pending move by Xerox into IT consultancy are all likely to fuel demand for MBAs. Such strategies follow in the footsteps of IBM, which is, today, the world’s largest provider of consultancy services, by revenue and employment numbers. There are also a growing number of small specialist consultancies looking to hire MBAs. Chris Lavin of Sierra Systems, Canada finds MBAs the perfect talent pool “They have a strong management toolkit that is the basis for good management consulting. And maturity and analytical skills to interact with senior clients.” Many such firms are using search agencies, or web services such as www.globalworkplace.com, rather than visiting schools. There is also a growth in specialist consultancies, for example ZS Associates, with a focus on sales and marketing.

Financial Services Almost all investment banks actively recruit MBAs. The credit crunch caused huge cut backs in MBA hiring amongst some banks – especially CitiGroup and Bank of America, which received the largest US government bailouts. But despite redundancies amongst experienced bankers, entry-level recruitment has remained steady in many banks and looks set to increase in 2010. Diane Morgan, Director of LBS Career Service sees “a pretty good outlook. All the banks are coming on campus and hiring similar numbers to last year.” Dr Simon Taylor, Professor of Finance at Cambridge’s Judge Business School feels “The banks are now robust and have been able to refinance to strengthen their balance sheets.” This demand for MBAs collapsed during 2001-2003. Goldman Sachs, Morgan Stanley and others cut MBA hiring by up to 80% in some offices. 2008/9 was completely different with many banks hiring actively. Diane Morgan believes “banks are taking a longer-term view of their MBA hiring. Several of them made the mistake of cutting back in 2002

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

and were left with a big gap in talent when the markets picked up.” Employers and students are backing-up this viewpoint. Sarah Thomas, Head of MBA Recruitment at Standard Chartered says “MBA hires are critical to building our leadership”. Those banks most exposed to Asia, Russia and Brazil are continuing to perform well. Belinda Regan of Fidelity International prioritises MBA hiring because of “intensive training from business schools and the fact that candidates are usually very motivated to commence a new career.” So what turns a bright new business school graduate into a successful banker? According to Angela Cassidy, a recruiter at Deutsche Bank, her firm looks for, “high achievers who are both focused and motivated and who can demonstrate a good understanding of our industry. We also want people who are bright and energetic and not afraid of working hard. We don’t just look at what an individual has achieved in the workplace, but also take into account what they have been doing outside their academic activities.” According to Anshu Jain, Head of Global Markets at Deutsche Bank, they will again hire over 150 MBAs in the next 12 months, as they did in 2008/9, making them Germany’s largest MBA employer according to Handelsblatt the business newspaper. Most people associate investment banking with mergers and acquisitions. But, most of the top banks look to recruit MBAs into global markets (sales and trading securities, fixed income and derivatives), managing assets, structured finance, corporate finance and increasingly on-and-off balance sheet hedge funds. There are also many back office positions in risk, financial control and technology. According to Dr Taylor, the areas which were hit hardest last year may bounce back strongly next year. These include M&A, private equity, and asset management. Market Risk & Compliance departments may see increased MBA hiring as banks seek greater security and control of risky investment classes. In fact, an overall emphasis on compliance experience may be spreading throughout the financial services industry. Dennis Nason, CEO of Nason & Nason, an executive search firm specializing in the financial services industry says, “[Financial services recruiters] want to see others who have been in a controlled environment, where they are used to following rules and being in compliance,” Opportunities in credit derivatives, which expanded to $trillions in value in recent years and are the source of current problems, are likely to continue to see cutbacks. It is not just banks which recruit MBAs into financial services.

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GE Capital is now one of the biggest recruiters of MBAs worldwide. American Express is also emerging as a major player. Insurance steadily hires MBAs and picked up noticeably in 2006 and this trend has continued in 2008. In the US there are a number of insurance companies that recruit 10 or more MBAs each year such as AIG, Travellers (part of Citigroup), CIGNA, and Liberty Mutual. A new feature in recent years has been the entrance of hedge funds, private equity and venture capital houses into MBA recruiting in significant numbers. In the past they have focused on more experienced MBA alumni recruited through a network. Today, they are recognising the need to recruit younger MBA graduates to meet the growing market opportunities. Dr Taylor predicted “the opportunities for MBAs in the banking sector will cool in 2008/9”, but he remains convinced “the prospect is for strong long-term growth.” Technology

Recruitment of MBAs into technology companies bounced back between 2005 and 2008 following a post-millennium bloodbath, especially on the west coast USA. The technology sector reports a modest 5% increase in growth this year, after a robust 29% growth last year. Avaya Communications is one of the largest recruiters of MBAs in the technology field, riding the wave of mobile phone growth in Asia. Telecommunications companies such as British Telecom and Vodafone are very active. According to Odesa Stapleton, Director of Talent Management at Verizon Communications, “We wouldn’t want any potential MBAs to assume that we are not hiring. We continue to seek top talent across the organization; in good times and bad, we need to be out on the campuses.” Some software companies, like Microsoft and Oracle for example, have increased their intake. Chloe Chometon of Oracle Ireland looks for MBAs with “International exposure, structured thinking.” Tom Kozicki, Director of Career Services at UC Irvine says “the high tech corridor on the west coast remains vibrant”. Asian technology recruiters are hiring actively in China, Taiwan and Korea. Though we still lack many Chinese recruiter respondents in the research, Korea is an example of the dynamism of technology in Asia. According to Jay Kang of Maekyung business newspaper, the big technology companies expect significant growth in MBA hiring in the long term.


However, the short-term outlook for the technology sector is less certain. US recruiters in particular are “re-assessing their MBA needs in light of the high compensation packages commanded by MBAs in North America” says Dan Beaudry of QS TopMBA. Hence demand is forecast to stall next year as these recruiters shift their focus to engineering and technology graduates. These companies may well be waiting for some downward pressure in MBA compensation levels before they re-enter the market aggressively.

General industry Within many parts of the world, but in particular in the USA, industrial companies have been badly affected by the sharp contraction in global trade caused by the credit squeeze, and we have seen significant reductions in domestic US demand for MBAs. It remains unclear whether this contraction in global trade has now bottomed out, but MBA hiring in the industrial sector remains closely correlated with global trade and GDP growth. Given the continued high growth rates in economies like China and India, demand for MBAs is buoyant and spreading throughout the North Asia and South East Asia region Our “General Industry” category is a broad grouping of industries covering aerospace, automotives, chemicals, logistics, manufacturing, steel, and for the purpose of this report, consumer goods and retail. Each industry reveals individual trends, but a common theme has been a steady increase in MBA hiring between 2005-2008, with a contraction beginning in 2009 and likely to continue into 2010. The increasing globalisation of international trade, growing inter-dependence of common markets and increased international competition has fuelled interest in MBAs across the sector, but also made it vulnerable to a global recession. More and more industrial companies are fully embracing globalisation and understand that MBAs represent an essential pool of international managers who are capable of working in diverse cultures and business situations. In particular, multi-national supply chains and procurement require internationally-minded, multi-lingual managers, making MBAs a natural talent pool. A sizeable number of MBAs who do find roles in the industrial sector will do so with multinational companies such as General Electric, Samsung, Toyota, Motorola where specific MBA induction programmes have been the norm for over a decade. Internationally-minded European

companies like Siemens have established MBA entry programmes. However, the automotive industry has cut back MBA recruiting considerably in 2008/9. The energy sector continues to report strong MBA recruiting. There seem to be two drivers of this trend. First of all the search for alternative energy sources is attracting many MBAs into smaller, entrepreneurial organisations. Secondly, as Graham Hastie of London Business School reports “many of the big oil companies will need to replace their senior management over the next ten years as they come up for retirement. These companies have identified that they need new MBAs for their leadership programmes and are offering exceptional packages to get the best people.” Exxon Mobil and BP are amongst the largest MBA employers in the energy sector. Consumer goods companies have been committed to MBA hiring in the US for many years. Lever Brothers traditionally hires 50+ MBAs in the US and fewer in Europe. This situation is changing. As more people graduate with MBAs, they are penetrating consumer goods companies around the world in ever-increasing numbers. It is now common for both local operations and head offices of such companies as Diageo, P&G, BAT and Coca Cola to hire MBAs. For local industrial companies, the high level of multinational salaries remains a barrier and can discourage MBAs from pursuing local opportunities that may bring them rewards in the longer term. Manel Gasca of Rittal Disprel, a consumer products/retail company based in Spain, has the following advice for MBAs: “Too much relevance is placed on salary straight after an MBA. Since the year I graduated I had to learn that the true value of my MBA was the knowledge I acquired and not the job I got straight after graduation. MBA recruitment is very sensitive to economic conditions and we should not value studying an MBA by the salary we obtain after graduation.” Inflated MBA salaries remain a problem for MBA recruiters in the industrial sectors. A consistent message from recruiters in industry is that they have to look outside the top-tier business schools to find the talent they need. However, they are almost all reporting success in their search.

Pharmaceuticals and healthcare Pharmaceutical companies have always been very active MBA recruiters and pay the best salaries after consulting and investment banking. They also offer attractive benefits and international mobility. They have remained committed to MBAs throughout the last decade and growth in

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

recruitment numbers is steady rather than spectacular. Cytyc Corporation has joined this group of active MBA recruiters within the healthcare sector, seeking over 30 MBAs. Merck has had a fairly traumatic few years in terms of patent losses and has significantly cut back MBA hiring. The loss of patents on blockbuster drugs may affect the ability of some big Pharma companies to maintain a high level of MBA intakes – Eli Lilly may be the next company to be affected. At the same time there are many smaller Pharma and healthcare companies that are aggressively pursuing MBA hiring to help them meet their growth potential. As in other industries, pharma companies are increasingly looking to find the recruits that truly want to build a career in their industry. Neil Currie of Johnson & Johnson says, “I recruit international MBAs - candidates often are reluctant to share vital information about their personal and career objectives and we waste their time and ours going through several interviews on campus and on site, [and] make offers only to discover that they want to work in consulting after all.”

A growing number of MBAs are interested in working for small/medium enterprises, start-ups or boutique consultancies. Many such firms are owned or managed by MBAs who want to hire dynamic business developers, marketing specialists, salesmen, financial “wizards” and analysts: all classic MBA roles.

Functional roles As might be expected in the current recession, “finance (other)” is no longer the number one functional role on offer to MBAs. General management takes top spot as the number one function on offer in 2009, followed by marketing and sales/business development. Functional roles offered to MBAs

Small enterprises and entrepreneurship The Internet revolution has given many MBAs the confidence to start their own businesses upon graduation or to join smaller entrepreneurial organisations. Some schools are reporting that 10% or more have chosen to do so. Colleen Clark of Eastern Mountain Sports says “MBAs bring business acumen, creative thinking and new knowledge (technology, people, branding and product development) to a business. They cut down on lag time between start up and ROI.” Karena Zornow of Drive thru Designs in the US reports that MBAs “have proven to be smart, ambitious, driven, quick learners, adaptable, leaders. These qualities enable them to progress quickly throughout the organization in cross-functional roles to make a real impact.” Technology has reduced the cost of starting a business, even for risk-averse MBAs. At US schools, the percentage of class starting their own business is consistently less than 5%, whereas many European schools exceed this level. Schools reporting particularly high levels of students starting their own businesses include: The Judge Institute, Cambridge University, EM Lyon, IE Business School, Manchester Business School, and Imperial College London.

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Source: QS TopMBA.com International Recruiter Survey 2009

There has also been an increase in roles in both strategic planning and finance (advisory). It may be surprising that the number of roles in “finance (advisory)” have increased this year, but as Gayathri Vaidyanathan of The Wall Street Journal observes, “A growing number of accounting firms are starting to seek professionals with broader and deeper business experience with strong analytical skills.”


Although many firms remain cautious about current market conditions, they are not willing to be caught out when the markets rebound and are starting to hire MBAs now in anticipation of the upturn. This is particularly true in finance.Consulting and industrial companies less affected by the recession, as well as medium/small-sized companies now have access to good quality MBA graduates ; previously inaccessible to them due to high salary expectations and location preferences. These companies are driving the demand for MBAs into general management, sales and ‘other’ roles.

MBA recruiters, and are overall more likely to find a post-graduation career through means other than campus recruiting.

Skills

Experience levels

Wise MBAs will seek opportunities to develop skills that are important to recruiters. The figure below demonstrates how “soft skills” such as interpersonal, strategic thinking, communication and leadership are more important than IT skills and other ‘hard’ skills. Recruiters in 2009 have indicated a marked increase in the importance of relevant experience in comparison to previous years.

2009 has seen a marked increase in the preferred levels of work experience for new MBA hires. Recruiters are paying close attention not only to the quality but the quantity of work experience MBA graduates possess.MBA recruiters consistently show a strong bias towards candidates with 3 - 5 years experience, targeted by 38% (37%) of employers. Graduates taking an MBA with less than 1 year of experience are targeted by only 2% (10%) of employers.

According to recruiters around the world, business school graduates are still not meeting expectations in terms of their soft skills. There has been a long-standing short fall in terms of leadership skills and interpersonal skills, which is apparent year after year in this research. Nonetheless, recruiters are more than satisfied with graduate skills in corporate social responsibility, risk management and multi-lingual skills.

Preferred levels of experience of MBAs

Key MBA Skills: Importance vs. Satisfaction

Source: QS TopMBA.com International Recruiter Survey 2009

These inexperienced candidates typically accept lower-paid graduate-level positions. MBAs with 1-3 years of experience are experiencing a sharp reduction in demand this year and are targeted by only 17% (34%) of employers. By contrast, MBAs with 5-8 years of experience have seen a surge in interest and are targeted by 35% (13%) of employers. MBAs with over 8 years of experience are targeted by 7% (4%) of employers. However, this experienced group typically fall outside the needs of mainstream international

Source: QS TopMBA.com International Recruiter Survey 2009

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

6. MBA salaries and compensation Overview and global trends 2009 As a result of the relative resilience in demand for MBAs during the current recession, MBA salary figures have remained remarkably robust. The outlook for MBA salaries seems to be stabilising overall after several years of strong growth, but there is little evidence of downward pressure. The average MBA salary reported by MBA employers in the USA and Canada is $93,050, in Western Europe is $87,167, compared to $53,300 in Latin America, $55,000 in Asia-Pacific and $49,560 in Eastern Europe. Each region can be further broken down by sub-region and by country and these figures are reported in more detail. MBA salaries by region 2009

Both Richard Bennett, HR Manager at Sony Europe and James Platt, Partner at BCG strategy consultants in London confirm that their MBA salary offers are certainly no lower in 2009 than they were in 2008. Platt adds “In London BCG has increased its MBA intake by 50% this year, reflecting an increase in demand for organisational change and turnaround projects.” Kenn Herskind of finance boutique Defaqto has had to raise MBA salary offers in 2009 in order to attract quality MBAs who can “bring all around business skills combined with specialist knowledge” The chart below shows the typically cyclical nature of MBA salaries over time, reported by sector in North America and Western Europe. In fact, in the 2009 recession, there has been little downward pressure on MBA salaries as reported in local currencies. The chart is not adjusted for exchange rate fluctuations, and the downturn in 2009 consulting salaries can be explained largely by the strengthening of the US$ against Sterling and the Euro. What is remarkable is the resilience of salaries in finance, industry and technology. Average salaries in US & Europe 1999-2009 ($)

Source: QS TopMBA.com International Recruiter Survey 2009

For example salaries in North Asia including China averaged $62,000 in 2009, compared to South East Asia where salaries averaged $32,000 in 2009. Yasuku Furuichi of IMD, who report average salary data earlier than 2-year MBA programs, reveals the current class have achieved £78,000 salaries (compared to £76,000 in 2008) plus an average sign on bonus of £17,000. Luke Li of Duke University’s Fuqua School estimates an average salary of $100,000 (£60,000), the same as the previous year, with bonuses of about £14,000. At the top end of the MBA salary range, Amy Armstrong, Marketing Manager at Ashridge Business School, reports an average salary of $195,000 (£135,000) in 2009, compared with £115,000 in 2008, for her MBAs who average 12 years of work experience.

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Source: QS TopMBA.com International Recruiter Survey 2009


MBA salaries Western Europe & North America 1996-2009 ($)

Source: QS TopMBA.com International Recruiter Survey 2009

Salaries and bonus A big attraction of an MBA qualification is not just the salary uplift, but also the likely bonuses. Bonuses continue to ensure that the MBA qualification offers superb returns on investment for almost all MBA candidates, with an average payback period of between 2-5 years. Many MBAs receive a sign-on bonus, to help pay back tuition, as well as a performance related end-of-year bonus. This section looks at average total compensation offered by sector across North America and Western Europe, taking into account salary and guaranteed bonuses on offer by employers. In recent years, overall MBA earnings (salaries and bonuses) have been on the increase in almost every country in the world. As demand for MBAs has surged, recruiters have competed on total earnings to secure their preferred candidates.

Despite the recession, or perhaps because of the need to restore their reputations amongst top MBA candidates, banks are offering the highest total compensation to MBAs in 2009 at $130,000, ahead of Consulting - $120,000, IT - $120,000 and Energy - $118,000. All sectors, apart from Defence, Government and Transportation, offer total compensation ranging between US$100-140,000. Dan Beaudry of Global-Workplace (www.global-workplace.com) observes. “Some companies have seen an opportunity to grab the best talent whilst the banks are undergoing a period of uncertainty. With many companies still hiring MBAs aggressively, there remains some upward pressure on total compensation in many markets, though to a lesser extent than in recent years. It remains possible that we may see some deflation in MBA salaries in North America and Western Europe in 2010.�

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

Bonuses The average first year bonus guaranteed for new MBA hires across North America/Western Europe in 2009 is US$21,700 which is down compared to the 2008 figure of US$26,875. This bonus which is typically used to repay school fees is the area of MBA compensation employers have felt most comfortable cutting during a time of recession. MBA earnings by sector - Western Europe & North America 2009 ($)

The sectors which have reduced MBA bonuses the most are; manufacturing (down from over $30,000 to $20,000) and high tech (down from over $30,000 to $22,000). MBA bonuses have tended to be volatile in the past and it may be that if MBA demand bounces back in 2010, so will these average bonuses. It is important for candidates to understand the fiscal status of their bonus. Maximizing after-tax bonus value should be prioritised: in some US states, bonuses are taxed at nearly 50%. In the UK, relocation expenses and tuition reimbursements can be claimed tax-free. In such cases the cost is the same for the recruiter, but the benefit far greater for the candidate. Furthermore, an up-front start bonus carries greater value than a year-end or performance bonus. Candidates can compare their offers with their peers to ensure they are getting a competitive offer and communicate this benchmarking to the recruiter. In at least one case, a top-tier consulting firm has increased its offer for the entire entering MBA class in order to match competitors. No MBA graduate can count on the promise of a performance bonus, making financial planning, including meeting minimum loan repayments, more difficult. Performance bonuses, whether tied to individual, team or company performance, are a means for an employer to introduce variable compensation and to ensure they do not make financial promises they may not be able to keep.

Trends by region

Source: QS TopMBA.com International Recruiter Survey 2009

Average reported bonus ranges between US$0 and US$40,000 depending on the industry sector. Banks are still reporting the largest average bonus at US$37,500, only slightly down on the previous year. The Energy sector is also offering bonuses in excess of $30,000 probably caused by their need to compete with banks and consultants to attract the top talent. The Consulting sector is offering slightly lower bonuses of $28,000 on average, comparable with the previous year.

24 Copyright Š 2009 QS Intelligence Unit

In US dollar terms, average salaries on offer in North America are level with the previous year. European MBA salaries have shown a drop, but this can be explained by exchange rate movements. When reported in Euros, MBA salaries in the Western Europe have also remained stable year on year. The drop in salaries in Latin America and Asia can be explained by the growth in number of local companies responding to the survey who are new to MBA recruiting. This is particularly true for countries like Uruguay, Argentina, India and Thailand, all of which are experiencing strong growth in demand for MBAs, but at lower salaries. (The chart below is not normalised for high-paying international verses lower paying local recruiters – see earlier section for these variations)


MBA salaries across regions 1999-2009 ($)

Source: QS TopMBA.com International Recruiter Survey 2009

There is a significant differential in salaries across regions between offers made by local and international employers. In fact, in every region of the world, including North America, international recruiters are paying higher salaries, on average, than their domestic counterparts. In Asia, both European and North American employers pay more than their Asian counterparts. In Europe, it is the North Americans which pay the most. In North America, by contrast, it is the European companies which pay the most. Multinational companies co-ordinate recruitment on a global level, and do not want to drive top candidates away from key geographies because of a salary differential. As international companies set up operations in emerging markets, they are increasingly willing to pay more for MBAs, who they see as critical for building a foothold in each region. Over time, it is likely that differentials with local companies will disappear as they respond by trying to attract talent for equivalent positions globally with more competitive salaries. Global recruiters very much kept in line with benchmarking in this way, with very few deviating by more than 15% above or below . Last year a global strategy consultancy firm was offering MBA compensation in excess of $150,000 in all regions of the word in an apparent attempt to outbid

all competition, for top talent. Other consultancy firms did not follow suit and it seems unlikely these sorts of offers will return in the foreseeable future.

Strategies for MBA salary analysis The downside to such high salaries is that some employers become disaffected with MBAs, or have excessive performance expectations relative to non-MBA staff on lower salaries. Patrick Smith, Bank of America, USA believes many MBAs “have unrealistic expectations about starting salary and speed of advancement.” In the last five years, more and more employers are looking to recruit MBAs from non top-tier business schools, having found salaries and candidates to be unapproachable at the elite institutions. Mesha Mott, Mead Westvaco USA confirms “depending upon the universities/reputation and the skills sets required, salary requirements may be misaligned with what the candidates actually bring to the table.”

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

Such recruiters have reported greater success looking beyond the traditional pool of schools. The message for newly graduating MBAs is not always to chase the highest short-term salary offer, but to look for an organisation which will lay the foundations for a successful long-term career – otherwise recruiters will look elsewhere – especially in the current economic environment. MBA graduates are known for their analytical ability. In negotiating salary offers or deciding on target geographies for a job search, it is important to take a step back from the numbers and think of the bigger picture. Job applicants should consider the cost of living when comparing salary packages across regions – the real, versus the nominal, wage a company and country offers. The OECD publishes annual research comparing purchasing power between countries (a good proxy for the cost of living). According to the OECD, the purchasing power in Mexico is over 25% more than in the US. So, even though the survey reveals that MBA graduates are paid 30% less in Latin America than in the US, graduates working in Mexico will enjoy a standard of living comparative with that of their US counterparts. By contrast, purchasing power in Japan is 30% lower than in the US, so, the higher cost of living will result in a lower standard of living if the same salary is paid as elsewhere. Lastly, Turkey’s purchasing power is over 50% higher than that of the US, which means that an MBA earning 40% less in Turkey will still enjoy a higher standard of living than a US graduate.

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Expansion of global trade and hence the growth in numbers of companies in each country looking to recruit MBAs.

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Increase in the number of MBA alumni in senior management or in roles responsible for hiring, who are better informed of the value of MBAs compared to traditional HR managers.

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Increased availability of information on average MBA salaries available on line and in social networks, enabling candidates to demonstrate their true value when negotiating with local employers.

However, it is inevitable that differentials between regions will remain, not least because of: -

The big variations in cost of living between countries

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The tendency for MBA students to be much younger in some regions (especially Asia) compared to others.

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Variations in the extent to which MBAs are accepted as a generally required qualification for senior managers in a country. The USA still remains the most MBA-centric job market for managers, though Canada, the UK, Mexico, Australia, India, China, Korea and Japan are following suit.

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As mentioned previously, the growing number of local companies seeking MBAs at salary costs benchmarked against lower local managerial salary levels.

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Availability of locally educated MBAs from less prestigious business schools willing to accept significantly lower salaries

Regional review of MBA salaries MBA salary differentials across regions have been steadily narrowing over the last ten years. This gradual equalisation in MBA salaries has been driven by several factors: -

More multinationals looking to hire MBAs on standard packages irrespective of the country in which they work (except for perhaps small cost of living adjustments).

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Overall rise in job opportunities for MBAs, relative to supply. As this report indicates, we have seen a doubling or trebling in demand for MBAs just since 2003, yet the number of graduating MBAs has grown at a much slower rate ( and the number of MBAs graduating from the top 200 business schools most highly sought after by employers has remained virtually the same)

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In the tables below we provide some average salaries by country, but only for countries where we have received more than five employer responses. We do not normalise for local versus multinational responses in the country figures, which means that there can be significant variation year on year. These country figures should be used as an approximate guide only, whereas the regional figures are based on large response samples and are much more robust.

US & Canada Within regions, there are substantial differences in salaries offered across industries. The chart below shows the salaries offered in different industries within the US and Canada. Salaries in the US are consistently slightly higher than those in Canada.


Consulting traditionally offers the highest salaries in the region and averages $97,000 in 2009. However, in the USA this year, it is the Government sector which reports the highest average salaries at $100,500. Telecoms reports an average of $95,000, Pharmaceuticals are reporting an average of $93,000. Financial Services and Energy are both reporting average salaries of $91,000. MBA salaries US & Canada by Sector 2009 ($)

There does however remain quite a large disparity between multinational MBA salaries compared to local company MBA salaries. Multinationals are offering between $7090,000 for new MBA hires retuning to the region. However, local companies are offering between $40-60,000 with an average of $51,000 this year.

Average salary 2009 ($) Brazil 65,000 Venezuela 61,900 Mexico 50,700 Uruguay 35,600 Salary levels in Latin America have risen and fallen regularly since 1996 but over the last five years, average MBA salaries, within each country, have increased steadily. However volatility is a feature of the region. A recent article in the Economist1 observes, “Income per person in the region has fallen on five separate occasions since 1980. What is different this time is that Latin Americans are faring no worse than the rest of the world. And there are reasons to believe that their recession may be relatively short and mild. That may not be cause for celebration but it is a crumb of comfort.�

Western Europe

Source: QS TopMBA.com International Recruiter Survey 2009

Salary stagnation was a major concern for candidates this year as the gap between supply and demand widened. Recruiters have the bargaining power to determine how many jobs they will post and at what level they will set MBA starting salaries. However, employers surveyed stated that they planned to maintain salaries at 2008 levels.

Latin America In the past, Latin America faced a series of currency devaluations that negatively impacted on the reporting of MBA salaries in US dollars. But as currencies strengthen in Mexico, Columbia and Brazil, their dollar values are now catching up with other regions.

Western European salaries have been relatively stable since the dot.com crash. In reality, an MBA graduate today will face similar prospects on either side of the Atlantic. Salary levels in financial services and consulting are very similar in both regions as are technology salaries and those in general industry. The recent strength of the US$ means that average European salaries reported in US$ have fallen this year to $87,000, but in Euro terms they have remained stable. There is a great variation in salaries across the region. United Kingdom, France and Switzerland are paying the highest MBA salaries, all with averages of $100,000 or more, well ahead of the regional average. MBA salaries in Germany and Netherlands have dropped back below the average for the region, though this may be explained by the fact that fewer (and a higher proportion of smaller) companies in these countries have responded to the survey this year.

1 The Economist (2009). Pain but no panic. September 28, 2009. Economist Newspaper Ltd. London, UK: Author

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

Because of the exchange rate change, MBA salaries by sector, in US$ terms, have dropped this year. Consulting offers are averaging $92,000. Financial Services offers are averaging $89,000 (these figures exclude bonuses). The highest salaries have been offered by IT/Computer services companies averaging $95,000.

Average salary 2009 ($) United Kingdom 108,900 France 100,400 Denmark 99,500 Spain 92,000 Belgium 88,100 Germany 81,500 Netherlands 79,200 Italy 71,400 Eastern Europe Salaries in Eastern Europe, except for Russia, tend to be much lower in comparison to their counterparts in Western Europe. Many multinationals offer similar salaries to their MBAs whether they start work in London or Moscow, but even in Russia, salaries offered to MBAs by local Russian companies tend to be much lower. Across the region, local employers tend to offer much lower salaries, compared to multinationals. The figures below represent average MBA salaries in the region by country including responses from both multinational and local companies.

Asia Pacific MBA salaries across the Asia Pacific region vary enormously and it makes little sense to look at averages for the region as a whole. We have broken the region down into three meaningful zones. Australia and New Zealand have MBA salaries more akin to other Anglo-Saxon regions like the UK and USA, with an average salary of US$80,700. North Asia and Singapore, with an average salary of $62,300, is made up of Japan, South Korea, China, Hong Kong, Taiwan and Singapore. Reported MBA salaries in this region range from $22,000 to $120,000. But MBA salaries are rising rapidly – in the last five years average MBA salaries in China have risen from $25,000 to just over $50,000 - and we expect them to gradually catch up with their higher paying trading partners in the West. South East Asia includes India, Thailand, Vietnam and surrounding countries where MBA salaries are consistently much lower and average $31,200. Of these countries, India presents the most variety. The vast majority of companies are paying salaries of between $20-25,000 and hiring locally educated Indian MBAs. However, western-educated Indian MBAs can earn salaries in excess of $90,000 and enjoy a remarkably low cost of living. As such, India offers one of the best returns on investment for internationally educated MBAs looking to return home to work. Average salaries: Asia Pacific 2009 ($)

Looking at responses by industry in the region, consulting, metals & mining and technology companies offer the highest salaries to MBA graduates, typically in excess of $65,000.

Average salary 2009 ($) Russia

60,600

Romania

52,100

Hungary

50,800

Czech Republic

47,500

Greece

36,800

28 Copyright Š 2009 QS Intelligence Unit

Source: QS TopMBA.com International Recruiter Survey 2009


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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

Appendix I: Participating recruiters Argentina Aeropuertos Argentina 2000 Assist Card International

Department of Energy Kids Futures Mercer Management Consulting

Baufest Bayton SA Bumeran.com El Rey del Cartucho Paradigma Sociedad de Soluciones Radio Victoria Fueguina

Chile Accenture CANAAN Empresas BDS - Terracorp L’Oréal Travel Club

Rousselot Argentina

China

Stracienta Corp.

Chem International

Tech Mind

CommBank Management

TGS

Consulting

Tiens Group International

Dell Dragon EXecutive

Austria Egon Zehnder International

POD Management Consultants

Azerbaijan

SgT

Pedersen & Partners

Colombia Belgium BASE

Bogofoods Fisconsejo

Eli Lilly Fortis Greenwich Consulting

Czech Republic Pedersen & Partners

Michael Page International

Finland

PricewaterhouseCoopers

Nordea Bank SamiCon & Partners

Canada CIBC Wood Gundy

France

Deloitte

Emerging Communication

30 Copyright © 2009 QS Intelligence Unit


Merck & Co

Hamon Investment Group Jada Toys Co

Germany Deutsche Post World Net / DHL Porsche

LRT Consulting

Microsoft National Semiconductor Peace Mark

Henkel Hypo Real Estate Holding Interpol Leitz TRUMPF Volkswagen

Hungary Boyden Epicor Software Corporation Hudson Global Resources Kornferry International

Greece Diners Club PricewaterhouseCoopers Procter & Gamble

Hong Kong Alpha Zeta Ltd

Microsoft Procter & Gamble Satyam Computer Services Solvo Biotechnology

Iceland Atlantis Group

American International Assurance American International Group

India ZenSar Technologies

Italy

Chevron

Indesit Company

China Optotech Company

Merck Sharp & Dohme

China Overseas Land &

Value Partners

Investment

Wind Telecomunicazioni

Deutsche Bank

Spa

DHL Logistics DYK Associates General Mills

Japan JPMorgan PRTM

Global Fortune China

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

Liechtenstein

Boston Consulting Group

Hilto Corporation

Chronos Consulting Warta Glass

Lithuania Euromonitor International

Portugal Banco Finantia

Mexico Asturer Elektra y Banco Azteca Embotelladoras ARCA

Boston Consulting Group Heidrick & Struggles McKinsey & Company

Grupo American Industries

Russia

Grupo Calidra

British American Tobacco

Grupo Finatrade

Eli Lilly

Grupo Nestle

Nasta Insurance

Home Depot

Polair

Ingenium

Troika Dialog

Johnson & Johnson Kelly Services Kornferry International Medica Integral Merck Sharp & Dohme Scotiabank Sterigenics

Singapore Accenture Allianz Global Investors Singapore Limited AXA Asia Regional Centre BP Cisco Security

Netherlands

Hay Group Pte Ltd

General Electric

OCBC Bank

Limbourg & Partners

Synovate Pte Ltd

Mercuri Urval Triceps

South Africa Burlington Strategy Advisors

Peru

Calibre People

El Guanaco Azul

Cape Venture Partners

Poland

Capital Outsourcing Group

32 Copyright Š 2009 QS Intelligence Unit


Deloitte

Isolux

Frost & Sullivan

Mafre

HR Solutions

Multicanal

ITP SA Human Resources

Mundo Edificio

Holdings

Novartis

Lwazi Lams

Oticon

Network Recruitment

Sun Planet

Paracon

Toldos Conil

Peloentle Quiglies Rand Personnel Renault South Standard Bank

Switzerland Adecco Finance & Accounting BBVA Briggs & Stratton

South Korea

Credit Suisse

Doosan Heavy Industry &

Medtronic

Construction

UBS

Samsung Fire & Marine Insurance

Taiwan HTC Corp.

Spain

Pfizer

Sun

Wyeth

Bodegas Melgosa Circulo de Progreso El Cortijosa Ergodecor EuroPraxis Consulting Ficosa International Grupo BBVA Grupo Intermark

Thailand Colgate-Palmolive MSIG Thailand Co. Ltd. NPU Pttphenol Co._ Ltd Samart i-Mobile PCL. The East Asiatic Company PLC Touchwood Limited

Hernest Consulting ICEX

Turkey

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QS TopMBA.com Salary & Recruitment Trends: 2009 Report

Finansbank

Marakon Associates

Hewlett-Packard Teknoloji Cozumleri Ltd. Sti.

Mayfair International

L’Oreal

Merrill Lynch

Nestlé

Michael Page

Opet Petrolcülük A.S.

Odgers, Ray & Berndtson PRTM

Ukraine AES

SABMiller Shell International

United Kingdom A.T. Kearney Amazon.com American Express AMX

Société Génerale Tesco Thomson Legal & Regulatory Unilever

Analysys BT Retail Centre People CHEP Citigroup CVO International Derivatives Appointments Devine Consulting Euromonitor International Fraser Dawson & Co GE Healy Hunt IBM Business Consulting IMI Intel Corporation Inzenka JPMorgan Eli Lilly

34 Copyright © 2009 QS Intelligence Unit

United States A.T. Kearney Procurement Solutions Abroad China Advisory Board Company American Airlines Analysis Group AOL Apollo Group April International Avaya Bain and Company Balakrishnan BDO Seidman BearingPoint Bechtel Corporation Black & Decker


Booz Allen Hamilton

Garden State Philharmonic

Bose Corporation

Gartner

Boston Scientific Corporation California Franchise Tax Board Calvert Cambridge Search Campbell Soup Company

Uruguay Concreta Isbel Kraft Foods Uruguay Merrill Lynch Tata Consultancy services Y&R Uruguay

Chemonics International CIGNA Cisco Systems Connelly Billiard Manufacturing Corporate Executive Board Deloitte Consulting Douglas C. Lane & Associates Driscoll Strawberry Associates Duff and Phelps DuPont E & J Gallo EDS Ernst & Young Euronet Worldwide

Venezuela Banco Guayana C.A. Vita Compuserman International Corporacion Clorox de Venezuela Farmatodo Galeno Quimica Huawei Technologies de Venezuela Inter Con-Vigilantes 24 Johnson & Johnson Network Consulting Group Realnatura Sedna-tech

Executive Recruiting Solutions Fannie Mae FedEx Ford Motor Company Friends of the Sea Otter Frito-Lay

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Copyright Š 2009 QS Intelligence Unit

QS TopMBA.com Salary & Recruitment Trends 2009 Report  

QS TopMBA.com Salary & Recruitment Trends 2009 Report

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