Mba Salary and Recruitment Trends 2005

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TopMBA.com International MBA Recruitment and Salary ReportQS Research 1990 - 2005

Nunzio Quacquarelli MA Cambridge, MBA Wharton Monisha Saldanha MBA Harvard

Copyright QS Research 2005

The worlds leading network for top careers and education

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. Reproduction: Tables and charts may not be reworked or presented in any other form without written permission from the publishers. Any excerpts must be sourced: QS TopMBA.com International Recruiter Survey 2005. All charts must be sourced: QS TopMBA.com International Recruiter Survey 2005.

The worlds leading network for top careers and education

Copyright QS Research 2005

Contents

1. Introduction 2. Summary of Findings 3. Methodology and Credentials 4. Companies Surveyed 5. Background to Trends - the upswing gathers pace 6. MBA Recruitment Trends 20056.1 Demand for MBAs 6.2 Demand for MBAs by Region 6.3 Demand for MBAs by Sector 6.3.1 Consulting 6.3.2 Banking and Financial Services 6.3.3 Technology 6.3.4 General Industry 6.3.5 Pharmaceuticals and Healthcare 6.3.6 Small Enterprises Entrepreneurship 6.4 Functional Roles 6.5 Experience Levels 6.6 Skills

2 3 3 4 6

77 8 10 10 10 11 11 12 12 12 13 14 15 15 16 17 17 19 20 20 21 22 24

7. MBA Salaries and Compensation7.1 7.2 7.3 7.4 7.5 7.6 Global Trends Salary and Bonus Combined Bonuses Trends by Region Strategies for MBA Salary Analysis Regional 7.6.1 United States and Europe 7.6.2 Asia 7.6.3 Latin America

8. Appendix

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1. Introduction

Since 1990, QS Research, in collaboration with TopMBA.com, has conducted an annual survey of MBA employers worldwide to determine trends in international salaries and recruitment. The TopMBA.com International Recruiter Survey 2005 is the most extensive ever and presents an unrivalled overview of the world MBA recruitment market. Complete responses were received from 505 companies (301) (comparative figures for 2004 are shown in brackets throughout the report) in 30 (20) different countries, a 68% increase in responses. This represents approximately twice the response level of the Business Week Employer MBA survey and includes five times the number of non-US respondents in 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 make informed strategic decisions:

1. Companies that recruit MBAs and recruitment consultantsNational 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.

2. Business school administrators and career services worldwideMBA programme administrators and career services will find the survey invaluable for providing guidance to students and managing the relationships with recruiters.

3. Current and future MBA graduatesMBAs 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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2. Summary of Findings

For the past two years, recruiters have foreseen a rebound in the demand for MBA graduates and salary levels. The TopMBA.com International Recruiter Survey 2005 confirms this trend. Recruiters are now predicting that MBA demand will return to pre-recession levels by next year, and will carry on growing thereafter. The number of recruiters taking part in the survey has risen to 505 (301), reflecting an expansion in interest and demand for MBAs. There is also a growth in the numbers of vacancies per employer. The TopMBA.com Index of MBA Recruiting shows an overall 20% (15%) increase in demand for MBAs in 2005, with the consulting sector reporting a massive 35% (15%) increase, financial services 20% (10%), general industry 17% (12%), and technology 18% (5%). In the previous eight years, average salaries for graduating MBAs increased by 27%, but they have increased by 12% in the last two years alone. This matches the pre-downturn levels of 2001 with a US-European average of US$84,500 (US$82,000). This increase reflects a high level of optimism amongst MBA recruiters and increased competition for the top talent. Bonuses for 2005 have increased substantially. The average reported bonus is a sizeable US$27,000 (US$19,000). Financial services firms are reporting a massive average bonus of US$40,500 with investment banks, in particular, reporting bonuses of up to US$100,000 for first year MBAs. While other sectors will find it hard to compete with these figures, banking bonuses do tend to be much more volatile than those in other sectors.

3. Methodology and Credentials

The TopMBA.com International MBA Recruitment and Salary Survey collects primary data on the state of the recruitment market and predictions of future trends from recruiters in 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, QS does not rely on MBA graduates to report their earnings, but obtains the information from the employers who pay them. 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 past 15 years, which allows meaningful trends to be identified over time.

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4. Companies Surveyed

Responses were received from across the globe. 43% of respondents were based in Europe (51%), 41% in the USA (31%), 4% in Latin America (8%) and 10% in Asia Pacific (10%).

Regional Distribution of Responding Recruiters 2005

41%

43%

Western Europe Latin America Eastern Europe US & Canada Asia Pacific

4% 2%Chart 1

10%Source: QS TopMBA.com International Recruiter Survey 2005

The spread of recruiters spans a wide spectrum of industries, reflecting the global range of companies that hire MBAs. Financial services and consulting make up the largest source of respondents, followed by healthcare, technology and consumer goods. Respondents from the recruitment consulting industry are kept separate although they have a bias towards financial services and consulting recruitment.

Recruiter Response by Industry 2005

Chart 2

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Te ch no lo g Se y rv ice M s an Re uf ta ac il tu r Lo ing gi st In ics du He str y a G o lthc ve ar rn e m Fin en t an cia FM l S CG er Co vice ns s ul t Ba ing nk in g Au Ag to en cySource: QS TopMBA.com International Recruiter Survey 2005

80 70 60 50 40 30 20 10 0

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The 505 national and international companies that responded to the survey are guaranteed complete confidentiality for their individual responses. Chart 3 gives a snapshot of some of the organisations that took part in the survey across the world. A fuller list can be found in the Appendix at the end of the report.

Consulting

Financial Services

Industry

Technology

Asia

McKinsey Copernicus (Jap) PA Consulting

Citibank Oppenheimer HSBC

Toshiba Johnson & Johnson CLP

Cisco Motorola Singtel

Europe

AT Kearney Accenture BCG

Barclays Capital Lehman JP Morgan

Whirlpool Ford Motor Co. Bosch

Vodaphone Philips BT

Latin America

Bain & Co. Roland Berger AMBC

BankBostonChile Merrill Lynch BBVA

Mattel Cemex Sabritas

Ingenium Pfizer Procura Digital

USA

IBM Consulting Mercer Bain

Morgan Stanley Fidelity Goldman Sachs

Sony American Airlines Corning

Microsoft Dell Hewlett-Packard

Chart 3

Source: QS TopMBA.com International Recruiter Survey 2005

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5. Background to Trends - the upswing gathers pace

A growing number of companies all over the world now see 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 consulting firm. In recent years, it has become more common for business development managers and technology managers also to study for an MBA, to help them take the next step in their career. 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 graduates from all of the worlds 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 stu

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