VideoIt's 7:30 A.M. on a Saturday and Ananda Baron is juggling a cup of coffee and a bagel, trying to down a quick breakfast before a long day of interviews. One of 25 MBA students invited to PG&E Corp.'s San Francisco headquarters for second-round interviews, Baron has been cruising a crowded conference room to network with company executives since the breakfast formally began 30 minutes earlier. That's on top of several hours spent networking the night before, when she sat next to the CEO at a group dinner and learned, among other things, how he met his wife.
Before Baron can spread the cream cheese, though, Steve Arnold, PG&E's chief tax executive, sails up to her. "I love your first name — what's the story behind it?" he asks. Breakfast waits another 20 minutes while Baron, a student at Northwestern University's Kellogg School of Management, tells him about her parents' hippie phase (her name is Hindu but her family is not). Then she neatly segues into how she's using her finance skills to help her father with his San Diego–based surfboard business.
Despite the friendly patter, there's little that is casual about this conversation. Baron, on the hunt for a high-level finance job, is trying to make a strong impression while deciding whether PG&E presents a better opportunity than the other three companies with which she is currently talking. Arnold, meanwhile, is trying to promote his company as a cool place to work while getting a sense of whether Baron could ever hack it as a replacement for him — or, someday, the CFO.
Scenarios like this are playing out all over the country, as companies increasingly look to MBAs to fill critical gaps in their succession-planning efforts for top roles in finance and beyond. The recruiting processes can be elaborate and time-intensive, as executives like Arnold take the opportunity to get to know candidates in casual and formal settings, in large groups and one-on-ones. In fact, recruiting MBAs might be among the more robust hiring processes a company undertakes these days, with more executive-level involvement than ever in picking future leaders.
Such involvement even extends to visiting business-school campuses. "When companies don't send a senior-level person to campus, you don't get the sense they're very committed to the school," says Everette Fortner, career director at the University of Virginia's Darden School of Business. American Express noted that fact a number of years ago and has since begun asking its best-performing middle managers to hit the campuses rather than asking for volunteers. Says Alan Gallo, senior vice president of corporate planning and analysis and head of MBA campus recruiting for finance: "If you don't send your best people to campus, there's less of a chance you'll get the best people."
Back in Demand
It wasn't that long ago that many companies were scaling back on MBA recruiting, figuring they could train undergrads at a lower cost and with the same results. But some employers are finding that MBAs, because of their prior work experience, are worth the salary premium. "We are hiring [MBAs] who had important positions with previous employers, or had their own start-ups. It's hard to replicate that with undergrads," says Gallo.
PG&E's finance department began recruiting more MBAs in 2000, prizing their skills, experience, and leadership potential, says CFO Chris Johns. Other departments took notice, and the company stepped up such recruiting for all functions. Last year, PG&E hired 13 MBAs; this year, it's aiming for a dozen, says Johns.
"Companies that were hiring one or two MBAs for the past few years are now looking for eight or nine, and a whole slew of new companies are coming onto the campuses," comments Maury Hanigan, president of the MBA Scouting Report, a consulting firm that helps employers target recruiting efforts. Companies such as American Express, Johnson & Johnson, Raytheon, and Textron report they are increasing the number of campuses they visit and the level of hiring for their MBA finance-recruiting programs, most of which are just five or six years old.
Salaries are going up, too: at Wharton, the median salary offered to the 22 percent of the class going into corporate finance has jumped from $85,000 to $95,000 over the past two years, plus sign-on bonuses. Meanwhile, the travel and entertainment costs involved in recruiting have tripled this recruiting season at PG&E compared with the previous one.
How to retain these up-and-comers until they reach maturity, however, is another issue. The general turnover rate among MBAs who have worked for a company 18 to 24 months is "staggering — probably 50 percent leave," says Hanigan. That puts pressure on every step of the recruiting process — from selecting the right campuses and deciding whom to put on the interview beat to identifying the right prospects and nurturing their careers.
What Companies Want
Later that Saturday at PG&E, seated in a tony executive office, Ananda Baron attempts to answer the "So why are you here?" question. In her case, the biggest draw was the California utility's new and ambitious goal to cut greenhouse emissions through alternative fuel sources, such as solar power and cow manure. This is a good answer: interviewer Rand Rosenberg, senior vice president of corporate strategy and development and a former investment banker, eagerly explains that the "green" initiative was what convinced him to join the company a year earlier.
Reader Comments» Post a comment