An opinion piece on the budding effects of the ongoing financial and economic crisis on HBS students’ career choices, and how these effects should be seen in a positive light.
It was worded simply and spelled out succinctly: “There will be significantly more oversight, and return profiles will go down”. In describing the likely long-term impact of their newly acquired statuses on the two big US Banks still on their feet, Morgan Stanley and Goldman Sachs, Professor Clayton Rose summarized the new economic reality of a defaced financial industry that will no doubt alter more than a few career plans across both classes here at Harvard Business School. While it could be worse (we could be out there in the real world instead of here), the effect of this game-changing financial crisis on current HBS students’ future plans is real. From ECs expecting to convert summer banking internships into proper offers and bank fellowship-wielding RCs whose summer plans seemed locked-in just a few weeks ago, to prospective financial analysts and seasoned ones on a “two-year break,” job prospects in banking specifically and the financial industry more broadly now seem bleak. Meanwhile, the career development office will soon be earning its keep.
Understanding what truly lies ahead is anyone’s guess. When asked by an EC student for their thoughts on where the “smart money” was and industries with brighter outlooks, HBS’ Fathoming the Financial Crisis all-star panel, anchored by Nobel prize-winning economist Bob Murton, was at a loss for words. The student’s question drew applause from all, in a crowd eager for an answer to one question underlying their attendance: What now? What now for the 44% of graduating HBS students that typically accept new jobs in the broad financial services category, and for the rest of us? Fortunately, RCs like me have another 20 months or so to answer that question, and a newfound interest in the opportunity to explore options they might have overlooked until now. A month ago when I came to HBS, I was intent on getting smarter on a number of topics and industries, but more specifically I was focused on opportunities that may be available to me in the financial industry. It became a question of determining how I could shape my skills to fit that industry rather than one of finding the industry that could enhance and use those skills. If left unchecked, this predisposition would probably have limited my ability to objectively explore potentially suitable career opportunities particularly outside the financial sector. I cannot help but think that I am not an isolated case, and that several students in both classes came here with assumptions on their likely career path that are now being challenged. And while many students’ ambitions in this area will probably not be shaken, this financial crisis might help RC and EC students by minimizing perceived emphasis on that sector and forcing students to make the most of the opportunities available to them during their time at HBS. For RCs, the decision to suspend our careers looks like pure timing genius in the eyes of our former co-workers, and not just for those from Merrill or Lehman. The aftershocks of this crisis and the failing economy are likely to have an impact on most industries and job security will be at risk across the board. But regardless of its effect, the RC class’s position is enviable. In recent years, the ebbs and flows of the economy have been bellwethers for the size of business schools’ applicant pool a year later, which is traditionally negatively correlated to the direction of markets and the overall economy. In bad times such as these, one would expect the number of applicants for next year’s HBS class of 2011 to surge. This outflow of workers from the workforce into business school also helps fuel an increased demand for graduating students on the backend as the economy recovers.
As the current crisis unfolds, it is important to realize that the net impact of these market pressures on the incubation process that is business school may be to catalyze the development of new leaders. Industries that might seem esoteric or of little relevance today might be the high-growth sectors of the proverbial smart money tomorrow. New high-interest industries such as green-tech and the social enterprise, that have been talked about at length but are yet to reach critical mass in their integration to business’s daily operations, are sure to now be considered much more seriously by students. This increased level of interest from MBA candidates is both important and timely; with each new graduate skilled in the application of new best-practices and focused on emerging sectors, the education of relevant leaders will be perpetuated at this institution. Thus through education (and introspection) the very crisis we face begets its own solution.