<p>sakky has the patience of mother teresa but make no mistake – he will pound you into a UFC-like submission with his very thorough and thoughtful posts.</p>
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<p>While obviously there is no one singular metric, there are certainly general trends that are quite prevalent within the MBA student community. Management consulting and investment banking have been particularly popular with MBA students at the top schools for several decades now, and have lately been superceded by specialty financial services (and to some extent, tech entrepreneurship, although that tends to wax and wane with the IPO window). One only has to look at the career profile records of the top schools in recent history and note that the vast majority of graduates take jobs with service providers as opposed to general corporate management, an observation further detailed in Khurana 2007 that noted that MBA students generally see standard corporate jobs as only for those students who, frankly, aren’t good enough get to jobs in consulting or finance. </p>
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<p>Yet as I said, most students at the top schools don’t want to take those jobs if they can jobs in the aforementioned consulting or finance. There is no burgeoning interest to work for Deloitte or PWC anywhere approaching the desire to get a job at Goldman or McKinsey, or even more so lately, at a top VCPE firm or hedge fund. </p>
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<p>That’s a different matter entirely, and pertains to the choice of even whether to attend an MBA program at all. However, given that a person is going to attend an MBA program, the relevant choice is whether to take a job in consulting/finance, or in a Fortune 500 corporate management job. Put another way, whatever problems may exist regarding the ROI of attending a top MBA program and then taking a consulting/finance job, the ROI would be surely even worse if they took a Fortune 500 job, which tend to pay significantly lower. </p>
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<p>And as I have pointed out repeatedly, that is because the top MBA students don’t want to work for Fortune 500 management, but would rather work for consulting or finance. How many times do I have to point that out? Again, to paraphrase Khurana 2007, the general zeitgeist is that they feel no compunction to be CEO’s of large companies when they instead can be the guys telling those CEO’s what to do. </p>
<p>The fact is, like it or not, it is the consultants and especially the financiers who actually hold the reins of the global economy, and the MBA’s know this all too well. </p>
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<p>No, it is you that is being myopic for ignoring what modern MBA students actually want. Over 70% of all HBS students are members of the VCPE club, and over 25% of them take jobs in VCPE or hedge funds (and more surely wanted to, but just didn’t get offers). Similarly, the VCPE club at the MIT Sloan School is now by far the largest student-run club at the Sloan School. That is not my doing - students are making these choices all by themselves. I’m just telling you what they want, don’t blame me for what they want. </p>
<p>If you don’t believe it, then read the following:</p>
<p>*Today job lust among B-schoolers is fiercest for the gilded, clubby preserve of private equity. “Absolutely, it’s become the hot job for MBAs,” says Maury Hanigan, president of New York’s MBA Scouting Report.</p>
<p>As always, MBAs chase the money. And nowhere are the pay packages more regal than in the land of private equity. First-year compensation of $300,000 for top-tier talent at a Wall Street investment bank doesn’t seem too shabby–until you consider that thoroughbred MBAs joining the largest private equity shops command base salaries and bonuses as high as $450,000. Add to that, of course, the real payoff: the equity. “More equity is flowing downtream to these new hires,” says Brian Korb, a partner at New York executive search firm Glocap Search, co-publisher of the 2007 Private Equity Compensation Report. “Especially for the all-stars. It’s just like in sports.”*</p>
<p>[What</a> B-Schoolers Lust For Now](<a href=“Bloomberg Businessweek - Bloomberg”>Bloomberg Businessweek - Bloomberg)</p>
<p>*Wonder why so many newly minted MBAs are turning to private equity these days?</p>
<p>According to this story today in the Wall Street Journal Europe, it is about simple numbers, of the monetary kind. The lowest-level workers at private-equity firms — Principals, Associates, Senior Associates and Analysts — are earning $215,000 a year. The total includes the cut these workers get of the firms’ so-called carried interest, the slice of profits private-equity firms get to keep from their buyout deals.*</p>
<p>[Why</a> Private Equity Is the MBA’s Mecca (Hint: $) - Deal Journal - WSJ](<a href=“http://blogs.wsj.com/deals/2007/10/30/why-private-equity-is-the-mbas-mecca-hint/]Why”>http://blogs.wsj.com/deals/2007/10/30/why-private-equity-is-the-mbas-mecca-hint/)</p>
<p>The popularity of private equity as a job destination for MBA graduates has more than doubled in the last six years…</p>
<p>[MBA</a> graduates flock to buyout firms](<a href=“http://74.125.45.132/search?q=cache:mmJD-pHFkxQJ:www.efinancialnews.com/homepage/content/1054386742+private+equity+MBA+flock&cd=1&hl=en&ct=clnk&gl=us&client=firefox-a]MBA”>http://74.125.45.132/search?q=cache:mmJD-pHFkxQJ:www.efinancialnews.com/homepage/content/1054386742+private+equity+MBA+flock&cd=1&hl=en&ct=clnk&gl=us&client=firefox-a)</p>
<p>*Hedge fund jobs are in high demand, many MBA graduates and experienced financial professionals now are looking for ways into the hedge fund industry. *</p>
<p>[Hedge</a> Fund Jobs](<a href=“http://richard-wilson.blogspot.com/2007/10/hedge-fund-jobs.html]Hedge”>Richard C. Wilson's Blog : Hedge Fund Jobs)</p>
<p>Put another way, the VCPE elective course at HBS has recently become so popular that it has expanded to four entire sections and is still oversubscribed, to the point that the school is thinking of adding even more sections besides. On the other hand, many elective general management courses have plenty of seats, and some have become so unpopular that they’ve been recently withdrawn.</p>
<p>So, again, I’m just telling you what the students want. Whether right or wrong, the fact is, they don’t really want corporate management jobs. Whether that’s beneficial to the world economy is a different matter entirely - I too fret for the state of management practice when most of the top talent would rather be service providers and capital allocators rather than actual managers. But, like it or not, the fact remains that that is what the students want to do. </p>
<p>Lest you think this is merely an East Coast phenomenon, allow me to exhibit the career statistics for the MBA graduates from UTAustin McCombs, which is the best MBA program in Texas. Listed by function, only 14% of the graduates took jobs with functions in General Management, with 23% took functions in consulting and a whopping 39% took functions in investment banking, financial analysis, investment management/research, sales & trading, or venture capital. Examined by industry, 49% of the graduates took jobs in investment banking, diversified financial services, or consulting. The trends are clear. </p>
<p><a href=“http://mba.mccombs.utexas.edu/careers/salary/Full-time-Salary-Stats.pdf[/url]”>http://mba.mccombs.utexas.edu/careers/salary/Full-time-Salary-Stats.pdf</a></p>
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<p>Frankly, I doubt whether any MBA program - whether in the East Coast or otherwise - has any monopoly on ethics, nor do I think that companies could. You pointed out yourself that Enron was a Texas-based company, although they did fill their ranks with MBA grads from schools worldwide. MCIWorldcom was based in next-door Missisippi. The recently arrested R. Allen Stanford is a Texan and Stanford Financial Group is headquartered in Houston. Hence, I don’t think the East Coast has any especial dearth of ethics. This is just how business is, for better or worse (mostly worse).</p>
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<p>It’s not what field “she” comes from, but what field “he” comes from.</p>
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<p>When over 70% of the entire student body at HBS is a member of the VCPE student club, when the VCPE club at MIT Sloan is by far the largest of all of Sloan’s student clubs, when typically over half of all students at Stanford GSB are members of the Venture Capital club alone - which is entirely separate from the Stanford Private Equity club - and when 700 of the 1600 MBA students at Wharton are members of the Private Equity club (which doesn’t cover VC), then I think we can safely say that those represent strong indications of where the students interests lie, at least at those schools. </p>
<p>Put another way, if general management was so popular, then why don’t more students join the corresponding club? Heck, HBS doesn’t even have a general management student club. Students are free to start one at any time, yet nobody ever seems to want to. Why not?</p>
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<p>Power is the ultimate aphrodisiac. </p>
<p>To quote Professor Felda Hardymon:</p>
<p>“It is the ability to influence that I think has attracted the students. … You’re not only making investment decisions. You’re also influencing the companies, either through board seats, or through the way the investments are structured, and so on.”</p>
<p>To quote a recent HBS grad who now works at the Carlyle Group:</p>
<p>* Gitanjali Swamy, said via e-mail that private equity was “a very preferred career of choice today; it involves all the activities of i-banking and consulting, while retaining a stronger element of ownership. We are more active-portfolio managers than transaction or service oriented.”*</p>
<p>[Lure</a> of Big Money Draws Grads To Hedge Funds, Private Equity - March 15, 2006 - The New York Sun](<a href=“http://www.nysun.com/business/lure-of-big-money-draws-grads-to-hedge-funds/29141/]Lure”>http://www.nysun.com/business/lure-of-big-money-draws-grads-to-hedge-funds/29141/)</p>
<p>Contrast that to the jobs you would have at a regular corporation. You don’t have influence over Board seats. You don’t get to tell CEO’s what to do. In short, you don’t have a fast ladder to power.</p>
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<p>No, they don’t, in fact, the exact opposite is true. As explained multiple times, the best MBA talent is heading for the service-provider industries, that is to say, the consulting or finance industries. That is where the competition for recruiting is perennially the most acute. It is actually the worst MBA talent, at least from the top MBA schools, that head to Fortune 500 firms.</p>
<p>Put another way. Last year, Ibanking recruiting took an absolute bath due to the aftershocks of the financial crisis, and many people who graduated last year and who were originally shooting for jobs in Ibanking at, say, the sundered Bear Stearns, had to “settle” for jobs at Fortune 500 companies (or, sometimes, at consulting firms). But this year it is actually regular corporations that are bearing the brunt of the layoff storm and Ibanking is making something of a comeback, with Goldman recently announcing the highest quarterly profits in the history of the firm. I’ve never heard of a single student saying that he was originally shooting for a particular Fortune 500 corporate job, but now can’t get one, and so has to “settle” for a consulting or banking job. Instead, they were usually relegated to an even worse Fortune 500 industry job, or an industry job outside of the Fortune 500 entirely. </p>
<p>That befits the one-way nature of the hiring hierarchy to which most students conform. Standard general management industry jobs are viewed as “safety” jobs for those students who simply weren’t strong enough to get jobs in consulting or finance. To be fair, there are a handful of students at top schools who come in with the express intent of joining Fortune 500 firms. But, if you exclude those who are sponsored by those firms and therefore have to return, they represent a mere pittance. After all, frankly, it makes little sense from an ROI standpoint to get a top MBA and then take a regular industry job - a point that you invoked yourself. {Granted, perhaps that person shouldn’t have gone to that B-school at all, but that’s an entirely separate matter. The question on the table is, given that the person does go to that B-school, what industry choice is he most likely to prefer, whether from an ROI standpoint or otherwise.} </p>
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<p>Nor am I providing any sort of ringing endorsement, and in fact, I have been careful not to do so. Heck, I’m actually one of the more prominent critics of the B-school system. </p>
<p>But that’s not the issue on the table. The issue on the table is what is it that the plurality of the MBA students at the top schools want to do? It certainly isn’t to work at a Fortune 500 firm.</p>
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<p>Here are some lists for you to consider:</p>
<p>[PEI</a> - PEI 50](<a href=“http://www.peimedia.com/pei50/]PEI”>http://www.peimedia.com/pei50/)</p>
<p>[Top</a> 100 Venture Capital Firms](<a href=“Money & Finance | Entrepreneur”>Money & Finance | Entrepreneur)</p>
<p>Personally, I strongly prefer the dataset available in VentureXpert, as it is the most comprehensive information available on the VC/PE industry, but that’s a bit unfair for me to tell you to look at that, as the subscription fees are pricey. But if you have access to that, then that’s far better than the links above. </p>
<p>But whatever data source you use, just go down the list of founders and managing directors, and just marvel at the multitudes of MBA’s from Harvard, Stanford, Wharton, MITSloan and the like. Again, of all the founders of private equity firms in 2007, over 27% were graduates of just a single school (Harvard). </p>
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<p>I said no such thing. What I said is that the knowledge you have to bring to the table is apart from the classroom, where, frankly, you probably don’t learn all that much. Arguably the most crippling weakness of the modern B-school is that the faculty is rife with pure academics who have never actually worked a single day in their entire lives in the field in which they are teaching, and often times, have never worked in industry in any capacity, but were hired simply for their ability to write academic research papers that are completely orthogonal to the actual state of practice. </p>
<p>(One saving grace of HBS is that they do have “Professors of Management Practice” who are culled directly from high positions within industry and who therefore do have a tremendous wealth of practical knowledge to impart. Felda Hardymon, for example, was, and still is, Senior Partner at Bessemer Ventures, Nabil el-Hage used to be at TA Associates and Advent International, and Bob Higgins was a co-founder of Highland Capital Partners.)</p>
<p>But, like I said, not everybody can get into their oversubscribed course. Furthermore, that course is an elective course and therefore by definition is not available to first-year students. So how do you learn enough to nab that crucial summer internship in that industry? By boning up on your own time, by either studying materials yourself, or very commonly, by networking with (a.k.a. drinking with) a classmate who used to work in that industry and pumping him for information. This is hardly a matter of a ‘bit of cramming’, but rather a grueling marathon. </p>
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<p>You know enough to get the offer, and then you have the opportunity to learn while on the job in order to justify it, on pain of losing it if you don’t. But you won’t have that opportunity if you can’t even get the offer.</p>
<p>As to whether this is overall efficient for the economy or not is a different matter entirely. Personally, I’ve marveled at the spectacle of MBA students being put into positions of power for which they have no ostensible expertise. For example, I was just recently talking to one of my old MBA friends who is working for a (unnamed) major consulting firms and whose project is with one of the Big 3 auto firms. He’s never worked a single day in his life in the auto industry, and he finds it completely ludicrous that he’s now advising top management of said auto firm, including some people with MBA’s and several decades of experience at the firm, on how to run their company. But, the auto firm, for whatever reason, thinks they need to purchase consulting advice, and so that’s what he was hired to provide. Nor is his experience unusual - it is a pervasive practice within the management consulting industry to hire MBA’s and then throw them onto projects for which they have zero prior experience or knowledge and expect them to quickly come up with high-priced recommendations. {Why clients continue to pay for this knowledge remains one of the paramount mysteries of business.} </p>
<p>Or consider the scathing words of Michael Lewis:</p>
<p>*To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.</p>
<p>I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.*</p>
<p>[The</a> End of Wall Street’s Boom - National Business News - Portfolio.com](<a href=“http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom]The”>http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom)</p>
<p>But what can I say? It keeps happening. Maybe it is all just an elaborate systemic fraud. But as long as people continue to be hired into positions of power of which they arguably do not deserve, then students are going to continue to pursue them. For example, right now there is something of an uptick in Ibanking hiring.</p>
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<p>Look, I realize your universe begins and ends with VC. Most MBAs see the rest of the real world.</p>
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<p>We are talking about the MBA students of the top programs, not MBA’s from all schools. Answer me the following questions: why are over 70% of all HBS MBA’s members of the VCPE club, if they don’t actually care about VCPE? Heck, it’s harder to find an HBS student who isn’t a member of the club than one who is. Why is the MIT Sloan VCPE club by far the largest student club at Sloan? Why are over half of all Stanford MBA students members of the VC club (and that’s not even talking about the PE club which is a separate entity at Stanford)? Why are nearly half of all Wharton MBA students members of the PE club (and again that’s not even talking about the VC club, which is also a separate entity)? </p>
<p>I have neither the desire nor the power to force anybody to join any clubs they don’t want to join. The students are making these choices all by themselves. Why did they make the choices they did if they don’t actually care about those industries? Are they just all being stupid? More poignantly, where exactly is the rush to join the general management club?</p>
<p>And again, it’s not just VCPE, but the general trend to service providers at large. Since you continue to resist what is an empirically well-established set of facts, allow me to quote Khurana 2007 (p.328-331):</p>
<p>*…Advisory businesses such as consulting firms and investment banks, which offered considerably higher salaries and greater career flexibility than most corporate positions, increasingly became the first-choice jobs for students graduating from elite business schools. Table 7.2 shows that between 1965 and 1985, Harvard Business School - which had always defined its core mission as educating the nation’s general managers - saw the number of its students going into positions in fields such as financial services and consulting rather than pursuing careers as corporate managers rise from 23 percent to 52 percent. (As consultants and investment bankers, indeed, these business school graduates would play a significant role in downsizing traditional manufacturing and product firms.) Other elite schools such as Wharton and the business schools at Stanford and the university of Chicago, began seeing similar shifts in student job preferences around this time. Moreover, even those students entering large corporations often typically went into staff positions in areas such as strategic planning, business development, or corporate finance, not into line positions.</p>
<p>…One of the last links to the combined forces of the Ford Foudnation’s recasting of American business education and the demands of a new generation of students, who as consultants advising firms on how to streamline and restructure themselves, or investment bankers and buyout artists carrying out the actual restructurings, would take up arms of their own in the effort to roll back the last vestiges of the managerial revolution in American business…Underlying the trend toward investment banking and consulting as avenues of employment for graduates of the elite schools, however, were larger changes in the national economy that were still only beginning to be understood in business schools."*</p>
<p>Again, did I compel Rakesh Khurana to write the above? I think not. His 2007 book was the centerpiece of the HBS tenure packet that he had been compiling for an entire decade. If you disagree, you can take it up with him, but I think the evidence clearly shows that elite MBA students increasingly do not want to work in standard corporate general management, and haven’t wanted to for several decades.</p>
<p><a href=“http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=bio&facEmId=rkhurana[/url]”>http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=bio&facEmId=rkhurana</a></p>
<p>Again sakky, the debate is whether the schools discussed are or are not really the “top” schools. So far, I have seen claims that these schools produce top executives, but the truth is something far different. The argument then became that the system was corrupt and these Ivy leaguers and such were just playing for their own greed, and that we should just accept that. Well, I do not, largely because I work with many people who earned advanced degrees and MBAs in order to be more effective; as I said, it’s a sad commentary on someone’s world if they only see the greed and not the ethics-driven professional.</p>
<p>You are making a strong case to claim that students at expensive schools focus on making money and little else. Especially the claim that so many do not bother trying to excel, but only learn enough to con their way into a job. I can tell you for a fact that while every school has some such frauds and criminals-in-waiting, at most schools there are many more who care about making a positive contribution, who take their vocation as seriously as their bank account, who see management as something to be taken seriously and done with your best ability. The idea that it’s acceptable to ‘learn while on the job in order to justify it’ is contemptible, and despite your assertions is not the standard or nominal condition in most of America, including the companies where I have been employed. </p>
<p>I am not saying that your experience is not as you describe it, but my own career experience is worlds apart, so much so that I honestly pity you if the people you know are so lazy, unethical, and corrupt in their values that such a mindset is tolerated, let alone advocated.</p>
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<p>The #1 piece of evidence of whether they are top schools should not be whether they produce top executives. Besides you, I don’t see anyone else debating whether the schools discussed are the top schools and don’t see you offering up what should be considered the top schools and why you are using the criteria you are.</p>
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<p>No one is saying that people obtaining jobs in PE are not taking it seriously, are lazy or corrupt or are doing anything less than using the best of their ability. I don’t see how that is possibly your conclusion.</p>
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<p>I don’t see how coming out of MBA school that someone from UTexas going into a management role at a corporation has any less to learn on the job than someone coming out of Harvard going to a PE firm. Both have the fundamental tools to be successful and will then go to apply them in a way to add value at the company. This is why they are hired and what is expected; I would hardly characterize it as “contemptible”.</p>
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<p>Yes gellino, that is exactly what was claimed, and to that I responded. </p>
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<p>It has been repeatedly claimed here that the so-called “top” schools only teach marginally useful skills, and students therefore depend on building networks than actuallly learning the material in their classes. This is in sharp contrast to the world I know. Perhaps we peasants take our education rather more seriously than you “elites”? Certainly the attitudes expressed here that getting in the door is all that matters would not fly well in the real world. If VC and IBs are truly in that ‘image is enough’ mold, it goes a long way to explain the disconnect between New York and the rest of the planet.</p>
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<p>I did not see anywhere here where sakky or anyone else claimed that those working in PE do not take their jobs seriously or are not trying their best. </p>
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<p>Please point to me in the world you know any MBA schools that have a vastly different curriculum from the “top schools” and are teaching anything that isn’t “marginally useful”.</p>
<p>Lets review, from this thread:</p>
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<p>That is a clear claim that getting the job is more important than being qualified for it.</p>
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<p>Same argument.</p>
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<p>Same argument.</p>
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<p>Falsely claims that all business schools are similar in attitude and lack of ethics.</p>
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<p>Hardly a ringing endorsement of Harvard.</p>
<p>I want to be clear on one thing; I have no beef with the fact that some schools are superior in one aspect of their MBA program. This includes VC and banking aspects. It is, however, in my opinion invalid to claim that advantages in one specialized program make a school the “best” school overall. </p>
<p>I also take sharp issue with the claim, one repeated here over and over I see, that immoral and unethical behavior is acceptable and common. I have worked with hundreds of men and women with MBAs, some from Harvard and Wharton and the like, and others with MBAs from Texas, Rice, and Houston. None have been binge drinkers, slackers, or anything like the no-count losers depicted here, who scheme to slip through the door to grab a high-pay job. The people I know earned their MBA after working in their field and went for the MBA to improve not only their career profile, but also improve their skill set.</p>
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<p>It’s not like people at Harvard and Wharton aren’t striving to improve their skill set but they’re learning pretty commodity-like tools.</p>
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<p>This is because there are no specific qualifications for a PE job. The way to be qualified is by showing intellecual horsepower, interest in the work and having a personality with which people would like to work.</p>
<p>Tell you what, gellino. We’ve made our arguments and this equine is distinctly post-mortem. We disagree and I think we should leave it at that. The generation gap is apparently in full effect. Good luck in your career.</p>
<p>I don’t really see how it’s possible to disagree with my last two statements. It’s not like I’m making any bold, extreme pronouncements. Having worked with people of your age, it seems to me that employers will always want to seek out intelligent, thoughtful workers.</p>
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<p>I agree with that statement. However, such workers are just as likely to come from “ordinary” schools as “elite” ones. Even in the top offices.</p>
<p>Not really, intelligent people are far more likely to come from an “elite” school. What do you think the GMAT measures?? Students at the top schools average about 1.5 - 2.0 std deviations higher on the IQ curve than those at the “ordinary schools”. So, once again, your statement doesn’t come close to making sense.</p>