You guys might find this article by Andrew Yang, founder of Venture for America, useful to the discussion why so many elite school grads are going into finance/consulting. Yang says our economy has moved “from making things to supplying financial services… We no longer manufacture devices, we manufacture analyses.”
He includes an interesting chart of the top dozen or so private elites, and the percentage of their graduates that go into one of six fields, including two of the biggest: finance and consulting, and contrast them to Teach for America and grad school. You can compare Harvard and Yale to Stanford and MIT, for instance. Unfortunately, the chart does not include public universities. I’m not savvy enough to know how to cut and paste it here. But here’s the link to it (it’s about half way into the article: http://www.businessinsider.com/why-elite-college-students-pursue-finance-jobs-2014-2
He writes:
"As you can see, a literal majority of national university graduates will pursue one of these six paths after graduation, none of which leads directly to new business formation or growth. What begins as a universe of options quickly shrinks to just a few. I’ve spoken to hundreds of college seniors who are in this predicament on the front lines. Some examples of the things I heard:
“If I go to career services, they’ll tell me straight out that they only have finance and consulting jobs for me to look at. That or Teach for America.”
"It seems like everywhere you look people are in suits scurrying to another banking interview. It has an effect on you after a while.”
“My friend tried to look for a job at a startup, but it was really difficult. Eventually he gave up and joined a consulting firm.”
Start-ups don’t recruit at Ivies. Start ups don’t really recruit. You find a job at a start up through connections and thise take time to make.
The idea of going out and starting a company straight out of college with no business training and maybe without ever having worked before is very, very rare. We hear about those stories (Microsoft, Apple, Facebook) but they are very rare. So why that author thinks a 22 year old is going to go directly into something that leads directly to business formation is baffling.
You have to learn about business first to start one. Most of these kids don’t stay in banking or consulting for more than 2 years. That’s why they need such a big pipeline from the schools. Up or out. Churn and burn.
It’s not that Big Consulting and Wall Street are “growing that fast.” Gettingschooled nails it:
“Churn and burn” is the name of the game. Big Consulting and Wall Street have an almost insatiable appetite for freshly minted HYPS grads because they spit them out almost as fast as they take them in. To be sure, they want to hire bright young things, especially those with quant skills. Hiring almost exclusively from the most selective schools does two things for them. First, the schools do a lot of pre-sorting just by virtue of being so selective. There might be equally capable students at the State U, but more winnowing will be needed to find them. Hire from Harvard and half the screening is already done. Second, and this is perhaps the more important point, the consulting firms and I-banks are buying the Harvard nameplate. This is a key selling point for them; it impresses their clients to hear that McKinsey is assigning a “team of top Harvard grads” to work on their strategic plan. In fact, it impresses the pants off the clients, which makes it easier to separate them from their wallets. .
But as gettingschooled points out, most of the young recruits who go directly into consulting or I-banking don’t stay more than 2 years or so. They’re handsomely paid, but in return they’re expected to work 80 or 100 hours a week, constantly on a short leash without much opportunity for work-life balance, and in the case of those in consulting, travel is a constant grind. Many find the work itself not inherently interesting, intellectually stimulating, or socially rewarding. Most tire of it pretty quickly, burn out, and seek other employment. The firms expect this high rate of attrition–in fact, they count on it, because if everyone stayed to make partner there would be less profits per partner, and it’s cheaper just to hire fresh replacement parts. Constant churning of entry-level employees is central to their business model. (FWIW, Big Law works much the same way).
So it’s really a 3-way prestige game. McKinsey, Goldman et al impress their clients by borrowing HYPS’s prestige, hiring fleets of freshly minted young guns from those schools. HYPS impress prospective applicants in part by sending off large numbers of new graduates to well paying jobs with “elite” employers like McKinsey and Goldman. And HYPS students, who got where they are by successfully competing for every merit badge along the way, often can’t resist the temptation to grab at that last shiny merit badge, an elite job with a prestige employer and a fat salary. The irony is that for many, these jobs are not so much a mark of achievement as simply the path of least resistance–the default option if they haven’t figured out anything more meaningful to do, because these employers come to them, and woo them and wine and dine them, so it really takes little initiative on their part. (Not to say that every HYPS grad will be offered such a job, but it’s in the interest of the firms to maintain the perception that the jobs are somewhat hard to come by, because that makes them more attractive to prestige-conscious college seniors). So for the students, it’s about “winning” the final competition, and that’s a powerful lure, even if they don’t expect to like the work, even if they’re not keen on the grueling hours and expectations, and even if they understand all too well that they’ll likely stay on the merry-go-round only a couple of years.
And other employers may decide that it is not worth bothering to recruit at HYP because their yield will be too low, because any offer they make will be beaten easily (in pay terms) by consulting and banking offers. So soon-to-graduate seniors may not see as many other employers in the HYP career center as at some other college’s career center, giving HYP seniors the impression that their most obvious choices are consulting, banking, law school, medical school, PhD program, or Teach for America.
@bluebayou - technically yes I agree I was probably wrong in saying the numbers are increasing. But the actual percentages are even higher than I was guessing. So I can’t say it has changed my impression of the reality.
@bclintonk Agree with everything you said but I would add if you want to be in business, these firms are very good training for all kinds of future jobs and a great way to make contacts. Finding the next job is not usually difficult for these kids.
Where do these kids go next? MBA programs? To a smaller consulting firm? General business elsewhere? Seems a lot of guys stick with finance as there are many of them in NYC and surrounding suburbs.
Yes to all of those. The big name MBA programs want you to work for a couple of years so yes if you had an English Lit undergrad you are probably headed to get your MBA. Unless you want to get your Masters in English Lit.
Clients hire a lot of the consultants away. A big dissatisfier in consulting is not seeing how the results of your efforts pay off or don’t. Working in consulting allows you and the company to interview each other over a few months in a way.
I would suggest that the biggest dissatisfied for Big Consulting (and Big Law) is Quality of Life. Billing 2000+ hours per year leaves no/little time for anything else. Thus, an extremely high voluntary turnover rate.
“The firm will take either Zoe or Doe but remember Zoe is willing to work all night and Doe might or might not.”
What a good point. I don’t work at my big corporate employer any more. I flatter myself that I ended up at H in the Doe mold, not the Zoe mold. I deeply cared about what I was doing in college, and I excelled. At the big firm…well…I don’t work there any more.
Do you people really believe making college admission to elite schools more hazy and ubiquitous is a good thing?
Having more high school students apply for the same limited number of spaces seems a terrible thing to do. Lowering admission rates even further is just not helpful. Who does this really benefit? The students or the institutions?
If these institutions really wanted to increase its low SES student population, it could from its current pool of applicants. If such applicants were not in the current pool of applicants, these institutions could contact low SES high schools’ guidance counselors and principals to pass the word to their top low SES students to apply. It is as simple as sending an email. But I doubt that this is really the goal of these institutions. If it were, they would already have a much higher low SES population given their huge endowments.
Haha. The low SES high school guidance counselors have their hands full already with students who are truant, in trouble with the law, are in and out of the foster care system, etc. It is unfortunate, but they don’t really have bandwidth to serve as college counselors.
To be honest, I never thought about it bcos…I…just…don’t…care.
The vast majority of students are educated at the local public Unis, and from a public policy perspective, I am much more concerned about educating the masses, as opposed to a handful of kids who attend a few “elite” colleges.
Of course. But so what if they don’t? What is the harm to society if low SES kid doesn’t get into Harvard but has to “settle” for say, Hopkins or Emory?
Better the low SES high school guidance counselor get 20 promising students to community colleges or other state u’s they can afford, than send 1 student to Harvard et al. I love a rags to riches story as much as anybody but too much emphasis on schools with 5% acceptance rates doesn’t seem like a real kindness to a lower SES student.
"This is a key selling point for them; it impresses their clients to hear that McKinsey is assigning a “team of top Harvard grads” to work on their strategic plan. In fact, it impresses the pants off the clients, which makes it easier to separate them from their wallets. "
I’ve been in on McK pitches, have seen their proposals and know quite a few people who work there. They subcontract my firm to do specialty consulting in X area. Never once have I actually seen any McK document that promises “your team will be made up of top H (or similar) grads” and not once has where any of the team gone to school been mentioned or brought up. Ever. The McK name already brings with it brand equity; they have no need to say to their clients “and look, we employ H grads.” Our mutual clients would likely yawn.
Every industry has it’s “go to” list of universities so it doesn’t surprise me that the financial industry hits the Ivy Leage, they are close so easy for recruiters to get to, the kids are smart so they don’t have to worry about that, the kids are ambitious so they are willing to do whatever it takes to go to work for those companies. For sheer plethora of Fortune 50 or Fortune 100 recruiters kids would be better off going to one of the Big schools…Penn State, Michigan, Texas A&M and so on are hit by just about every major company including Wall Street companies. If what parents “want” for their kids is to make big bucks, and Wall Street is the shining beacon for “big bucks” then parents, for whom, that is important will continue to push their kids toward those schools doing whatever it is they think needs to be done to get those kids into those schools. But I really think it’s not a national issue and is limited strongly to the NE and splotches of especially new wealth and aspirational suburban areas in other parts of the country.
The luster will never be “off” the Ivy League it will just morph over time as it always has to accommodate that next generation of people who want that name brand…from the colleges known for where the rich kids go to today where they are the colleges the smart kids go to who knows what they will be in the future. There is enough strength and endowment spread around the Ivy League that they could re-brand themselves in whatever manner they choose. Heck they could rebrand themselves to be THE CHOICE for students who want to give back to the world and live in Tiny Homes attracting a whole different group of parents and students. I think it’s a pretty “trite” issue that is self-induced and that touches not very many families but I also come from a region of the country that cares far less about what private colleges do with their time and money and more about how great their flagship is and how successful those graduates are.
“But I really think it’s not a national issue and is limited strongly to the NE and splotches of especially new wealth and aspirational suburban areas in other parts of the country.”
I think so too. For the majority of people, Wall Street simply isn’t anything they aspire to, see as greater or grander than anything else, or is what they are desperately hoping their children land on. But there is a tendency to think that what’s popular in suburban NJ or CT must be national in scope! Elsewhere, “the Ivies are great because they serve as a direct path to Wall Street” is kind of a “well, that’s nice, but so what.”
^Indeed, I use to hang with a recruiter from Goldman and she was always complaining about how difficult it was to get top kids from Stanford and Berkeley to move to Manhattan. Entrepreneurial Silicon Valley the Venture Capital crowd is just a huge draw on the Left Coast.