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Monday, October 16, 2006

Increasing MBA recruiting

Clock Ticks, Bonus Ebbs for Recruits

Published: October 13, 2006

Some companies trying to attract M.B.A. students have been playing a version of beat the clock: offering bonuses that decline in value or disappear unless the student accepts the job by a certain date.

Mike Mergen for The New York Times
Stuart Chaffee attends Wharton.
Think of it as early admissions in the corporate recruitment world. The declining bonuses are a tactic this year largely in the finance and consulting industries, although other companies are using it as well.

The bonuses offered to the most promising summer interns, as much as $45,000 in some cases, will be cut in half or will be withdrawn if the students do not accept the job offers by an early deadline, typically the middle of October.

The clock is ticking. The students must decide if they sign on with their summer employer or skip the bonus, leaving them free to participate in on-campus interviews this fall.

“Given how competitive the recruiting environment is right now, we are seeing more of it than we saw three years ago,” said Sheryle Dirks, assistant dean and director of career management at the Fuqua School of Business at Duke University, where the number of companies signed up to recruit on campus is up 25 percent this fall. “It’s a good time to be looking for a job as an M.B.A.”

For the students who are certain they would like to work for their summer employer, the bonuses — sometimes also called incentive bonuses — are welcome. But for the students who are unsure, the bonuses add stress to their decision making.

“To all of us walking out of here with significant debt, $20,000 makes a big deal toward a comfortable second-year experience,” said Stuart Chaffee, a second-year student at the Wharton School at the University of Pennsylvania.

Mr. Chaffee worked at a consulting firm this summer that did not include declining bonuses in its job offers, which has made his decisions less stressful than it has been for others.

Many business schools ban so-called exploding job offers that require candidates to accept the job on the spot or lose the offer completely. Declining bonuses, however, are usually allowed because, though the bonus decreases or goes away, the job offer stays on the table.

Harvard Business School, on the other hand, does not allow declining bonuses.

“H.B.S. believes, and I agree, that students should not be making employment decisions based on undue pressure,” said Jana Pompadur Kierstead, director of M.B.A. career services at Harvard. “We don’t believe it makes for good decisions in the long run.”

Companies were reluctant to discuss declining bonuses and would not say how successful the bonuses are in luring students to make an early commitment.

“It gets into recruiting, which is, you know, a competitive sport, so to speak,” said John Campbell, a spokesman for Mercer Management Consulting, which offers the declining bonuses to students it wants to hire. “It’s a very competitive world out there for top students.”

Microsoft, another company that offers declining bonuses, said they were nothing unusual. “To attract the greatest talent, the company offers competitive salaries, sign-on bonuses and a strong benefits package," said Lou Gellos, a company spokesman.

Kraft has offered the bonuses for a couple of years. “It helps us manage our recruiting activity and staffing needs,” said Charlie Simpson, a spokesman for Kraft.

Companies that do not offer such bonuses criticized them as stressful for students and disruptive to the hiring market.

“In the last year or so, the M.B.A. market has started to shift from a second-year market to a first-year market,” said Julie Billingsley, a principal and manager of human resources at ZS Associates, a consulting firm. “There are fewer and fewer students looking during their second year. A lot of students take their summer offer.”

October traditionally has been peak recruiting season for many business jobs, but some business schools are finding that many students already have jobs by that time. At the Tuck Business School at Dartmouth College, for example, 80 percent of the students received job offers from their summer employers this year. Tuck expects that about 60 percent of those students will accept those offers, said Richard J. McNulty, director of career development at Tuck.

Other career directors and students at business schools say the declining bonuses make sense because they provide companies with greater knowledge about how many people they will need to recruit.

“The early-decision incentive bonus is really quite fair,” said Cibel Castillo, a second-year student at Wharton. “They give the student the equivalent amount that a company would spend if they had to come on campus and interview other candidates for that same intern’s position.”

Ms. Castillo added that the people she knew who accepted the bonuses probably would have accepted those jobs in any case — without the bonus.

One classmate, Grant Allen, said many of his friends believed that the money did not factor into their decisions. “The market’s hot, people know they have lots of options and they want to figure out what those options are,” Mr. Allen said. “They’re not being wooed away by 10 or 15 grand.”


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