Tuesday, April 4, 2017

Record 46% Of INSEAD MBAs Go Into Consulting

INSEAD is well known as one of the top feeder business schools for the global consulting industry, sending more MBAs into the field than any other B-school in the world. But in 2016 46% of the graduating class last year accepted jobs in the consulting sector, up from 43% a year earlier and nearly 13 percentage points higher than just three years ago.

The three big global players, McKinsey & Co., Boston Consulting Group, and Bain & Co. took 29.8% of the graduates who reported their career choices to INSEAD. 

McKinsey employed 125, up from 102 MBAs last year. 
BCG hired 67 grads, slightly down from 72 a year earlier.
Bain employed 48, down from 52 a year earlier. 

Only three firms, all in technology, broke up the consulting party: Amazon, Microsoft and Google, which were among the dozen top employers. 

Many of these graduates returned to their firms after picking up their MBA in the 10-month-long program. The accelerated pace of the MBA experience makes the school particularly appealing to consulting firms who sponsor their employees. The McKinsey total, for example, includes 75 new hires and 50 MBAs who returned to the firm. At BCG, 26 of the 67 hires were of former employees, while at Bain 14 of 48 total hires had previously worked for the firm.

The total median compensation package, adjusted for the percentage of graduates reporting sign-on and year-end performance bonuses, totaled $134,268, a 2.9% decline from a year earlier. 

The total pay is composed of median salary of $102,500, sign-on bonuses of $22,800, reported by 65% of the class, and performance bonuses of $22,300, received by 74% of the MBAs. 

INSEAD’s $134,268 total, just behind the University of Texas McCombs School’s $135,885, puts INSEAD behind 19 U.S. business schools. The highest paid MBA graduates last year again came off the campus of Stanford University’s Graduate School of Business and Harvard Business School. Stanford MBAs pulled down a total median pay package of $163,827, while HBS grads landed packages worth $158,080 (see What MBAs Make In Their First Year Of Work).

The pay gap is largely the result of many more INSEAD MBAs going to work in countries where pay levels are significantly lower than they are in more mature economies as well as many students who enter the program with salaries below those at many U.S. schools. Salaries across the world, even in the same industry from the same employers, can vary widely.  INSEAD revealed that graduates who took jobs in India earned median salaries of $47,360, or 3,200,000 Rupees, compared to overall median salaries for the entire class of $102,500, a sum that would include the Indian salaries.

The median starting salary for a consulting job in North America topped out at $145,000, exactly the number reported by leading U.S. schools, the median in Southern Europe was just $77,900. In Latin America, starting salaries in consulting were only $81,300, while in Asia Pacific they were $113,500, according to INSEAD. Moreover, the cost of getting an INSEAD degree are significantly lower than those who enter a more traditional two-year MBA program, resulting in one of the highest returns on investment for any MBA in the world.

INSEAD reported that 89% of its graduates had at least one job offer three months after graduation, down from 90% in 2015. That level of employment also trails many of the leading U.S. schools. At Chicago Booth and Wharton last year, more than 98% of the graduates had job offers three months after commencement, while at London Business School, 96% of the 2016 class had job offers at that point. Still, the 89% job offer rate was just a point below Stanford’s 90% job offer level last year. Given the unusually wide dispersement of INSEAD grads around the world, the 89% offer rate is impressive, or as Hastie pointed out, “a remarkable achievement given the intensive nature of our 10-month global MBA programme and the macro-economic uncertainty in some of our traditional sectors and geographies.”

While 46% of its graduates landed jobs in Europe, some 29% gained employment in Asia Pacific, 10% in Africa and the Middle East, 8% in North America, and 7% in Latin America. The school said that no single country accounted for more than 14% of the jobs its graduates landed last year.

Only 27% of the school’s MBA students came from the consulting sector, 46% of the graduates enter the field.  Among those who have joined the consulting sector, INSEAD reported that 25% of them will be based in Asia (compared to 22% in 2015), taking away geographical share from Europe (falling from 48% in 2015 to 45% in 2016), with the share of the other regions largely unchanged. This mix mirrors the growth expectations of these regions.

Average consulting salaries remained mostly flat for most regions, with the exception of Asia and the Americas. In Asia, average base salary increased by around 3% while the average base salary fell by 4.3% for the Americas. INSEAD said the fall in average salary in the Americas is mainly due to exchange rate impact and the reversal in regional mix between Latin America (65% in 2016 vs 33% in 2015) and North America (35% in 2016 vs 67% in 2015). This brought the overall average down despite the rise in average salary in the North and Latin America regions of 11% and 17% (without currency effects), respectively.

The 46% of the INSEAD class that was hired by consulting, moreover, compares with just 16% at Stanford, 25% at Harvard Business School, 27% at Wharton, and 30% at Chicago Booth. One other consequence of this is that the school’s representation in other sectors, particularly finance and technology, is much lower than many of its rival schools. Last year, only 14% of INSEAD’s MBAs went into financial services, while just 17% accepted jobs in technology. Similar to previous years, 6% of INSEAD’s graduates last year became entrepreneurs post-graduation.

The school reported that almost eight out of ten graduates used their MBA to switch industries, functions or geography. Some 48% of the class changed country, 52% switched industries, while 63% changed function. “This year, our students chose exciting roles with more than 300 different employers in 68 countries, which represents by far the most global and diverse reach of any top MBA programme,” wrote Hastie. “This is made possible thanks to strong employer relations with nearly 600 companies and an alumni network of more than 52,000 in more than 170 countries. In terms of career change, nearly 80% of the class changed one dimension of sector, function or country, with 27% of the class making simultaneous changes in all 3 dimensions.”

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