Business students shun Wall Street for Main Street
LAST year, Donovan Perkins, a business-school student, made the rounds of cocktail parties hosted by Wall Street companies. He liked what he heard: ``It seemed like a go-go industry,'' he says. For Mr. Perkins and thousands of other business-school students, Wall Street is more gone-gone than go-go. ``After the layoffs, I thought, `Well there goes that industry,''' says Perkins, a second-year student at the University of Virginia's Darden graduate business school.
For several years Wall Street seemed a corporate black hole that sucked in the best and the brightest from places like Harvard, Stanford, and Wharton. Despite the stock market's 508-point plunge last Oct. 19 and subsequent layoffs, investment companies say they want to remain a presence on campus. But for the first time they are having to compete for talent.
Recruiters who used to pick and choose among candidates for interviews, not to mention job offers, are going begging. Meanwhile, mainstream corporate America - the Fords and Eli Lillys and Mead Papers of the world - are seeing a new tide of interest from MBAs, which, economists say, that bodes well for United States competitiveness down the road.
Last year's insider-trading scandals involving big players like Ivan Boesky curbed a few appetites for Wall Street jobs. But the stock market plunge and subsequent layoffs - 14,000 in the New York City financial district alone - have created an ``active disinterest'' in investment banking, says Darden's dean, John Rosenbaum.
That has led to an overhaul in student thinking about Wall Street players. ``There's a sense of: `These guys cooperate with the takeover artists to destroy America,''' Mr. Rosenbaum says. ```These guys, in a self-serving way, [take part in] the Wall Street-Boesky greed.'''
And if there were any doubt left about whether Wall Street was a good place to work, he adds, ``The first time the market starts to turn down, it's `Clean your desk out; you're gone.'''
While job opportunities have narrowed, the October plunge has been healthy for students, says Mark-Tami Hotta, a Stanford Business School student. It has forced them to reassess their life goals.
``There were a lot of people in the business who didn't belong there,'' says Mr. Hotta, who worked at First Boston last summer but is not returning to Wall Street. ``They were there for the wrong reasons: money, fame, glamour, not because they wanted to be bankers.''
For many students, Wall Street still has its allures: the intellectual rigor of the work; the impact that the young employees have on corporate clients; and, incidentally, the $50,000-plus salary in the first year, not including bonuses, which often double one's total pay.
Michael Smart at the Wharton School is one of the loyalists. Last summer he worked at the investment firm Dillon, Read & Co. and plans to return to Wall Street after graduation. ``The people who sincerely want to do investment banking aren't letting [the stock market plunge and layoffs] divert them from that goal,'' he says. ``The market fluctuates, and you have to take the bad with the good.''
Pick of the graduate crop
For its part, Wall Street has a history of taking the good, generally graduates from the top of the class. Last year, it skimmed off 30 percent of Harvard grads, 25 percent of Wharton grads, and 28 percent of Columbia's business school grads.
This year, Wharton and Columbia expect Wall Street to get as few as 15 percent. Harvard won't make predictions, but it's reported that interviews by investment banks have dropped by half.
Consider the case of Goldman, Sachs & Co., one of the nation's premier investment banks. When executives made their presentation at the University of Chicago business school, about 500 students attended. That was before Oct. 19.
``A month later, we had empty slots on the interview schedules,'' says Rachel Adler, who heads recruiting in the Chicago office. That was a new experience for Goldman Sachs, whose interviews have been a prized possession among MBAs.
By contrast, Boise Cascade, a paper company based in Idaho, is pleasantly stunned by its newfound popularity. In the past, company recruiters always had time to kill when they visited Harvard Business School, since students didn't fill the interview schedules.
This year, Boise Cascade had hoped to interview 16 second-year students, or two schedules of eight interviews, says Jaye B. Pierce, human resources administrator. ``We got a call from Harvard's placement office asking us to add two more schedules because there was such interest in the company,'' she says. ``So we added two more schedules.''
Then two weeks ago, she got another call. Harvard wanted a fifth schedule. ``The stock market crash has enlightened MBAs that there are other things to consider than just salaries,'' she says. ``Things like opportunities for advancement and security.''
Bidding for choice interviews
That ``enlightenment'' can be quantified in a way. Many schools have an auction system for allocating interviews among students. At Virginia's Darden school, each second-year student gets 2,500 points; he or she then bids points to get on interview schedules. The more attractive the company, the greater the competition and the higher the bids.
Last year, the high scorers were the investment banks, with Goldman Sachs getting a 1,500 bid and Shearson Lehman Brothers getting a 900-point bid, according to Karen Dowd, Darden's director of placement. This year, the investment banks are getting top bids in the 200s.
Meanwhile, corporate Main Street is riding high. The interview waiting lists are long, and bids are high at places like McKinsey & Co. (with an 850-point bid), Digital Equipment Corporation (750), real estate company Spaulding & Slye (501), Marriott, Quaker Oats, and AT&T (all with 500-point bids).
`Trade schools for yuppies'
The shift in interest is a happy event for business schools, says Charles Hickman at the American Assembly of Collegiate Schools of Business. The fact that so many students were going to Wall Street ``made business schools very uncomfortable. They had gotten the reputation for being trade schools for greedy yuppies,'' he says.
If the interest lasts, it could boost American industrial competitiveness, says Samuel Hayes, a professor at Harvard Business School. ``To the extent that this shifts the spotlight to manufacturing and the industrial sector,'' good managers from the top schools ``could generate the energy and excitement needed to meet the Japanese competition,'' he says. He notes, however, that the ``spillover of excitement'' might not show up on the bottom line ``for another decade.''
Others are skeptical about the sudden lack of interest in Wall Street. ``I'm not sure it's real,'' says Vladimir Pucik, a professor at the University of Michigan.
Some securities firms - notably, E.F. Hutton, which was recently bought by Shearson Lehman Brothers and is laying off 6,000 employees - have pulled back their recruiting efforts. Most, however, want to retain their presence on campus, and say they will hire as many grads this year as last.
The theory among students is that Wall Street is just cleaning house at the most cost-effective level: the experienced, highly paid employees. The Street still needs young ``spear carriers,'' to do the legwork and number crunching.
``The hot air is that managing directors are there till 10 or 11 every night,'' says Sean Mullin, who worked at Merrill Lynch Capital Markets last summer. ``But it's the associates who put in 100-hour weeks.''
Others aren't so sanguine about new graduates' opportunities on the Street. ``They'll be competing with experienced people for those spots,'' notes Victor Lindquist, a Northwestern University dean, who conducts an annual survey of business employers.
And more distressing to students, new graduates will be competing with one another. ``People who had expectations to interview at investment banks suddenly shifted to fields I was interested in,'' says E.Blanton Hamilton Jr., a Darden student looking at real estate careers.
The market crash not only stepped up competition but also sharpened a general uneasiness among students about the future. It raised doubts about the economy's strength and its ability to absorb a new horde of MBAs - not just on Wall Street, but in the entire job market.
That uncertainty was reflected in an interview that James Van Vleck, a recruiter for Mead Corporation, had with a Darden student last week.
``I asked him for a description of the ideal job,'' he recalls. ``The first thing he said was, `One that's going to be there tomorrow.'''
``I had never heard that before,'' he says.