A recent article in the Yale Daily News contained a statistic that was so outlandish that I could hardly believe it could possibly be true. Marina Keegan says,
If this year is anything like the last 10, around 25 percent of employed Yale graduates will enter the consulting or finance industry. This is a big deal. This is a huge deal. This is so many people! This is one-fourth of our people! Regardless of what you think or with whom you’re interviewing, we ought to be pausing for a second to ask why.
I don’t pretend to know anymore about this world than the rest of us. In fact, I probably know less. (According to the Internet, a consultant is “someone who consults someone or something.”) But I do know that this statistic is utterly and entirely shocking to me. In a place as diverse and disparate as Yale, it’s remarkable that such a large percentage of people are doing anything the same — not to mention something as significant as their postgraduate plans.
I too found this statistic “utterly and entirely shocking” for two reason. First, since it’s unlikely that 25 percent of the students at Yale studied a field that is related to management consulting and finance, why would a company hire them to as consultants? Is there a nationwide shortage of business or finance majors? Second, why would anyone pay a freshly minted Yale grad to tell them how to run their business?
For the sake of argument, let’s assume that Yale is officially the Best College in America (even though U.S. News and World Report ranks them as #3) and that their graduates are some of the smartest kids entering the job market in any given year. Nevertheless, few of them will have ever actually managed a business before and will have no particular expertise in management. Most of them probably are deep in student loan debt, which shows they are not that savvy about “finance.”
Keep in mind we’re not talking about newly minted MBAs or PhDs. We’re talking about people who simply have a Bachelor’s degree. Most folks in the corporate world already have a B.A. degree and several years—if not decades—of actual experience. So why would they take advice from somebody who was sitting in a classroom five months ago?
As economist Arnold King says, “I doubt that students know anything more than when they came in about running a no-profit or a restaurant, or about management consulting for that matter. I imagine that many students are now better prepared to take more classes, say, in law school or graduate school. And perhaps that is where most of them are actually going.” I think that’s probably true. And I don’t blame the Yalies for taking a cushy job that will pay them a lot of money while they save up for grad school. But why would the consulting firms hire them?
The article made me think of Joseph Knippenberg’s post yesterday about young high achievers having inflated expectations. If you start college thinking you’ve entered the Yale-to-McKinsey pipeline and find, to your shock and dismay, that you have to get a job actually working in a corporation for a manager rather than consulting managers about how to run a corporation, you’d naturally be irritated and think the world was being unfair.
I don’t mean to pick on Yale grads, for my issue isn’t really with them. To be honest, I’m not sure what the issue is exactly. I wish I could articulate what it is about this news that I find so troublesome. It seems like there are overlapping issues related to business, higher ed, and the economy that I’m failing to convey. Am I completely offbase here? Anyone else feel that this is a minor signifier of a larger problem?
October 27th, 2011 | 2:48 pm
Consulting and finance are very different worlds, and I don’t understand why they’re being lumped together in this way. I can certainly assert that in the late 90s dreams of consulting work was huge at Ivy League-caliber colleges, although I thought that had evaporated substantially after the dot-com bubble burst.
Lots of consulting work, especially the stuff they give to junior people, is not “Let me tell you how to run your business” but “Let me tell you what envelopes you should use to send out your bills” and other soul-deadening work that doesn’t require any expertise at all, but simply some basic skills that many employers figure an Ivy League education should come with.
As for finance, again, lots of entry-level jobs on Wall Street simply require you to be reasonably smart (again, Ivy League credentialocracy going on) and work slave-labor hours (for admittedly non-slave-labor pay). No finance experience required.
So yes, you are right that this is a minor signifier of a larger problem. Our system has somehow developed into a credentialocracy where the right piece of paper is valued far more than experience and actual skills. That is a very bad thing that won’t end well.
October 27th, 2011 | 2:49 pm
The way this works is, companies like Goldman and McKinsey hire the top Ivy League grads, almost regardless of major, at ridiculously high salaries, which is why so many of the kids do it. The companies use the extremely difficult admissions process to these schools as a screening tool for intelligence and personality type. The companies want brilliant, ambitious, obsessive workaholics, which is what most kids who managed to get into Yale, Harvard and Princeton are. The kids get assigned to do hard research and grunt work while they learn the trade – they will not be meeting with clients (yet). Many of these kids will go to business, law or other grad school in a few years. The companies that work with clients need to advertise that their staff went to the best schools. This is why parents are so nuts about getting their kids into the “right” school – it means a ticket to get rich if you are willing to take the ride, without the risks of starting your own business.
October 27th, 2011 | 3:13 pm
Well, I work for one of the consulting firms that hires a lot of Ivy League graduates.
When we hire junior people we’re looking for smarts (especially quantitative smarts), attitude and work ethic, and enough maturity and polish to talk to clients. We recruit heavily at Ivy League schools because the “hit rate” on those three criteria is high (though nowhere near 100% – more like 10-20% among the folks we interview).
We also draw people from “less prestigious” schools, though in general we tend to have a lower hit rate on interviews. We’d be more than happy to hire everyone we need from The University of Illinois, but in practice to get the kinds of traits we need we have to recruit heavily at the “prestige” places.
With Ivy League liberal arts grads, the biggest gaps tend to be quantitative skills. Even economics majors often aren’t comfortable enough with numbers to do the work we need our junior people to do.
With business administration or engineering students at big state schools, the gaps tend to be around polish and communication skills. They are plenty smart enough to do the work, but come across as nervous and inarticulate, which is a big problem in a client serving business.
We focus on raw abilities rather than specific skills because we need for people to be very flexible and to learn on the job in what is, effectively, an apprecticeship environment. Executives don’t pay our fees to “take advice” from 23 year old Yale grads. They pay our fees to take advice from 50 year old Partners with 20-25 years of experience in the business. But the advice of those Partners is dependent on having lots of facts and good, rigorous analysis of those facts. And that’s what the 23 year old’s work centers on providing.
October 27th, 2011 | 4:10 pm
Some helpful insights from the comments above, but I think there are still two troubling realities here.
1) These grads are jumping into “industries” that don’t create anything except information that allows a limited elite to plow wealth into their already large coffers. The fact of growing income inequality makes this seem even more crass.
2) Smart, hard working people who didn’t have the right parents, proper education and sufficient vision when they were 14 or 15 years old to get into an Ivy League are effectively locked out of this gravy train. Ironically, I suspect businesses suffer because they end up lacking real diversity of intellect and personality.
Grad programs, for instance, are packed with smart, creative people who got ambitious too late and lack the entree to elite business that an Ivy Leaguer enjoys. They end up warring with one another for a slim set of relatively low-paying jobs in academia, the government and the non-profit sector.
October 27th, 2011 | 6:32 pm
We focus on raw abilities rather than specific skills because we need for people to be very flexible and to learn on the job in what is, effectively, an apprecticeship environment.
So, really, it’s not the education that is valuable, it is simply the gateway into the chance to get the education that is the real value.
Smart, hard working people who didn’t have the right parents, proper education and sufficient vision when they were 14 or 15 years old to get into an Ivy League are effectively locked out of this gravy train.
It sure sounds to me like a system whereby you have to spend lots of money going through an elaborate educational system to get into the apprentice program where the real job training starts certainly undermines the ideals of meritocracy and equality of opportunity.
The question, of course, being “what can be done about it?”
1) These grads are jumping into “industries” that don’t create anything except information that allows a limited elite to plow wealth into their already large coffers.
It seems to me that America was always founded on checks and balances – and that excess is the path to ruin. (I can’t think of a single situation where this isn’t true – nor a single virtue that does not turn into a vice in excess).
So the real problem IMO is that we have a situation where the system itself is contributing to income disparity.
While OWS looks for a scapegoat, the real solution must lie within the rules of the system itself: if we do not find a way to check the processes that are creating bad outcomes, the system will become unstable.
October 27th, 2011 | 6:48 pm
1) In response to RedWell: getting a decent-paying job in academia or the non-profit sector is at least as hard as landing a comparable salary at a consulting or finance firm; those jobs are extremely hard to come by these days.
2) I suspect that the reason that elite schools have such a disproportionate share of the jobs in consulting has to do more with social capital than innate intelligence or even hard work. Even if you’re extremely intelligent and hardworking at an average State U, you aren’t going to pick up the same understanding of the wheels of power that you would hanging around your classmates at an Ivy League or comparable university.
3) Joe, the way the gig works is this. New students come out of college and get paid a ton of money to go to consulting or finance. After a few years there, most of them leave to go to business school. Their former companies will pay for their business school tuition on the condition that they come back and work for a few more years there. By the end of this, you have a significant number of 30-year olds who are very immersed in that corporate atmosphere and stick with the company for several decades more. Clients pay a lot to consulting teams and financial institutions for (theoretically) the expertise that the partners and senior managers have accumulated. The 23-25 year olds earn a lot more than they contribute, but they’ll come back eventually as senior managers and partners. That’s the price a client has to pay to keep the whole system going.
October 27th, 2011 | 9:40 pm
RedWell- You need to think about the concept of intellectual property; not everything that can be created is tangible. As to the grad programs, as an earlier commenter pointed out, these Yalies are likely to leave their entry level investment banking or consulting jobs after a few years in order to attend a top notch business school, most of which require several years of work experience and do not accept applicants right out of college.
October 27th, 2011 | 10:51 pm
Freshly-minted Yale grads are not, however, telling people how to run their businesses. An entry-level employee at a consulting firm is spending most of his or her time staring at Excel spreadsheets and Powerpoint presentations. Same with investment banking — the kids get all the grunt-work.
After proving your worth with a few years’ of service, the company then keeps the employees who have proven themselves by promoting them and getting rid of the rest.
Top law firms work the same way with Ivy League law graduates. The point is not that Ivy League graduates know so much or have applicable real world skills. The point is that they have high IQs and so firms test out entry-level hires from these places, monitor them closely for a few years and then keep the ones they like.
October 28th, 2011 | 5:44 am
You have to remember that these are the “Best and the Brightest” that were and are instrumental in creating and defending the financial catastrophe of our Country and, indeed, the world. I sometimes wonder if what is going on in the Eurozone is the Peloponesian War of finance for Europe as World Wars I & II were for Europe’s political structure. The time is out of joint and this article tells me (as I knew) that it starts with a moral vacuum at the top. Ichabod! Ichabod!
October 28th, 2011 | 9:58 am
Agree with all of the comments that these recent grads tend to do the number-crunching, PPT preparation, and other analytical work under the supervision of more experienced people – this is true in many large professional organizations beyond consulting firms. On what might be disturbing Mr. Carter about Yale, read today’s David Brooks piece which reviews essays by older Yale grades on their lives. I like Brooks, but the inherent hubris embedded in the essays is just breathtaking.
October 28th, 2011 | 10:06 am
To clarify: my emphasis is not on grad students at state universities; rather, the point is that we should be troubled that the most powerful and wealthy private sector entities lack imagination.
Yes, it is rational to go to an Ivy League to reliably identify smart, young prospects, but those schools also filter for a very specific type of student–one who enjoyed lots of early support, a focused but potentially unimaginative personality and, typically, access to wealth. Employers may find that immediately useful, but society should be a little concerned that this narrow subset of individuals too easily rises to the top.
I don’t imagine Yale worries too much that its students are tapped for such work, but, again, we should wonder as a society about so many young elites lacking the imagination to do anything but jump into a conventional wealth trajectory.
Finally, I fully acknowledge that the knowledge economy is important and growing, but I argue these people are not part of it. They are learning how to manipulate financial transactions and swim in an elite business environment. Such skills remain marginal to innovating new, more efficient (and wealth generating) technologies and production systems.
October 28th, 2011 | 12:38 pm
I can add a little more to the above, based on my experience working for a large company that has hired management consultants.
Sometimes clients benefit from the knowledge of the senior partners, backed up by detailed analysis the Ivy league grads did in the back room under the partners’ direction. Having a different perspective from outside can be helpful.
But all too often, consultants are hired simply to provide cover for an unpopular decision that company management has already made, especially when layoffs will result. Or, many companies have an inferiority complex regarding their own people, so they hire consultants that end up telling them exactly the same thing that the middle managers and senior professionals in the company were saying.
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