29 May 2019 20:55 IST

Salaries for fresh MBAs in US are highest on record this year

GMAC and EFMD release report on current market and hiring trends based on survey with 1200 employers

The Graduate Management Admission Council (GMAC), a global association of leading graduate business schools, in partnership with MBA Career Services & Employer Alliance and European Foundation for Management Development (EFMD), has released its Business School Hiring Report based on findings from the annual Corporate Recruiters Survey, with over 1,200 employers in 45 countries providing insights into the current market and hiring trends among MBA graduates.

Recent graduates with an advanced business degree, particularly in the US, receive substantial starting salaries. The median annual base starting salary US employers plan to offer new MBA recruits this year, is $115,000, more than double the median for new bachelor’s degree employees ($55,000) and the highest ever recorded in the US when adjusted for inflation. By industry among US employers, median MBA starting salaries are highest in the consulting ($135,000) and finance/accounting ($125,000) industries.

“Employers clearly place a high value on acquiring MBA graduates,” said Sangeet Chowfla, President and CEO of GMAC. “There is a highly active candidate marketplace in terms of geographical shifts in study destinations, but the value that both employers and graduates see in an advanced business degree is constant.”

Overall, most employers plan to increase MBA starting salaries this year (56 per cent), including 63 per cent of Asia-Pacific employers, 56 per cent of US employers, and 49 per cent of European employers. Median annual base starting salaries vary considerably by world region. European companies plan to offer new MBA hires $95,000 this year, and the median for Asia-Pacific companies is $45,000.

US companies’ hiring plans

Forty-eight per cent of US employers either plan to, or are willing to, hire international candidates this year, about the same as 2018 (47 per cent) and down from 55 per cent in 2017. This year’s survey was fielded in February and March, before the recent H-1B rule change became official on April 1. The rule change stands to benefit international graduates with advanced degrees from US institutions of higher education over graduates with bachelor’s degrees.

“There has been a feeling of uncertainty in recent years around the direction of US visa policy, which is impacting international hiring and application trends,” Chowfla continued. “It will be interesting to see how much positive impact this rule change may have on both the flow of international students to the US and their employment opportunities.”

While MBA hiring projections remain strong relative to historic trends, for the second consecutive year, a smaller proportion of companies overall report plans to hire MBA talent compared with the previous year. Among US employers, 77 per cent plan to hire MBA talent this year, down for the second consecutive year. A slightly smaller proportion of responding US companies report plans to grow and expand this year (66 per cent) compared with last year (69 per cent), as worries associated with talk of trade wars and higher tariffs may be impacting employer plans.

Nearly nine in 10 (87 per cent) companies in Asia-Pacific plan to hire MBAsthis year — the highest share of any world region, though off slightly compared with last year (90 per cent). Nearly seven in 10 European companies plan to hire MBAs this year (69 per cent), up from 2018 projections (64 per cent).

Hiring trends and factors

International hiring is on the rise among Asia-Pacific and European companies as US companies continue to pull back. Seventy-one per cent and 69 per cent of European and Asia-Pacific companies, respectively, either plan to or are willing to hire international candidates this year, both up from recent years.

Across world regions, reasons differ for not hiring international talent. US employers are notably more likely to cite uncertainty about future changes in policy/law as a factor (25 per cent), which further emphasises the potential positive impact around the recent H-1B rule change. While in European or Asia-Pacific companies, 15 per cent and 11 per cent respectively cite policy/law as a determining factor in hiring.

“Our recent research reported the decline in US companies recruiting international students from MBA and speciality master’s programmes based on uncertainty about economic conditions,” said Megan Hendricks, Executive Director for the MBA Career Services & Employer Alliance. “While the decline in this year’s GMAC report holds steady with regard to US business’ plans to hire foreign talent, we hope the recent H-1B visa rule change will encourage students to study in the US in order to diversify B-school classrooms and talent pools.”

“This year’s GMAC report on MBA and GME hiring trends shows the tremendous opportunities graduates have when they finish their business studies,” said Eric Cornuel, Director General & CEO of EFMD. “The growth of quality business schools around the world has also been met with increased employment opportunities for graduates in emerging markets and regional economies. Now is an exciting time to be pursuing an MBA and business master’s degree.”

Prospective Students Survey

GMAC also released a new career aspirations report based on 10 years of data from the mba.com Prospective Students Survey. The new report highlights how the mix of GME candidates’ aspirations for their careers post-GME have shifted over time, as now a greater share of candidates seek to enhance their current career path (41 per cent) than switch job functions (36 per cent) or industries (27 per cent).

Candidate interest in consulting is high, as 36 per cent identify it as a job function and industry of interest. Other industries of interest include finance/accounting (34 per cent of candidates interested), products/services (27 per cent), and technology (19 per cent). The desire for international employment also rose slightly (2 per cent).

The report features a detailed demographic breakdown of candidates’ post-GME career interests, including by gender, age and world region of citizenship.