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How Harvard students are channeled into finance & consulting

Amy Binder has a really interesting new piece in the Washington Monthly on why so many grads of Harvard and Stanford go work for McKinsey or Goldman when they finish. Surprise (well, not really) — it’s organizational.

Based on research she conducted with UCSD grad students Nick Bloom and Daniel Davis, she argues that elite schools have created a “structured pathway that leads straight to them.” In the 80s, banks and consulting firms realized that being able to advertise teams of Ivy League grads was valuable. In her words:

To get to those kids, the nation’s top banks and consulting firms began by competing with each other to become “platinum” members of the career services programs run by the most elite schools. Winners of this pay-for-play competition get the best tables at campus career fairs, access to students’ email in-boxes, entrée to the most impressive banquet rooms for holding information sessions and receptions, bundled delivery of applicants’ résumés, and space and scheduled times to hold one-on-one interviews, among other goods and services known as “recruitment.”

As these careers became the most central and visible on campus, student culture became more and more heavily organized around the search for these kinds of jobs. They’re seen as the high-status thing to do in very competitive campus environments.

What’s ironic is that it’s not so much about the money. It’s partly about status, but it’s also about a clear pathway at a time of uncertainty. Harvard students don’t go to college dreaming of becoming investment bankers. Okay, a few do, but this–all from students who took the finance/consulting track — is more typical:

Most students come to campus with vague plans about their professional lives, along the lines of a Harvard alum named Kevin, who said he planned to “study philosophy and go to law school and have a nice life,” or Olivia, who had chosen Stanford because she dreamed of launching a start-up. Another junior at Harvard laughingly recalled that he “thought careers in finance were like being a bank teller, being an accountant, or something.”

But they have to pick something. And the schools make it easy. From one student:

I guess a good job means consulting or finance because, well, look, that’s what the Office of Career Services has. When I talk to my peers, that’s what my peers are talking about. For someone like me who had very limited professional experience, who didn’t really have any baseline for what one could do, it was like, hey, I just see that these are the things that people from Harvard go do.

Ultimately, Binder’s argument is that the schools bear some responsibility for how large this track has become — 31% of Harvard grads take jobs on this track. Some articles have suggested there’s been a downturn in the numbers in the last five years, but even if that’s the case, it’s still a large fraction.

Harvard and its ilk don’t really need the money from career services booths, though they may like the promise of high-earning alums. But they are doing their students, and the rest of us, a disservice by making these paths so easy to fall into. Sure, there are students who have a passion for finance, and that’s probably where they should be. But for the rest of them, a little more encouragement to explore the road less traveled could be a very good thing.

Written by epopp

August 29, 2014 at 11:15 am

Posted in education, professions

5 Responses

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  1. Harvard and its ilk don’t really need the money from career services booths…

    That might be true of the institution, but often units within universities — even well-funded ones — operate on their own budgets. The argument would then be that elite private schools should invest more of its tuition and endowment-generated income into its career center rather than rely on booth-generated revenue. But that, in itself, is a different organizational problem.

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    mike3550

    August 29, 2014 at 4:28 pm

  2. It’s long past the time that any University really ‘educates’ its students rather than tool them for a career. Whether this is a good or bad thing is something else to be discussed, but there are few fields/schools that actually try to foster open education. Like mentioned above, it’s largely because of funding opportunities. Even unis like Harvard are too tempted by those potential outlets, despite being insanely well funded (to the point that Harvard could pay all tuition and still make a profit every year).

    No clue how we could ever incentivize upper education institutions to go back. Just look at Harvard.

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    Elias Garcia

    August 29, 2014 at 5:19 pm

  3. Hmm. It must require an elaborate conspiracy to draw fresh undergraduates into the highest paying jobs.

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    anon

    August 30, 2014 at 12:33 am

  4. I think the article and the post are mostly on target. Just a few clarifications from an alum.

    Most of my classmates at Harvard were really risk averse when it came to trying to find jobs. Finance and consulting have clear cut career paths where the next few years are set for you. In fact, most of these jobs – especially consulting – were talked about as ways to explore the corporate world. Law school (at the time) offered a similar straight-forward career path and was a popular option for similar reasons. The structure in and of itself was reason enough to apply.

    The other thing to note is that for students on financial aid, the allure of the money is non-trivial. Among those with significant debt or who were first generation college students, the choice of heading to the public sector and making $35K a year in an entry level job versus making $70K+ was an obvious one. For whatever it’s worth, the $35K isn’t an arbitrary number; Harvard’s Public Service organization, the Phillips Brooks House, had a fellowship program that would match a person to a 1 year fellowship at a nonprofit with a $35K salary. Also, after the year you didn’t have a guaranteed permanent position with the organization or anything.

    For many people I know, this was mostly a financial decision or for international students – 10% of the graduating class – a visa decision. In fact, the people who were most likely to head for public service, peace corps or TFA tended to be the people with the most resources. TFA was smart and reduced the risk even further by making partnerships with banks and consulting firms to defer a job for a TFA gig. So even a number of the students who went to TFA did it as a two year public service stint to then take guaranteed full-time jobs at a bank or consulting firm.

    Finally, I think the role of local status was unbelievably important. The article talks a little about what made a “good job”. But even more important was that there was a fairly strong consensus on the status orderings for jobs within on-campus recruiting. And if you know anything about elite college students, you know that they like to compete for measurable things. People would constantly talk about the number and places where they got interviews. In fact, many students even applied to jobs they had no interest in taking just to see if they could get it. So it became somewhat of a game. Who could out network the other students? But in sum, job offers – especially the choice of ‘good jobs’ – was a socially acceptable way to display status. Simply put, getting a job at McKinsey was an immediate way to get respect from your peers. Only getting a job at a lower status firm was equally revealing.

    Perhaps more interesting was the extent that this status hierarchy on campus was different than the external one. For instance, one of the small firms on campus that was considered extremely high status was the now defunct Katzenbach. Through very unconventional marketing and a visibly socially progressive staff – openly gay staff and senior leadership that was not entirely straight white males – they were able to make spots at the firm highly coveted. Yet outside of the university, it was just a weird boutique firm. The social construction of what constitutes a “good job” was pretty fascinating.

    Obviously I’m am biased, but I feel like there is this strange one-sided narrative out there about the reproduction of elites through elite schools. There are certainly the old boys clubs that perpetuate high earning jobs through social networks and cultural reproduction (I’m sure Lauren Rivera’s upcoming book on this will illustrate this). But I think what gets missed in this discussion is that the people under the highest pressure to take these jobs are actually the ones from more disadvantaged backgrounds. They have both the financial pressure, social pressure and often the family pressure to get the highest status and most lucrative opportunities. They feel the greatest need to reaffirm their status and competence through these jobs. And things like public service or graduate school are luxuries that either come with a high opportunity cost or which they might not be able to afford.

    Liked by 3 people

    jmodel

    August 30, 2014 at 1:07 am

  5. I found the parallel that Binder draws with TFA to be the most interesting part of her article (the rest seems to basically mirror what Karen Ho already observed in “Liquidated”). But I’m not sure that the success of TFA proves what Binder seems to believe. Instead, I wonder how much of TFA’s popularity is due to its value as a prestigious credential when applying to prestigious professional school programs? How exactly did TFA come to enjoy such prestige? Is there any reason to believe that other types of employers/programs would enjoy similar success on these campuses?

    Also, if students are only applying to these jobs because they are not sure what else to do, what becomes of those who fail to land these jobs?

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    Kevin

    August 30, 2014 at 1:18 am


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