MBA Advisor: The Undisclosed Gem In Haas’ 2018 Employment Report

UC-Berkeley Haas School of Business

For the fourth year in a row, median base salaries for MBA graduates at UC-Berkeley’s Haas School of Business remained stuck at $125,000. No less surprising, median salary and mean sign-on bonuses declined to $145,448, down from $146,224, because fewer students reported getting signing bonuses this year, according to Haas’ newly released 2018 employment report.

In 2018, 70% of the graduating class of MBAs report average sign-on bonuses of $29,212 (the school does not report median sign-on bonuses). A year earlier, 76% of the class got signing-bonuses that average $27,926. The decline in the number of students getting sign-on incentives put Haas’ starting pay on the downside. The school’s median salary is $15K under Harvard Business School, $10K below MIT Sloan and Wharton, $5k less than the median at Chicago Booth, Northwestern Kellogg, Columbia Business School and Dartmouth Tuck.

While Haas consistently ranks among those top schools with the highest ranking of any MBA program at a public institution, median salaries are more on a par with other publics such as the University of Michigan’s Ross School of Business and the University of Virginia’s Darden School, both at $125K medians this year.

WHY MBA PAY AT HAAS APPEARS STALLED

All this makes Haas one of the few top-tier school failing to report record pay for its graduates this year. In fact, MBA compensation at the school has not kept pace with inflation since 2014. Four years ago, salary and sign-on bonus totaled $145,082, just $366 less than this year’s starting pay. And those pay levels are in San Francisco’s Bay Area, one of the most expensive places in the country to live.

What’s going on? It’s more a story of industry choice and unreported compensation at Berkeley than it is a matter of how much top-tier MBA employers are willing to pay the school’s graduates. The percentage of Class of 2018 MBAs who went into nonprofit and government jobs, where salaries are among the lowest and signing bonuses are virtually nonexistent, nearly doubled this year to 4.4% of the class. Haas grads entering consulting, which typically pays the highest starting comp packages and the most reliable signing bonuses, declined as well this year.

This year, the median base and bonus in the nonprofit sector at Haas was $113,000, compared to more than $167,500 in consulting. But the shifts don’t end there. More Haas students this year moved into other industries, including transportation and energy, where base salaries are below the overall class median.

WHAT YOU DON’T SEE THAT IS SIGNIFICANT: STOCK GRANTS & STOCK OPTIONS

If the school’s numbers appear lackluster next to peers, it’s because Haas is not giving applicants or students a full picture of the pay and employment prospects of its graduates. The school, for example, stopped reporting other guaranteed compensation in 2014 when the total for that element of MBA pay averaged an extraordinary $31,107, received by an equally extraordinary 47.3% of the class. (By way of comparison, this year Harvard Business School reported that only 14% received other guaranteed comp with a median of $28,700.) And Haas’ numbers did not even include stock or stock options, received by 30.8% of its graduates in 2014.

A spokesperson for Haas says “we have elected not to report other guaranteed compensation because we feel it grossly under-represents graduates’ first year compensation in terms of stock options and other bonuses.”

Yet, other guaranteed comp and stock is especially important in some industries, especially financial services and tech. Haas an unusually high percentage of students pour into the technology industry which tends to be far more generous on the equity front. These goodies are not captured in the statistics Haas now shares with applicants. The under reporting by Haas may help set expectations at a level where they will be exceeded by graduates of the school but they also put Haas’ MBA program at a disadvantage when comparisons are made by applicants with peer institutions.

2018 MBA Employment Reports

Harvard Business School

University of Pennsylvania Wharton School

MIT Sloan School of Management

University of Chicago Booth School of Business

Northwestern University Kellogg School of Management

Columbia Business School

Dartmouth College Tuck School of Business

University of Michigan Ross School of Business

Duke University Fuqua School of Business

University of Virginia Darden School of Business

Georgetown University McDonough School of Business

Vanderbilt University Owen School of Management

Haas Professor John Morgan in the classroom

‘THERE ARE A LOT OF COMPANIES THAT ARE PAYING IN STOCK & OPTIONS’

Asked why median salaries have stalled, Assistant Dean of Career Management Abby Scott has a ready answer: stock grants given to MBAs who particularly enter the technology, transportation, and energy industries, three sectors that accounted for more than 37% of this year’s hires. “It appears like our students take a hit on salary when stock options tend to be a significant factor in many of their total compensation packages,” she says. “There are a lot of companies that are paying in stock grants and options. Our compensation isn’t as heavily weighted in salaries and bonuses as they are at other schools so we don’t see all of our compensation in these numbers. It’s fair to assume that nearly every technology company and every transportation and logistics company offer includes stock.”

It also doesn’t help that Haas’ spare employment reports fail to put the school’s best foot forward. Unlike all its peer schools, Haas doesn’t disclose the percentage of students who have and/or accepted job offers at graduation or three months later. It doesn’t tell you how many graduates did startups or how many students were sponsored. The school also fails to report the percentage of its graduating class that returned its employment surveys or how many of its students found jobs through Haas career center.

When Poets&Quants asked for this information, the school promptly provided it. But applicants won’t see any of this information in Haas one-page report on the school’s website. The school told Poets&Quants that 83.2% of its MBA graduates had at least one job offer by graduation, with 75.5% of the class accepting those offers. There months later, 94.4% of the MBAs had job offers and 93.4% of those offers were accepted. Haas added that 196 of this year’s graduating class of 243 students were seeking jobs. Some 14 members of the class stared their own companies, while 28 were sponsored and returned to their previous employer. The 2018 employment report is based on 240 students.

AMAZON WAS HAAS’ TOP EMPLOYER FOR THE SECOND YEAR IN A ROW

Haas Assistant Dean of Career Management Abby Scott

Why doesn’t Haas publish more detailed reports? “We are still a pretty small class,” explains Scott. “As we get bigger, we will be able to slice the data in a way that will make it more meaningful. The second reason is that our evening and weekend students are also pretty active in their participation of recruiting. And the way the standards are set up, it’s for only full-time students. That is changing but we have significant numbers of people who we want to include and we will. Again, it’s just another reason to keep it simple.”

Amazon was the top employer at Haas for the second year in a row, hiring 14 graduates. McKinsey & Co. was next, making ten new hires but also bringing back to the consulting firm another half dozen sponsored employees from the Haas MBA program. Google, BCG, Bain and Tesla each hired seven Haas MBAs this year. The rest of the top employers (hiring three or more students) were Adobe, Deloitte, Parthenon EY, IDEO, KraftHeinz, PwC, and The Clorox Co. Dropping off this year’s list was Genentech, Microsoft and VMware, all of which made the list in 2017.

Scott says that 14% of the students this year went to work in startups, up from 11% a year earlier. Meantime, roughly 6% of the graduating students, 14 in all, launched their own companies or organizations. That is up from 5% of last year’s graduating class.

TECH INDUSTRY REMAINS MOST POPULAR AT HAAS BUT TAKES FEWER GRADUATES

While technology remains the most popular industry at Haas, the school’s employment reports shows that fewer students are entering the field. Some 31.7% of this year’s class accepted jobs with tech firms, down from 36.9% a year ago and well off the peak in 2014 when 43.4% of Haas’ graduates went into the tech industry. But the year-over-year comparisons are not necessarily apples-to-apples. Scott notes that you could just as easily count some companies in transportation, such as Uber and Lyft, as tech firms. “Last year,” adds Scott, “we didn’t have enough students going into transportation and logistics or manufacturing to call it out. Some of those previous data points could have been rolled up into tech.”

One standout area for Haas is clearly tech pay, even without accounting for equity. At Haas, students entering the tech industry this year were paid median base salaries of $130,000, with average sign-on bonuses of $35,337, a package that matches the offers in consulting. “We do have significant numbers of students who go into the big tech companies that pay well like Amazon and Google,” adds Scott. “They tend to have comp structures that are pretty decent.”

Consulting was also down, taking 24.0% of the MBAs, compared to 26.2% last year. Oddly, median starting salaries in consulting slipped to $137,500 from $140,000 a year earlier. Scott attributes the difference to the likelihood that a few more students were recruited to overseas offices where starting pay is not as high as it is in the U.S. “Some of the consulting firms are aggressively recruiting for emerging markets so it could be reflected in those stats,” she explains. “It’s probably just a handful of students that could swing it.”

MORE MBAS TOOK JOBS IN FINANCIAL SERVICES, CPG, RETAIL & NONPROFIT SECTORS

Graduates taking jobs in the healthcare and biotech industries also fell to just 4.4% of this year’s class from 8% in 2017. Real estate was yet another industry with less of a draw this year as 2.2% of the students went into that industry, down from 3.7% last year.

Taking up the slack from those declines were financial services, consumer packaged goods and retail, and the nonprofit sector. Haas MBAs who went into the financial sector rose to 13.7% from 11.8% a year earlier, while CPG claimed 8.2% of the class, up from 7.5%, and the nonprofit and public sector attracted 4.4% of the students, up from just 2.1% in 2017.

Haas reported that 3.8% of the class went into manufacturing; 3.3% into transportation and logistics; 2.2% into the energy industry, and 1.6% into media and entertainment. A year ago, all four of those industries attracted so few students that Haas did not break them out.

MBA Advisor

Tuesday, December 4, 2018

The Undisclosed Gem In Haas’ 2018 Employment Report - Poets&Quants