Thursday, June 16, 2011

Business schools, demographics, and reach

The Wall Street Journal reported recently on how Harvard Business School's incoming class demographics are changing.  The article analyzes the recently released data on HBS's class of 2013 and compares it to prior years. The two biggest trends are more women and fewer financiers.  Harvard's dean of admissions has obliquely confirmed that some of this trend is deliberate, but I imagine not all of it is and I'm thinking about the reasons and ramifications.
Wall Street Journal graph showing changes in industry over time.
The percentage of students with finance backgrounds peaked with the class of 2011, the students in that class would have been applying in late 2008 and early 2009 when their industry was being decimated.  It makes sense that many of these students were seeking refuge from the carnage or are looking for a change of industry.  I would bet, though I don't have any data, that the applicant pool for the class of 2011 had a bumper crop of applications from those with a finance background.  As the financial crisis has subsided this effect will have also faded, causing a lower percentage of people with finance backgrounds to apply.  Harvard Business School is also probably looking long-term; since they had so many finance-related students accepted in 2011 and 2012 they will likely want to course correct a little to ensure that their alumni stay relevant to all industries.  Consulting has seen a similar trend probably for similar reasons.

The number of students in technology and manufacturing has instead grown to take the place of finance and consulting.  I think this is a very strategic move on Harvard's part since quantitative easing and devaluation of the dollar may help to improve the viability of manufacturing in the US and technology continues to be a major force in our economy.  I'm thinking that this shift helps to bring Harvard Business School a little better into alignment with the economy as a whole - 32% of your students coming from a finance background feels very out of whack if you're trying to affect change in business as a whole.

If business schools are trying to increase their institutional reach than I think it makes sense for them to diversify the industries and demographics represented by their student body since it broadens their alumni network and pushes their methodologies into more companies, industries and  regions.  However, by localizing where your alumni are they may have a better chance of reaching the critical mass needed to create real and lasting change.  Harvard may not be as significantly swayed by the latter point since they graduate around 900 students a year, more than many other business schools.

Do you think business schools' admissions are motivated by the impact the school can have further down the road?  Nominally these schools are selecting for the best potential leaders of their generation and are grooming them to be even better.  Certainly selecting the best and gaining wide exposure improves the visibility and value of their brand and would cause more applications to come in.  Do great leaders just come disproportionately from finance?  Somehow I doubt it.  I'd love to see profiles of applicant pools to go with this data and I would have appreciated if other industries, the public sector, and nonprofits were shown as well since they compose a significant part of our economy and employment.

What do you think causes changes in business schools' demographics?  How does this change the impact they have on our society?

For more thoughts around the trends behind Harvard Business School's class of 2013, check out MoneyMamba's article on Harvard predicting a manufacturing rebound.  He beat be to the punch on posting about this and takes it in a different (and more interesting) direction!

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  1. It's kind of ironic that students are going for finance now that the industry clearly isn't doing so well compared to others. Maybe they have hopes of revitalizing the economy or something.

  2. Since it broadens their alumni network and pushes their methodologies into more companies, industries and regions. They may have a better chance of reaching the critical mass needed to create real and lasting change.
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