by Heather B. Hayes
As a finance professor at George Mason University’s School of Management, Gerald Hanweck is used to seeing students treat his subject with quiet dedication —
not overt enthusiasm. But since Wall Street began a financial meltdown this fall, Hanweck has learned to check his expectations at the door.
Thanks to the media attention surrounding the crisis, many GMU business students have made the switch to finance or added it as a second major. The sudden
interest is incredible, Hanweck says, noting that classroom discussions are spirited and a little known elective called “Derivatives, Futures and Options” is
overenrolled for the spring semester.
Today’s financial crisis offers “essentially a living laboratory for students to learn in,” says Hanweck. “Who would have thought that [the insurance giant]
AIG had a huge portfolio of credit default swaps? It’s like the early studies of human anatomy: Now we suddenly have the bodies opened up, and we can see
inside. It’s quite exciting.”
In fact, business school officials say that recent events make this one of the best times to study the fundamentals of business, but the same environment
also could create one of the toughest job markets in years for b-school graduates.
“Business schools right now are experiencing a boom in applications,” says Robert F. Bruner, dean of U.Va.’s Darden Graduate School of Business
Administration. Despite the significant loss of jobs on Wall Street, students still see a business career as highly attractive, he says. “I am not hearing a
sharp change in attitude among students towards business.”
Changing career options
At the same time, however, Bruner is cautioning second-year students to cast a wider net in choosing careers. “Students should reassess their aspirations,
not in terms of the standard job description, such as investment banker or investment manager, but rather in terms of the special strengths they bring to
business,” Bruner says.
Students interested in Wall Street jobs, he notes, usually have the kind of financial analysis, modeling and communication skills that are attractive to
companies in a variety of industries. Various school officials are now telling students to consider, for example, jobs as bank examiners, financial analysts,
risk officers, consultants, corporate finance officers or community bankers.
Edward Felton Jr., professor of ethics and strategic management at the College of William & Mary’s Mason School of Business, points out that even Wall Street
is likely to provide opportunities at small, stable firms that weren’t involved in the subprime mortgage debacle. But he cautions that competition for any
job is likely to be fierce because of the high number of laid-off finance employees in New York. “The reality is that students may have to start somewhere
they really don’t want to be, but it’s kind of like being admitted to college: If one place doesn’t turn out to be the best fit for you, you can always
transfer later,” Felton says.
Richard E. Sorensen, dean of the Pamplin College of Business at Virginia Tech, says that, no matter what their focus of study, some business-school graduates
this year and even next year could end up underemployed in the early part of their careers. Many companies have started limiting the number of schools they
visit for recruiting, although Virginia Tech remains on their list, he says. In mid-November, several recruiters informed school officials that they are
going to delay or reduce their job offers for students. “All of a sudden, there’s been significant uncertainty introduced for our students,” Sorensen says.
And there is some disillusion, though mostly with the excesses seen in the financial-services sector rather than business in general. Ari Perlman, a
second-year student at Darden, was once interested in a career in finance, even getting an internship at Lehman Brothers in New York last summer. But his
experience with the now-bankrupt investment bank forced him to give up any dreams he harbored about making a killing on Wall Street. Perlman has accepted a
position as a strategy consultant for Deloitte, a company he worked for before going to graduate school. “I think the mentality on Wall Street of ‘here one
day, gone the next’ definitely drove me back to the business consulting industry, where I think firms almost across the board value their people in a
different way than do investment banks,” Perlman says.
Likewise, Risha Malhotra, a second-year student at W&M’s Mason School and former producer for CNBC, no longer wants to work on an international stock
exchange. This fall, he switched his concentration from financial markets to entrepreneurship and hopes to land a job in growth strategy or business
development at a foreign office of a U.S.-owned corporation. “I like the idea of the old-style management where your focus changes completely from just
looking at the financials to understanding the dynamics of each and every factor that impacts business,” Malhotra says. “I want to be part of creating a
best-value culture within an organization that helps it to succeed and grow, not just play around with money without creating any value.”
Focusing on fundamentals
In fact, business schools say that they are using the financial crisis to help students put the focus back on business fundamentals, something that is easily
lost in the speed, complexity and scale of today’s global economy, Bruner says. “The world needs sound business education more than ever,” he says.
Darden already has churned out a case study that details the causes and remedies of financial panics and is developing others that focus on the current
crisis. Likewise, Virginia Commonwealth University’s School of Business is putting more emphasis on teaching the necessity of enterprise risk management. And
William & Mary is using the crisis to address ethical issues in business and relying on Career Acceleration Modules (CAMS) to immerse students in
John Merrick, who teaches the CAMS course on investments and financial services, recently put his class on a bus and took them to Wall Street. There they
visited Bank of America, Shenkman Capital Management, BlackRock Inc. (a financial management firm) and the International Swaps and Derivatives Association.
“We were right in the thick of things, talking to people who gave us very good insight into how their specific worlds have been affected by all this,” he
He’s also added a new component to his class, asking students to research and analyze seven episodes of extreme market volatility — including the banking
crisis of the 1930s, the Japanese asset price bubble in the late 1980s and the U.S. inflation crisis of the 1970s and 1980s. Once they report back, students
will compare their findings with today’s crisis. “I’m hoping that by giving them some historical perspective, they’ll get a better sense of how far markets
can get stretched and how far they can snap back,” Merrick explains.
The hallmark of business, Bruner notes, is the ability to adapt to challenges and opportunities as they arise. That is something that he advises that company
executives and business students keep in mind as this economy evolves. “One of the most dangerous things you can say is that this time is different,” he
states. “The people that forget — or never learn — the fundamental notions of profitability, of serving customers, of developing employees, of managing with
integrity and other deep principles of business will be people who are left behind when the recovery begins.”