Posted by fmba
on Apr 10, 2016 in MBA Alumni
, MBA Careers
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MBA students are adept at putting a value on long-term cash flows. New research suggests this mentality is also present in their evaluation of job offers particularly if an alumnus of their business school is doing the recruiting.
Professors from NYU Stern and MIT Sloan found that students securing a job through a member of their institutions alumni network received a starting package worth 16 per cent less than those recruited through more traditional and more impersonal campus hiring events.
They took that lower offer after being comforted by the fact it originated from a former student on the same top programme, argues NYU Sterns Jason Greenberg, co-author of the research to be published in Sociological Science with MIT Sloans Roberto Fernandez.
The jobs coming through the alumni channel are perceived as having significantly better growth potential, he says, linking this preoccupation with long-term cash flow to the net present value calculations that are a staple of MBA courses. They are willing to take less today for a job that has better prospects in the long run.
As well as giving a clearer view of what the job entails, an approach from an alumnus can offer a reassuring vision of what the young graduates career might look like in a few years time. You get a window into your potential future.
How can recruiters exploit this bond of trust? Prof Greenberg suggests that smaller employers who cannot afford the hoopla of on-campus hiring could use their MBA graduates to target young prospects in their old classrooms.
But the strategy may not yield long-term savings: even net present value addicts will at some point demand to be paid the prevailing market rate.