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Demand keeps compensation competitive; experience is a plus
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A majority of employers seeking to hire business-school graduates in 2014 plan to raise annual base salary levels for new hires at or above the rate of inflation, the nonprofit Graduate Management Admission Council (GMAC) found in a study comparing business-graduate pay in 2013 and 2014.
In November 2013 the GMAC conducted its annual year-end poll, predominantly of employers in the U.S. (53 percent of respondents) and Europe (25 percent), to preview hiring projections for the coming year. The 2013 Year-End Poll of Employers revealed that more than half of organizations plan to increase base salaries for recent MBA graduates either at the inflation rate (45 percent) or above it (11 percent).
In comparison, just under half of employers plan to offer recent bachelor's candidates starting base salaries either at the inflation rate (35 percent) or above it (13 percent).
“There are more and more graduate business school students on the market, but the demand is still high so compensation remains competitive,” according to the survey report.
Employer demand for non-MBA business master’s graduates continues to grow. The greatest growth in demand is expected to occur in the share of organizations that plan to hire new Master in Management graduates (42 percent of employers, compared with 37 percent in 2013). Demand for recent Master of Accounting and Master of Finance graduates remained consistent with 2013, hovering just above one-third of employers planning to hire graduates from this field.
For these and other specialized business degrees, the expected change in 2014 average annual base salaries from those in 2013 is expected to be as follows:
The study emphasized that employers are after candidates with solid work experience. "By participating in an internship during their graduate business program, students can set themselves apart in the job-applicant pool," the report stated.
But even those without degrees who have industry experience relevant to a hiring company can expect to receive 2014 salaries more likely to outpace inflation than those with recent bachelor's degrees (hiring of non-degreed candidates, including those who completed formal apprentice programs, is more prevalent outside the U.S.).
The survey revealed that 38 percent of employers that plan to hire direct-from-industry candidates will offer salaries that match the inflation rate, and 1 in 5 will boost base salaries above the inflation rate for experienced individuals, reflecting a "work experience premium."
“Good people with solid experience will continue to be in demand," according to the report, but "demand is not so great that companies are willing to take people with little previous work experience and/or mediocre academic performance."
Expected Change in 2014 Average Annual Base Salaries versus 2013 Salaries (percentage of employers)
New-hire salary above inflation rate
New-hire salary at inflation rate
New-hire salary same as 2013
New-hire salary down from 2013
Master of Accounting graduates
Master of Finance graduates
Others specialized business degree graduates
Experienced hires (direct-from-industry candidates)
Bachelor's degree graduates
Nonbusiness master's degree graduates
Source: Graduate Management Admission Council
In another notable finding, more than three-quarters of employers that plan to hire business-school graduates in 2014 expect to maintain their 2013 hiring levels or increase them.
Asked about hiring business-school graduates, 96 percent of employers agree or strongly agree that these candidates bring value to their organization, and 68 percent agree or strongly agree that recruiting business-school graduates is a priority in their hiring plans.
The vast majority of organizations, when considering business-school talent, expect graduates to be able to use data to drive decisions and have exceptional interpersonal skills.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
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