Why Women MBAs Still Make Less Than Men
Maria |
May 24, 2023

Welcome to our thought-provoking episode of Business Casual! Join hosts John, Maria, and Caroline as they shine a spotlight on the persistent gender wage gap among women pursuing MBA degrees. They will embark on a journey of exploration, delving into the intricate web of societal, cultural, and structural factors that contribute to this disheartening disparity. Through deep analysis and insightful conversations, we aim to understand the root causes behind women MBAs facing lower salaries compared to their male counterparts.

Episode Transcript

[00:00:07.130] – John

Well, hello, everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast with my co hosts Maria Wich Vila and Caroline Diarte Edwards. We just received a report from the Fortuna Admissions, which is taking a look at women in leadership roles after they get the MBA degree. And there’s sort of mixed news here. I mean, there’s on one level, what happened is that Forte found that there’s been an increase in women’s enrollment in MBA programs that we are well aware of and we’ve talked about in the past, and that when it comes to pay, the gap between the genders has, in fact narrowed from 2016 to 2022. But unfortunately, it still persists, and it persists fairly significantly on a number of levels in terms of promotions, leadership roles, obviously compensation. We’ll get into some of the details here and it’s a pretty good study. I mean, the researcher surveyed nearly 1500 MBA alumni and over 60 elite MBA programs and really got a good view of where women are once they get an MBA degree. Maria, what do you make of this?

[00:01:26.460] – Maria

I wish I could say that it was completely shocking to read this result, but unfortunately, it isn’t. It’s funny. I graduated from college 25 years ago. My 25th college reunion is coming up, and I started thinking about how when I graduated in 1998, I went into the workforce completely naive, and I was like, Woah, it’s such a good thing to be a professional woman in today’s world. Not like back in the where women had to deal with sexism. I’m so glad that that’s behind us now. And that lasted all of, what, three days until I had people making inappropriate comments or all kinds of that was just my beginning foray into the wonderful world of sexism in corporate America. And I just think it’s everywhere. I don’t think it was just my particular employer. I think it’s literally everywhere. And so I’m not surprised to see that women are often penalized professionally. I think one of the biggest things that does contribute to the pay gap for professional women is the I think I quipped right before we started recording that the elephant in the room is actually a small seven pound baby that once women decide to have children, even if they have a very willing partner, even if they have gender equity in terms of intended division of labor in the home, a lot of the tasks with child rearing and family management does tend to fall stereotypically, typically to the woman.

[00:02:54.050] – Maria

And then making things even more complicated. Then 15 years, 1015 years later, then we enter what’s called the sandwich generation, which means that we’ve got both younger children at home, and now our parents are ailing, and so they may have health challenges. And again, I just think because there are these are just very deeply embedded systemic prejudices or biases, that the woman is the nurturing one the woman is the one who should take care of the child. The woman is the one who can probably cook better, even though in my relationship that is not the case.

[00:03:24.000] – John

Whoa, wait, that’s not the case in my house, right? Meals.

[00:03:29.110] – Maria

Yes. And I am very fortunate that my husband is amazing, but on average, and he’s way better at cooking, which, thank goodness for all of us. But it’s the truth that a lot of that burden does tend to fall to women and something has got to give, and that something does tend to be their careers.

[00:03:46.730] – John

Yeah, that’s really true. And it’s sad in a way. Before I have Caroline weigh in, I want to just give you some numbers out of the report, and they’re kind of interesting. I mean, what the report showed is that pre MBA, the men were making $83,524, which is pretty good income for a young person in their mid to late 20s before they even get an MBA. And the women were making 76,660. So the gender gap, essentially between men and women was 8.2% 1st job. Post MBA, the gender gap pay differential narrowed from 8.2 to 6.4, but still persisted. Men earned roughly $9,000 more than women. The men were earning 135,000 job out of post MBA and women, 127,000. And obviously this is for a wide range of schools because we know, obviously at the M seven that these numbers are much higher. But I think that they give a really good picture of MBA programs in general. And then what happens is the wage gap really increases substantially a few years after one gets the MBA. So it goes from 6.4% difference to a 17.2% difference when men report making 209,000 a year, and this is basic compensation, and women report making 173,000.

[00:05:27.270] – John

So the difference there after just a few years is $36,000. The difference post MBA was roughly $9,000 and the difference before the MBA was about $7,000. So that’s a big jump. You would think that the MBA did narrow it somewhat, but you would think that that would be a more sustainable advantage, but it turns out not to be. And Caroline, I’m imagining that you share Maria’s views on why that’s so.

[00:06:00.340] – Caroline

Yes, it is sadly unsurprising. And as I mentioned earlier before the podcast, I looked at this data at INSEAD and somewhat similar to what Forte is showing here, we did see that there was a bit of a gap, so slight gap in the salaries of men versus women coming into the program. But what we saw was that there was no gap when they came out of the program. So that’s different to this Forte data. So perhaps INSEAD is a better option for women, but I don’t know how that evolves over time. So I have to qualify that. I don’t know how the trend evolves over time, and I wouldn’t be surprised, honestly, if there is a similar trend for the reasons that have been mentioned so far. So I think it’s a very complex mix of factors with embedded prejudice, right. That we’re inheriting thousands of years of gender prejudice and then it is difficult for mothers, I think, to juggle life in a corporate career with having a small child. And I think that’s particularly true in the US. Maria was mentioning before we started recording that you do not have the advantages in the US.

[00:07:22.140] – Caroline

That you do have in some, at least some European countries where when I had my four children while I was working at INSEAD in France, I benefited from very generous maternity leave, paid maternity leave, which you do not have guaranteed at all in the US. And several benefits. Right. We were given money from the government for having children.

[00:07:48.010] – Maria

Right.

[00:07:48.310] – Caroline

And that was not even me tested. So regardless of how much you earn, we got nice benefits paid to us because we had children. And so it’s much more difficult, I think, in the US. I don’t know. I frankly do not know how people manage to have children here because you don’t get the paid in terms you leave, and you have so little paid vacation.

[00:08:12.260] – Maria

Right.

[00:08:13.170] – Caroline

When I had young children, I was working in France, I had six to seven weeks a year of paid vacation. In the US. You’re lucky if you get two weeks. Well, how are you supposed to manage school vacations with two weeks parental vacation? It just doesn’t work.

[00:08:31.140] – Maria

Right.

[00:08:32.210] – Caroline

And all of the summer camps and so on, they cost an absolute fortune. At least they do here in California.

[00:08:39.820] – John

Yes.

[00:08:40.470] – Caroline

So I’m amazed that people have as many children as they do here in the US.

[00:08:47.130] – Maria

Because I’m not sure I would have.

[00:08:48.910] – Caroline

Done it if I started out having a family here. So I think that there’s a lot that could be done to support families and make it put the structures in place, have much more support for childcare in France. You can send your child to I mean, there’s subsidized nurseries and then there’s free public education from the age of three years old for every child. Right. And it’s so much harder here. I’m not sure that people quite realize how hard up they are in the US. Compared to many other developed countries. It doesn’t have to be like this. There are different ways of doing things that could make it much easier for families. And so it might not solve everything, but I think it could go a long way to making lives for working parents easier, because at the end of the day, if you’ve got two demanding careers, something’s got to give, right? Unless you’re both earning vast sums of money and then you’re outsourcing all of your parental responsibilities. And not everyone wants to do that either.

[00:09:59.360] – John

True. And even if you choose to work, childcare siphons off most of your earnings in this country. So that when you actually sit down and you calculate what you’ve made, the numbers are nothing like what your gross income is on your w two form it’s a fraction because you’re really working for personal growth and fulfillment and not real income when you’re a woman and you have children in this country. Now, one of the things in the past I know Sally Blout, who had been the dean, very distinguished dean at Kellogg School of Management, often said that many women prefer not to enter two of the most lucrative post MBA fields, and that would be finance and consulting, in part because of the demands that the consulting industry places on people for travel. The common sort of timetable is you leave on a Sunday night and you come back on Thursday and you spend Friday in your local office, but you’re essentially away for five nights a week. And then investment banking, where we know the demands on you, are, frankly, unrealistic. It is a client service business, and people routinely work 80 hours a week in it.

[00:11:19.320] – John

It’s a young person’s game, pretty much, unless you really are wanting to stay and deal with that and become a partner. And Sally’s point was that more women need to go into these two fields, but these two fields are so demanding and so unforgivable in terms of the time that’s consumed by the roles that people play in them that I would think that makes it very difficult for women to take these jobs. Maria, comments well, I think that’s why.

[00:11:52.310] – Maria

We end up seeing women who do pursue those fields immediately after business school end up being, quote unquote, mommy tracked, where they end up working in recruiting or professional development or something that isn’t client facing, something that is more a support role within the organization. Now I’m hoping. I do think that several of the firms are trying to create more on ramp programs so that a woman can sort of step aside or step away from the very intense day to day client facing work. Maybe take more of a support role for a few years and then get back into being a consultant later. But it’s tough, right? It’s a competitive field. It’s not as competitive to get those jobs, which is what I think most of the listeners here who are applying to business school, they’re more focused on getting the job. But then once you get the job, you have to do well in the job. You have to keep getting promoted in a highly competitive it’s not just highly competitive to get a job in a bank or consulting firm, but once you’re there, it’s highly competitive to get that next coveted spot.

[00:12:47.680] – Maria

And so if you’re like, well, I haven’t really worked in front of a client for five years, but I want to be on the partner track. I don’t know how that doesn’t really go over well. Those are five years. Let’s just say it’s five years. Those are five years where you’re not building those client relationships and therefore you can’t become the rainmaker later who brings in that big project. And then that’s all those dominoes that need to fall into place for someone to become a partner or managing director, even if the person is still employed at the firm, those dominoes are not being set up for them in the same way right now.

[00:13:20.820] – John

And Caroline, you chose consulting after you got your MBA at INSEAD initially. What was that like for you?

[00:13:27.990] – Caroline

Actually, I was a management consultant before I went to business school.

[00:13:31.060] – John

Oh, that’s right.

[00:13:31.970] – Caroline

And then I worked for the World Bank. So I do think that the travel can make a big difference and I wonder now if things may change a bit. We learned during the Pandemic to do so many more things online than we did before. And I do see some people who are traveling, friends and acquaintances who used to travel much more pre Pandemic, who have learnt to dial that back and are traveling less now and are still able to do their jobs just as efficiently. People have realized that you don’t necessarily have to always be face to face to get everything done. So I do wonder if perhaps things may change a bit and travel may be less a requirement and perhaps that sort of grueling schedule that you described, John, may be less the norm. I don’t know. Of course, when you’re client facing, you don’t get much of a choice about how things about your own schedule. It’s more when you get to the more senior levels, when you can decide if you’re going to travel or not. And by then it may be too late. You might not have got to that senior level.

[00:14:38.890] – Maria

Right.

[00:14:39.130] – Caroline

If you haven’t been through all that, through all of those years of travel beforehand. So it’s tricky. But I do hope that with increased use of virtual communications, that might perhaps favor women and make it easier for women to get their hands on responsibilities, that might have been more difficult in the past.

[00:14:58.450] – John

Right? I think one of the things about this report that’s very interesting is the detail in it. For example, the study found that women MBAs are less likely to be promoted. They averaged 1.8 promotions post MBA by the time they were responding to this survey, compared to men who averaged 2.2 promotions. Minority women incidentally, averaged only 1.5 promotions. Women have on average 1.1 fewer direct reports than men do. Women were much more likely to cite a lack of female leaders or role models and a lack of confidence. More women also pointed to leadership barriers, such as a lack of formal or informal sponsorship in the organization and their own hesitancy to share their ambition with leaders. Also, there was this other interesting thing that more women than men are looking at mid management levels of manager through director. More men than women. Aspire to partner clevel executive President, CEO and Owner which goes to the point that both Maria and Caroline are making in regards to how if you want a family and have children, the burden falls on you. And that affects also your aspirations at work, which then leads to even a bigger pay gap as a result.

[00:16:23.450] – John

On the other hand, let me just try to put a more positive spin on some of this at least. The increase in pay once you get your MBA, if you’re a woman, is roughly the same as a man. In fact, it was 65% versus increase for men with 62%. Also, interestingly enough, minority women had a salary gain of 57% lower than both white men and women. Non minority women had a 68% pay jump compared to that 57%, which is, again, that’s another issue here. If you’re an underrepresented minority, it looks like the gender pay gap is even greater for you than it is for a white woman. But on the other hand, I think this is such a good study that it does call more attention to the fact that companies need to do more to give women who they hire more support, more mentorship, more acceptance, and value them in a way that gives them the kind of responsibilities that’s going to lead to more promotion and more money. That’s clearly to me, the message that comes from this report. Caroline, what do you think a company looking at this report might make of it?

[00:17:45.580] – Caroline

Well, it’s a very complex issue and I don’t think any individual company can resolve it. But I think everyone needs to take some personal leadership here. So companies and business schools and government, it needs everyone to be pulling in the same direction, to really make a big difference and hopefully we are moving in a positive direction, but I don’t know.

[00:18:13.310] – Maria

Right.

[00:18:13.550] – Caroline

It’d be interesting to see what this data would have been 1020 years ago and whether there is a positive trend or not. But there is still an ongoing issue with feeling levels of management being male dominated. And it’s not an issue we have at junior levels. We have plenty of talented young women coming into the workforce. Business schools have done a pretty good job of attracting an increasing number of women to get an MBA. And in fact, if you look at college graduation stats, it’s very female dominated now, isn’t it? Switched, right. It used to be absolutely 40, 50 years ago. It used to be that men were in the majority and now that’s completely flipped it’s now women are in the majority. And so it’s not an issue with talented women coming into the workforce. And so companies need to look at the incremental biases that are affecting women over time. And I think, as you talked about, those careers that perhaps women are opting out of because of those 80 hours work weeks and because of those grueling travel schedules. I mean, to me, that smacks are quite a sort of macho work culture and is it really necessary to work those kind of hours?

[00:19:44.170] – Caroline

Or is that FaceTime is that sort of kind of proving a point that I can do it, I’m the toughest guy here, I can do I can pull the all nighter. To me, I don’t think that that’s necessarily about performance and results. That’s more about sort of beating my chest that I’m the hardest worker in the office and I’m proving to the boss that I can work the longest hours. And that’s probably a culture that appeals more to men than to women. And companies need to I think there’s a lot that they could do to address those practices, which are probably more likely to attract men than to attract women in the first place.

[00:20:33.370] – John

Yeah, that’s true. Maria, I wonder if you when you got out of Harvard, if you felt that pressure to be there all the time, to put in all those hours to try to match the men who were recruited alongside you.

[00:20:49.310] – Maria

I think I was working more than they were, probably it was at a startup and I was really committed to the startup success, so I was working a ton of hours. I just want to quickly point out, as a side note, and John, you brought this up when we were sort of pregame chatting before we started recording that this isn’t just about political correctness and performative wokeness. Study after study shows that women led companies tend to have better return on capital. Women led funds tend to do better. Women led teams tend to be less dysfunctional or have more healthy dynamics. So this isn’t just about like, well, let’s just pick an arbitrary statistic and put the flag down that it has to be gender gender equality. I mean, the data show that women led businesses or business units or business teams tend to outperform. So it is in everyone’s best interest that talented women are given these opportunities. Just now, Caroline, we were just talking about what can businesses be doing differently? But it really is such a big issue, as Caroline said, that it’s a little bit like I mean, I think some of it is like, hey, if you get mommy tracked, we’re not necessarily going to penalize you for that.

[00:22:07.160] – Maria

But I think it goes much deeper than that. I read in one of the articles that some of the suggestions were, well, let’s have more cases with female protagonists, or let’s have more male allies. And that’s all great, but that’s very indirect. As I was reflecting getting ready for today’s podcast, I was thinking, like, what would have been most useful for me? And I think for me, almost like a mini course or a workshop on the realities of things, because I don’t know that in business school. And maybe this is just my memory being wonky, which is very, very likely, but I don’t remember anyone ever pulling me aside and being like, look, it’s still going to be really sexist out there. Even a very pragmatic thing that I did not at all take into consideration. I went into work for startups after business school. I was working in the tech sector, and I didn’t realize, because it didn’t occur to me to ask her to look into this, that smaller companies do not have the same requirements to adhere to things like maternity leave and family leave offerings. So a very small company, if someone would have pulled me aside and been like, look, if you want to start a family one day, you should probably work at a bigger company because they will have things like maternity benefits.

[00:23:18.400] – Maria

They will have health insurance. That’s going to be really good. They might have for people who might have fertility issues, larger companies tend to have their health insurance plans, tend to cover fertility benefits. So there are all these very pragmatic things that I wish someone would have that I think business schools could have pulled people aside because I think it’s great. Look, I love where gender parity or almost gender parity, a lot of business schools, companies are doing more. That’s all great. It’s great to get more male allies involved. Yes, we definitely need the male allies involved, but on a pragmatic level, until those changes kind of ripple through the system, I also think we’re doing women a disservice by perhaps pretending that some of these issues aren’t really there or kind of glossing over them and therefore people are graduating. Fresh face and optimistic real life hits, and it’s like a ton of bricks. It’s like the anvil on the Wily coyote’s head of the reality of it all.

[00:24:15.700] – John

Yes, well, that’s very true. And I wonder too, if in fact this is probably going to be a controversial question, but I’m going to ask it nonetheless. If you graduate from a top 25 school, right, not a second tier school, are you more likely, less likely to see a gap? And here’s why I asked this, because the McKinsey Bain BCGS, they’re not paying women less than men when they hire them, and neither would Goldman Sachs or J. P. Morgan or Morgan Stanley or Microsoft, Apple or Google. And yet even this survey shows that there is a difference in pay between men and women even right after graduation. And I wonder if that’s a function of the companies that don’t have all the greatest resources and don’t have all the money and aren’t the glamour companies. And it may be that the pay differential in those types of companies or jobs is greater than at the elite level that we more often than not talk about. Caroline, do you think there’s anything to that or am I just trying to get into a can of worms here?

[00:25:31.290] – Caroline

Yeah, I don’t know. Or is it that or is it that men are more likely to go into those finance private equity jobs with a super high salaries, and women are perhaps not going into those. I don’t know whether it’s the difference in positions and companies or whether there are actually substantial differences within companies for similar positions. I don’t know. I suspect that the gender pay gap reflects some differences in career path and positions that the women have versus the men.

[00:26:13.190] – John

Yeah, one of the points in the studies is that men are more likely than women to hold line jobs, which come with profit and loss responsibility and higher pay than women at at a pace of 47% to 42%. So not a big difference, but a difference nonetheless. And obviously, the mean compensation for a line role was about 207,000, and for a staff role, it was more like 181. So there is some of that. But even when women do hold line roles, incidentally, they still earn less than men anyway. The study found that women earn an average of about $34,000 less than men even in line rolls. So there’s still a problem, obviously, and I don’t know, it’s something that’s not going to go away. But I think as more women are in MBA programs today and will have positions of responsibility and power and leadership, I’m hopeful that they’ll help to change things by getting companies to pay for child support so that women can actually come to work and not worry about their children and how their children are faring at home and not siphoning off half or more of their pay to take care of their kids, which is a big problem.

[00:27:37.140] – John

I think a lot of women don’t go back to the workforce because just the economics of it just do not work in this country for many women. And it’s a real sacrifice that you have to make, particularly if you don’t have a mom, a grandparent nearby who would gladly care for your children when you’re at work and be totally supportive and enthusiastic about you’re wanting to have a fulfilled professional career. So for all of you out there, we’re hoping that someday we’ll see this gender gap truly narrow. If you want to read about the study, it’s on the Poets and Quant site. It’s called New Forte Study. MBA boosts wages for women and minorities. But gender pay gap persists. Caroline, you make a really good point about how Europe treats women so differently with children than in the United States, and how it’s much more conducive to encourage women to go back to work. I wonder if you ever could foresee some of that happening in the US.

[00:28:43.590] – Caroline

Well, there’s a very long way to go, right? I mean, I think it might happen sorry, going to happen on a state by state basis. I think getting some federal laws through that would be more aligned with European regulation could be very difficult in this country. But honestly, the gap is just so enormous. When I think back, I had such generous maternity leave. Our nanny you were talking about the cost of childcare. I think we had tax deductions for the nanny. We got benefits from the government because we had children. I mean, it was just one thing after the other. It made so much difference to me. It’s astonishing how little support there is in this country. And I’m amazed that the birth rate is as high as it is, quite frankly, given how little support there is here for families. Hey, any progress would be great. Progress, right? So there’s a lot of progress we made that, I think, at least on a state by state basis. If we could start making some progress, that would be wonderful.

[00:29:51.070] – John

Very true. And I say if there’s a miracle in life, it’s the miracle of birth. I don’t think there’s any other real miracle in life. And maybe that’s the reason why so many people want children, even in the United States, where the government policies might not be too friendly to parents and children. All right. This is John Byrne with Poets and Quants. You’ve been listening to Business Casual.

Why Women MBAs Still Make Less Than Men
Maria |
May 24, 2023

[00:00:00] John Byrne: Well hello everyone, this is John Byrne with Poets and Quants, welcome to Business Casual, our weekly podcast with my co-hosts Maria Wich-Vila and Caroline Diarte Edwards. Today we have a special guest, Heidi Hillis from Fortuna Admissions. She is based in Australia, is a senior expert coach for Fortuna, and has three degrees, all from Stanford, a BA in English literature, that’s my degree, an MA in Russian studies, and an MBA from the Graduate School of Business. And we have Heidi here to discuss some really fascinating research. Here’s what Fortuna did. They dug into the last Two class profiles of the Stanford Graduate School of Business.

That’s the class of โ€˜23 and the class of โ€˜24. They looked up all these folks on LinkedIn to identify a little bit more about their backgrounds, including their former employers and their places of undergraduate education to come up with an incredible analysis. Heidi, welcome.

[00:00:46] Heidi Hillis: Thank you. I’m glad to be here.

[00:00:48] John Byrne: Heidi, what is, what are the big takeaways from your deep dive discovery?

[00:00:54] Heidi Hillis: It’s hard to know even where to start. I think there’s a quite a few interesting kind of trends that we’ve seen that have taken place over the years. We were mentioning before the call that traditionally there hadn’t been, 10 years ago, if you’d looked, you wouldn’t have seen so many tech companies represented, but now there’s a big presence of tech companies who are feeding a lot of these MBA programs in Stanford in particular.

I think that the thing that was really interesting was, looking, not just at where the companies that were feeding the students, the applicants to Stanford. When they were working there, when they were applying, but actually the paths that they took prior to their current job.

So how many people were working, if you look at McKinsey, for example, or Bain and BCG, those are obviously companies that feed a lot of applicants to the program, but we found 20%, which seemed to be normal of, the class came from consulting, but if you actually look into the numbers in their background, You would see that actually 37 percent of these two classes had worked at McKinsey sometime prior, or actually in consulting, so it was, it’s The kind of the patterns that are behind, what you would normally see in terms of what Stanford tells us.

So you get a sense of the paths that people have taken. And so that’s something that was really interesting to see.

[00:02:16] John Byrne: Absolutely. And of course, this is this analysis goes so far beyond what any applicant would learn by simply looking at the class profile that the school up because, this level of detail is never available to people.

[00:02:33] Heidi Hillis: No, and yeah, for example, you could see that, Stanford will say that they have around, each year around 50 percent of applicants are international, which is a great statistic and gives you lots of hope if you are an international student. But when you dig into the numbers, you actually understand that.

75 percent of the people who get into Stanford actually went to a U. S. University. So even if you’re international, it does have does seem to have kind of an advantage of having been educated in the U. S. That seems to be something that they look for. However, I think. The concentration of universities in the U.

S. that are feeding to Stanford is something also that, if you’re looking at it, you might find a little bit dis, disconcerting. There’s a few programs that are really, obviously the top. Programs as you would expect places like Harvard, Stanford, Yale, the Ivies but if you look at the international universities very diverse from all over the world, really lots of people from different places, which is also really interesting.

[00:03:38] John Byrne: Yeah I tell you, one of the things that struck me in the data is how consistent it is. 10 years ago, we did the same exercise at Stanford and a bunch of other. Schools from Harvard and Dartmouth and Columbia and talk and a few others and back 10 years ago, we found that 25. 2 percent of the class of 2013 were from Ivy League colleges.

And the Ivy League 8 schools, not including Stanford. And if you included Stanford, it would have been 32. 6%. So now, let’s move forward to your data. And in 23, 30. 7 percent went to Ivy League schools, even above the 25. 2. And in 24, 27. 9 percent went to Ivy League schools. So it looks like Stanford has gotten even a little bit more elitist than it was.

Yeah,

[00:04:41] Heidi Hillis: It’s, it is it’s what the data says, right? Obviously, this is a sample. We have 80 percent of the two classes. So we don’t know where those other people went. And that might skew the data a little bit in another direction. But it is, if you look at there’s 15 schools, that include the Ivy’s and then you have UC Berkeley and obviously Stanford that really are contributing, 49 percent of the class of 23, 47. 3 percent of the class of 24. So that is a pretty heavy concentration and But, if you actually look into the data, you see a lot of people also, each of these is actually an individual story.

You see a lot of people who come from other schools as well. So it’s not like you have to give up hope if you come from a different school. I see a lot of individual stories that, from the whole range of U. S. schools that really are feeding into Stanford. So I think what the data doesn’t also tell you, unfortunately, is how many of these Of people from these backgrounds are actually applying.

So

[00:05:39] John Byrne: good point.

[00:05:40] Heidi Hillis: It’s it’s hard to know. And sometimes I think people this is. A path that a lot of people who go to these schools plan to take from the very beginning. So I would see, it would be interesting to know that I don’t know that we will ever find that out. But, um, that’s something to keep in mind as well.

[00:05:56] John Byrne: Yeah. And that’s a fair point. Because how reflective are these results of the applicant pool reflective of an elitist attitude probably a combination of if I had to guess, but, it is what it is, and these institutions obviously are great filters, so you come from McKinsey, Bain, BCG, and you go to Harvard or Stanford or Penn, and you pass through a fine filter, and it makes you less of a admissions risk than if you went to, frankly, the University of Kentucky and worked for a company that no one knows of.

That’s just the reality of elite MBA admissions, right?

[00:06:40] Heidi Hillis: Yeah. And so you will see that the people who are not going, you’ll see a lot of the people who you would, the profiles that you would expect, the Harvard undergrad that then goes to Goldman that then was working at a PE firm.

That’s a really typical profile that you’ll see. But you’ll also see some really, unique and interesting ones, which I think, Okay. Helps you understand that if you don’t have that path, you also have a real chance at these schools, and maybe even more of a chance, again, not knowing, how many of those Goldman P.

E. Harvard grads are applying. So I’m thinking of the guy that I saw who he went to UPenn undergrad, studied engineering, started out a kind of pretty typical path working in private equity, but then made a big pivot to work for go to Poland where he was working in a real estate investment firm and the head coach of the Polish lacrosse team.

So you have really interesting profiles like that, that you can see that. aren’t necessarily taking that typical path. And sometimes that really does help you stand out.

[00:07:42] John Byrne: True. Maria, what surprised you most about the data?

[00:07:48] Maria Wich-Vila: Wow. I think we already covered, the, one of the biggest ones was the number, the percentage of people who would had some sort of either their undergraduate or graduate education within the United States.

Intuitively, I had felt that was true. And sometimes when I try to, give some honest, tough love to applicants from certain countries, and they’ll say, oh, but Maria, I think you’re being a little too pessimistic. After all, X percent of the applicants at these schools are international, and Y percent are from a certain geography internationally.

I’ll say yes, but that doesn’t mean that they’re all Solely from that area. A lot of them are, do have significant international educational experiences. I think another, speaking of the international piece the percentage of people who had significant international work experience as well was something else that really jumped out at me.

Because it would signal to me that Stanford really does value this global perspective both within probably its domestic applicants and also its international applicants. So I thought that was also a really interesting piece of data that jumped out at me.

[00:08:52] John Byrne: Now remind me what percentage was that?

[00:08:56] Heidi Hillis: People who are international

[00:08:58] John Byrne: who have had international work experience.

[00:09:01] Heidi Hillis: I think it was 30%.

[00:09:02] Caroline Diarte Edwards: Yeah. Yeah. Yeah, it’s pretty

[00:09:04] John Byrne: impressive.

[00:09:04] Caroline Diarte Edwards: 30%, which I was thrilled to see. As well as coming from in Seattle and Europe. Obviously the international schools put a heavy emphasis on international experience and I hadn’t fully appreciated that. A school like Stanford would also.

really value that to the same extent. And it’s great to see that candidates are making the effort to get outside of the U. S. and get international experience because I think you gain so much from that exposure. And you bring more to the classroom if you’ve got that experience. I know that both Maria and Heidi.

I’ve worked outside of the home countries as well. Pre MBA and I think that you just have so much more to contribute to the whole experience. And it was great to see that 30%.

[00:09:50] John Byrne: What else struck you, Caroline?

[00:09:53] Caroline Diarte Edwards: We talked about the concentration of academic institutions, and I was also surprised about the concentration in employers.

So while there is a very long list of employers where the students have worked pre MBA when you dig into the career paths that they’ve taken there is some interesting concentration. Heidi had noted that the reports that There are 26 companies that account for nearly one third of the class in terms of where they were working right before Stanford.

But when you look at their whole career history, those same 26 companies represent over 60 percent of the class. So that is, yeah, that’s quite extraordinary that so many of the class have experience of working at quite a short list of companies.

[00:10:46] Heidi Hillis: I think that’s reflective of, if you really think about it, you have a lot of these companies.

You’re talking about the Goldmans and the Morgan Stanley and McKinsey that have really large programs that recruit out of undergrad that are really training grounds for. A lot of people that then on to do, work in industry or go on to work for in finance in particular, a lot of people starting out at some of these bulge bracket banks and then going into.

Private equity or smaller firms. So the diversity within finance in terms of where they were working prior to MBA is quite large compared to consulting because there just aren’t as many consulting firms, but a lot of people in financing, a lot of different firms, but they, a lot of them really do start out in these training programs, these analyst programs that are so big and popular.

[00:11:34] John Byrne: Yeah, true. And looking back, I did this exercise as well. The feeder companies to Stanford 10 years ago in the class of 2023, 22. 8 percent from McKinsey, Bain, BCG, and your data, 22. 5 percent work there. Incredible consistency over a 10 year period. When you look at the top six employers 10 years ago, they were McKinsey, BCG, Bain, Goldman, Morgan Stanley, and JP.

Morgan Chase. They accounted alone for 34 percent of all the students in the class of 20, 2013 at Stanford. In your data for 23 and 24 they account for 29. 8%, just a few percentage points less. So remarkable consistency. And I think you’re right, Heidi, this is a function of the fact that these firms bring in a lot of people who are analysts and actually expect them after 3 to 5 years to go to a top MBA school.

So there’s a good number of them in the applicant pool to choose from and let’s face it, they’re terrific candidates.

[00:12:46] Heidi Hillis: Yeah. I think another pool of really terrific candidates that you see, and I don’t know what the 2013 data was saying, but is the US military, which is really, I think, again, something that I felt having worked with lots of military candidates myself, understand that, Yeah, intuitively, I would have expected, but to see it in the data is actually really interesting.

You just see Stanford in particular, I think, is really looking for leadership potential, and it’s so hard to show that as an analyst, as a consultant, but as in the military, these people have such incredible leadership experience that it really helps them to stand out.

[00:13:23] John Byrne: Yeah. And let’s tell people what the data shows.

How many out of us military academies,

[00:13:28] Heidi Hillis: In all in total, we had, 20 over the two years. So that’s in the two classes that we found. So that’s, a pretty large number. And they come from all the different academies, right? So you’ll find them from different, not academies, in the army, navy and the marines.

So you’ll see that. And you also see quite a few, in the data we’ll, we see a lot from the Israeli military as well, but that’s actually a little bit difficult to because every Israeli does go into the military. So it’s they have that in their background. Any Israeli candidate would have Israeli military background as well, but again, that’s.

Place that people can really highlight their leadership. So you had eight people from who had been, who were Israeli and obviously had military experience where they were able to demonstrate significant impact and leadership prior to MBA.

[00:14:18] John Byrne: Yeah. In fact, 10 years ago, roughly 2%. of the class went to either West Point or the U.

S. Naval Academy. Good number of people actually from the military. Maria, any other observations?

[00:14:34] Maria Wich-Vila: Yeah, I was also surprised at the fact that within those top employers And when we look at the tech companies, it was Google and Facebook and Meta with a pretty large showing. Google was actually the fourth largest employer after the MBBs and, but then, I was expecting there to be an equal distribution amongst those famous large cap technology companies.

So I, I would have expected even representation amongst Google, Meta, Microsoft, Apple, Nvidia, Amazon, et cetera. And yet. Apple and Amazon only had one or two people each versus Google at 25. So I thought that was really fascinating and it makes me wonder if perhaps it’s a function of maybe Google and Meta might give their younger talent more opportunities to lead impactful projects, perhaps.

I’m just guessing here, but maybe Apple and Amazon perhaps are more hierarchical. And maybe don’t give their younger talent so many opportunities, but I was really surprised by that. I would have expected a much more even distribution amongst the those famous those famous tech companies.

[00:15:40] John Byrne: Yeah. You’re right. And I crunched the numbers on the percentages and Google took three and a half percent of the two classes and that’s better than Goldman, Morgan Stanley, JP Morgan Chase. Facebook had 2. 7 percent and Microsoft at 1. 5, and I was shocked at Amazon because, Amazon is widely known as the largest single recruiter of MBAs in the past five years.

At one point, they were recruiting a thousand MBAs a year, but in, in one sense, maybe Amazon quite doesn’t really have the prestige. For Stanford MBAs who might rather work elsewhere, I think that might be is, you look at the employment reports at a lot of the other schools and Amazon is number one at a number of schools and very low percentage of people from Amazon going to Stanford.

We don’t know, of course, how many. Leaving Stanford and going back to Amazon, but it can’t be that many.

[00:16:41] Heidi Hillis: I wonder if there’s something about just a proximity effect here. You have the plate, like the meta and Google just being so close to Stanford, maybe it just, attracts more people applying because they.

They’re almost on campus and maybe, just being Amazon all over the world and different places could be not attracting as many. I don’t know.

[00:17:03] John Byrne: Yeah, true. The other thing, the analysis shows, and this is what you also gather from the more public class profile is really the remarkable diversity of talent that a school like Stanford can attract year after year.

It is, it blows you away, really. The quality and the diversity of people despite the concentration of undergraduate degree holders or company employers, it’s it’s really mind boggling, isn’t it?

[00:17:33] Heidi Hillis: Yeah, they come from everywhere and really interesting paths and even the people I think that, have those kind of typical paths, you see a lot of diversity within them as well.

So I think, even if you’re coming from a Goldman or a McKinsey having lived in another country or gone to done a fellowship abroad or running a non profit on the side. These things are actually what helped them to stand out. But you do see some really interesting, I think, profiles, too, of people who’ve just done, you get a sense of what it would be like to be in the Stanford classroom.

People from really unique and different backgrounds. People who come from all different countries and lawyers, doctors people who have run, nonprofits in developing countries people running large programs for places like Heineken or Amazon too. But, it’s a real diversity of backgrounds.

[00:18:27] John Byrne: Now, Heidi, I wonder if one is an applicant. Is this discouraging to read and here’s why if I’m not from Harvard, Stanford, Penn, Columbia, Brown, Cornell, Dartmouth, and if I didn’t work for McKinsey, Bain, BCG, Goldman, Google am I at a disadvantage and should I even try? Some people look at the data and come away with that conclusion.

[00:18:52] Heidi Hillis: I think it’s a reality check for a lot of people. I think it’s just, it’s really, it just helps people understand, what it, the difficulty of this, why it’s so competitive, but I think that there is, again, behind the kind of the percentages, you do look at these individual profiles and I would get, I would actually take a lot of hope from it if I were looking, as an applicant, because especially if you are.

Maybe a little bit more of a big fish or small fish in a bigger pond or big fish in a smaller pond you go to Rice or you go to Purdue or, and you do really well, those are the people who, they’re definitely looking for that diversity of background as well as the international.

I think that’s really neat. think that, instead of looking at the data and saying, why not, why I shouldn’t even apply, it’s why not me look at these other profiles of people who have taken really unique paths that that do get in. So I think it is actually a Kind of a mix of both, it is a reality check for a lot of people, but it’s actually, there is so much diversity in the data as well.

I think also one thing that we haven’t really covered is about is just the prevalence of social impact in, that’s really taken hold of the class. I don’t, again, going back to your 2013 analysis, I’m not sure how easy it was to tell that, but a lot of you can see reflected in the both the types of organizations people are working for, but also their titles and the kinds of work that they’re doing that that there’s a huge 40 percent of the class of the two classes had some kind of social impact in their background.

Whether that’s, running their own nonprofit on the side or volunteering or. Running trans transformational kind of programs within companies that are, either in finance or consulting or in industry. That’s a big trend. I think that people can take heart from as well.

So if you’re working if you feel like you’re in an organization where you’re not getting the leadership that you. can use to highlight your potential for Stanford, that’s definitely a place you can go is working for in volunteer capacity for a non profit or on the board of a of some kind of foundation.

Those are the kinds of places that you can highlight your potential

[00:21:00] John Byrne: true. And I know we have a overrepresented part of every applicant pool at an elite business school are software engineers from India. And I wonder in your analysis, how many of them did you find from like the IITs?

[00:21:18] Heidi Hillis: That’s a good question. The IITs, it was again, it was one of these you have about 50 percent of classes internet, so 25 percent of the class. was educated outside of the US. The IITs are going to be up there. Let’s see from India, 2. 1 percent of the class came from India. So probably, I don’t know offhand exactly how many of those were IITs, but

[00:21:43] John Byrne: I’ve had a lot of them.

[00:21:45] Heidi Hillis: Yeah, probably a lot of them. Although I think, that’s the other thing is that people who come, to work with me from India, they feel like if they haven’t gone to IIT, then that’s going to be a disadvantage. But I think, you’ll find that there are, there’s representation of other universities as well.

Definitely.

[00:22:00] Caroline Diarte Edwards: Yeah, I was just looking at the list of undergrad institutions. And for example, you’ve got Osmania University from Hyderabad. So it is not, it’s not all IIT. Okay.

[00:22:12] John Byrne: Yeah, exactly. And Caroline, 1 of the things about the institutions that are really represented here and that I don’t really see unless I missed it.

I didn’t see a Cambridge or an Oxford. Two of the best five universities in the world. And I wonder if that’s just a function of fewer people in the applicant pool or what? What do you think that could be about?

[00:22:36] Caroline Diarte Edwards: I had a look through the uk Institutions and you have got cambridge in there.

I think I also noticed. Bristol university there are a few different universities. So i’m aston university, which is not it’s not on a par with Oxford or Cambridge. So I think that speaks to the point that Heidi made that you don’t have to have been to an elite school to get into Stanford.

Aston is a good solid university, nothing wrong with Aston, but it’s not it’s not one of the top UK universities. So there’s definitely some interesting variety in the educational backgrounds of the students going to Stanford. And

[00:23:16] John Byrne: then, yeah, it is if you’re a big fish in a small pond, like Afton, you’ll you could still stand out in the pool.

[00:23:26] Heidi Hillis: Absolutely. There’s a lot of really interesting background, you have look hard on blue and you have Miami University and some really smaller universities abroad. I think. Again, it’s really, if you look at that, it does give you hope because it’s really what you do afterwards and if you, obviously, if you come from one of these schools, you probably want to be in the top, 5 percent of the graduating class, you want to show that you have the GPA that can support an academic background that they feel comfortable that you’ll be able to compete academically, but, and maybe that’s what you’re Offset by the, the GMA or the scores, you don’t know, we don’t have those on here.

But, um, the path post university really becomes much more important in those cases. What you’ve done since then where you’ve, how you’ve risen from starting at a entry level position to, running a division or heading a country group or something like that.

[00:24:21] John Byrne: And as far as Cordon Bleu goes, every good business program needs a Cordon Bleu, for God’s sake, right?

You want to eat well at those NBA parties, don’t you?

[00:24:32] Heidi Hillis: Absolutely.

[00:24:35] John Byrne: Maria, I’m sure that was true at Harvard.

[00:24:38] Maria Wich-Vila: I wasn’t the one doing the cooking but I certainly, I was certainly a member of the wine and cuisine society where I happily participated in the eating and consuming a part of that.

But to, to the point that we were just recently talking about. regarding being a big fish in a small pond. Not only have I seen it personally with applicants that I’ve worked with who did not attend these elite universities, but even many years ago, I attended a, an admissions conference where Kirsten Moss, who was the former head of admissions at Stanford, she actually told stories about how they’ve accepted people who even attended community college.

But within the context of that community college, they had really moved mountains. And she said that one of the things that they look for is, Within the context and the opportunities that you’ve been given, how much impact have you had? So maybe you don’t have an opportunity to go to Yale or MIT or IIT for your undergraduate, but whatever opportunity you have been given, have you grabbed that opportunity and really made the most of it and really driven change?

So she specifically called out, I believe, I believe there were two students that year at the GSB who had both started their educations, their higher educations at community college. Anything is possible. It really is about finding the people who, wherever they go, they jump in and make an impact.

[00:25:55] Heidi Hillis: Yeah, I think that to that point, I think it can almost be a more difficult if you’ve gone to Harvard and then worked at one of these, gone on one of these paths because we know that there’s, that’s an overrepresented pool in the applicant pool to stand out among those to have had that, that pedigree sometimes can be a disadvantage, right?

If you haven’t done as much as you should have with that, or if you started at that high level to show that level of progress over the course of your career is actually a little bit more difficult. Okay. And coming from a community college and rising to, a country level manager in some places is actually puts you at a significant advantage, I would say.

[00:26:31] Maria Wich-Vila: Because it’s hard for those people, it’s hard for those people to stand out, but also I think some of them go on autopilot, right? I think some people are on this kind of achievement, elite achievement treadmill, where they’re not even really thinking about what do I want to do with my life?

They’re always reaching for whatever that next, what’s the best college to go to? It’s Harvard Princeton. Yeah. Okay. Now that I’m here, what’s the best employer to work for? It’s McKinsey, Bain, BCG and without actually perhaps stopping to think about what is my passion? What impact do I want to make in the world?

And so I feel sometimes those autopilot candidates, I feel a little bit bad for them because they’re doing everything quote unquote and yet sometimes when you speak with them, that passion just isn’t there. And I do think that may ultimately harm them in the very, very elite business school.

Admissions because business schools want people who are passionate because at the end of the day, in order to do hard things, you’re going to need passion at some point to get you through those low periods. And so I think that’s something business schools look for. And I do think that sometimes these.

These kind of autopilot candidates might sometimes be at a disadvantage.

[00:27:29] Heidi Hillis: Yeah, I think that, to that point look in the data, when you look at it, you see so many people who’ve gone to McKinsey, Bain, Weasley, or Goldman, but then there’s a, you see a lot of success for people who’ve actually pivoted.

So those pivots that are post The second or third job really do show you that, if you’re if you get a candidate who’s coming from, still at McKinsey, okay, that’s fine. They have to be the top 5 percent of McKinsey, like they have to be going to get so many McKinsey applicants that the only the, you can look at the data in a couple ways.

One is, oh, my God, they took 12 people from McKinsey and the others. Oh, my God, they only took 12 people from McKinsey, right? That’s So if you want to be one of those 12, you have to be the top 12 in the world, right? Whereas if you’ve gone to McKinsey and then done an externship at a health care startup and then moved on to be a product manager at for health at Google, that kind of a path is definitely showing a little bit more, maybe risk taking, maybe ability to follow your passions.

So I think that. When I see candidates who come to me, for example, and they’re like, not thinking about applying now, but maybe in a year or two, I say, look for an externship, maybe think about pivoting out of one of these places and looking for some operational experience.

And because you see in the data that works.

[00:28:42] Maria Wich-Vila: And they’re doing themselves a service not only in terms of enhancing their admissions chances, but even just in terms of determining, what do I want to do with my career? If I do eventually want to go into industry, what functional role do I want to have?

What industry do I want to work in? So it’s, it actually benefits them in the long term to do that as well, even if they don’t go to business school. I think those secondments and externships and second job, post consulting jobs are extremely valuable. Totally agree with you.

[00:29:06] Caroline Diarte Edwards: And I’m sure they also bring more to the classroom as well.

I would think that’s also why Stanford is selecting some of those candidates, because not only have they worked at McKinsey, but they’ve also led a non profit in Africa or worked in private equity or whatever it is. So they have much more breadth that they can bring to the classroom. And I think that It’s seen as a very valuable contribution

[00:29:29] John Byrne: in Heidi.

Did you see that? The majority of the candidates to examined actually did work in more than one place, right?

[00:29:37] Heidi Hillis: Yes, most of them did. There were very few that, you see working at one place. And I would say that those are people that would have really risen through the ranks.

Someone who’s worked at Walmart and become, started in, I don’t know, in one state, but then to become a regional manager and things like that really are going to onto a global role. The people who have stayed at one place really have shown significant career progression within that.

And then the other people I think you do see a lot of movement. The big. The most typical would be from investment banking to private equity and then you do find in finance, there’s a little bit less kind of movement into other industries. You see a lot of people staying within finance, but within finance.

Yeah. Yeah. The other industries, especially consulting or other, tech, people are really moving into other places and it’s becoming, it is a little bit difficult. We have these categories that we’ve talked about, for example, healthcare, but it’s hard to categorize some of these companies.

Are they healthcare? Are they tech? There’s a lot of overlap. And so everything’s a little bit of tech in something nowadays. So whether it’s finance and fintech or education and ed tech or health care and health tech, these are all merging and combining. It’s hard to categorize them.

[00:30:53] John Byrne: So looking at the data here I wonder if you’ve seen your old classmates in the sense that these new people are very much like the people you went to school with at Stanford. I

[00:31:05] Heidi Hillis: put this out and it’s really interesting to a lot of my classmates downloaded the report and read it. And a lot of them came back and said, oh, boy, I would never get in now.

It’s these people are super impressive. I think that you see a lot of. It’s just become more and more competitive. And I think that with more information and more people every year applying, it is becoming really difficult. I think that you do see a lot of, I am encouraged by the diversity part of it that you see still Stanford.

I feel like they do take risks on some really interesting profiles and candidates that maybe some other schools are less likely to do. And so that’s what does give me. A lot of hope when I get some kind of really nontraditional candidate who wants to, their dream school is Stanford. I feel like, I say all the time, there’s a 6 percent chance.

You’re going to get in, but there’s 100 percent chance. You won’t get in if you don’t apply. So you’ve got to, you got to give it a go. And that’s, the attitude that we take to it.

[00:32:04] John Byrne: Indeed. So for all of you out there read Heidi’s article on our site, it’s called who gets in and why exclusive research.

Into Stanford GSB and I’ll tell you one conclusion I have about this is that, man, if you really want to get into Stanford, you need a Sherpa, and and Heidi would be a great Sherpa for you because the, just the profiles of these folks, where they’ve been, what they’ve done, what they’ve accomplished in their early lives is so remarkable that To compete against, in this pool for a spot in the class you need every possible advantage you can get.

And and having an expert guide you through this trip probably would be a really big advantage. So Heidi, thank you for sharing your insights with us and the research, the very cool research.

[00:33:01] Heidi Hillis: Thank you

[00:33:03] John Byrne: and for all of you out there. Good luck. And if you want to go to Stanford, you got to check out this report.

Okay. It will inspire you to up your game, even if you are from Harvard, Stanford, Wharton, or wherever McKinsey, Bain, BCG, Goldman, Google, you want to look at this report and you want to really think about. What it will really take to get in. I think it will inspire you, motivate you to really put your best foot forward.

Thanks for listening. This is John Byrne with Poets& Quants.

Maria

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