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VIEWPOINTS : At Harvard, High Pay and Some Bad Omens

November 02, 1986|FLOYD A. OLIVER | Floyd A. Oliver, a 1956 graduate of Harvard Business School, is a partner in Foristall Co., a Los Angeles public relations firm

A comparison of the Harvard Business School class of 1956 with the class of 1986 points up quite clearly what has happened to the American economy in the 30 years in between. And the statistics, presented at a recent reunion of the class of '56, say a lot about what lies ahead.

Thirty years ago, 60% of the class found their first jobs in manufacturing and only 40% in the service sector. Manufacturing had dwindled to just 20.4% of the 1986 graduates. A staggering 55.7% of the '86 class entered investment banking and consulting, compared to only 10.3% in 1956.

The trend seems to run counter to key criteria for admission to Harvard Business School--demonstrated ability and interest in management. If that was their interest, their job selection didn't reflect it. Well over half of the class of '86 opted for deal-making and advisory-type jobs.

Why? Money and a few other things. Consulting and investment banking meet the financial needs of young students. Many are heavily in debt, and the average starting salaries for Harvard Business School graduates of $72,000 for consultants and $63,000 for investment bankers are compellingly attractive. Also, compared to going directly into a management job, they are generally given greater initial responsibility and provided with an immediate opportunity to apply the analytical skills they have learned.

The service industries dangled juicy plums before the 1986 graduates in areas other than consulting and investment banking. For instance, real estate, computer-related jobs and commercial banking each had an average entry-level salary of $55,000. By contrast, the manufacturing sector offered salaries in the low to middle 40s. The growing intensity with which the graduates are wooed is evidenced by the fact that 656 recruiting organizations sought graduates in 1986, compared to 251 in 1956. Of the recruiters, 68% were for service industries in 1986, compared to 37% in 1956. And what of industrial companies? They sent 30.3% of the recruiters in 1956 but only 4.4% in 1986.

What does all this mean? If business graduates from Harvard and other top schools represent the best and the brightest, it means that top talent won't be attracted to the manufacturing sector. Manufacturers simply don't compete aggressively for these top graduates. As a result, manufacturing will sink deeper into a morass and America will slip as a world economic power.

On the other hand, all those graduates moving eagerly into investment banking and consulting may get their comeuppance, too. In 1956, some of the 60% who chose jobs in manufacturing made the wrong choice. In the first year after graduation, manufacturing jobs decreased by 140,000 while services created 623,000. The prospects for manufacturing proceeded to get worse. Over the years, MBAs have often entered an industry just before the industry collapses.

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