How much have Harvard MBAs made this year?August 27, 2012: 12:06 PM ET
While overall pay held steady from last year, MBA students who ventured into some of the hottest fields experienced healthy increases in starting salaries.
By John A. Byrne
(Poets&Quants) -- A modest economic recovery? Don't tell that to this year's graduating MBAs from the Harvard Business School.
For the class of 2012, median base salaries were $125,000 -- exactly the same as last year -- with three of every four graduates getting a median signing bonus of $20,000 and one in five (21%) reporting median "other guaranteed compensation" of $25,230. Harvard MBAs lucky enough to collect all three landed first-year pay of $170,230.
Yet, even that sum could be highly conservative because Harvard's numbers -- released last week on its website -- do not include such things as performance bonuses, reimbursements, profit sharing, 401k matching programs, stock, or stock options. And the compensation is going to MBA graduates with less work experience. The average work experience for the class of 2012 was 44 months, 10 months shy of the 54-month average only four years earlier in 2008. Typically, the more post-college work experience a graduate has on the resume, the more that graduate is paid.
While overall base pay held steady from last year, MBA students who ventured into some of the hottest fields experienced healthy increases in starting salaries. The median starting salary for a Harvard MBA entering consulting was $135,000 this year, with a $20,000 signing bonus. That's a $10,000 increase in base pay over last year. Harvard said that 94% of its MBAs who went into consulting got a signing bonus, while another 18% received median of $20,000 in other guaranteed compensation.
Only two other industries paid more to Harvard MBAs this year: hedge funds and private equity. The median salary for a grad landing a hedge fund job was $142,500, with a median signing bonus of $27,500. Even more alluring, however, is the "median other guaranteed compensation," which Harvard reported was $150,000. These jobs, of course, are generally hard to get because there are fewer of them, and they tend to recruit only students with previous experience in the field. The school said only 5% of the class of 2012 went to work at a hedge fund.
Private equity, where around 15% of the class landed, was the only other field to top consulting in pay. The median pay for a PE job this year was even better than hedge fund money -- $150,000, up $15,000 over last year's base of $135,000. But that's not all. PE grads reported median signing bonuses of $30,000. Other guaranteed compensation, reported by a third of the grads going into private equity, was $150,000. So for about 40 MBAs in Harvard's class of 2012, the median first-year compensation was at least $330,000. A year earlier, private equity and leveraged buyouts snared 14% of the Harvard class.
MBAs who were lucky enough to land jobs in private equity, hedge funds, and investment management were the most likely to win the highest first-year potential windfall from their degrees. Besides the median $330,000 for the few who went into PE, the first-year potential was a median $320,100 in hedge funds and $201,500 in investment management.
The highest salary reported by Harvard this year was a base salary of $200,000 for a private equity job. HBS, however, never reports the full range of salaries but rather the salary at the 25th and 75th percentiles. The $200,000 payday was for the 75th percentile for a graduate who entered private equity.
A near-record 29% of Harvard's class of 2012 headed into the still-booming consulting industry, according to the school's employment statistics. That's a full five percentage points higher than the year-earlier class of Harvard MBAs and nearly matches the record 30% of graduates who chose consulting in 2003.
Grads entering the financial services industry, on the other hand, slipped by four percentage points to 35%, compared to 39% for the class of 2011. Ever since 2008, when 45% of Harvard's graduating class went into finance, the numbers have been declining, largely the result of cutbacks on Wall Street and at other large financial institutions. The biggest hit was in investment management jobs, which attracted only 4% of this year's class, versus 12% of the class of 2011. Investment banking jobs for Harvard MBAs fell to 7%, from 10% a year earlier.
Not all finance jobs were down. At 15% of the entire class, Harvard MBAs who took private equity jobs hit a new record. Last year, 14% of the class of 2011 headed for jobs in PE, up from 9% a year earlier and the highest since 2006, when 13% of the class took PE and leveraged buyout jobs.
The lowest median salaries were in government and the non-profit world. Harvard MBAs who entered those two fields reported median starting salaries of $90,000 -- 50% lower than MBAs who went into consulting -- with no signing bonuses or other guaranteed compensation. Harvard said about 3% of the class of 2012 went into the non-profit and government sectors, up from 2% last year but still well down from 6% in 2010 and one of the lowest recorded percentages in the past 10 years.
Harvard is the first prominent business school in the U.S. to report employment statistics for its class of 2012, which graduated in late May. The school said its self-reported student numbers are based on a sample of the class at graduation and "is subject to change until finalized in the fall." The data for other business schools tends to trickle out after September.
After financial services and consulting, the most popular industry destination for the class of 2012 was technology. Some 11% of the class took jobs in tech, the vast majority in the computer software field. Those positions paid a median starting base salary of $119,000, with 88% of the grads reporting a median sign-on bonus of $20,000.
Health care grabbed 7% of the Harvard MBAs, while manufacturing got 6% of the school's output this year. MBAs in health care reported median salaries of $120,000, with 76% reporting median signing bonuses of $20,000. MBAs who ventured into manufacturing reported median base salaries of $115,000, with 76% saying they received median sign-on bonuses of $25,000.
Not surprisingly, the vast majority of the class of 2012 landed jobs in the northeastern part of the U.S. Harvard said 41% of the class had jobs in the northeast, with 24% in New York City and 11% in Boston. Nearly one in five HBS grads ventured westward, with 12% of the class landing positions in California's Bay Area and another 3% in Los Angeles. Some 8% of Harvard's class of 2012 took jobs in Europe, while 7% headed for Europe. India and China each accounted for only 1% of the jobs taken by HBS MBAs this year.
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