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© QS Quacquarelli Symonds Limited 2004

MBA Salary & RecruitmentTrends 2004

QS Research 1990-2004

Nunzio Quacquarelli MA Cambridge, MBA WhartonMonish Saldanha MBA Harvard

MBA Salary and Recruitment Trends 2004

QS Research 1990-2004

Nunzio Quacquarelli,Monisha Saldanha.

TopMBA.com International Recruiters Survey 2004

Copyright QS Quacquarelli Symonds Limited, 2004

QS Quacquarelli Symonds Limited, 1 Tranley Mews, Fleet Road, London NW3 2DG, United Kingdom

The entire content of this publication is protected by international copyright. All rights reserved. No part of this publication may be copied or reproduced inany form without the prior written permission of the publisher.

Reproduction: Tables and charts may not be reworked or presented in any other form without written permission from the publishers. Any excerpts must be sourced to: TopMBA.com International Recruiters Survey 2004. All charts must be sourced: TopMBA.com International Recruiters Survey 2004.

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Contents

1. Introduction 2

2. Executive Summary 3

3. Sample and Methodology 4

4. MBA Recruitment Trends Survey – The upswing gathers pace 5

Global demand for MBAs in 2004 5

Demand for MBAs by Region 7

Demand for MBAs by Industry Sector 8

Consulting 8

Banking & Financial Services 8

General Industry 9

Technology 9

Small Enterprises & Entrepreneurship 9

Functional Roles Offered by MBA Recruiters 10

Experience Levels Sought by MBA Recruiters 11

Skills Sought by MBA Recruiters 11

5. MBA Salaries and Compensation 12

Global Trends in MBA Salaries 12

MBA Compensation - Salary and Bonus Combined 13

Regional Differences 14

Europe and America lead, with Asia close behind 14

Cost of living is critical when comparing offers 16

Regional Focus: United States versus Europe 16

Regional Focus: Asia 17

Regional Focus: Latin America 19

Appendix: Some Participating Companies 20



1 Introduction

The purpose of the salary survey is to give MBA graduates, MBA career services, and recruiters abroad picture of salary expectations and hiring trends. The data includes specific information bysector, geography, and year. Time trend analysis and sector/regional variations have beenincorporated into this final report. Our intention is to help MBA graduates, corporate recruitersand recruitment firms, and MBA program administrators make informed decisions. This researchcan be used by MBA graduates to determine which industries and geographies to pursue in thejob search, and to help negotiate a favourable total compensation package. Recruiters can usethis information to manage their own human resource policies (for example, whether theyshould determine salaries globally or locally) and to benchmark their salaries against peerinstitutions. Lastly, MBA program administrators, particularly career services offices, can use thisinformation to provide guidance to students and set expectations for recruiters.

We differentiate our research in the MBA marketplace through i) our objectivity as a third partysitting between recruiters and business schools, ii) our contacts with recruiters who are willing toshare information with us, and iii) our 14 year databank that allows us to adduce meaningfultrends over time. Unlike many surveys, we do not rely on MBA graduates to report theirearnings, but rather the employers themselves.

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CONSULTING FINANCE INDUSTRY TECHNOLOGY

ASIA McKinseyCopernicus (Jap)

CitibankLehman BrothersUBS

Times of IndiaJ&J MedicalGencon

LucentPatni ComputerTata Elxsi Ltd.

EUROPE AT KearneyRoland BergerAccenture

PrudentialEBRDJP Morgan

Gulf OilFord Motor Co.Bosch

VodafoneDellSun Microsystems

LATIN AMERICA Bain & Co.Hermes Consult.

BankBostonChileMesoAmerica InvBBVA

L’OrealCydsaShell

TACAPfizer

USA IBM ConsultingGallupSiemens Consult.

Morgan StanleyFidelityGE Capital

General MillsAmerican AirlinesGoodyear

SprintSonyOracle

SOME OF THE MAJOR ORGANISATIONS THAT HAVE TAKEN PART IN THE SURVEY


2 Executive Summary

When QS conducted this research in 2003, recruiters indicated that they believed the first quarterof 2004 would witness a rebound in the demand and salaries for MBA graduates. The researchconducted this year has demonstrated the accuracy of these predictions. Many companies havelifted formal and informal hiring freezes which restricted hiring in the previous three years.Rises in the major US and European stock markets further buoyed hopes for employment gainsand the transformation of the “jobless economic recovery” touted in the US.

The TopMBA.com Index of MBA Recruiting shows a 15% increase in 2004 compared to 2003.Although there has been a delay between economic recovery and a translation into improved jobprospects for MBAs, this is now happening in 2004. The service sector in particular - fuelled byconsulting and financial services - has lead the rebound in increased MBA hiring. Some recruitersare now predicting that MBA demand will return to pre-recession levels by 2006. The technologysector is lagging behind, but pent-up demand leads recruiters to predict 70% uplift in MBA hiringin this sector in 2005/2006.

Globally, average salaries for graduating MBAs have increased 27% in the past eight years. In 2004,companies are reporting MBA salaries will rise by over 9% compared to 2003 - matching thelevels of 2001(see Chart 9 on page 12) - reaching over $82,000. This increase reflects a high levelof optimism amongst MBA recruiters and increased competition for the top talent. The onlycloud on the horizon is the potential impact of further shocks to the global economic systemfrom rising oil prices and/or global terrorism.

Bonuses for 2004 have increased substantially compared to 2003. The average bonus is a sizeable$19,183. Recruiters favour bonuses tied to performance. Financial services firms are reporting amassive average bonus of $42,000. Many investment banks are reporting bonuses of $70,000 -$100,000 for first year MBAs. Other sectors will find it hard to compete with these figures, butbanking bonuses are much more volatile than those in other sectors.

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© QS Quacquarelli Symonds Limited 2004 4

3 Sample and Methodology

Since 1990, QS has conducted an annual survey of MBA recruiters worldwide; over 4000recruiters were surveyed this year, with complete responses from 301 companies from 20different countries - 30% more recruiter respondents than any other MBA survey and five timesthe level of non-US respondents than any other MBA survey.

The recruitment survey collects primary data on the state of the recruitment market, includingforward-looking predictions of market trends from the recruiters themselves. The recruiters, whospan industry, consulting, financial services, and technology, participate in strict confidentiality.Therefore, we do not publish the names of individual recruiters. As Chart 1 below demonstrates,in 2004, 51% of respondents were based in Europe, 31% in the USA, 8% in Latin America and10% in Asia Pacific. This unique geographic spread of respondents provides detailed insightsacross regions and industries.

Chart 2 below shows a sample of recruiters spread across a wide range of industries. This spreadreflects the global range of industries that hire MBAs. Finance and consulting make up thelargest sources of respondents, followed by healthcare, technology and consumer goods.Respondents from the headhunting industry are asked to indicate the sectors for which they arehiring - this was fairly evenly spread, with just a slight bias towards financial services.

Chart 2 Source: TopMBA.com International Recruiters Survey 2004


EUROPE

ASIA PACIFIC

LATIN AMERICA

UNITED STATES

8%

31%

10%51%



4 MBA Recruitment Trends Survey - The upswing gathers pace

Global demand for MBAs in 2004

Graham Hastie of London Business School concurs. “The MBA job market has transformed fromlast year to this. In April 2003 only 30% of our students had a full-time job offer. In April 2004,over 50% have offers. We expect most students to have offers at graduation. The prospects areoutstanding for next year’s class.”

How can the MBA market have transformed so quickly from mire to, what Simon Tankard ofSaïd Business School describes as, “possibly the start of a golden era in Europe” ? Overall, from 1994-2001, worldwide demand for MBAs grew at an average of 15% CAGR. Thisgrowth was spread across all the major continents and benefited graduates from all of theworld’s top 100 business schools. Recession in the USA, however, and slow growth in majoreconomies as far apart as Germany and Japan, took their toll in 2002-2004. The net result wasthat demand for MBAs fell by about 20% from 2000-2003. In this period, on-campus companyvisits fell significantly and students had to resort to off-campus job searches and networkingamongst alumni.

In 2004, this survey reveals that 62% of employers state that they expect to increase MBA hiringin the next twelve months, with only 10% expecting to decrease MBA hiring.

The chart below shows the trend in MBA hiring worldwide, by sector. The cyclical sectors ofconsulting and banking have rebounded particularly sharply. Consulting has shown a 25% upliftin targeted numbers of hires in 2004 compared to 2003. Banking has reported an uplift of over20%. Between them, these two sectors will account for 50% of MBA hires at most schools -precisely the proportion struggling to find jobs over the past two years.


Over the medium term, recruiters are very optimistic that this cyclical upswing will be sustained.By 2006, consulting and general industry will have increased hiring by nearly 50% compared to2003; banking will have increased hiring by nearly 30%. Although the technology sector has yetto emerge form the recession, recruiters in this sector are predicting a strong recovery in2005/2006, with a 70% jump in hiring in that period. The strong turn around in MBA employment prospects is filtering through to all levels. Withmore and more people taking undergraduate degrees, new graduate unemployment hasreached record levels across most of Europe, the US and even in parts of Asia. Employers areincreasingly looking for postgraduate degrees, MBAs or some other exceptional attribute to agraduate CV. People without MBAs are feeling far more vulnerable in the job market. In most countries around the world, we continue to see a big rise in demand for MBA places aspeople judge an MBA to be the most career-flexible and salary-improving postgraduate course.Many young professionals are also trying to time their MBA so that they graduate in to a ‘hot’job market.

The picture is not all rosy. Unlike the boom of 2000, few students can expect to receive three ormore job offers - it remains a buyers market. But the outlook for the MBA market remainsoptimistic. A growing number of companies all over the world, now see a top MBA as anessential management entry-level qualification. Without an MBA, it is almost impossible tobecome an analyst at a top investment bank, or a senior consultant at a top consulting firm. In recent years, it is becoming more common for business development managers andtechnology managers also to take an MBA to help them make the next step in their career.

Global-Workplace - which operates a jobs site (www.global-workplace.com) on behalf of manyof the world’s top business schools - has seen over 7800 new MBA jobs added to the site during2004. Adrian Barrett of Global-Workplace says, “the big demand for MBAs this year is comingfrom the service sector - banks and consultancies - including many smaller organisations. An ongoing trend in recent years is for MBA alumni, who are now in a position of hiringresponsibility, to return to their school to pick up new talent.” As the economy picks up, thegrowing MBA alumni pool is being activated by career services to create jobs in all sectors. Elaine Hewens, the Careers Director at Warwick, says, “We work very closely with our alumni,many of whom come back to recruit our students.” The most successful job searches this yearwill be conducted by MBAs who are willing to use alumni networks to identify opportunities. Global-Workplace is one of several networking services available to top MBAs.

The upturn is being used by many companies to change the profile of their hires. The traditionalMBA profile of young, local, male aged 26-35 may still be the majority choice, but women andethnic minorities are increasingly being actively targeted as part of diversity drives. Investmentbanks are particularly in the market for high calibre women MBAs.

Kasper Rorsted, European Managing Director for Hewlett-Packard, says, “there is a lot ofcomplacency about equal opportunity in Europe - people seem to think it has already arrivedjust because we have had a woman Prime Minister in the UK...we are working hard to get thingsright at HP. MBAs are an important target of new diverse talent for HP.”


One of the most revealing aspects of the TopMBA.com research is, however, the growth in MBAopportunities outside of the traditional North American and North European markets amongstcompanies headquartered in those regions. Despite 81% of responding recruiters being based inthese two regions, as the chart below reveals, only 65% of MBA opportunities are in the US andEuropean Union. Asia now accounts for 15% of opportunities whilst Latin America and CentralEurope account for 10% of opportunities each. As major MBA employers expand around theworld, they are spreading the opportunities for MBAs.

Chart 4 . Source: TopMBA.com International Recruiters Survey 2004


Demand for MBAs by Region

As Western economies recover, Western Europe and the US are set to yield the greatest increasein MBA opportunities. Chart 4 below shows the growth in numbers of jobs by headquarters ofthe employer. Traditional MBA employers in the US and Europe are fuelling the growth indemand. Local companies in Asia and Latin America still account for relatively few MBAopportunities. Though this situation may change, recruiters in such local organisations seem tohave no immediate plans for a sharp increase in MBA hiring.

10%

31% 10%

15%34%


Demand for MBAs by Industry Sector

Consulting

The consulting market is recovering. Career Service Directors struggled to replace the sheervolume of consulting opportunities that went missing during 2001-2003. After a sharp three-foldincrease in demand from 1994 - 2000, there was a sense of shock when overcapacity in theconsulting market in 2001 saw MBA hiring cut back.

For the MBA class of 2005, consulting firms are back in the market in a big way. The powerhouseslike McKinsey, Booz Allen Hamilton, BCG, Bain, IBM Consulting and Mercer are all hiringaggressively. There is also a growing number of small specialist consultancies looking to hireMBAs. However, many such firms are using search agencies, or web services like Global-Workplace(www.global-workplace.com), rather than visiting schools directly. There is also a growth inspecialist consultancies like ZS Associates, with a focus on sales and marketing, which areexperiencing strong growth in MBA hiring needs.

The companies that have yet to resume major MBA hiring, but may yet create a further stimulusin demand in 2005, are the big professional service firms. All the professional consulting firmshave been absorbed into other enterprises with mixed results. ATOS KPMG, PWC Consulting(now part of IBM), Cap Gemini Ernst & Young are still working through the staff rationalisationsneeded from such big integration exercises. IBM is hiring again and we expect a gradual returnfrom these firms, whilst the auditors they broke away from are also developing new businessadvisory services once again.

Ragna Simon of PA Consulting in Germany has the following advice for students hopeful ofgaining a consultancy position: “During the past three years I interviewed more than 1,500people. Those Applicants who had a long-term industry experience and then somewhere inbetween did their MBA had the best chances. This would always be my recommendation - firstlearn how work works in the industry and then do an MBA for more strategic and conceptualthinking, as well as leadership skills. Those graduates who do a MBA right after their studies atuniversity often fail because one needs knowledge to build an MBA upon - and not for the sakeof having done it.”

Top 10 Consulting recruiters of MBAs in 2004 are (alphabetical order): Accenture, AT Kearney, Bain & Co, BCG, Booz Allen Hamilton, IBM Consulting, McKinsey & Co,Mercer Management Consulting, Roland Berger & Partners, Siemens Management Consulting.

Banking & Financial Services

The Banking MBA Recruiter Index more than doubled from 1994 - 2000. Almost all investmentbanks actively recruit MBAs into their Mergers & Acquisitions departments, trading, research,sales and fund management. This demand literally collapsed in the period 2001-2003. Banks likeGoldman Sachs and Morgan Stanley cut MBA hiring by up to 80% in some offices.

2004/2005 is a completely different environment. All the big banks are back on campuscompeting for talent (see Chart 9 on page 12 for the impact on MBA salaries). Though Mergersand Acquisitions departments are yet to return to a boom, many banking divisions areprospering and especially; derivatives, hedge funds, sales and trading of debt and equities,structured finance, public sector and private sector corporate finance, property, private equity


and wealth management. Finance hiring is no longer restricted to banks. GE Capital is now oneof the biggest recruiters of MBAs worldwide. American Express is also emerging as a major player.

Top Ten Banking & Finance recruiters of MBAs in 2004 are (alphabetical order): American Express, Citibank, Deutsche Bank, Fidelity International, GE Commercial Finance and GE Capital, Goldman Sachs, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley.

General Industry

Those organisations that have embraced ‘globalisation’ are accepting that MBAs are an essentialpool of international managers capable of working in diverse cultures and business situations. A sizeable number of MBAs who do find roles in the industrial sector will do so with companiessuch as General Electric, Eli Lilly, Pfizer, Ford and General Motors where specific MBA inductionprogrammes have been the norm for more than twenty years. Internationally minded Europeancompanies like Siemens and DaimlerChrysler have established MBA entry programmes.Pharmaceutical companies have always been very active MBA recruiters.

The increasing globalisation of international trade, growing inter-dependence of common marketsand increased international competition has fuelled the interest in MBAs across the sector.

For local industrial companies, salary remains a barrier. Manel Gasca of Rittal Disprel, a consumerproducts/retail company based in Spain, has the following advice for MBAs: “Too much relevanceis placed in salary straight after an MBA. Since the year I graduated I had to learn that the truevalue of my MBA was in the knowledge I acquired and not from the job I would get aftergraduation. MBA recruitment is very sensitive to economic conditions and we should not valuestudying an MBA by the salary we obtain after graduation.”

Top Ten Industrial Recruiters in 2004 are (alphabetical order): Eli Lilly, Ford, General Electric, General Motors, GlaxoSmithKline, Johnson & Johnson, Pfizer,Procter & Gamble, Siemens, Unilever (including Lever Bros USA).

Technology

Recruitment of MBAs into technology companies has yet to bounce back, but recruiters arepredicting a strong recovery in demand in 2005/2006. Telecommunications companies such asBritish Telecom and Vodafone remain active. Some software companies, like Microsoft forexample, have increased their intake. Hardware companies like Hewlett-Packard and Dell areamongst the most active recruiters at present.

Top Ten Technology MBA recruiting companies in 2004 (alphabetical order): British Telecom, Cisco, Dell, Hewlett-Packard, IBM, Intel, Microsoft, Philips, Sprint, Vodafone.

Small Enterprises & Entrepreneurship

The Internet revolution has given many MBAs the confidence to start their own business fromday one. For the first time ever, some schools are reporting that 10% or more of their class havechosen to start out on their own. Technology has reduced the cost of starting a business, evenfor risk-averse MBAs. It is noticeable that, at US schools, the percentage of class starting theirown business was consistently less than 5%, whereas many European schools exceed this level.


Schools reporting particularly high percentage of Students Starting Own Business include:Cambridge Univ. (Judge Institute): 19%, Manchester Business School: 10%, Instituto de Empresa: 7%,Imperial - Tanaka: 7%.

A growing number of today’s MBAs are looking at Small Multinational Enterprises, start-ups orboutique consultancies. Many such firms are owned or managed by MBAs who are looking tohire dynamic business developers, marketing specialists, salesmen, financial wizards, analysts -the list of roles taken on by MBAs is almost endless.

As Paul Kellett, an Imperial MBA comments: “My MBA came up with the goods. I securedinterviews I could never have imagined without it and my current role is reporting to the twoowners of Starkstrom, both of whom are Imperial MBAs themselves, so the network has beeninvaluable.”

Functional Roles Offered by MBA Recruiters

Chart 6 below reveals that marketing roles (15%) have replaced financial roles (12%) as the mostfrequently available to MBAs across our sample of 301 MBA recruiters. Consulting accounts for10% of all opportunities. It is interesting to note that e-commerce manager, a relatively newrole, has fallen dramatically in popularity since 2001, when over 10% of MBA roles were for thisfunction. The roles offered reflect a return to the basics of management - away from ecommerceand toward marketing, strategic planning, sales, and finance.



Skills Sought by MBA Recruiters

Savvy MBAs will seek opportunities to develop skills that are important to recruiters. As Chart 8below illustrates, “soft skills” such as people skills, strategic thinking, and leadership are moreimportant than finance skills, academic success, and IT skills. Choosing opportunities todemonstrate mastery of these skills - perhaps through club or project leadership - will allowMBAs to shine in the recruitment process.



Experience Levels Sought by MBA Recruiters

MBA recruiters show a strong bias towards candidates in the ranges of both 1 - 4 yearsexperience and 4 - 8 years experience. Fresh graduates taking an MBA are targeted by only 4%of respondents, whilst MBAs with over 8 years experience are sought by only 5% of respondents,as the graph in Chart 7 below indicates. This does not mean that either group is not in demand,but that they fall outside the needs of mainstream international MBA recruiters. Inexperiencedcandidates typically accept lower paid graduate level positions. Experienced professionals aremore likely to use a search company to identify suitable opportunities.


5. MBA Salaries and Compensation

Global Trends in MBA Salaries

In 2004, companies are reporting MBA salaries will rise by over 9% compared to 2003 - matchingthe levels of 2001(see Chart 9 below). This increase reflects a high level of optimism amongstMBA recruiters and increased competition for the top talent. The only cloud on the horizon isthe potential impact of further shocks to the global economic system from rising oil prices and/orglobal terrorism.

The long-term trend in global MBA salaries reveals a strong cyclicality in the figures. The 1990swas a decade of uninterrupted economic growth resulting in ever-increasing salary and bonuspackages for MBA graduates. This trail of gold encouraged a growing pool of MBA graduateswho were eagerly consumed by businesses worldwide. Despite the dot.com disruptions in the USmarket in 2000, the momentum behind this trend fuelled increased salary packages in 2001.Even though companies decreased salaries overall, starting salaries for top MBAs continued toincrease in 2001. The trend reversed in 2002, however, and salaries fell near to the 1998 pre-dot.comboom level.

All indicators suggest that 2004 is the starting point of another upswing in the MBA hiring cycle.“As I’ve been saying for the past couple of years, it’s no surprise that MBA salaries are beginningto increase,” says Mike Holmes of the Global-Workplace, “Demand in the non-service sector hasremained robust throughout the last four years. With service companies re-entering the market,there is bound to be some upward pressure on salaries.”

Chart 10 on page 13 reveals the trend in MBA salaries from 1999 to 2004 across key sectors forMBA recruiting: industry, consulting, financial services, and technology. For many years, thebase salaries in consulting surpassed the base salaries offered in finance. In 2003, finance edgedahead and, in 2004, remains slightly ahead of consulting salaries.

65100 66670 66560

7380078370

81680

74360 75840

82810

100000

80000

60000

40000

20000

0




The extraordinary drop in average technology salaries can be explained by the dramatic rise intechnology positions in China and India, which offer much lower salaries, even for MBAs, than inother regions, yet which still prove attractive to the MBA community because of the long termopportunities in those regions.

MBA compensation - Salary & Bonus Combined

The graph in chart 11 on page 14 reveals that there is significant salary variation across sectors.For instance, consumer products and retail jobs pay almost $30,000 less than finance jobs.Finance has moved well ahead of consulting in paying the greatest base salary - averaging$98,000. Consulting is paying an average of $86,000, with transportation, media and healthcare thenext best paying sectors.

When comparing compensation across industries, it is important to consider not just the basesalary, but also the likely total compensation earned over the year. Different industries havetheir own methods of providing compensation, with some industries offering a higher basesalary while others offer a high year-end bonus. When deciding between jobs, candidates arerecommended to assess their own risk profile and level of financial flexibility.

Bonuses for 2004 have increased substantially compared to 2003. The average bonus is a sizeable$19,183. Recruiters favour bonuses tied to performance. Financial services firms are reporting amassive average bonus of $42,000. Many investment banks are reporting bonuses of $70,000 -$100,000 for first year MBAs. Other sectors will find it hard to compete with these figures, butbanking bonuses are much more volatile than those in other sectors.

Bonuses cannot be taken at face value, either. In some US states, bonuses are taxed at nearly 50percent. What at first may seem a great deal may literally melt away in a candidate’s handsbefore the ink is dry on the employment contract. Maximizing after-tax bonus value should beprioritised. In some locations, such as the United Kingdom, relocation expenses and tuitionreimbursements can be claimed tax-free. The cost is the same for the recruiting firm, but the


benefit is far greater for the candidate. In addition, the familiar time-value-of-money analysis reveals that an up-front signing bonuscarries greater value than a year-end or performance bonus. While companies try to benchmarkagainst each other to offer enough to entice the best candidates (but not so much that theyoverpay) candidates can compare their offers with their peers’ to ensure they are getting amarket competitive offer. Communicating this benchmarking data to the recruiting officers canhave a beneficial impact. In at least one case, a top-tier consulting firm has increased offers forentire entering MBA classes in order to match their competitors.

Lastly, performance bonuses, whether tied to individual, team or company performance, are ameans for an employer to introduce variable compensation. This is a means for companies toensure they do not make financial promises they may not be able to keep at year-end. An MBAwith loans to repay cannot count on a performance bonus, whether it be sizeable or insignificant.This makes lifestyle planning, including meeting minimum loan repayments, more difficult.

Regional Differences

Europe and America lead, with Asia close behind

The US and Western Europe reported very similar average salaries, while Latin America andEastern Europe lag behind. These salaries are not surprising, given the differing costs of livingacross the regions below.One reason for the convergence of salaries across Asia (excluding India and China), Europe, andthe US is that the increasing globalisation of major MBA recruiting companies has encouragedstandardisation of recruiting practices. Global companies co-ordinate their recruitment on aglobal level, and do not want to drive top candidates away from key geographies because of asalary differential. This globalisation of key players, such as investment banks, has not been asfully realised in Latin America and Asia. The key cities for MBAs recruited into investmentbanking remain New York, London, Frankfurt, Hong Kong, and to some extent Shanghai and San Francisco.

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(US$)



The lower salaries offered in Latin America and Eastern Europe result from the weak exchangerate and their status as non-target regions for business development. These geographies havefallen out of favour with investors in the past decade, which has both weakened the exchangerate in many countries (in the past year, Argentina in particular) and caused companies to focustheir business development efforts in Asia. Note: 2004 Asian salaries exclude China, India, Thailand companies that offer much lower MBA salaries when

converted to dollars.



A closer look at the numbers above demonstrates a significant differential across regions. Asiansalaries are only 8.7 percent less than those offered in the US, while Latin America typicallyoffers salaries 33.6 percent lower than the US.


The time trend information in Chart 13 on page 15 demonstrates that there is a trend towardsconvergence between Asian and US/European salaries, while Latin American salaries havedemonstrated a greater volatility and seem that they won’t be rising to match the levels offeredin other regions.

Cost of Living is Critical When Comparing Offers

It is not the nominal but the real wage that is important. Job applicants should consider the costof living when comparing salary packages across regions. The OECD publishes annual researchcomparing purchasing power parity (a good proxy for the cost of living) across nations.According to the OECD, the purchasing power parity in Mexico is 24 percent less than in the US.So, even though the research tells us that MBA graduates are paid 33 percent less in LatinAmerica than in the US, graduates working in Mexico will enjoy a standard of living comparativewith their US counterparts on average. In comparison, Japan’s purchasing power parity is 36percent higher than the US. Although Asian graduates enjoy average salaries almost equal to UScounterparts, the higher cost of living in Japan will result in a lower standard of living. Lastly, Hungary’s purchasing power parity is 55 percent lower than the US, which means that an MBAearning 44 percent less in Hungary will still enjoy a higher standard of living than a US graduate.

MBA graduates are known for their analytical ability; in negotiating salary offers or deciding ontarget geographies for a job search, it is important to take a step back from the numbers andthink of the bigger picture - the real, versus the nominal wage a company and country offers.

Regional Focus: United States versus Europe

Even within regions, there are substantial differences in salaries offered across industries. Chart 14 below shows the salaries offered in different industries within the US and Europe.

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US salaries are considerably greater within general industry, where the MBA is more broadlyaccepted as an entry qualification. It is not surprising that finance and consulting salaries arenearly exactly the same in these regions, given the high level of multi-nationalism in theseparticular industries. Salaries in the technology sector are also very similar in both regions.

A close correlation between US and European salaries reflects the close association of the twoeconomies and the increasing integration of firms on either side of the Atlantic. An MBAgraduate will face similar prospects on either side of the Atlantic.

Even within geographic areas, there are major differences in salaries paid. For instance, EasternEuropean recruiters reported an average salary of nearly $50,000, while Western Europeanrecruiters reported salaries close to $80,000. Within countries, MBAs in major cities such as NewYork can expect salaries 20% larger than MBAs in less major cities, such as Atlanta or Phoenix.

Regional Focus: Asia

The 1997 Asian financial crisis derailed decades of hyper-growth in the region, and the USrecession that began in 2000 severely curtailed demand for the high-tech products produced bycountries like Singapore. These problems were compounded by the war in Iraq and the SARSoutbreak in early 2004.

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Even so, salaries in Asia, fuelled by uninterrupted growth in China and a rising global demandfor Indian IT workers and call centres, have steadily risen. From 1996 to 2004, average salaries asseen in Chart 15 above have risen an impressive 38.6% in US dollars for MBA graduates. UnlikeLatin America, where a series of currency devaluations has negatively impacted the reporting ofMBA salaries in US dollar terms, the relative stability of the currency regimes in Asia during thepast few years has meant that Asians enjoy increasing purchasing power on a global scale.


Regional Focus: Latin America

A little over a decade ago, it seemed that Latin America had escaped the trap of poverty.Foreign direct investment and trade surpluses buoyed the major nations of the region andprospects for the future looked bright. Latin America did not follow the dot.com boom of therest of the world. Instead of the boom, a series of economic shocks and destabilisations hauntedmajor Latin American nations through the turn of the century. The 1998 downturn impactedsalaries over the next few years. Only in 2002 did Latin America return to the salary offers of1999. Sadly, the global ills of war and disease, coupled with the banking crisis in Argentina thatsent a shock wave through the region, threatened recent gains. As the graph below in Chart 18demonstrates, salary levels in Latin America have risen and fallen regularly, with there beinglittle overall gain since 1996.

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With many business schools within the region and a growing population, Latin America looks tobe set for greater salary gains in the future. The recent Argentine devaluation, against abackdrop of recession and hyperinflation, hopefully may be viewed as a temporary setback anda much-needed correction. The settling of the strikes in Venezuela and the success of the war ondrugs in Columbia, were positive outcomes in the beginning of 2004. The rise of Lulu in Braziland Kirchner in Argentina, with their emphasis on building the long-term stability of theirnations, is a hopeful tiding for better days to come.


Hermes Mgmt Consulting Argentina

Johnson & Johnson Argentina

BSI People Australia

J&J Medical Australia

Rio Tinto Iron Ore Australia

Carrefour Belgium Belgium

DTZ Winssinger Tie Leung Belgium

INEXSA Belgium

McKinsey & Company Belgium

NV Bekaert SA Belgium

Procter & Gamble Belgium

Shields Belgium

Sterling Belgium

Bain & Company Brazil

BankBoston Chile Chile

Corporación Farmacéutica Rec. Chile

LAN Airlines Chile

L’Oréal Chile

Shell Chile SA Chile

Emerson Electric Asia Pacific China

Gencon Pharmaceuticals China

Hangzhou MSD China

Macroview Telecom China

Prudential Assurance China

UBS Warburg China

Coca-Cola Company Costa Rica

Mesoamerica Investments Costa Rica

Novo Nordisk Denmark

TACA El Salvador

Unilever de Centro America El Salvador

SamiCon & Partners Finland

CPM SEARCH France

Credit Lyonnais Securites France

Lazard France

S. T. Dupont France

Alstom Lokomotive Service Germany

Continental Teves Germany

Deutsche Post Consult GmbH Germany

Philips Germany

Robert Bosch GmbH Germany

Roland Berger Strat. Consult. Germany

Patni Computer Systems Ltd India

RPG Enterprises India

Standard Chartered Bank India

Tata Elxsi Limited India

The Times of India Group India

Alfalayer Italy

A.T. Kearney Italy

Atlantic Technologies Italy

Ciba Specialty Chemicals Italy

Enel SpA Italy

GF Management Consulting Italy

Granmilano Spa Italy

Italtel Italy

Schering-Plough Italy

Vedior SpA Italy

Vodafone Italy

Whirlpool Europe Italy

Citibank Japan

Copernicus Associates Japan

Lehman Brothers Japan

NTT DoCoMo, Inc. Japan

Shinhan Financial Group S. Korea

Amrop International Mexico

Cydsa Mexico

Enertec México S. de R.L. Mexico

Femsa Comercio Mexico

Grupo Maseca Mexico

Laboratorios Ovejero Mexico

Pfizer Mexico

BiBiZed SRL Moldova

ABN Amro Netherlands

Cap Gemini Ernst and Young Netherlands

Expatica Communications BV Netherlands

McKinsey Netherlands

NIB Capital Netherlands

Petroplus International NV Netherlands

Royal Philips Electronics Netherlands

Power-One AS Norway

Argos Intellectual LLP Russia

Lucent Technologies Singapore

Monetary Authority Singapore

WhiteRock Partners Singapore

Banco Zaragozano Spain

Bassat Ogilvy Spain

Bosch Spain

Boyden Spain

Burger King España Spain

CableEuropa Spain

Circulo De Progreso Spain

El Cortijo, SA Spain

Eurocredito Spain

Ficosa International Spain

Grupo BBVA Spain

Heineken Spain

Hernest Consulting Spain

ICEX Spain

Isolux Spain

Italfarmaco Spain

Morena Films Spain

MTV Spain

Occidental Hotels and Resort Spain

Porsche Iberica, S.A. Spain

Practical Marketing Spain

Sun Microsystems Spain

Sun Planet Spain

Talman Group Spain

Teleline Spain

Daikin Industries Thailand

Thai Laemchabang Terminal Thailand

A.T. Kearney Ltd UK

Accenture UK

AOL- an AOL TimeWarner Co UK

Capital One UK

Citigroup Global Market Ltd UK

Dell UK

EBRD UK

Gulf Oil International UK

JPMorgan UK

Merrill Lynch UK

Prudential UK

Teach First UK

Thomson UK

American Airlines USA

American Express USA

Bayer HealthCare USA

Boston Scientific USA

ChevronTexaco USA

Chiquita USA

ConAgra Foods USA

Constellation Power Source USA

Darden Restaurants, Inc. USA

Eli Lilly and Company USA

Fidelity USA

Fisher Scientific USA

Ford Motor Company USA

GE Capital USA

General Mills USA

General Motors USA

Goldman, Sachs & Co. USA

Goodyear Tire & Rubber Co USA

Harrahs Entertainment USA

IBM USA

Kraft Foods USA

Millennium UN Plaza Hotel USA

Miller Brewing Co. USA

Morgan Stanley USA

Oracle Corporation USA

Pepperidge Farm USA

Pepsi-Cola USA

Playtex Products, Inc. USA

Roche USA

Schering-Plough USA

Siemens Management Consult. USA

Sony Corporation of America USA

Sprint USA

Staples USA

The Gallup Organization USA

The Wall Street Transcript USA

UBS Financial Services Inc. USA

US Airways USA

Appendix: Some Participating Companies (Total Respondents: 301 in 2004)

MBA Salary and Recruitment 2004

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