Tuesday, October 19, 2004

Report on B-Schools / Rankings

SPECIAL REPORT -- 2004 RANKINGS

The Best B-Schools
Schools known for tougher academic standards gained ground -- with
students and recruiters
Midway through his MBA program, Andy Brown had a big decision to
make. His career choices -- to start his own small private equity
firm with a partner, or join a prestigious firm and learn at the
feet of the masters -- were enviable for any soon-to-be graduate.
But Brown, a student at Northwestern University's Kellogg School of
Management, was torn. So he did what he'd done dozens of times
before. He turned to Professor Larry Fox.

At Fox's home north of Kellogg's Evanston (Ill.) campus, the two
spent hours sipping tea and sorting through Brown's options. Fox,
61, who led an elective class on private equity in 2003, helped
Brown hash out the pros and cons of each path and examine his
long-term goals. Fox shared his own experiences at similar career
crossroads. When Brown left, he had the names of three high-level
executives Fox knew personally to call for more brainstorming. For
the next year, the two continued to dissect Brown's choices by
phone -- by then, Fox had retired to California.

It might seem an unusual relationship, but for Brown, 29, it was not
uncommon. Other professors had been equally generous: One was a
sounding board for Brown's business ideas, and another helped Brown
raise money for a Kellogg business plan competition. "One of the
main reasons I chose Kellogg was for its extremely accessible
faculty," says Brown, who ultimately chose to join a Houston-based
private equity firm. Kellogg's academic rigor, responsive
administration, and closeknit community were equally appealing.

The balance between an in-depth academic experience and a welcoming
culture is what once again put Kellogg at the top of BusinessWeek's
2004 biennial survey of the world's best business schools. In a year
when MBA students rebelled against academic corner-cutting and
sloppy ethics, Kellogg's achievement represents a high-water mark
of sorts. With five No. 1 rankings to its credit, Kellogg now has
more than the University of Pennsylvania's Wharton School, the only
other school to win the top spot since BusinessWeek began ranking
B-schools in 1988.

Clearly, Kellogg's is a formula that works. But it wasn't the only
way to ascend to the top. Downtown rival University of Chicago
Graduate School of Business, with its cerebral environment and
research-oriented bearing, stands in stark contrast to Kellogg --
and it landed at No. 2 for the third time since the rankings began.
Yet it may be what Chicago has in common with Kellogg that made the
difference this year: a mix of pure scholarship and can-do culture
that permeated the ranks of administration, faculty, students, even
recruiters. Indeed, Chicago's grads were hands-down favorites in our
survey of companies that hire MBAs. More than just a factory for
churning out economic whiz kids, the school's capacity for shaping
students' thinking was at the top of recruiters' minds. "Everything
is grounded in theory and analytics," says Blaine Barnett, a 2004
grad now working for high-end recreational product maker Brunswick
Corp. (BC ). "In every class it was, 'prove it to me,' 'show it to
me,' 'tell me why you think that,' 'give me the data.' It's a way
of thinking, a way of conceptualizing the problem."

Chicago's penchant for critical thinking has a long and storied
history. But enthusiasm among students, and even faculty, is a
newer phenomenon, ushered in by alum and now-dean Edward A. Snyder,
who joined the school in 2001. Just three years later, his ambitious
plans to revitalize the school and shape the program's culture
around its academic strengths and thought-provoking environment are
bearing fruit, and Chicago has ended its inconsistent performance in
the eyes of students. The success of this type of culture, says
Snyder, hinges on the expectations he announced on Day One,
including mutual respect, professional communication, and personal
responsibility. Snyder's weekly roundtable breakfasts are a hot
ticket, and not just for the flapjacks. Every student (each class
has about 500) is invited at least once to the anything-goes
meetings. Just weeks ago, a big source of student gripes -- poor
facilities -- was remedied when a new seven-story,
415,000-square-foot home for the business school opened.

If there's one lesson to be distilled from this year's ranking, it's
that student satisfaction is cruci- al. At Wharton, a new building
did little to remedy student unhappiness in 2002, when the school
fell from its long-held No. 1 spot to No. 5. Waning student
satisfaction, an ineffective placement office, and a dip in hiring
by its most reliable recruiters led some to question whether the
venerable finance school had lost some of its luster. But in 2002,
Dean Patrick T. Harker hired Peter Degnan, a former investment
banker, to overhaul career services, and students have taken
notice. Says one Wharton grad, who landed a six-figure job at an
investment management firm: "Degnan and his team have done an
incredible job attracting employers, increasing the number of
interviews and the number of job offers -- all in a very short
period of time." Recruiters noticed the well-oiled machinery, too
-- they named the placement office at Wharton the most effective of
any school. It all added up to a No. 3 spot for Wharton this year.

Also on Wharton's improvement checklist: 23 new faculty across
several disciplines and some fine-tuning of the program, including
more "soft-skill" classes in communications, and experimenting with
new interactive tools developed in the school's learning lab. And
though students still complain about spotty teaching, Wharton's
faculty -- 223 full-timers -- rivals that of any program. That's
borne out by the school's intellectual-capital ranking -- based on
published research and book reviews -- which was among the best
this year. It's not uncommon at Wharton to look down at a class
textbook and find that your professor wrote it.



SCHOOLS OF HARD KNOCKS
For the class of 2004, a school's intellectual prowess was just one
way students judged a degree that was beginning to feel less
valuable. Remember, the most recent group of MBAs applied not long
after September 11, with the economy in tatters. They witnessed the
layoffs of tens of thousands of employees, and some were downsized
themselves. What's more, just a few months before applications were
due, the Class of 2004 watched in disbelief as recruiters in 2002
reneged on job offers to hundreds of newly minted MBAs. An MBA was
no longer a golden ticket, and more and more grads found themselves
without jobs, even months after commencement. At the same time,
B-schools continued raising tuition, making the price tag for the
degree -- already staggering -- an even bigger reach. All of this
at a time when pundits and even B-school insiders were questioning
the value of the degree after a spate of corporate scandals that
often involved MBAs. "It has been a sobering experience for the
business community as a whole," says Bruce Willison, dean of UCLA's
Anderson School of Business, No. 14 this year. "People are mindful
of that as they decide to go back to business school."

The tumultuous state of Corporate America and the world of
management education created near-perfect conditions for a backlash
against the "glitz factor." In the late 1990s, many MBA programs
catered far too much to student whimsy, sometimes to the point of
dumbing down curriculum, reflecting the "I-want-more" culture that
permeated the boom years. But the MBA is, after all, a $100,000
investment, and the country club atmosphere just doesn't cut it
anymore with students. "[The MBA] is really about investing in
yourself, acquiring a knowledge base you didn't have before so that
you have a professional future that's brighter," says Robert L.
Joss, dean of Stanford Graduate School of Business, No. 4 this
year. "That has to come from effort and work, and there has been a
growing awareness of that."

That may be why business schools known more for their tough academic
environments have gained ground in the ranking this year with
students and recruiters. Carnegie Mellon Tepper School of Business,
with a reputation for turning out grads skilled in quantitative
analysis, shot up four spots, to No. 15, and technology powerhouse
Purdue University's Krannert School of Management leapt five spots,
to No. 21. For Purdue, the improvement came despite student
complaints that the career services office didn't do enough to help
them with job searches. They also said alumni contacts were barely
useful in the hunt.

Schools that failed to meet students' intellectual needs paid dearly
in the 2004 student survey. University of Southern California's
Marshall School of Business fell 10 spots overall, to No. 27, and
nine places in the student poll, to No. 23. In spite of a class
boasting perhaps the highest average GMAT scores in the school's
history, "the administration failed to match the caliber of
students with an equally tough and challenging curriculum," says
one grad.

This year's class saw the first signs of a recovery in the MBA job
market after three years of lackluster recruiting. You could almost
hear the sigh of relief. About 75% of grads at the top 30 schools
had at least one offer by graduation. By three months after
graduation, only 11% were still looking for work. That's in stark
contrast to 2003, when nearly 35% of grads at the top schools were
still pounding the pavement at summer's end. Harvard took the lead
this year -- 94% of the Class of 2004 had at least one job offer by
graduation. And even though students complained about the school's
lack of connections with smaller recruiters, grads received an
average of 2.6 offers per student -- more than any other school.

Most schools had to pull out all the stops to maintain and
strengthen relationships with companies -- and get them to come
back to campus. Cornell University's Johnson School of Business,
No. 7 this year, used a private jet, loaned by its B-school
namesake, S.C. Johnson & Son Inc., to fly recruiters to
out-of-the-way Ithaca, N.Y., for presentations and interviews. Some
29 companies took advantage of the unique perk to recruit first- and
second-year students. And 14 job or internship offers from companies
like GE Consumer Finance (GE ) and IBM Global Services (IBM ) came
about as a result of those trips.

Companies weren't just back in hiring mode for the Class of 2004.
They were also more willing to pay a little more for grads' skills.
Median graduate-reported total compensation -- salary, signing
bonus, and other guaranteed payments -- was up 26%, to on average
$136,569 in 2004. Many grads had something even better to be
thankful for -- a big part of the compensation increase came from
companies paying off their loans. Others were just happy to see
more recruiters on campus -- and to be among the employed.



RETURN OF THE RECRUITERS
Career service directors privately worried that 2004 wouldn't be
much better than 2003. But in the spring, their phones started
ringing. Banks and consultancies, months after fall recruiting
ended, came back to campus to snatch up uncommitted grads. Hiring
among consulting firms and banks that answered the BusinessWeek
survey in 2002 and in 2004 was up 21% this go-round. And prospects
are looking even better for the Class of 2005. "Two of the major
firms hosted summer receptions for students who hadn't even started
business school yet," says Sheryle Dirks, career services director
at Duke University's Fuqua School of Business, ranking No. 11. "We
haven't seen anything like that in at least five years." Students'
growing coolness to hard-charging Wall Street jobs has pushed the
banks, in particular, to be more aggressive in their recruiting
(page 76).

And that's not all. Recruiters, who have long grumbled about MBAs
who can't hit the ground running, now say MBAs are making a
contribution from the get-go. Of those who responded to the
BusinessWeek survey, about 50% reported that grads' skills and
abilities were better today than they were three years ago. Only 4%
said grads were worse now than in 2001. "Before, everybody was going
to business school just to go or because they were [laid-off]. Now,
the people who are there really want to be there. It's more
competitive to recruit, but the quality [of grads] is much better,"
says the head of a top consulting firm.

One reason could be that schools have become more innovative,
adopting hands-on learning techniques designed to give them a taste
of the business world they're about to inhabit. What had been a
smattering of experiential learning projects at a handful of
schools has turned into a full-fledged phenomenon over the last few
years. Students at most schools aren't just learning about
structured finance, marketing strategy, or brand management.
They're doing it. Through a variety of consulting projects, teams
of students get a chance to test-drive their new skills.

At Kellogg, students have hundreds of opportunities to consult or
work on real-life corporate projects -- often as a supplement to a
particular course. The combination has won them kudos from
corporate recruiters who named the school's curriculum the most
innovative. For example, students in technology marketing studied
the latest marketing concepts for high-tech firms under the
watchful eye of professor Mohan Sawhney and Dean Dipak C. Jain.
Between pop quizzes and homework assignments, they consulted with
senior management at Microsoft Corp. (MSFT ), identifying business
problems, writing case studies, and developing solutions for the
company. Microsoft has already implemented several student
marketing ideas related to its .Net initiative to sell Windows
software as a service.



TURNING OUT LEADERS
One of the biggest changes in the B-school world this year has been
a recognition among students that leadership is important. As
important as, say, cost allocation or strategic planning. But
teaching the fine art of leadership to Type-A MBAs is a challenge,
especially when many already see themselves as destined for the
corner office. Harvard Business School, alma mater of a sitting
President and dozens of CEOs, made the biggest splash by making its
first core-curriculum change in 25 years. Last fall, it launched a
year-long required course on leadership and ethics, team-taught by
10 of the school's top professors (35 applied to teach it). Student
response was overwhelming: One student wrote to a professor about
his visit years earlier to a Polish concentration camp where he
lost relatives during the Holocaust. The trip left him certain that
human beings were incapable of changing their ethical stripes. "You
have proven me wrong. While we become harder to convince over time,
we are still...'moldable' at any age."

Of course, Harvard doesn't own the market for creating leaders.
Under Dean Robert J. Dolan, University of Michigan's newly named
Stephen M. Ross School of Business expanded its flagship leadership
program from one week to two and added a third week just before
students graduate -- and won raves from recruiters, pushing it up
two spots to No. 6. University of Virginia's Darden Graduate School
of Business Administration, at No. 12, creates leadership and ethics
case studies from its own center dedicated to the subject. And Emory
University's Goizueta School of Business moved up two spots to No.
20 this year, with grads giving it the highest score among all
programs for the school's numerous efforts to nurture and improve
their leadership skills. Through a mix of seminars, workshops, and
year-long classwork, the school constantly reinforces the idea of
leadership. Next year, Emory will add a Leader's Academy for
students who want even more training. They'll have to be committed,
though -- the academy meets on weekends and requires serious sweat
equity in exercises that include working a minimum wage job and
spending a long weekend at Marine Corps boot camp.

Grads who are grounded in the fundamentals but who also have
business-building skills are in high demand these days. That's
something that sets Babson College's F.W. Olin School of Business
apart from its peers. "Companies can only do just so much with
operating excellence or cost-cutting," says Dean Mark P. Rice. "At
a certain point, you need new products, processes, and services.
That's what drives revenue growth, and that's what Wall Street
wants to see." In recent months he has received many requests to
talk to executives at companies like Gillette Co. (G ) and United
Technologies Corp. (UTX ) about innovation.

Babson, which enters the ranking for the first time at No. 26 this
year, lives and breathes entrepreneurial zeal -- even though
upwards of 80% of its grads go on to work for traditional
companies, which increasingly appreciate their creative thinking.
Even hard-charging schools are getting on board the innovation
bandwagon. R. Glenn Hubbard, recently appointed dean of Columbia
Business School, hopes with a new mandate he can infuse a dose of
entrepreneurial thinking into every course the nearly 500 MBAs take
each year.

Such changes reflect a sense of optimism in the classroom that was
fading two years ago. After surviving an economy in free fall and
an unprecedented loss of faith in business itself, it wouldn't come
as a surprise if the class of 2004 were a hard-nosed lot. But that's
not the case -- and with good reason. Recruiters are back, and
schools are making meaningful changes. In the increasingly complex
business world this year's grads have inherited, it may just be
worth more than ever.


By Jennifer Merritt with Erin Chambers in New York

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