Harvard vs. Stanford MBA for Investing Compensation (New HBS Employment Report)

js4244's picture
Rank: Senior Chimp | 16

First off, this is in no way meant as trolling -- I'm genuinely curious to get thoughts.

HBS just released its 2017 employment report:

http://www.hbs.edu/recruiting/data/Pages/detailed-...
Stanford GSB hasn't released the latest yet but here is their 2016 (PAGE 6 OF PDF):

https://www.gsb.stanford.edu/sites/gsb/files/files...
For all of the talk about HBS as the place to go for finance opportunities, it looks like GSB places the same percentage of their class into investing jobs as HBS and the total comp appears much higher for most of those jobs at GSB compared to HBS. If you go back and compare the last several years this seems to be consistent, so its not a recent anomaly. HBS only gives medians and doesn't even report any means, which would probably make them look even worse.

Why is this? I'm researching business schools and trying to figure out my rank order -- I'm interested in staying in PE and always thought HBS was the better bet (and when I look at employee profiles on firm websites it always seems to be mainly HBS grads), but looking at this employment data it looks like Stanford might be the better option if you can get in...I mean the comp numbers aren't even really close out of the two programs. Also guessing there are probably less people going for PE at Stanford compared to Harvard.

Any thoughts?

Comments (11)

Nov 10, 2017

Bumping to follow.

Looking at GSB in the next 3-4 years myself.

Nov 11, 2017

I'm not a stats genius but the sample size for Stanford IM and hedge funds is 9 students (total). I don't think the figures are far enough apart to really call them superior with that small of a sample size, even if its comparable year over year.

IM and hedge fund comp post MBA is right skewed with a massive fat cat tail (get it?). I'd be more interested in what the top half of HBS offerees get, which isn't reported. If Stanford's median is $175k + $75-100k bonus, that means they have at most probably ~3-4 people making over $300k a year in IM/hedge right out of school. I'd be surprised if HBS wasn't comparable (adjusted for size of the program).

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Nov 11, 2017

Thanks for the reply. I see 5% of the GSB class going into HF and 4% into IM. GSB is around 400 a year, so that comes out to ~36 students. Still not a huge sample but bigger than nine.

The really big disparity seems to kick in around PE comp -- the other guaranteed comp for GSB is just so much higher (and the base is moderately higher).

The other thing -- which isn't reported in the statistics -- that GSB really seems to have going for it is the denominator, meaning how many students are actually going for these jobs on campus. While HBS and GSB have a similar percentage of students coming into the class with PE/VC experience, my sense is that more of those students at GSB are trying to get into something else while the HBS Pre-MBA PE folks are trying to get back to the buyside. Most years GSB has a slightly higher percentage of the class going into PE/VC than came in, which implies that people are breaking in without Pre-MBA experience. At HBS the percentage of students taking PE/VC jobs post-MBA is usually right at the pre-MBA percentages, and my guess is the vast majority of those are the students who already came into school having done PE/VC. I've heard it's next to impossible to break into PE post-MBA if you didn't do it before school at HBS. I don't have as much info on GSB, but I bet it's easier (though probably still challenging).

Again, not trying to flame and don't want to offend any HBS folks, just curious what people think. To me it looks like GSB has the upper hand in buyside recruiting, which bucks conventional wisdom on these boards and elsewhere.

Nov 12, 2017

You're right - I read the % as absolute values. However, I'd still think my point on sample size still stands. Point is - with ~30 people landing at GSB, it could just be that there's a smaller concentration of funds at the school that pay well and recruit regularly. It doesn't necessarily mean that success rates are much better. HBS could still be a better feeder to the industry with more attractive opportunities than GSB and a wider range of funds that recruit for attractive roles. We'll need folks from the programs to weigh in, but I wouldn't overweight the numbers too much.

It's also important to note that the programs are very different in terms of cohort structure vs flexibility. Those are probably bigger differentiators than recruiting and I'd encourage you to explore how a flexible vs strict cohort structure will impact your experience.

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Best Response
Nov 12, 2017

The differences are explained more by differences among the individuals than differences in the recruiting benefits of GSB vs HBS. From my observation, the following seem to have more of an affect on comp than where you went to school (assuming you go to a top-tier program):

1) Age- The older you are, the higher your pay post-MBA. An older VP who decides to go back to get his/her MBA will get more comp than an associate with 3 years of experience who went straight from ugrad to buyside.

2) Fund/Firm - Comp will vary by firm circumstances. For instance, someone who goes to a newly formed fund will not get paid as much early on, but may get more later as they probably will come in at a higher position and get more carry earlier. In addition, there's even differences with established firms. Some pay high early on, but your year-on-year increase isn't quite as steep while others pay less upfront making your earn "the brass ring."

3) Location - while it's obvious comp will be lower depending on where you live due to COL differences (e.g. NYC vs Atlanta), it becomes even more pronounced when you factor in international locations. Taxes, COL, local customs all will affect pay. Note: MBA programs historically have a high amount of international students; I think mine was like 30%.

In short, it could be GSB students going into PE tend to be older, go to more established firms in high COL places vs the opposite at HBS, rather than the difference being attributed to better recruiting at the former. The issue seems to be that employment reports only give what happens right after graduation. It's hard to make inferences from this single data point. To really evaluate, you'd have to compare at several years out (e.g. 5-year, 10-year, etc.). Unfortunately, I haven't really seen any place that reports these stats.

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Nov 12, 2017

Thanks everyone for the opinions. I'm curious if anyone else has thoughts. I appreciate your time.

Dec 15, 2017

Stanford puts up even more impressive numbers this year:

Stanford: https://www.gsb.stanford.edu/sites/gsb/files/emplo...
Harvard: http://www.hbs.edu/recruiting/data/Pages/detailed-...

Dec 15, 2017

Yeah, well, turns out that's for a reason:

https://poetsandquants.com/2017/11/30/stanford-gsb...
Looks like Stanford's been using scholarship money intended for needs based applicants to lure candidates with strong careers in finance who are headed back into finance - huge driver of their ability to command higher salaries after school. And with a smaller sample size it doesn't take too many of these to move the needle.

Dec 18, 2017

All things equal, I don't actually think that there's a difference between GSB and HBS in terms of the school's ability to impact student placements (I would also argue that this also applies to Wharton for reasons that should become clear below). 23mich has a pretty good breakout of the possible factors that influence individual PE placement (and therefore skew overall statistics), but my guess is that the firm selection as a function of prior experience is the most important factor here.

Why? This is purely anecdotal and could be entirely incorrect, but my sense is that given the heightened level of competition for GSB slots, the mix of PE associates heading into GSB tends to be skewed more towards megafunds, upper middle market firms, and other elite funds. The same could be said for HBS, but to a lesser degree; I get the sense that a somewhat greater proportion of HBS ex-PE associates came from out-and-out middle market or lower middle market firms compared to GSB.

As a result, when GSB graduates recruit for the buyside, they are more likely to re-enter megafund or upper middle market PE or successfully transition to HF, which pay more than middle market PE.

This isn't to say that GSB is inherently superior (it is, of course, a subjective opinion) but that they have roughly half the spots that HBS has even though the overall applicant pool, especially from PE, highly overlaps. This would promote a higher proportion of b-school students from the most well-known funds, therefore driving up post-MBA placement and compensation.

Dec 18, 2017

outofbananas, thanks for the thoughtful reply. Would you say GSB is viewed as more prestigious than HBS in your private equity circles?

Dec 19, 2017
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