Recruiting in a Down Market, Part 1: The State of the Market

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“Ladies and gentlemen, the state of our union is strong.”

-President Bill Clinton’s State of the Union Address, 1998

(If only we could say the same about the state of our industry.)

Part 1 of “Recruiting in a Down Market” (the presentation Kevin and I have been giving) begins today, with an overview of how things have changed in the past few years and where we’re at now.

After that, we’ll move onto the 4 major ways you need to change your recruiting strategy in a down market, and some key considerations when thinking about your “Plan B” (…and Plans C – Z).

Major Changes vs. 2004-2007

I hate to repeat depressing news, so let’s get this out of the way quickly.

In 2004-2007 the market was in recovery / boom year mode and competition for recruits was fierce. Banks had it harder holding onto top talent than you had finding jobs back then.

Now it has completely reversed and every bank has had multiple rounds of layoffs, enacted hiring freezes, and sharply cut back on recruiting.

You might think that such a poor environment would affect underlying demand / interest in these fields.

Whenever I tell new friends about this site, that’s always the first question they ask – “Who wants to do finance / consulting anymore, anyway?”

Even the Wall Street Journal has poked fun at this before.

So who does want to do finance/consulting anymore, anyway?

As you might expect, those with only lukewarm interest have fallen out of the market – but the core set of students and professionals who have always been interested in finance/business remain interested.

And some schools have such strong pre-professional leanings that nothing aside from a meteorite hitting Manhattan will change students’ motivations anytime soon.

So the number of people interested in finance/consulting has declined, but the quality of applicants has gone up – and competition is tougher than ever.

Another side effect: virtually anyone interested in finance is spreading his/her net wide and applying for anything available – making it tougher to get interviews if you don’t have top grades/experience.

Order of Magnitude & Some Numbers

The question of specific numbers / order of magnitude came up in a few presentations. Hardly anyone has “real” numbers showing how things have changed, but here are a few stats / guesstimates:

  • In past years big firms like Goldman Sachs might award 50-100 offers at core recruiting schools (not all of these would be for banking / front office roles).
  • This past fall that number was way down – maybe more like 10-20 – and some troubled firms just stopped recruiting altogether.
  • At most “target” schools this year, each bank has been interviewing 30-40 people and giving out 2-3 internship offers.
  • The number of applications, on the other hand, is up and everyone is applying for everything, even if they have no interest in doing it. The general pattern seems to be hundreds of people applying for each position and the same 20-30 always getting interviews.

Consulting vs. Finance

Management consulting serves as “Plan B” for a lot of prospective bankers, but is that realistic?

Not according to Management Consulted, which has written about reduced hiring at McKinsey and layoffs at other consulting firms like Accenture.

Even if consulting has been less affected, keep in mind that the industry is smaller than finance to begin with.

When times are good, it’s still tougher to land an internship / job at a top 3 consulting firm than it is to work at a bulge bracket bank.

Also, many companies view consultants as optional – a “nice-to-have”, but not a “must-have” – in all but a few cases. So they’re just as likely to cut back on consulting as they are to stop buying / selling companies.

So Who’s Actually Hiring?

Ok, so no one is hiring, apocalypse is upon us, and yes, believe it or not, they’re still selling remnants of Lehman Brothers on eBay.

That’s what you hear if you listen exclusively to the mainstream media, but a few firms actually view the current times as a great opportunity – opportunity to expand, hire quality bankers from elsewhere, and prepare themselves for future years.

Elite Restructuring / Advisory Boutiques

The most notable boutique that has been on a hiring spree lately is Moelis & Company, which is poaching senior bankers left and right and hiring lots of new junior people as well.

And they’re not alone – many boutiques are attracting laid-off or disillusioned bulge bracket bankers and luring them in with promises of higher pay and more independence / stability.

Back when I wrote Boutiques vs. Bulge Brackets, I said that larger firms were a better bet to start at – but I could this reversing itself in coming years.

Internship / Entry-Level Hiring

As I predicted in Summer Internship Recruiting: Down But Not Out, virtually all firms – even ones on the brink of collapse – hired summer interns this year.

It’s not in their best interest to “save” several hundred thousand (against revenue in the hundreds of millions) by not hiring interns, especially since no one knows when the market will recover.

Outside the US

Other parts of the world have been hit harder by the downturn than most people stateside have acknowledged, but they’re still in better shape than New York / London.

One point Kevin has made is that consulting firms have actually been hiring more people in high-growth regions like Dubai.

Oil prices and the real estate bubble popping have hurt the region, but the government is spending a lot on infrastructure projects and they need consultants to tell them what to do.

Coming Up Next

Coming up next: the 4 major ways you need to change your recruiting strategy to stand out in this market, and how you need to change your attitude toward recruiting, especially if you’re at a top university / business school.

About the Author

is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys learning obscure Excel functions, editing resumes, obsessing over TV shows, and traveling so much that he's forced to add additional pages to his passport on a regular basis.

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