Guide to MBA Careers – Business Administration Career Paths
The versatility and value of a master’s degree in business administration (MBA) have made it arguably the most valuable education of the postwar era. No other degree offers so much flexibility and opportunity—not even law degrees. Although graduates of MBA and Juris Doctor (JD) programs were about equal 40 years ago, today MBA graduates outnumber JD graduates by nearly four to one, according to Statista.
In that context, it might seem curious, even paradoxical, that career choices among MBA graduates remain highly concentrated among less than a handful of industry sectors. For years, most MBA graduates from the country’s top business schools have accepted jobs in only two careers: management consulting and investment banking. Today, at least a third of the graduating classes at the more reputable business schools take positions in management consulting—more specifically at the “Big Three” (McKinsey & Company, Boston Consulting Group, and Bain & Company)—according to LinkedIn.
Over the last couple of years, the technology industry has begun to chip away at the share of MBA graduates joining the finance world, and more specifically, investment banking. Some studies even suggest that tech has already, or soon will, become the top recruiter of MBA graduates.
The financial industry has been known to lure candidates away from tech firms like Amazon, Microsoft, and Facebook through bidding wars—although usually unsuccessfully considering the high salaries and better work-life balance. Tech firms pay almost as well as financial institutions, but require fewer hours and offer more flexible working environments, conditions, and schedules.
This guide explores the reasons for the continued dominance of management consulting as a career preference among MBA students and graduates, along with a few alternative career paths to management consulting.
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Management Consulting Careers
“There is no industry or field that attracts more MBA graduates in a given year than consulting,” according to Poets & Quants editor John A. Byrne, a leading expert on business schools. Indeed, consulting is the most coveted target career among MBA graduates, according to the MBA Applications and Aspirations Report by QS Quacquarelli Symonds—one of the most extensive business school surveys that samples opinions from MBA applicants around the world.
Why is Consulting So Popular?
Variety and Challenge
Byrne sums up the appeal concerning variety and challenge. He points out how the sector provides “unparalleled variety, allowing a new recruit to work at different companies and industries, in different functions and locations,” all offering “broad exposure to a vast number of business challenges.”
On top of those benefits, consultants are exposed to top management, interact with high-powered colleagues and client networks, and travel extensively—all attractive components to recent MBA graduates.
Better Positioning for Future Jobs
Admissions and employment coach Angela Guido considers consulting to be a perennial top choice among MBAs because it allows professionals to learn about multiple industries and businesses without pigeonholing themselves. She continues in the Poets & Quants article:
For many people, consulting truly is the best choice for their first job post-MBA. Think about it: a lot of people want an MBA in the first place to open more doors and expand their horizons. Consulting continues to do that by exposing you to a variety of industries and functions without—in the case of most firms—forcing you to specialize immediately. It gives you the chance to apply what the MBA taught you, continue developing at a rapid rate (consulting has a very steep learning curve), while still opening new doors and better positioning you for other jobs.
What’s more, Guido continues, consulting firms confer unparalleled networking opportunities, and many industry positions prefer to hire former consultants. As with public accounting jobs for newly licensed CPAs, the networking and travel built into careers in management consulting give these careers tremendous value since they can function as stepping stones to subsequent jobs with client companies. McKinsey, Bain, and BCG all have offices in hundreds of cities and dozens of countries, allowing for a genuinely global and wide-reaching network.
Structured Career Paths
Furthermore, for those looking for a highly structured career path, consulting presents one that contrasts with the ambiguous career paths in many fields today. The sector offers a stepwise progression from business analyst to consultant, manager, principal, and all the way up to partner.
Finally, consulting management offers competitive and attractive salaries. According to the United States Bureau of Labor Statistics (May 2021), the median pay for management analysts is $93,000 per year. However, career data vendor TransparentCareer (2022) reports that the average starting total compensation of an MBA graduate in consulting, including signing bonuses, amounts to about $200,000 and Byrne says that partners can earn more than $500,000 per year.
See the BSchools MBA in Management Consulting guide for more on this field.
Despite consulting’s popularity, a new report by Poets & Quants on MBA candidate preferences suggests that the tech industry may have surpassed consulting as the most attractive career preference.
“The margin of victory is slim, with 60.4 percent of candidates identifying tech as their desired career path post-MBA versus 57.5 percent for consulting,” says Zach Mayo at RelishCareers, an online platform that helps business school students connect with corporate recruiters. “But it reflects the first time ever that tech has been on top.”
The worldwide shift to remote work during the pandemic is a key reason more tech companies are recruiting MBAs. BecauseBusiness reports that tech companies expanded their hiring of MBA grads from 80 percent to 96 percent – a significant jump of 16 percent between 2019 and 2021.
Moreover, at New York University, tech recruiting has exploded five-fold since 2010; among NYU’s most recent MBA graduating class, 10 percent accepted careers with tech firms. That surge prompted the school to introduce an accelerated tech-focused one-year MBA program incorporating feedback from venture capitalists’ feedback and major employers like Paypal and IBM. Those conversations resulted in a tailored curriculum focusing on experiential learning with large firms solving real-world problems.
Similarly, graduates from Stanford University’s world-renowned graduate business program, located at the heart of Silicon Valley, most commonly take jobs in finance, technology, consulting, and entrepreneurship. While finance still takes the top spot, 25 percent of graduates land in technology and 16 percent become entrepreneurs.
Why Are More MBAs Choosing Technology Careers?
One apparent reason for tech’s ascendance among MBA grads involves pay. Consulting and Wall Street firms no longer consistently win bidding wars for MBA talent against Google, Microsoft, and Amazon.
Jeff McNish, a career development dean at the University of Virginia’s Darden School of Business, told the Financial Times that since 2008, tech firms have matched Wall Street for pay. “At Darden, whether it is a consulting job, an investment banking job or a product management job in a tech company,” says McNish, “the pay is going to be the same, in the $125,000 to $140,000 range.”
Better Quality of Life
A second reason involves the universal consensus that the quality of life in a technology career vastly surpasses that of investment banking and finance. When pay is roughly the same, the principal difference between the two industries is their paradoxical work-life balance and work culture. The top tech jobs stand in stark contrast with the outmoded, work-from-the-ground-up sweatshop approach that most banks still require. Paul Petrone, LinkedIn Learning editor, wrote:
It’s quite the juxtaposition to see big banks known for demanding jobs and three-piece suits competing for talent against software companies known for ping pong tables and employees wearing jeans to work. But it isn’t surprising.
The fact is, Silicon Valley culture is quickly permeating throughout the world. As the numbers show, people are becoming more and more drawn to more laid-back organizations where employees feel empowered, as opposed to the top-down hierarchies where new employees work grueling hours.
Preferred Companies for MBAs
In September 2017, Poets & Quants compiled an employer ranking of the best and worst companies for MBA graduates based on self-reported data from MBA graduates to TransparentCareer across three weighted measures: total compensation (50 percent), weekly hours worked (10 percent), and job satisfaction (40 percent). Again, Google garnered the top honors as the most desirable employer, followed by L.E.K. Consulting, Microsoft, and Adobe.
More than any other tech company, one appears to be the driving force behind the increase in MBA recruitment. According to the Wall Street Journal, Amazon recently reported hiring 1,000 MBA graduates a year, which is a new record for any MBA employer in history. The next closest employer, McKinsey, typically recruits only about half that.
For example, Poets & Quants reports that the top recruiter of MBA graduates in 2021 was Amazon. Why? One reason may be that even though Amazon pays only slightly less than McKinsey, Amazon employees tend to work significantly fewer hours. According to TransparentCareer data, Amazon MBAs work about 52 hours a week, while those at McKinsey work 69 hours—the most hours of any employer in the survey.
See the BSchools MBA in High Technology Management guide for more on this field.
Functional Roles for Tech MBAs: Product Management and Operations
But how do these MBA graduates benefit tech firms? TransparentCareer reports that the top functional role for MBA graduates is in the computer software sector—especially for those with technical or engineering backgrounds.
The Wall Street Journal recently called product management, which was traditionally a marketing job that originated at manufacturers like Clorox and Procter & Gamble, the most coveted job title for MBAs. These roles account for more than a third of MBA jobs at e-commerce and internet firms, according to TransparentCareers, and blend disciplines like marketing, design, analytics, and strategy. Product management ranked well above the next most frequent functional role: operations.
See the BSchools MBA in Project Management guide for more on a related emerging field.
Finance and Investment Banking Careers
The financial services and investment banking space typically attracts MBA candidates for similar reasons as those of management consulting. For example, because a substantial share of the business at deal-making investment banks involves mergers and acquisitions comprising firms from a wide range of industries, recruits rapidly gain exposure to a variety of companies, all presenting unique business challenges.
In 2020, the investment banking sector recruited heavily from Duke University’s Fuqua School of Business, with nearly 93 percent of the graduating class earning positions in Bulge Bracket or underwriting roles. Also like consulting, investment banks expose MBAs to essential issues and high-powered colleagues and client networks—not to mention that they also pay very well.
Furthermore, banks provide stable, well-defined career paths similar to those at consulting firms, from the entry business analyst level, next to the associate level where many MBAs start, and eventually to the case manager, manager, and partner levels. Many MBA holders prefer the stability of working at a bank’s office to the near-constant travel expected of associates and managers at consulting firms.
Why Are Fewer MBAs Choosing Finance and Banking Careers?
Decline in Hiring
Despite these career advantages, finance recruiting accounts for only a small fraction of the levels from ten years ago at most business schools. Back then, almost half of the graduating classes at elite business schools with top-ranked finance specializations, such as the Wharton School of the University of Pennsylvania, accepted jobs in finance and investment banking.
According to Poets & Quants, the number of Wharton graduates who have gone into the financial sector—including positions in private equity, hedge funds, investment banking, venture capital, or investment management—has plummeted by almost 70 percent since 2008 and now accounts for less than a third of the graduating class. Moreover, MBA hiring statistics at Wall Street feeder schools, such as Columbia University, the University of Chicago, and New York University have seen a similar downward spiral. According to the Financial Times, JPMorgan Chase even canceled recruiting in Europe in 2013 because it hired so few graduates.
Understanding how and why the bottom fell out of hiring in this industry requires a historical perspective during such a relatively brief interval.
The Great Recession
Almost every article about the decline of MBA recruitment by investment banks and financial services firms begins with the Great Recession and the impact that the global economic collapse continues to wield on Wall Street’s anemic hiring practices and current MBA job candidates themselves.
After all, this generation of MBA graduates vividly remembers the September 2008 network news footage of all the fired Lehman Brothers employees carrying their “banker’s boxes” full of personal belongings out of bank headquarters in New York. The venerable 158-year-old Lehman Brothers—one of the largest investment banks in the country at the time—filed the largest Chapter 11 bankruptcy petition in history in the U.S. with $613 billion in debt because of the firm’s massive, derivative-leveraged exposure to the torrent of subprime mortgage defaults. Lehman’s bankruptcy then kicked off the 2008 global financial crisis.
For young people considering careers on Wall Street, Lehman’s collapse shocked them in ways that the Kennedy assassination shocked an earlier generation not that many years before. TransparentCareer co-founder Kevin Marvinac suggests that the continuing downfall in popularity of financial services roles is a sign of the times. Most current MBAs, he explained to Poets & Quants, were college undergraduates during or immediately following the financial crisis. “I remember being a finance major in college and thinking, ‘Wow, I have no interest in banking anymore after watching the Lehman Brothers debacle. The ensuing hiring freezes didn’t help either.”
Antiquated Work Culture
However, Poets & Quants editor John A. Byrne believes that other factors account for the reduction of MBA hiring in the financial sector than either the Great Recession or the above-discussed excellent work-life balance and richer cultures at competing tech firms.
“There is still a strong core of graduates who consider going into it,” explained Damian Zikakis, director of career services at the University of Michigan’s Ross School of Business. “But some of this is a Millennial issue. I’ve seen students come back to campus from their internships in investment banking and say, ‘No way. I don’t want that lifestyle.’”
Currently, TransparentCareer reports that the average MBA job in investment banking requires almost 80 hours of work every week. That’s double what most in the United States consider a standard workweek—and 23 hours above the average for all other MBA grads. Lazard Freres & Co. reported 83 hours, and Goldman Sachs data even reported as much as 86 hours in 2016. So if that’s the average, how many hours must a Goldman star performer log? In 2021, Ben Chon, a 27-year-old former investment banker left his position at JPMorgan Chase for more control over his schedule: “You don’t have control of your lifestyle, and you’re working even when you don’t want to.”
However, in 2013 the most prominent banks established “protected weekends” to create workplace cultures more enticing to MBA graduates, according to Forbes, although the news might have possibly been more of a public relations pitch than reality. Some policies don’t cover entire weekends because they leave out a sizable chunk—those policies merely prohibit junior associates and analysts from working during the 36 hour between 9 p.m. on Friday night and 9 a.m. Sunday morning. That said, some have noted a positive change in work culture.
Last year, the Fuqua School of Management’s top ten recruiters consisted solely of technology and management consulting firms. “Banks still hire people, but they have to up their game,” Fuqua’s Dean Bill Boulding told the Financial Times. “If you are going to attract the current generation of students you have to give them something that has meaning and purpose, not just the opportunity to make a lot of money.”
Whatever the causes, if the finance industry hopes to recruit MBAs in the numbers they once did—especially if they seek to hire more Millennials away from the tech and consulting sectors—they face a tough road ahead. For example, in the Poets & Quants employer study, although the financial services giant Liberty Mutual finished in seventh place, no banks appeared among the top ten—and only Goldman Sachs and Morgan Stanley made it into the top 20.
See the BSchools MBA in Finance guide for more on this field.
Consumer Product Marketing Careers
The consumer products industry, sometimes known by the CPG designation that stands for consumer packaged goods, has long been a devoted recruiter of MBA graduates. As TransparentCareer explains best, “What newly-minted MBA wouldn’t want to drive strategic initiatives for high-profile brands they can use themselves, can see on TV, or go touch on a store shelf?”
So what distinguishes product marketing careers?
Certain elements differentiate the traditionally more qualitative, marketing-focused careers in this field from consulting, tech, investment banking, and finance. The first is that MBAs seeking jobs in this field appear to be driven by different motivations.
TransparentCareer reports that one of the most closely-correlated variables with job satisfaction in CPG roles is their impact. CPG careers score above average in the “impact of work” arena. Moreover, the blog post continues, “the ability to create and own projects, products, strategic initiatives, and even entire budgets in these large companies undoubtedly attracts MBA grads anxious to flex their analytical and operating skills.”
The second aspect involves the generally less-desirable company headquarters away from the East and West Coasts and often in the Midwest, with some companies headquartered in secondary and tertiary metropolitan areas.
For example, Procter & Gamble’s headquarters are in Cincinnati; General Mills’ are in Minneapolis; and Whirlpool’s and the Kellogg Company’s are in the Michigan Rust Belt—Benton Harbor and Battle Creek, respectively. That said, exceptions do exist. Probably the most noteworthy is Clorox’s urban headquarters in the San Francisco Bay Area.
Dominance of Women
The third aspect involves the large proportion of women in the consumer products industry. An astounding 56 percent of MBAs in this industry are female, which contrasts dramatically with the percentage of women who earn MBAs, which is about 37 percent. An analysis from Monster suggests that women may prefer marketing jobs like these because they require creativity and collaboration, along with better work-life balance flexibility.
Better Work-Life Balance
TransparentCareer’s data supports this fourth aspect of work-life balance advantages. MBA grads in consumer products report working 45 hours per week on average, far less than the overall average of 55 hours. Moreover, the data indicates a low travel proportion of only 11 percent, with 66 percent reporting no travel at all.
Presumably, employers feel compelled to offer these work-life balance advantages to lure top marketing talent despite this industry’s less desirable locations and far lower pay—the fifth and final distinguishing aspect of the analysis.
Compensation in the CPG sector is substantially lower than the career options discussed in the previous sections. The total compensation of graduating MBAs accepting marketing and brand management offers in this industry only averaged $146,000, at the 28th percentile—far beneath the $210,000 standard in the consulting industry.
See the BSchools MBA in Marketing guide for more on this emerging field.
Digital Marketing Careers
According to the Financial Times, digital marketing refers to marketing products or services using digital channels to reach consumers. Promoting brands through various forms of digital media amounts to the critical objective, and typically involves proficiency in mobile, social media marketing, display advertising, search engine optimization, and any other form of digital media.
Most experts believe digital marketing requires a new approach to marketing and a new understanding of consumer behavior. For example, digital marketing requires companies to analyze the value corresponding to new kinds of metrics, such as the number of app downloads on mobile devices and engagements on social media sites such as Twitter, Facebook, and Instagram.
The Surge in Demand for Digital Marketing Careers
It is easy to understand why one might consider an MBA focusing on digital marketing. Demand for digital marketing skills is exploding, and employers are willing to pay a substantial salary premium for these skills.
Consider the growth in demand for crucial digital marketing job skills during the period 2011 to 2016, according to research from Boston labor market analytics vendor Burning Glass Technologies. During these five years, the demand for content marketing expertise skyrocketed by a staggering 450 percent, and demand for digital analytics capabilities shot up 152 percent.
Two categories that nearly doubled include demand for social media marketing skills, which increased 96 percent, along with their need for digital marketing skills overall, which surged 92 percent. Moreover, since 2011, job postings calling for digital marketing skills grew 30 percent faster than overall marketing job postings.
Furthermore, according to a recent study from McKinley Marketing Partners, of those marketing executives hiring this year, 56 percent will hire professionals with digital marketing skills, with digital advertising, content strategy, and social media counting as the top three in-demand skills. But their search for digital marketers will be a tight one. Only a fraction of digital marketing professionals are actively looking for new job opportunities, and almost half say they would only switch because of a salary increase.
Burning Glass Technologies also reports that four in ten marketing job openings now call for digital marketing skills. Those skills carry nearly a $7,000 salary premium over other marketing roles, and digital marketing jobs take 16 percent longer to fill. Mobile marketing appears to be the highest-paid skill, with a national average advertised salary of $88,681. Still, the Glassdoor database suggests that director-level salaries in markets like San Francisco that are about 28 percent above the national average are approaching $137,125, according to Glassdoor data.
McKinley Marketing Partners even went so far as to admonish hiring managers that they “should always be looking for marketers with digital skills, so they have a pool of talent to tap into when a need arises; otherwise they may have a hard time finding the right candidate on short notice.”
With such remarkable employment trends, it is not surprising that progressive business schools, notably the University of North Carolina and the University of Illinois, have devoted considerable resources to recruiting experienced faculty and consultants in digital marketing and updating their curricula to incorporate topics in this new discipline.
See the BSchools MBA in Digital Marketing and Social Media guide for more on this emerging field.
According to TransparentCareers, healthcare is another leading sector that employs MBA graduates. This multivariate industry includes opportunities in healthcare services, pharmaceuticals, insurance, informatics, hospital administration and finance, and medical device sales, among other specializations.
The healthcare sector may appeal to MBAs because of its exceptional worker satisfaction scores. In fact, TransparentCareers found that this industry had uniquely high “impact of work” scores. Those entering the field reported an 8.4 out of 10 in overall happiness—one of the highest among the researchers’ database of 3,500 MBA employers from around the globe. In addition, the relatively light workload and low travel compared to other industries were other favorable factors for MBAs employed in healthcare.
See the BSchools MBA in Healthcare Management guide for more on this emerging field.
Career Switching After Graduation from Business School
The MBA credential can provide graduates with greater flexibility by enabling different avenues of opportunity. This flexibility may describe why 67 percent of MBAs switch industries after graduating, according to a 2021 report from the Graduate Management Admissions Council.
Another study reported even larger post-graduation career-switching rates. According to Poets & Quants, almost nine out of ten MBA graduates either switch industry or function after graduating—and nearly seven in ten change both.
Because of this substantially enhanced career mobility, MBAs appear much happier after graduating than before entering business school. On a ten-point scale, MBAs reported a happiness level to TransparentCareer of 4.94 before starting business school. But after graduation, their average skyrocketed to 7.81, almost a 60 percent surge!
Concluding Thoughts on MBA Career Paths
The one factor that may be driving MBAs’ interests in career fields beyond management consulting and investment banking may be a factor that is not yet generally discussed. This driver may be the easy and rapid availability of job market intelligence MBAs receive through some newer labor market analysts and portals, including Burning Glass and Glassdoor—especially platforms like RelishCareers and TransparentCareer.
Free and open information universally available to all buyers and sellers embodies a core assumption of microeconomic theory, and an ingredient essential to the efficient functioning of any healthy market, especially the labor market. However, not many decades ago, business school graduates were essentially embarking on careers without good data.
For example, word-of-mouth reputations existed based on anecdotal evidence that many investment banks required long, grueling hours, but relatively few credible, authoritative studies of that characteristic existed. And before the internet, reviewing what little evidence did exist required a trip to the library.
Platforms like TransparentCareer offer a significant advance to MBAs and others making critical and challenging career decisions. Now anyone with internet access can easily see for themselves global, national, regional, and even individual data on components such as average weekly hours, job satisfaction, and overall happiness with potential employers. Those users can then quickly draw their conclusions about how those measures fit with their aspirations and lifestyle preferences.