Posted by askivy on February 1, 2010 under Uncategorized |
Started by second year harvard MBA students as a way to improve B-school ethics, the Harvard “MBA Oath” was signed by over half of the Harvard class of 2009. Quickly, MBAs around the world forwarded the oath to friends and the oath now gathered over 800 signatures to date.
You can find the oath here: http://mbaoath.org/take-the-oath/
While this is an laudable attempt to improve the ethics standard of the MBA population among a string of high profile fraud cases and CEO of failed companies rewarding themselves by large bonuses, I do find that the oath somewhat disturbing. In particular students signing the oath are promising to “act with utmost integrity”, “take responsibility for my actions”, “be accountable to my peers” and “safeguard the interests of my shareholders, co-workers, customers and the society in which we operate”.
This is quite striking to me - isn’t the behaviour described above normal and expected behaviour? I find it quite disturbing that an oath and a pledge is needed to be “honest”. After talking about it with my classmates, I realised that this may be in fact a key difference that exists in terms of business ethics between the US and Europe.
The World Bank publishes a yearly Global Competitiveness Report with some indications of Corporate Ethics. If you look at the chart below, it seems that the US has a long way to go before reaching Europe’s ethical standards. In fact, the USA is much closer to China in terms of corporate ethics, which I found to be quite interesting after all the noise created around Google in China.
Posted by askivy on January 30, 2010 under Uncategorized |
As you start thinking about your career options, you may be asking yourself whether now a really a good time to go into investment banking. People often tell me that the good days are gone, and with the new taxes and regulations, banking will not be attractive as a career option anymore.
Well, in my opinion, there has never been a better time to go into the industry. My logic is as follows:
1) Investment banking remains and will still remain one of the best training platform for young graduates.
There is no other place that can provide you with such level of technical and financial training at such a junior level. The high-pressure high-responsability environment will give you a unique exposure that is almost impossible to get at any other job. In fact, it is very common to see analysts spending some time learning the ropes in the M&A department of a big investment banking before going back to the family business. In the US, Investment Bank Goldman Sachs is so influencial and sends so many of its alumni into high government jobs that the bank if often called “Government Sachs”
2) Investment banking is cyclical!.
People tend to forget that good times come and go, but bad times also come and go. People also tend to be over-optimistic in good times, and over-pessimistic in bad times. I believe that there is now over-pessimism in the industry, and that now is the perfect time to ride the next economic expansion wave. The graph below is quite interesting and shows how cyclicality the industry is: it plots the number of Wharton students going into Investment Banking against the S&P500 index. Nothing new you might say, economy is bad so they hire less. But the number of Wharton students is fixed (at about 800) so more people in investment banking means less entrepreneurs, consultants or people in the industry. That means that at the peak times, banking becomes really popular. I actually have a theory on this - if the porportion of the MBA class going to Banking is over 25%, sell your stocks, find another career, the economy is about to crash!! If it is less than 20%, BUY, go for a banking job! What was it last year? 17.5%, an all time low.
Wharton MBAs going into Investment Banking
3) Finally, competition is now less intense.
People got fired, left the industry, went back to their home countries, graduates have chosen to study other disciplines than business or finance, and banking jobs are becoming less popular due to the current “negative perception” that surrounds the industry. This means that the industry will quickly be short of junior people, which will translate in higher demand, more opportunties, and ultimately higher bonuses.