A couple of ground rules: Cautiously evaluate firms' claims. Don't let a firm pressure you; take your time in making a comfortable decision. This is the one and only time in your relationship with a firm that you have some leverage; use this to make sure you get the information you need to make your decision. Any firm that discourages you from taking your decision too seriously because you're "just an analyst" is probably not a firm that will take your career seriously.
The Nuts And Bolts of the Offer
Consulting firms and investment banks make job offers over the phone. A senior recruiter will call you to give you basic information about your offer. Information includes:
- Base salary
- Signing bonus-a once--only bonus that is paid when you join the firm
- Indication of yearly bonus--many firms divide the yearly bonus into two components, individual performance and the firm's overall performance
Two particular aspects of the offer are very important:
- First, most consulting firms will allow you to remain a generalist (someone who works on projects in different industries) for several years. However, investment banks will require you to join a group. Banks will either make you an offer in a specific department or make you a general offer with the condition that you will be assigned to a specific department once you've arrived. Your investment banking department assignment will make or break your experience.
- Second, if you're an analyst, watch for time limits placed on your tenure at the firm: Some companies state outright that theirs is a two-year analyst program, while others leave it more open-ended. Why is this important? Open-ended offers provide a cushion in case you don't get into business school or can't immediately find an appealing new job in another company.
The minute a firm decides they want you, it's as if they can't live without you. The firm will assign one or two people to act as your "mentor." Soon after you receive a job offer, you will begin getting phone calls from these people day and night. You'll start to use your answering machine to screen out calls. Technically, the mentor is responsible for answering your questions and putting you in contact with other employees if you have questions he can't answer. Realistically, the mentor's role is to "sell" you-to persuade you to join the firm. Your mentor will court you until you've made up your mind. Mentors, like recruiters, are picked for their loyalty to and success at the firm. The mentor cannot help but feel the pressure to sell you on the firm because he will be recognized for a successful job. Therefore, mentors are not natural candidates for providing you with a representative sample of opinions on the firm.
The highlight of the large firm's selling process is the "sell day": The company pays your way to visit the office, stay in a posh hotel, and schmooze with current employees. One unspoken objective is to impress (and entice) you with luxuries you are not accustomed to, to create an image of banking or consulting that is fast paced and glamorous. During the sell day, the firms will trot out extremely senior people to make you feel important. Sometimes, these bigwigs won't remember your name once you've joined the firm. All of the people you talk to will be friendly, positive, and happy with their jobs--people who are unhappy with the company are not included in recruiting. Some firms also may massage your ego, trying to flatter you into taking the job. Be cynical.
Although you should discount at least half of the official information you hear, you can pick up valuable information by carefully observing the subtleties of what people are saying and doing. Listen to your gut instinct when evaluating your surroundings. Use the selling process to fill in informational gaps.
Their Sales Techniques
The importance of an unbiased career decision can't be stressed enough. Some very intelligent people feel that their rational thinking fell a victim to banks' and consulting firms' sales techniques. Whether during sell day or other recruiting functions, be aware of the effect of these techniques on your thought process:
- "Attending our sell day event doesn't mean you're obligated to join us. We just want a chance to answer your questions." This is a classic case of escalation of commitment. The objective is to break down one large act of commitment (your taking the job) into several smaller acts of commitment so that you can more easily stomach the large commitment. Once you arrive at sell day, you may find yourself seriously listening to the arguments put forth by the firm's employees. The firm has therefore won a share of your attention by convincing you to take an initial step.
- "We love our jobs." Human beings like to see themselves as consistent. There would be a large contradiction between hating a job and doing it anyway, especially when explaining one's actions to others. Therefore, analysts and associates justify their actions by claiming that they love their jobs. They want to love their jobs because they've already chosen them and are doing them. This is especially true of first-year analysts, who still care that their college classmates see them as having chosen the right path.
- "Carefully consider whether you're cut out for this job, because not everyone can make it here." This technique plays on your ego, your machismo. It challenges you to try to succeed, an offer that tempts overachievers. Also, describing the analyst program as difficult builds mystique around it and makes outsiders want to belong to a "club" of people who have succeeded in this experience. The analyst program is made out to be a special and separate world from the outside.
- "We had one analyst out of sixty last year who was so good and worked so hard that he was promoted to the associate position without an MBA." The firm will create myths around certain people and elevate them as role models. This communicates to you what the firm's values is--hard work, sacrifice--and may tempt you to try to resemble these mythical analysts. And become a legend yourself.
- "Look at it this way--you're going to be working long hours anywhere you go, but it's better to be working at our bank that at XYZ bank." Translation: It's better to be low on our totem pole than on someone else's. This argument presents your choice solely as one between investment banks rather than as a choice between investment banking and something completely different. Once this argument has narrowed your perspective to just investment banks, it appeals to exclusivity and encourages you to pick the best of investment banks. This argument is also used by consulting firms. Remember, you don't have to do anything you don't want to. Evaluate any job offer in absolute, not relative, terms.
- "But you told me that you'd join our firm if you got an offer." Be careful what you promise during an interview or any other contact with the firm: It will come back to bite you. Firms like it when you make very public, verbal acts of commitment. When they challenge you later by recalling these statements, they rely on the fact that you don't want to see yourself or have others see you as flaky. This ignores the fact, of course, that it is perfectly reasonable to change your mind.
- Sunk costs: You already have put so much time and effort into interviewing with this firm, do you really want to go through the process all over again with another firm and waste your precious effort?
- Peer concerns: Your friends on campus know that you have been interviewing--how will it look to them if you change your mind all of a sudden about what you've been doing and decide that banking and consulting aren't right for you? It's better to change course now than to be miserable later.
- Public failure or success: You want to show that you've succeeded in an immensely competitive process, and often this means accepting one of the jobs you've won. This pressure is especially high for people who are very self-conscious.
If there are specific people of whom you'd like to ask questions, call your mentor in advance to arrange a meeting during sell day. If a firm has made you a department-specific job offer, make sure to meet as many of the people in that department as possible. Some candidates have accepted their offers only to arrive at their assigned department and find that the one person they met was not indicative of the rest of the clan (or, worse yet, has left the department).
If your offer is a general one but you will be assigned to a group later, make sure to investigate thoroughly how assignments are made, which groups tend to be more sought after among analysts, and why. MBAs should actively try to influence their department assignment if they haven't already; a good justification for stating a preference now is that you have gathered information during the recruiting process and have come to a conclusion. Undergraduates, if they have a strong preference, should get as much of a commitment as possible from the firm that they will receive this assignment. This should happen before taking the job; once you have accepted the job, you have no more negotiating leverage.
One word of caution: Behave professionally at all times during selling events, even around junior business people who will be your peers. Firms often take successful candidates out for a night on the town, and this often involves drinking. You need to stay in the good graces of your possible future employer. Getting plastered in front of the firm's representatives will be remembered for a long time.
What's negotiable?
Can you negotiate the offer you get? It depends.
Undergraduates and others applying for entry-level analyst positions have almost no room for negotiation, with the following exceptions:
- Unstructured recruiting programs, or job offers from smaller firms or regional offices, may have more room for negotiation.
- If you are absolutely opposed to the department assignment you have received, it may be possible to change it. This has happened in a few cases. If you receive an offer in a specific department, ask to talk to as many people in that department as possible. If you have serious concerns about the group assignment, ask how flexible the assignment is and express an alternative preference as a condition of taking the job. If your offer is a general one, ask how department assignments are decided and express a preference up front, before you accept the job. If possible, try to get an indication or commitment as to whether you'll get your preferred assignment.
- Firms are not flexible when it comes to salary and title. They may be more flexible regarding less important components of the offer, such as relocation expenses and starting date. It is reasonable for you to request reimbursement of relocation expenses, particularly if you are planning a long-distance move. It may be possible to delay your start date if you have very important reasons for doing so. Some firms even will allow you to defer your start date for a year in order to make use of a prestigious scholarship such as the Rhodes or Marshall.
Sometimes a firm will give this in-between group a special formal title: senior analyst, for example, or junior associate. In this case, it is practically impossible to get your offer raised up to the full associate level, and frankly you should be thankful that you don't have to settle for the analyst title.
MBA students have the most leverage in negotiation, because the firm sees you more as a long-term investment and because the experience and skills of MBA candidates vary more widely than those of undergraduates. While you cannot increase the offered base salary or bonus, you can negotiate one of the biggest perks of all: reimbursement of part or all of your business school tuition by returning to a firm where you've worked as a permanent or summer employee. In addition, MBAs frequently have been able to alter start dates simply in order to travel, relax, or do some other work for a year. By talking to members of the firm, they have been able to evaluate and influence their placement in particular departments.
Culture and People
You will hear this many times, but it bears repeating: Among similar job offers, you should choose the firm whose culture and people you like best. Why? Because success very much depends on how well you mesh with the company culture.
At school, your individual performance can be quantified fairly objectively through tests and projects that you prepare alone. At work, this changes. Especially at a junior level, you work as part of a team and have few assignments that you alone are responsible for (aside from photocopying and proofreading). In addition, the work your team has accomplished is difficult to grade because there are a few immediate quantitative measures of a client's satisfaction. (They will pay you the same fee, no matter how much they liked your work.) There are no exams, no papers, and no class rankings. As you can imagine, performance measurement tends to be much more subjective at work than at school. In addition, you'll be judged by one or two managers at work versus four or five professors at school, so your evaluation becomes less balanced. Most important, you no longer can control your performance based solely on your individual effort; in order to get your job done well, you will rely on other people's help.
Because the work performance review is so subjective, and because you need cooperation from others, it is critical to build strong work relationships with your colleagues, managers, and mentors. It is especially possible to do so if you have an underlying friendship. Those who are able to joke around go out for beers, try a great restaurant, or play golf with their colleagues-in other words, relate to them on a personal level-are at a great advantage. Unfair as it seems, friendships carry over into the work environment and will affect colleagues' perceptions of you and your work. People who like you will champion your cause, look after you, and cooperate with you.
In conclusion, this means that you should look for people with whom you can bond and build strong relationships. Seek firms whose culture and people you're comfortable with, whose style you would want to emulate. Seek an environment in which you won't feel that you're hiding your true self every minute of the day. If your gut is telling you that the culture doesn't fit you right now, the culture probably won't ever fit you. Don't make the mistake of thinking you can succeed at a firm based on your performance and regardless of the other people there: Remember, now performance is a subjective thing.
The company hit a rough spot in the 1980s, when it found itself overstaffed and facing soft business conditions. Restricted by its one-client-per-industry policy, it also was hurt by having to turn down business. In the meantime, competition was increasing from firms that had adopted this company's implementation focus. Moreover, the firm's founders had created an employee stock ownership plan, borrowed against it to take out cash for themselves, and saddled the firm with debt. In 1990 it laid off about 15 percent of its employees, including recent college graduates. In response to increasing demands of junior officers for a share in management and profits, the firm shifted ownership of the company from its eight original owners to the company's then seventy officers, making them partners.
Since then the company has recovered and thrived. Job-seekers, take notice: The firm's jobs may be some of the most secure in the industry, since the firm seems determined at all costs not to repeat its 1990 layoffs. Since many clients did not see it as an issue, the firm has somewhat relaxed its policy of serving only one client per industry. It has remained focused, resisting the temptation to diversify--although it does a mix of strategy and operations work, the majority of its revenues are derived from corporate strategy. It still emphasizes increasing the shareholder value of clients, proudly charting the stellar stock performance of its clients relative to the S&P 500. If you interview at this firm, you'd better say that you're focused on results-the company doesn't write reports. The firm also has a principal investors advisory practice that helps clients assess the strategic value of properties being purchased, perform due diligence, and develop profit improvement plans.
According to insiders, the firm's culture is down-to-earth and spirited. Senior managers are known to socialize with younger colleagues after work. "I would enjoy having a drink with just about anybody in the company," a consultant the firm commented during an interview. Offices are largely self-governed and develop their own unique atmosphere. There is acceptance of individualism, starting at the top. After leaving this firm, many consultants start their own companies. One insider estimates that 50 percent of consultants who leave are departing for entrepreneurial ventures or venture capital, whereas at other firms the same number might be leaving for Fortune 500 companies.
This firm is organized in a matrix structure of overlapping functional and industry groups:
"Practice," or functional, areas: including competitive strategy, organiza-tional effectiveness and change strategies, customer loyalty, logistics, infor-mation technology, mergers and acquisitions
"Industry" areas: including industrial products, consumer goods, financial services, manufacturing, health care, and technology
After you've accepted a firm's offer, do one more thing to bring an end to the recruiting process: Call each firm from which you've received an offer. At least give them the courtesy of turning down their offer directly, rather than leaving a message on voice-mail. Firms will appreciate it, especially after putting a lot of time, thought, and money into recruiting you. Believe it or not, some recruiters become attached to candidates they'd really like to see join the firm.
Besides courtesy, these calls make business sense. You don't want to burn any bridges, since you might end up knocking on these people's doors again- perhaps after business school or if your initial job choice is disappointing. You might even want to send a personalized thank-you note to recruiters with whom you had significant contact.
Now you can go out and do some real relaxing. Enjoy! You've reached the fruition of a lot of hard work.
Questions for Undergraduates to Ask During Sell Day
General Questions
- What do you like most and least about your job?
- How many analysts will be in my analyst "class"?
- How will my performance be evaluated?
- How will my work and responsibilities change over my two years as an analyst?
- How many analysts were accepted last year at Harvard, Stanford, and other leading business schools?
- What support does the firm provide to analysts applying to business school?
- Do you have a business school reimbursement policy? How many people receive this option?
- Typically what percentage of analysts each year is asked to stay for a third year?
- How do you determine which department I'm assigned to?
- How would you describe the differences between M&A, corporate finance, and other departments?
- Can I meet more people in the department that I have been assigned to?
- Please describe your staffing process. How will I interact with staffing coordinators?
- How many projects can I expect to work on during my two years as an analyst?
Questions Specific to Sales and Trading
- How quickly would I be assigned to a specific product desk permanently?
- What types of training would I receive during my first few months at the firm?
