Leveling the playing field of finance recruiting

Transcription

1 Leveling the playing field of finance recruiting Lauren A. Rivera, PhD Rob Langrick, LLB, CFA, MBA

2 School rankings are self-reinforcing Professors Students Rankings Employers 2

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4 100 question, 2 hour test of financial acumen Secure all tests proctored Taken by 244,000 students from 3,800 schools = Data to test Lauren Rivera s hypothesis

5 Which is the smartest school? #1 #1 Princeton Princeton Harvard Yale Columbia Stanford Chicago MIT Duke UPenn CalTech Dartmouth Johns Hopkins Northwestern Washington St Louis Cornell Brown Notre Dame Vanderbilt Rice UC Berkeley Emory Georgetown UCLA UVA Carnegie Mellon USC Tufts Wake Forest UMich UNC Chapel Hill BC NYU College of William and Mary Rochester Brandeis Georgia Tech UC San Diego Case Western Reserve UC Davis Lehigh UC Santa Barbara BU Northeastern Rensselaer UC Irvine Urbana-Champaign Wisconsin-Madison Penn State Florida Miami Washington Seattle Yeshiva UT Austin George Washington Ohio State Pepperdine Tulane Fordham Southern Methodist Syracuse UConn Brigham Young Clemson Purdue Georgia Maryland Pittsburgh Texas A&M Worcester Polytechnic Rutgers American University Baylor Iowa Minnesota Virginia Tech Clark Indiana Bloomington Marquette Miami Oxford Stevens Institute of Technology SUNY Environmental Texas Christian #100 Delaware Umass Amherst Michigan State UC Santa Cruz Vermont Binghampton Colorado School of Mines Stony Brook Alabama Boulder Denver Tulsa Drexel Florida State NC State San Diego St Louis Missouri Average BAT score #101 #200 #200 Utah State Nebraska New Hampshire Auburn Buffalo SUNY Dayton Iowa State Loyola Chicago Kansas Oklahoma Oregon San Francisco Tennessee UC Riverside South Carolina St Thomas Catholic University of America Duquesne Illinois Institute of Technology Michigan Technological Pacific Clarkson Colorado State DePaul Temple Arizona Rutgers, Newark Seton Hall Albany SUNY Arizona State Louisiana State Ohio Cincinnati Kentucky Utah Hofstra New School Arkansas George Mason Missouri Science Oregon State Washington State Illinois State Kansas State St John Fisher Howard Oklahoma State St John s UT Dallas Adelphi NJIT San Diego State Alabama, Birmingham Illinois Maryland, Baltimore County Mississippi Maryville St Louis Mississippi State Texas Tech UMass Lowell Virginia Commonwealth Biola Louisville Rhode Island South Florida Wyoming Idaho La Verne Andrews Hawaii, Manoa North Dakota South Dakota West Virginia Azusa Pacific Ball State Bowling Green State Florida Institute of Technology Pace Central Florida Maine Western Michigan Edgewood College Immaculata North Dakota State South Dakota State Spalding St Mary s of Minnesota Alabama, Huntsville UNC Greensboro Southern Illinois Carbondale Houston Missouri - Kansas City New Mexico Widener Central Michigan Indiana Purdue Kent State Northern Illinois Montana Nevada Reno Utah State

6 University ranking #1 #1 Princeton Princeton Harvard Yale Columbia Stanford Chicago MIT Duke UPenn CalTech Dartmouth Johns Hopkins Northwestern Washington St Louis Cornell Brown Notre Dame Vanderbilt Rice UC Berkeley Emory Georgetown UCLA UVA Carnegie Mellon USC Tufts Wake Forest UMich UNC Chapel Hill BC NYU College of William and Mary Rochester Brandeis Georgia Tech UC San Diego Case Western Reserve UC Davis Lehigh UC Santa Barbara BU Northeastern Rensselaer UC Irvine Urbana-Champaign Wisconsin-Madison Penn State Florida Miami Washington Seattle Yeshiva UT Austin George Washington Ohio State Pepperdine Tulane Fordham Southern Methodist Syracuse UConn Brigham Young Clemson Purdue Georgia Maryland Pittsburgh Texas A&M Worcester Polytechnic Rutgers American University Baylor Iowa Minnesota Virginia Tech Clark Indiana Bloomington Marquette Miami Oxford Stevens Institute of Technology SUNY Environmental Texas Christian #100 Delaware Umass Amherst Michigan State UC Santa Cruz Vermont Binghampton Colorado School of Mines Stony Brook Alabama Boulder Denver Tulsa Drexel Florida State NC State San Diego St Louis Missouri Average BAT score average BAT score #101 #200 #200 Utah State Nebraska New Hampshire Auburn Buffalo SUNY Dayton Iowa State Loyola Chicago Kansas Oklahoma Oregon San Francisco Tennessee UC Riverside South Carolina St Thomas Catholic University of America Duquesne Illinois Institute of Technology Michigan Technological Pacific Clarkson Colorado State DePaul Temple Arizona Rutgers, Newark Seton Hall Albany SUNY Arizona State Louisiana State Ohio Cincinnati Kentucky Utah Hofstra New School Arkansas George Mason Missouri Science Oregon State Washington State Illinois State Kansas State St John Fisher Howard Oklahoma State St John s UT Dallas Adelphi NJIT San Diego State Alabama, Birmingham Illinois Maryland, Baltimore County Mississippi Maryville St Louis Mississippi State Texas Tech UMass Lowell Virginia Commonwealth Biola Louisville Rhode Island South Florida Wyoming Idaho La Verne Andrews Hawaii, Manoa North Dakota South Dakota West Virginia Azusa Pacific Ball State Bowling Green State Florida Institute of Technology Pace Central Florida Maine Western Michigan Edgewood College Immaculata North Dakota State South Dakota State Spalding St Mary s of Minnesota Alabama, Huntsville UNC Greensboro Southern Illinois Carbondale Houston Missouri - Kansas City New Mexico Widener Central Michigan Indiana Purdue Kent State Northern Illinois Montana Nevada Reno Utah State

7 So smart schools do well. What s the fuss all about? #1 #1 Princeton Princeton Harvard Yale Columbia Stanford Chicago MIT Duke UPenn CalTech Dartmouth Johns Hopkins Northwestern Washington St Louis Cornell Brown Notre Dame Vanderbilt Rice UC Berkeley Emory Georgetown UCLA UVA Carnegie Mellon USC Tufts Wake Forest UMich UNC Chapel Hill BC NYU College of William and Mary Rochester Brandeis Georgia Tech UC San Diego Case Western Reserve UC Davis Lehigh UC Santa Barbara BU Northeastern Rensselaer UC Irvine Urbana-Champaign Wisconsin-Madison Penn State Florida Miami Washington Seattle Yeshiva UT Austin George Washington Ohio State Pepperdine Tulane Fordham Southern Methodist Syracuse UConn Brigham Young Clemson Purdue Georgia Maryland Pittsburgh Texas A&M Worcester Polytechnic Rutgers American University Baylor Iowa Minnesota Virginia Tech Clark Indiana Bloomington Marquette Miami Oxford Stevens Institute of Technology SUNY Environmental Texas Christian #100 Delaware Umass Amherst Michigan State UC Santa Cruz Vermont Binghampton Colorado School of Mines Stony Brook Alabama Boulder Denver Tulsa Drexel Florida State NC State San Diego St Louis Missouri Average BAT score Two problems: #101 #200 #200 Utah State Nebraska New Hampshire Auburn Buffalo SUNY Dayton Iowa State Loyola Chicago Kansas Oklahoma Oregon San Francisco Tennessee UC Riverside South Carolina St Thomas Catholic University of America Duquesne Illinois Institute of Technology Michigan Technological Pacific Clarkson Colorado State DePaul Temple Arizona Rutgers, Newark Seton Hall Albany SUNY Arizona State Louisiana State Ohio Cincinnati Kentucky Utah Hofstra New School Arkansas George Mason Missouri Science Oregon State Washington State Illinois State Kansas State St John Fisher Howard Adelphi NJIT San Diego State Alabama, Birmingham Illinois Maryland, Baltimore County Maryville Mississippi St Louis Mississippi Texas State Tech UMass Lowell Virginia Commonwealth Biola South Rhode Louisville Florida Island Wyoming Idaho La Verne Andrews Hawaii, Manoa North Dakota South Dakota West Virginia Azusa Pacific Ball State Bowling Green State Florida Institute of Technology Pace Central Florida Maine Western Michigan Edgewood College Immaculata North Dakota State South Dakota State Spalding St Mary s of Minnesota Alabama, Huntsville UNC Greensboro Southern Illinois Carbondale Houston Missouri - Kansas City New Mexico Widener Central Michigan Indiana Purdue Kent State Northern Illinois Montana Nevada Reno Utah State ) Anybody ever tried hiring somebody from Princeton? Was Oklahoma State St John s UT Dallas it cheap and easy? 2) Firms hire individuals, not institutions. Use of institution averages (think: rankings) systematically exclude top individuals from non core/target schools

8 Surprise! Ivy League does not have a monopoly on talent Top 100 all-time BAT scorers in the USA # 1-50 # # # < UPenn 21. Brown 31. Notre Dame 51. Minnesota 71. Arizona 91. Rochester 2. Virginia Tech 22. Johns Hopkins 32. Ohio State 52. U of San Francisco 72. UPenn 92. Rochester 3. UC Berkeley 23. CalTech 33. Princeton 53. Columbia 73. Northwestern 93. Stanford 4. UPenn 24. Case Western 34. Princeton 54. Rutgers 74. Harvard 94. Ohio State 5. UT Dallas 25. Harvard 35. Yale 55. MIT 75. Indiana 95. USC 6. University of Utah 26. Hamilton College 36. Arkansas 56. Rice 76. Notre Dame 96. BU 7. Florida International 27. Harvard 37. Delaware 57. Notre Dame 77. UC Berkeley 97. Northwestern 8. Cornell 28. Cornell 38. Duke 58. UPenn 78. Rutgers 98. Arizona State 9. Chicago 29. U of San Francisco 39. Claremont McKenna 59. Columbia 79. Houston 99. UNC Chapel Hill 10. Duke 30. UPenn 40. Notre Dame 60. Ithaca College 80. Texas Tech 100. Brigham Young 11. Harvard 31. Urbana-Champaign 41. Arizona State 61. Claremont McKenna 81. Claremont McKenna 12. UCLA 32. UPenn 42. Harvey Mudd 62. Harvard 82. UPenn 13. U of Michigan 33. BU 43. UCLA 63. CUNY Queens 83. U of Illinois 14. Columbia 34. CUNY City College 44. UCLA 64. Fordham 84. Northeastern 15. Vanderbilt 35. Chicago 45. Notre Dame 65. UT Austin 85. North Dakota 16. Harvard 26. Rensselaer 46. Houston 66. Princeton 86. Harvard 17. Harvard 27. Loyola Chicago 47. Oklahoma 67. Georgia State 87. Harvard 18. Columbia 28. Duke 48. UVA 68. Walsh College 88. Minnesota 19. Chicago 29. UC Berkeley 49. Indiana 69. New Mexico 89. Missouri 20. Penn State 30. Urbana-Champaign 50. Harvard 70. UPenn 90. U of Michigan Source: US News & World National College rankings

9 Pedigree: How Elite Students Get Elite Jobs Lauren A. Rivera, PhD June 18, 2015 MANAGEMENT & ORGANIZATIONS

10 Class Matters US economic inequality is at record high levels; rates of intergenerational mobility are lower than in most other Western industrialized nations Social class affects children s future educational, occupational, and economic attainment; overall mental and physical well-being Income-achievement gap is now 2x the black-white achievement gap Class is a particularly powerful source of stratification at the very top and bottom ranks of the US economic hierarchy Sources: Couch & Dunn 1997; Pew 2012, 3; Reardon 2011; Saez 2008; Stephens et al. 2012; Torche

11 Class Biases in Employment Existing research has focused almost exclusively on social class inequalities in schooling Neglects a vital dimension of economic stratification: employment Even among graduates from the same universities, students from the most elite backgrounds tend to get the highest-paying jobs. How and why does this happen? To answer this question, I turn to employers Goal of the book: to understand the ways that employers contribute to demonstrated social class inequalities in hiring in elite jobs Sources: Alon 2009; Bowen & Bok 1998; Dinovitzer & Garth 2007; Lareau 2003; Mettler 2014; Stevens 2007; Tilcsik & Rivera 2015; Useem & Karabel

12 Elite Professional Service (EPS) Firms Top investment banks, management consulting firms, and law firms Analyzing hiring decisions for recent undergraduate and professional school (MBA, JD) students (summer+full-time) Among the highest paying entry-level jobs in the country Catapult recent grads into top 10% of household incomes; salaries are often 2-4 those offered by other types of jobs Stepping stones to positions or power and prestige elsewhere Share many similarities in recruiting process, work performed, time demands but also some differences, especially regarding the structure of job interviews 12

13 Research Methods Qualitative, comparative case study Research on employers 120 interviews with decision-makers in top firms 9 months of ethnographic observation of one representative firm s recruitment department (pseudonym Holt Halliday ) Research on job seekers Ethnographic observation of recruiting events across industries and schools 32 interviews with job seekers 13

14 Book Summary At each stage of the hiring process, employers use an array of sorting criteria ( screens ) and ways of measuring candidates potential ( evaluative metrics ) that are highly correlated with parental income and education Taken together, these seemingly economically neutral decisions result in a hiring process that filters students based on their parents socioeconomic status and leads employers to miss out on top talent 14

15 Pedigree EPS Definition n. The quality of a job applicant s achievements, namely the prestige of schools attended, organizations affiliated with, and extracurricular activities; interpreted as evidence of fixed intelligence, orientation to success, and work ethic 15

16 Pedigree Merriam Webster Definition: n. 1. a register recording a line of ancestors 2. an ancestral line, lineage; the origin and the history of something 3. distinguished ancestry; the recorded purity of breed of an individual or strain 16

17 Chapters Chapter 1: Entering the Elite Chapter 2: The Playing Field Chapter 3: The Pitch Chapter 4: The Paper Chapter 5: Setting the Stage for Interviews Chapter 6: Beginning the Interview: Finding a Fit Chapter 7: Continuing the Interview: The Candidate's Story Chapter 8: Concluding the Interview: The Final Acts Chapter 9: Talking it Out: Deliberating Merit Chapter 10: Social Reconstruction Chapter 11: Conclusion 17

18 The Playing Field: Cores, Targets, and Black Holes Formally restricted competition to the nation s most prestigious universities via on-campus recruitment At core and target schools, any student may apply; firms invest heavily in events to maximize number of applicants Determined through perceptions of prestige (not necessarily rankings), stereotypes, geography, employee alma maters The degree of time/attention given as well as interview and offer slots ( quotas ) vary by school prestige Accepted but did not consistently review nontargeted applicants ( black hole ) Driven by widely shared belief that top students go to top schools ; described as a matter of efficiency; clients 18

19 Backdoors: Personal Connections For those outside of listed schools, the primary back channel was a personal connection at the firm Served the very practical purpose of being an express lane to review; not necessarily better job fits Did not need to be a senior employee (even the recommendation of 1 st years were trusted) to push candidates through to interviews; but senior employees were more successful in pushing candidates to offer However, given homophily in social networks, students from more affluent backgrounds and white students most likely to have these insider connections See also: McPherson et al

20 False Doors: Diversity Recruitment Most firms participated in diversity recruitment activities, especially diversity fairs However, diversity fairs were not seen as real sources of new hires (referred to as PR, outreach, marketing, community service ) due largely to the lower school prestige of attendees Those attendees who were successful tended to come from listed schools and were already eligible for on-campus recruiting; did little to expand the pool 20

21 Defining the Playing Field: What s the Problem? Stifles class and racial diversity; diversity associated with better team and organizational outcomes; increasingly used by clients as a performance metric (clients often more diverse than firms) Wooing elite students is (Chapter 3) extremely costly Elite students may not be the best job fits Students from most elite class backgrounds and most prestigious schools are least happy with these jobs and want to leave within 1-2 years of being on the job Often have worse listening, coping, and emotional skills than students from lower SES backgrounds, which are important in client- and team-facing jobs Sources: Chen &Miller 2012; Dinovitzer & Garth 2007; Kraus et al. 2010; Kraus & Keltner 2009; Owens & Rivera 2012; 21

22 Defining the Playing Field: What s the Problem? (Cont d) Social connections as a backdoor Does little to diversify the pool in terms of demographic characteristics (but can provide minimal level of school diversity) given that people tend to have demographically homogeneous networks Diversity fairs as false doors Many managers blame lack of diversity as a problem of the pipeline but construct pipeline in artificially narrow way that prevents diversification beyond token levels 22

23 The Paper: Résumé Screenings and School Prestige Revisited Most commonly screened résumés again by university prestige; this time, drew strong distinctions between super-elite and selective universities Privileged students from the top of list GPA/grade thresholds lowered/eliminated for students from super-elite schools Used not because of content/quality of education but strong cultural meanings they attributed to admission and enrollment at an elite school Some variation by evaluator school and SES of origin Compounded class and race biases in accessing the playing field 23

24 The Paper: Extracurriculars as Credentials of Character Extracurriculars were the second most common résumé screen; more common than grades, test scores, prior employer, tasks performed at prior jobs, or diversity Strongly associated with perceptions of sociability, time management, drive Not all extracurriculars created equally Preferred time- and resource-intensive activities pursued over long periods of time that resonated with upper/uppermiddle-class culture Undervalued academically or professionally oriented activities as well as paid employment (unless 40+ hours per week) or caregiving 24

25 The Paper: Grades Grades were a tertiary screen. Use was highly variable and depended on: The academic track record of the particular evaluator; highachievers emphasized them more The candidate s school prestige; the more elite the school, the less grades counted/the lower the threshold The applicant s extracurricular profile; strong discounts for heavy involvement, especially in sports When used, grades typically served as a floor rather than a basis of selection

26 What s the Problem? Further screening by school prestige compounds class and racial biases in accessing the playing field Again, super-elite students not necessarily best job fits One of strongest predictors of participation in leisureoriented extracurricular activities is parental social class In addition, preferred stereotypically masculine and white extracurriculars; excluded stereotypically feminine candidates (male or female) and some minorities from interviews Class rank tends to be a better predictor of on-the-job performance than extracurriculars or managers gut feels; underutilized at super-elite schools 26

27 Summary: A Tilted Field Together, the way firms define the playing field and screen résumés strongly biases the applicant pipeline by applicant social class and race This is even before class, gender, and racial biases in the interview process and in hiring committee deliberations which are the focus of the rest of the book kick in Systematically excludes high-performing applicants who may fit better with job, while keeping diversity artificially low 27

28 What Can Be Done to Create a More Equitable and Effective Pipeline? Adopt a wider definition of school quality; include schools that have high levels of academic achievement and diversity Screen more intensively on class rank, tasks performed at prior jobs, coursework taken to cope with wider pipeline Create a nontargeted/nonsponsored recruiting stream with dedicated personnel; nontargeted recruiting week (not at candidates expense) Blind evaluators to candidates extracurriculars and/or develop more systematic ways of assessing drive Educate employees about biases present in relying on school prestige and extracurriculars as markers of merit See: Bowen & Bok 1998; Karabel 2005; Soares 2007; Rosenbaum & Binder

29 Thank you!! MANAGEMENT & ORGANIZATIONS

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