Culture & Society

For MBA Grads, Corporate Responsibility Trumps Salary

A survey of graduating MBAs reveals how far they'll go to find an employer whose thinking is in sync with their own.

June 01, 2008

| by Bill Snyder

A survey of 759 graduating MBAs at 11 top business schools reveals that the future business leaders rank corporate social responsibility high on their list of values, and they are willing to sacrifice a significant part of their salaries to find an employer whose thinking is in synch with their own.

The study by David Montgomery and Catherine Ramus of UC Santa Barbara examines the tradeoffs students are willing to make when selecting a potential employer. They found that intellectual challenge ranked number one in desirable job attributes, while money and location were essentially tied for second, each roughly 80 percent as important as the most important factor. “Had money not been ranked high, I would have thought I’d made a mistake,” says Montgomery, the Sebastian S. Kresge Professor of Marketing Strategy, Emeritus.

A reputation for ethical conduct and caring policies towards employees ranked high as well — 75 percent as high as intellectual challenge and 95 percent as important as the financial package. “I was frankly surprised that ethics and caring about people came up so important as they did,” says study coauthor Montgomery of Stanford GSB. “This augurs well for the character of the 21st century MBA.”

Other attributes of corporate social responsibility, including environmental sustainability and care for the community and other stakeholders, was weighted with over half the importance of the top job criterion, intellectual challenge.

Montgomery first looked at MBA job preferences some 30 years ago, but his initial interest was really methodological, he says. He wanted to demonstrate that conjoint analysis could predict behavior with a reasonable degree of accuracy. It does.

Montgomery and the late Dick Wittink, the George Rogers Clark Professor of Management and Marketing at the Yale School of Management and editor of Journal of Marketing Research, conducted interviews with MBA students early in the winter quarter of 1978, and used the results to make predictions about the types of jobs the graduates would accept. When the researchers compared the jobs the grads actually accepted the following spring, they found that the results of the conjoint analysis made a correct prediction 68 percent of the time. Chance alone was below 30 percent.

Because conjoint analysis has been shown to successfully predict MBA job preferences and choice, it answers one obvious objection to Montgomery’s work: “Aren’t the answers influenced by the subject’s desire to appear (both to the interviewer and to him/herself) socially conscious or at least, not greedy?” What’s more, the recent interviews were not conducted in person, but anonymously online, so there is also less chance of bias contaminating the answers.

Montgomery developed his own software to administer conjoint testing in the 1970s. A more sophisticated, commercial product called Sawtooth Software was used in the recent studies. The software poses questions to the subject; follow-up questions vary according to the content of the previous answer.

Montgomery, the former dean of the School of Business at Singapore Management University, travels widely and uses those opportunities to gather data. During appearances at business conferences in such venues as Seoul, Singapore, and Dubai he asked the largely American audiences how much of their salary they thought graduating MBA students would forego to work with an employer who shared their values of corporate responsibility. The majority (55.8 percent) thought the grads would sacrifice between zero and $3,000 a year, while just 5.4 percent put the number at $9,000 a year or more.

Seem accurate? It wasn’t. The attendees greatly underestimated the dollar amounts the grads would be willing to give up, a finding that shows the results of the broader study are far from intuitive.

Montgomery and Ramus broke down corporate responsibility into four categories: caring about employees, caring for stakeholders (such as community residents), environmental sustainability, and ethical business conduct. A fifth category was a model that shared all of the above characteristics.

The researchers found that the students expected to earn an average of $103,650 a year at their first job. Nearly all (97.3 percent) said they would be willing to make a financial sacrifice to work for a company that exhibited all four characteristics of social responsibility. They said they would sacrifice an average of $14,902 a year, or 14.4 percent of their expected salary.

Montgomery concedes that the students may have inflated the dollar amounts they would be willing to sacrifice, but because those numbers are very consistent with other data within the study, he said he believes the overstatements are not large.

Montgomery says he finds the results hopeful. “I wouldn’t have been surprised if the financial package had turned out to be most important,” he says.

As for the future, he and his colleague are broadening their sample and looking to see how gender and nationality figure into MBA job choices. His preliminary take: “It’s not a ‘Men are from Mars and Women are from Venus’ sort of thing,” though women do seem more concerned with social factors than men are, he says. Regional variations exist as well, with Europeans less likely to be concerned with attributes of corporate social responsibility than their counterparts in North America.

It appears, then, that recruiters may need to fine-tune their pitches to take into account the rising social consciousness of business students.

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