One statistic that stood out last year was the
increased proportion of people with work experience who joined
B-schools. How do B-schools manage the placement of these students? Most
of the top B-schools now run a separate 'Laterals' program that provides
companies with an option to hire students with work experience directly
for the middle-management positions. We decided to dig deeper to find
out more about the people who leave their jobs for pursuing MBA, and
determine how they can leverage their experience during lateral
We have categorized students
with work experience into four segments:
- Switchers: This group is interested in changing
their career track altogether. They want to try out something new.
More often than not, they have not decided upon which functional
stream they will finally select and wait until they have dipped into
all the subjects to make their choice. In addition, they are willing
to cast aside their experience and join as freshers.
- Climbers: Climbers are those who wish to obtain a
management degree so that they can go back to the industry in which
they were working. What they expect is a direct climb of two or
three rungs in the hierarchical ladder when they return. An example
would be that of a programmer who wants to be a Project Manager.
- Jumpers: Jumpers are an interesting lot. They look
forward to jumping across streams within the same industry. A
typical example would be that of a technical lead who wants to join
the Marketing/Strategy/Business Development team. The Jumpers often
foresee the possibility of hitting the glass ceiling in the absence
of a formal management degree and pursue their MBA to fill the gap.
- Multipliers: The Multipliers join the course
primarily in anticipation of future monetary benefits. This group
expects their compensation to be a multiple of what they were
earning before. Just like Switchers, they too are not initially
clear about what function they would finally select.
A classical 'Lemons problem' exists here. A 'Lemons
problem' occurs whenever information asymmetry in a market makes it
impossible to determine the actual quality of the object being sold.
Applying the concept to the B-school scenario, we can see that Climbers
and Jumpers are the best hires for companies in the industry in which
these students have worked - as compared to Switchers and Multipliers.
However, the presence of the latter two segments of students during the
laterals makes it very difficult for companies to differentiate. Grades,
which are often touted as a signal of quality, turns out to be a
non-starter as this is a competitive advantage that can be easily
emulated by Switchers and Multipliers. The problem is compounded further
due to the conditions in the job market that forces the students to
hedge their risks by applying to almost every company that comes for
Fortunately, there is a way to handle this situation.
This requires a quantum shift in the strategies adopted by both the
students and the companies.
Strategies for the Students
Leverage your Technical skills: This is the most
important asset for students who desire to return to the industry in
which they were working. It is necessary for these students to have
a holistic understanding of this industry, its structure, and
revenue streams. There should be a clear pattern of competence
building by selecting electives and projects relating to the
industry. This, as a signal of quality, can have an immense impact.
Climbers and Jumpers are the ideal candidates to exploit this
- Leverage your People Management skills: The
students should expect to be quizzed on peer 'networking' and people
management skills. Learning ability, appreciation of new technology,
international exposure/knowledge of foreign languages and ability to
work in different geographies with diverse workforce are all points
that will place the candidates in a favorable light.
- Leverage your Project Management skills: Climbers
have a big advantage here. They are interested in this job
description and have been directly/indirectly involved in it. The
candidates would do well to take up leadership roles to manage
clubs, events etc. during their years at B-school. These students
can also take up projects during the course that reinforces this
skill. The aim should be to acquire a healthy mix of 'hard' and
Strategies for the Companies
- Use the right signal of quality: Generally it has
been observed that companies - in the absence of any other indicator
- select grades as the most tangible signal of quality. This is
often misleading, especially when it comes to laterals. For example,
Climber and Jumpers are interested in a particular industry and
hence spend a disproportionate amount of time researching about it.
Obviously, this is a trade-off, (with grades), that they make
consciously, and hence they should not be penalized for it. Thus,
companies should give due consideration to this fact while selecting
- Betting it right: Climbers and Jumpers expect the
companies to give due importance to their experience, not just in
terms of compensation but also in terms of the designation offered.
That being the case, the companies should sufficiently differentiate
the offers made during the laterals to those made during the final
- Changing the mindset: It is a perception that
management students from the top B-schools are avid job hoppers,
more so during the initial years. However, it must be recognized
that students with experience have already had exposure to the
industry and look forward to grow with one company rather than
switch incessantly. Recently, there was a quote by a HR Manager in a
leading magazine: "If they don't want us, we also don't want them".
We believe this is as much a problem with the 'marketing' of the
candidates by the B-schools as it is with the positioning by these
Thus, we believe a qualitative shift in the way the
students and companies approach laterals is required to ensure a net
gain for both the stakeholders.