Customized for: Erin ([email protected]) Samer HamadehandMark Oldman. New York City andwasfoundedin1997byHussamHamadeh, “a killerapp”bytheNew York Times, Vault isheadquarteredin Vault istheleadingmediacompanyforcareerinformation. Called Inc. Vault About comprises 120+titlesforjobseekers,professionals andresearchers. on careersubjects.Researched,writtenand published byVault, Inc.,Vault CareerLibrary™ guidebooks of collection up-to-date and comprehensive most world’s the Vaultis Career Library™ • NorthropGrumma • LockheedMartin • JohnDeere • IngersollRand • HoneywellInternational • HarleyDavidson • Georgia-Pacific • GeneralMotors • FordMotorCompany • DuPont • BoiseCascade • Boeing • Alcoa GET INSIDEINFOON: “For thosehopingtoclimbtheladderofsuccess, Vault’s insightsarepriceless.” “Fun reads,edgydetails.” “Excellent.” —Library Journal —Library •  •  • Recentcompanynews • Companyoverviews IN THISGUIDE: •  •  AT VAULT.COM: • Andmuchmore! Inside infoonworkplace for eachcompany Info onthehiringprocess 10,000s oftopjoblistings Vault JobBoard— 1,000s oftopemployers Employee surverysfor culture andcompensation Forbes — Money —

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MBA CAREER BIBLE CAREER MBA 2009 EDITION

MBA THE VAULT AND PUTYOURMBATOTHEBESTUSE. GET EVERYTHING YOUNEEDTOKNOWABOUTAWIDEVARIETY OFINDUSTRIES CAREER BIBLE 2010 Edition Edited bythestaff ofVault ® Customized for: Erin ([email protected]) 162-59461_Shallow_Vault.indd 1 36USC220506 Member ofDeloitteTouche Tohmatsu Limited Copyright ©2010DeloitteDevelopmentLLC. rightsreserved. All sex, religion, color,national origin,oranyotherbasisprotected byfederal, state,orlocallaw. race, to regard without employment for consideration structure of Deloitte LLP and its subsidiaries. All qualified applicants will receive legal the of description detailed a www.deloitte.com/us/aboutfor see Please subsidiaries. its and LLP Deloitte means “Deloitte” document, this in used As If you’re thekindofpersonwhoexpectstotakeleadroles, adviseseniorpeople, person. We offerwhatleaderslikeyouneedtothrive—from theeverydayrush of workingoncomplex,meaningfulprojects toourapprentice-like environment and make a difference far beyond your cubicle walls, you’re farbeyondyourcubiclewalls, and makeadifference aDeloittekindof that helpsyouadvancequickly. Diveinatwww.deloitte.com/us/careers. Around here, there is no shallow end 9/8/10 5:09:42PM Customized for: Erin ([email protected]) Here’s asamplingofourcoverage. The media’s watchingVault! – USA Today USA – current andformeremployees.” “Vault [provides] theskinnyonworkingconditionsatallkindsofcompaniesfrom – “Vault has becomethego-tosourceforcareerpreparation.” Post Washington The – as wellcommentsfromworkersabouttheirexperiencesatspecificcompanies.” “Vault hasawealthofinformationaboutmajoremployersandjob-searchingstrategies Magazine SmartMoney – “To gettheunvarnishedscoop,checkout Vault.” Forbes – One ofForbes’33“FavoriteSites” Times York New The – “A killerapp.” Report World & News U.S. – “The granddaddyofworkersites.” Journal Library – centers.” purchased byacademiclibrariesfortheircareersections[and]university “[Vault guides]makeforexcellentstartingpoints job huntersandshouldbe Fortune – “The bestplaceonthewebtoprepareforajobsearch.” magazine Money – “For thosehopingtoclimbtheladderofsuccess,[Vault’s] insightsarepriceless.” Crain’s New York Business York New Crain’s Customized for: Erin ([email protected]) CAREER BIBLE MBA 2010 Edition VAULT EDITORS VAULT GUIDETOTHE Customized for: Erin ([email protected]) Vault, theVault logo,and“TheMost Trusted NameinCareerInformation without theexpresswrittenpermissionofVault.com Inc. mechanical,foranypurpose, and disclaimsallwarranties.Nopartofthisbookmaybereproducedortransmitted inanyformorbymeans,electronic All informationinthisbookissubjecttochangewithoutnotice.Vaultthe informationcontainedwithin makesno claimsastotheaccuracyandreliabilityof Copyright ©2009byVault.com Inc. All rightsreserved. Printed intheUnitedStatesof America ISBN 10:1-58131-708-5 ISBN 13:978-1-58131-708-4 Library ofCongressCIP Dataisavailable. (212) 366-4212. For informationaboutpermissiontoreproduceselectionsfromthisbook,contact Vault.com, Inc.,75Varick Street,8thFloor,New York, NY 10013, TM ” aretrademarksofVault.com Inc. Customized for: Erin ([email protected]) like toacknowledgethesupportofourinvestors,clients,employees,familyandfriends.Thankyou! We areextremelygratefultoVault’s entirestaffforalltheirhelpintheeditorial,productionandmarketingprocesses.Vault alsowould Acknowledgments v Customized for: Erin ([email protected]) apeMARsm . ..7 MBAResume Sample . ..6 History Selected . . .6 Broadly Think . ..6 YourYouWhat What It’sNot TagName Did, Said . . .5 TenSeconds Resumes THE MBAJOBSEARCH . ..1 Overview MBAHiring INTRODUCTION Table ofContents Vault Q&A: Rebecca Preston, Chevron . . ..34 Chevron Preston, VaultRebecca Q&A: . . . .33 Citigroup Sercovich, VaultFederico Q&A: . . ..33 MBARotations ROTATIONAL PROGRAMS . . . .27 Bank M&TVault Silverman, Q&A: Ann Diversity . . .26 Honeywell Financial Analyst, Soni, Pipasu VaultQ&A: Diversity . ..25 Mentors of Importance The DIVERSITY . . . .21 Questions Interview Finance Sample . . . .18 Interviews Finance . . .18 Guesstimate Sample . ..17 Case Sample . ..15 Interviews Case Interviews . MBALetter . .14 Full-TimeCover . . .13 Letter Cover Internship MBASummer . . Format . ..9 Template Letter Cover The Cover Letters 3 1 29 23 15 5 9 vii Customized for: Erin ([email protected]) ra fItrs oMA . . ..97 MBAs to Interest of Areas . . . .95 Government Federal Government andPolitics . . . .90 Ratings . . ..86 Insurance . . .83 Services Card Credit . . . .83 Industry the of State Financial ServicesandInsurance . . ..77 MBA Fashion Chang, VaultJudy Profile: . . . . .77 Perks and Pay . . . . .77 Hired Getting . . ..77 MBA the and Fashion Fashion . ..72 Hired? Gets Who . . ..70 Company? TypeWhat of . . .69 Function? Job Which . . ..65 Sector? Energy the is What Energy/Oil andGas . . .59 Manager Brand Life: Assistant the in ADay . . .57 Marketing in Careers . . ..56 Management Brand . . ..56 Goods Consumer Brand Management/ConsumerGoods . . .48 Midland Daniels Barbee, VaultArcher Darryl Q&A: . ..48 Industry the in Working . ..45 Overview Industry Agriculture . ..40 Limit the Sky’s . ..39 Overview Industry Aerospace andDefense INDUSTRY OVERVIEWS Table ofContents The Vault MBA CareerBible viii © 2009Vault.com Inc. 37 95 83 77 65 53 45 39 Customized for: Erin ([email protected]) al &:CteieWn,Iut. . .123 Wang,Inuit VaultCatherine Q&A: . ..122 MBA Techthe and Experience . ..121 MBATech in The . . .119 TechnologyEverywhere is High Tech . ..115 Management Risk . . .114 Fund Typicala Hedge of Structure Organizational . . .111 Characteristics Distinguishing . ..111 Fund? Hedge a is What Hedge Funds . ..104 Care Health in MBAs . . . . .101 Overview Industry Health Care a nteLf:Sno nls,HdeFn . . ..151 Fund Hedge Senior Analyst, Life: the in ADay . . . ..150 Research Investment . . . ..149 Firm Fund Mutual Manager,Major Portfolio Life: the in ADay . . . .148 Management Portfolio . . . .147 Segments Three The . . . .147 Today Industry The . ..145 History Investment Management . . ..138 & Acquisitions Mergers . . .137 Finance Corporate Life: Associate, the in ADay . . ..136 Players The . . ..136 Finance Corporate Investment Banking . . ..132 Development Resource Human . . . .131 Management Resource Human . . ..130 HR? Why . . . .128 Do? Professionals HR Do What TodayResources Human . . ..128 . . ..127 Resources Human of History The Human Resources career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Table ofContents 119 111 101 145 135 127 ix Customized for: Erin ([email protected]) h isn ik itc . . ..214 Biotech link: missing The . . . . .213 Biopharma and Biotech Big Pharma, Big Name: a in What's Pharmaceuticals andBiotech . . ..208 Officer Foundation Life: the in ADay . . . .207 Officer Foundation/Program . . . .205 Fundraising and Philanthropy . . . .202 Choices Many . . ..201 Organizations Nonprofit . . ..201 Matter Doesn’t Money Mean Doesn’t Nonprofit Nonprofit . ..196 Executive Planning Strategic Life: the in ADay . . .195 Pay and Lifestyle Says: Survey Our . . .194 Positions Business Media . . .193 MBAs Entertainment and Media Media andEntertainment . . .186 Management Chain Supply MBAin The . . ..185 Careers Chain Supply . . . .183 Chain? Supply the is What . ..181 Overview Industry Manufacturing . . ..174 Consulting Inhouse Net World Post Deutsche Eberle, VaultHeather Q&A: . . . .173 Consultant Strategy Life: Associate the in ADay . ..171 Why? and Consultants, Hires Who . ..170 Sets Skill Consulting . . .169 Practice Areas . . .167 Myths Consulting . ..165 Consulting? is What Managment Consulting . . .161 Structuring/Origination Associate Finance Leveraged Life: the in ADay . . . ..158 Finance Leveraged in Opportunities . . .157 Banking Finance/Investment Corporate vs. Finance Leveraged . . .157 Finance? Leveraged is What Leveraged Finance Table ofContents The Vault MBA CareerBible x © 2009Vault.com Inc. 213 201 193 181 165 157 Customized for: Erin ([email protected]) pesadDwes. . ..232 Downers and Uppers . . ..231 Responsibilities Job . . .230 Paths Career . . . .229 Do? Managers Wealth Private Do What . . ..229 Industry the of State The Private Wealth Management . . . .226 Maker Deal The Life: the in ADay . . .224 Equity Private in Players The . ..223 Firm Equity Private Modern The . . . .223 Equity? Private is What Private Equity . ..218 Biotech in Development Business . . . .217 Jobs Marketing and Sales MBA-Level . . .216 Industry Pharmaceutical Global The okn nteTlcmIdsr . . . ..259 Telecomthe in Working Industry . . ..257 Overview Industry Telecommunications . . . .251 Consultant IT Life: the in ADay . . . .249 Technologyof State The Consulting Technology Consulting . . ..243 Path MBACareer . . ..242 Sales-Trader Life: the in ADay . . . .242 S&T MBAin The S&T: . . .241 Relationship? ASymbiotic . . ..241 Talk Shop . . . .241 WarZone The Sales andTrading . ..238 MBAs Estate Real for Seeking Advice Job . . . .238 MBA Estate Real The . ..235 Overview Industry Real Estate career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Table ofContents 229 223 257 249 241 235 xi Customized for: Erin ([email protected]) Vault Editors . ..282 VaultEditors ABOUT THEEDITOR . ..278 Downers and Uppers VC . ..277 VentureCapitalist Life: the in ADay Venture . . . .275 Capital and Industry Financial The . ..275 VentureToday Capital Venture Capital . . . .265 Overview Industry Airline . . .263 Overview TransportationIndustry Transportation andAirlines Table ofContents The Vault MBA CareerBible xii © 2009Vault.com Inc. 275 263 282 Customized for: Erin ([email protected]) for MBAswithinthem. alma matersinthedifficultfinancialclimate. The goodnews time positions)aredownbyatleast10percent. reported thatrecruitingisdownattheirbusinessschoolthiswinter. Andthemajority(70percent)reportedthatjobpostings(forinternshipsandfull- MBA CareerServicesCouncilsurveyedbusinessschoolcareerservicesofficesabouttheircurrentrecruitmentcycle.Notsurprisingly, about56percent respondents saidtheyhavereducedtheirhiringgoalsfromwhatoriginallyplannedforthe2008-2009schoolyear.February 2009,the Andin and lessrosy. Inearly2009,Vault conductedasurveyofemployerswhohireundergraduateandMBAgraduates.Astaggering76.8percent to-be graduates.WhilereportsascurrentNovember2008saidthatMBAhiringwouldbestablethisyear, outlookappearsless astimegoeson,the Unless you’vebeengettingyourMBAinacavewithnointernetornewsmediaofanykind,youknowthatthejobmarketisroughforrecentandsoon- The badnews back onthejobmarketwithanewdegreeandnewerskills,youwanttomakesurethattheypayoff.Déjàvu? Allofasudden, you’re So you’vespentafewyearsinbusinessschooland(ifyou’relikemostB-schoolgrads)theworkforcebeforethat. MBA HIRINGOVERVIEW Introduction “better” schoolsnowthatthecompetition hasdecreased. said thattheywouldberecruiting fromschoolsthataregeographicallyclosertotheiroffices,and 12.4percentsaidthatthey havebeenrecruitingat techniques theydidlastyear. Infact,youmayseecompanies oncampusyou’veneverseenbefore.Almostone-fifthof Vault’s surveyrespondents usingthesame other internettools)overthetraditional “hightouch”methods.Sodonotlosehopeifyoudon’t see thesameemployersoncampus Vault thattheyarechangingtheirrecruitingstrategies,favoring morecostefficient“hightech”approaches(e.g.,usingsocial networkingwebsitesand But whatifyourdreamemployerisn’tparticipatingintraditional on-campusrecruiting?Itdoesn’tmeanthey’renotpresent. Infact,employerstell the year, actualon-campus interviewingandrecruitingtendstobestructuredonapredictableschedule. schoolsthroughout check withcareerservicesandfairsfordates.Whilecompanies usually makepresentationsandsendrepresentativestobusiness According totheGlobalMBAGraduateSurvey, mostMBA-holdersarerecruitedwhilestillinschool.Andwhererecruitersgo,interviewswillfollow— tracktoemployment. But landingagreatinternshipisn’ttheonlywaytogetyourfoot in thedoor—farfromit.On-campusrecruitingisanotherfast employers aren’tcomplaining—moststilllooktotheirmostrecent internshipclassfirsttofillanyopenpositions. current students(likeyou)arelookingforinternshipsthatwill provide “greatopportunitytobecomeafull-timeassociateaftergraduation.”And experience, 53percentofMBAstudentssurveyedreceivedtheir joboffersthroughinternshipsorworkprojects.AccordingtoVault’s survey, more of findingemployment.AccordingtoGMAC’s 2008GlobalMBA©GraduateSurvey, whichsurveyed5,312graduatingMBAstudentsabout their For manyfull-timebusinessschoolstudents,on-campusrecruiting andsummerinternshipsfollowingthefirstyearofaremostimportantmethods From internshipsandrecruitingtointerviews recent alumni,either—inlate2008, as contactinformationforalumniinyourfield(s)ofinterestwhoarewillingtoprovideadvice.Andtheseresourcesaren’tjustcurrentstudentsand finance-heavy resumetomakeitmoreappealingemployersoutsidetheindustry. Thecareercenteralsostillhasjobandinternshiplistings,aswell counselors canofferguidanceifyou’relookingtochangeyourplanfrominvestmentbankingother, healthierindustries,andhelpmassageyour career managementprofessionalshavebeenworkingovertimetoopenupnewavenuesofopportunityforcurrentandformer students.Career In thefaceoftoughertimesforMBAgrads,manyschoolshaveampeduptheircareerservicestobetterservestudentsandalumn i. Businessschools’ Career servicesstepsitup You’ve cometotherightplaceexploreyouroptions.Vault’s And rockingthatfinancejobintheenergyindustrywillputyouabetterpositiontomovebackwhensomethinggreatopensup. nontraditional sectors.Consideringajobinanindustryyoupreviouslyoverlookedmaymeanthedifferencebetweenhavingjobandunemployment. 2008 MBAAlumniPerspectivesSurvey),wethinkoftheconsultingandfinanceindustries.Studentsalumniarelooking tobusinessjobsin we thinkoffinance/accounting,consultingandmarketing/sales(jobfunctionsthattraditionallyclaimtwo-thirdsMBAgradsaccordingtotheGMAC So thinkingbroadlyiskeythisrecruitingseason.Thatmaymeanchangingone’s careerpathoritmaymeanjusttakingadetour. Traditionally, when and betterpeoplewehaveraisedthebarontypeofpersonhire.” any firmsstillhiringaregoingtobemorepresentontopbusinessschoolcampuses.OneemployerwithspotsfilltoldVault, “We arehiringmore industriesand government, healthcare,educationandenergyindustries,aswellboutiquemiddlemarketfirms.Infact,companiesin those Though thatassociatepositionatLehmanBrothersmaynotbepossible,therearestilllotsofjobsoutforMBAgrads,particularlyinthegrowing The Wall Street Journal Street Wall The MBA Career Bible Career MBA reported thatthenot-so-recentlygraduatedarealsogettingmoreassistancefromtheir profiles lotsofnontraditionalindustriesanddescribestheopportunities 1 Customized for: Erin ([email protected]) The Team atVault Good luck! more thanhalfreportedbeing“extremely”or“very”satisfiedwiththeiremployerandjob.Sogoahead,grads—gethappygethired! satisfying onapersonallevel.Amongalumni,72percentfeltthattheirMBAeducationwasextremelyhelpfulinlanding current position,and So far, MBAgradsconcur. AccordingtoGMAC’s 2008MBAAlumniPerspectivesSurvey, degreewas 97percentofMBA-holderssaygettingtheir business schoolwillmakeyouabettercandidatewhenitcomestimetoapplyforfull-timejob,andit’llyouratschoolmoreenjoyable. under yourbeltaspossible.”Studyhard,joinaclub,participateinaninternshipandvisitcareerservicesearlyon.Being activeandinvolvedin agrees: eveninthismarket,an“MBAwillstillopendoors.”However, HealynotedatarecentMBA fair, youneedto“armyourself” and“getasmuch MBA asaglobalcurrency—adegreethatsymbolizesvalueallovertheworld.”PaulHealy, headofMBAmarketingatManchesterBusiness School in 2008,theMBAisstillavaluableadditiontoanyresume.AccordingcurrentpresidentofGMAC,DavidWilson,“We havelongreferredtothe So isthedegreestillworthit?You byMBAgraduates bet!Despitesomebacklashagainstbusinessschoolsafterthemanagerialdebaclesperpetrated Taking stock of employerstackon.Infact,theaverageexpectedtotalannualsalaryforarecentMBAgraduatein2008was$102,619. a typicalMBAcandidatereceivedstartingannualsalaryof$89,621.Andthat’s which99percent notevencountingothercompensationandbenefits, offers thantheclassof2008received,they’restillnotsmallnumbers.Forexample,accordingtoGMAC,executivesandmanagers projectthatin2008 One surefirebonusoftheMBAdegreeisahighstartingsalary. Thoughabout52percentVault’s surveyrespondentssaidnotto expectbiggersalary Shaking hands Introduction The Vault MBA CareerBible 2 © 2009Vault.com Inc. Customized for: Erin ([email protected]) THE MBA JOB SEARCH The Vault MBACareerBible Customized for: Erin ([email protected]) 4 © 2009Vault.com Inc. Customized for: Erin ([email protected]) Think abouthowtowriteupyourexperienceintargeted,clear, bulleted,detail-richprose.Herearesomeexamples. keep reading. Solve thisproblembycreatingbulleted,indented,focusedstatements.Short,powerfullinesshowthereader, inaglance,exactlywhytheyshould can’t figureouthowyourexperienceappliestotheavailableposition,resumeisnotdoingitsjob. reader.So distill,distill.Long,denseparagraphsmakeinformationhardtofindandrequiretoomucheffortfromtheoverworked Ifthatreader condensing yourinformationdowntoitsmostpowerfulform. resume mustpresentyourinformationquickly, clearly, Thatmeans andinawaythatmakesyourexperiencerelevanttothepositionquestion. of papertowadethrougheverymorning,employerslookforanydeficiencypossiblereducetheapplicantpoolamanageable number. Thus,your Because ofthemassesjobsearchers,mostmanagersandhumanresourceemployeesreceiveanenormousnumberresumes.Facedwithapile Studies showthatregardlessofhowlongyoulaboroveryourresume,mostemployerswillspend10secondslookingatit.That’s it. TEN SECONDS Resumes • Contributed tocopywritingofpromotionradiocommercialsforselectedevents • Handled pressreleasemailingsto • Compiled andmaintainedmailinglistof10,000—CambridgeTheater’s largest-ever list • Wrote artistpressreleases thatcontributedtoanincreaseinsalesby23% Experience includes: as assigned. office attendants,handlingphotoandpressreleasemailingstomedia,assistinginradiocopywritingperformingvarious otherduties Responsibilities includedassistingwithartistpressreleases,compilingtrackingsheetsbasedoninformationfromreservation ists andbox • Installed anddebugged InternetsystemsforbusinessessuchasRydell’s Sports,AppleFoodsandEricCinemas • Analyzed andfixed softwaremalfunctionsforWindows applications • Assembled and repairedDell,Compaq,GatewayandotherPCcomputers Primary Duties: Primary dutiesincludedcomputerrepairandassembly, softwaretroubleshooter, Internet installationandtroubleshooting,games. After Before After Before Anchorage Daily News Daily Anchorage and FoxFourTelevision 5 Customized for: Erin ([email protected]) your employment. look likeareal-lifeWalter Mitty, reduceyourresume’s referencestothemostrelevantpositions whilemakingsuretherearenogapsintheyearsof you so.Ifyou’resignificantlyundereducated,there’slast fiveyearsmakeyou noneedtomentioneducationatall.Ifthe10jobsyou’vehadin jobs makeyouoverqualifiedforaposition,eliminatethosepositionsfromyourresume.Ifyou’reovereducated,don’tmentionthedegreethatmakes Similarly, ifinformationlurksinyourpastthatwouldharmchancesofgettingthejob,omitit.Inresumewriting,omitting isnotlying.Ifsome applying. this employer?”Ifsomethingdoesn’thelp,dropit.Makemorespacetoelaborateontheexperiencesmostrelevantjob forwhichyouare When editingyourhistorytofittheresumeformat,askyourself,“Howdoesthisparticularinformationcontributetowardsmyoverall attractivenessto the resumewillbe. Youyou create,thestronger edit. Resumesrequirethatsametypeofdisciplined,succinctediting.Thebetteryouareatcontrollingtheinformation A lotofthingshappenineveryone’s day, butwhensomeoneasks,“Howwasyourday?”youdon’tstartwithfirstcoughandlostslippers. SELECTED HISTORY workers emphasizetheseskillstoprospectiveemployers,it’llbethehighwaylifeforthem. environment.” Makingchangeforriderstranslatesas“Financialtransactionsinahigh-pressure,fast-pacedsetting.”Butunl ess thesetoll-booth but eventhatcareerrequiresmultiplejobskills.Helpinglosthighwaydriversreadamapmeans“Offeringcustomerservicein aprompt,detail-oriented because eventhemostisolated,repetitivejobsofferarangeofexperience.Highwaytollcollection,forinstance,isrepetitivejobwithlimitedvariation, When consideringtheskillsthatmakeyouavaluableprospect,thinkbroadly.several differentskills, Anyonewhohasworkedasingledaycanpointto you think. checker orresearchassistant.You mayornothavetheexperiencenecessarytoapplyforanyofthesejobs.Butyou moreskillsthan A personinterestedinacareerpublishing,forexample,mightapplyjobsaswriter, proofreader, editor, copywriter,grant proposalwriter, fact- careers, applytomanydifferentjobs. Applicants applyingforspecificjobopeningsmustcustomizetheresumeeachposition.Manyhunters,particularlythosebeginningtheir THINK BROADLY a cogfromanothermachine.Instead,yourresumeshouldpresentyouasanessentialcomponentofcompany’s success. account assistantfromChase.”Whilesomeformeremployerscanpromoteyourresumebytheirmerepresence,youdon’twanttobethoughtofas Resumes shouldscreamability, notclaimresponsibility. Employersshouldbevisualizingyouinthenewposition,notremembering youas“that IT’S WHAT YOUDID,NOTWHAT YOURNAMETAG SAID Resumes The Vault MBA CareerBible 6 © 2009Vault.com Inc. Customized for: Erin ([email protected]) SAMPLE RESUMES career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com • Recenttravelto Yemen, EgyptandVenezuela • Otherinterestsincludeviolin, soccerandtheharmonica • WinnerofMastermaster.com stocktradingcompetition inNovember2005.Won firstplaceoutofover1,600 OTHER • Initiated,createdanddocumentednewfirmwidestandard forsoftwaremoduledevelopment • Worked onadailybasiswithclientstocreateandimplementcustomizedstrategic softwaresolutionforequity • Developedcutting-edgeanalyticsoftwareforusebyWall Streettraders Analyst FINANCIAL TECHNOLOGY GROUP Technology Project Manager–InvestmentBanking SMART BROTHERS EXPERIENCE Bachelor of Arts inPhysics(CumLaude) ANDERSEN COLLEGE Master ofBusiness Administration –FinanceandStrategicManagement MIDWAY SCHOOL OFBUSINESS EDUCATION • Devoted20to25hoursamonthinstructingjuniormembers oftheteamininterestaccrualandtrading • Selectedtoworkonhigh-profileprojectre-engineercorporate bondtradingP&L system.Reduced • Appointedleaddeveloperofinterestaccrualteamafterjustthreemonthsindepartment.Initiatedand • Ledteamofsixanalystsinfirmwideprojecttore-engineerloansyndicatetradingflowsfirm’s largest • Developedanoriginalmathematicalalgorithmfortradingprocessingmodule,improvingperformanceby • Promotedtoprojectleadershiproleintwoyears,wellaheadofdepartmentaveragefour • Managedprojectteamstodevelopprofitandlosssystemsforproprietarytradinggroup • Completeddissertationinthefieldofcondensedmattertheory • PhysicstutorforBureauofStudyCounsel;activeparticipantinHabitatHumanity • Violinist in Andersen CollegeSymphony • Andersen CollegeScholarshipforacademicdistinction;Dean’s Listallsemesters • ActivememberofManagementConsulting,CorporateandStrategy, andHigh Tech Clubs • Dean’s HonorList entrants worldwidewithone-month returnof43.3% traders. Helpedcreateanddeliverextensivetrainingprogram forclients overnight processingtimefromsixhoursto20minutesand improveddesktopapplicationspeedby350% controllers designed projecttocreatecustomized,improvedinterestaccrualandP&L applicationsforfixed-income processing technology projectof2005.Recommendationsestablishednewfirmwidestandardforreal-timetrade 1,200% for insidercompany profiles,expert advice, Eugene H.Huang 5050 S.LakeShoreDr., Apt. 1407 [email protected] Chicago, IL 60615 (773) 555-1234 June 2004–May2005 June 2005–July2007 New York,NY New York,NY June 2004 Boston, MA June 2009 Chicago, IL The Vault MBA CareerBible Resumes 7 Customized for: Erin ([email protected]) 8 © 2009Vault.com Inc. Customized for: Erin ([email protected]) THE COVERLETTERTEMPLATE Cover Letters career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com Sign Here Sincerely, or givethematimewhenyou’llbegettingincontactbyphone. The lastparagraphisyourgoodbye:youthankthereaderforhisorhertime.Includethatlookforwardtotheirreply summarizing whyyou’rewhatthey’relookingfor. You mayalsoclarifyanythingunclearonyourresume. The secondandoptionalthirdparagraphtellmoreaboutyourself,particularlywhyyou’reanidealmatchforthejobby knowledge oftheircompany. Thegoalistodemonstratethatyouareaworthyapplicantandenticethemreadfurther. reveals whereyoureadaboutthejob.Italsoquicklystateswhoare.Nextitwowsthemwithyoursincere,researched The firstparagraphtellswhyyou’recontactingtheperson,theneithermentionsyourconnectionwiththatpersonor Dear Ms./Mr. CONTACT: Date Company FaxNumber Company PhoneNumber Company City, StateZip Contact’s StreetAddress,Suite# Contact’s CompanyName Contact’s Department Contact’s Title Contact’s Name Your FaxNumber Your PhoneNumber Your EmailAddress Your City, StateandZip Your StreetAddress,Apartment# Your Name for insidercompany profiles,expert advice, COVER LETTER?HERE’SASTEP-BY- WONDERING WHAT GOESONA STEP GUIDE 9 Customized for: Erin ([email protected]) To besuccessful,thisfirstparagraphshouldcontain: First paragraph body ofacoverlettershoulddeliver. informationthe sometimes thosethatbreakrulesachievesuccessbyattracting attention. Butmostdon’t.Herearesomebasicguidelinesonwhat Unlike theresume,coverletterofferswritersignificantroom forflexibility. Successfulcoverlettershavecomeinvariousdifferentforms,and FORMAT Dear S To solutions are: If youdon’tgetalloftheinfo,worry. whoyou’readdressing.Some Thereareseveralsalutationstousefinessethefactthatyou’vegotnoidea persistent, askforacontactname,saythankyouandhangup.Don’tidentifyyourself.Ifhavequestions,waituntiltheinterview. always, headofHR)maywork.Butusually, companiesdon’tlistthisinformationbecausetheywantyoucallingatall. So ifyoucall,bepolite, When you’retryingtogetthenameofacontactperson,callingcompanyandaskingreceptionistforrecipient (normally, thoughnot a businessbyeitheritsaddressorphonenumber. an addressorphonefaxnumberbutnocompanyname,tryareversedirectory, suchasSuperpages(www.superpages.com), whichletsyoutrace However, inothercases,youhavelessthancompleteinformationtogoon.Thisisparticularlytruewhenrespondinganadvertisement.If contact, inwhichcaseyoushouldlistitthisorder: you’re tryingto Next comestheaddressofpersonyouarewriting.Inmanycircumstances,you’llhavecompleteinformationon If youchoosetolistyourphonenumber, makesurethatyoudon’tlistitsomewhereelseonthepage. heading iseitherleftjustifiedorandindentedtothefarright-handsideofpage. Your headercanbedisplayedcentrally, justliketheresumeheader—includingyournameinalargerand/orboldedfont.Butmostcases, given, butthewayinformationiswritten.IfyoulistedyourstreetasAve. insteadofAvenue onyourresume,dosocoverletter, too. Your nameandaddressonthecoverlettershouldbesameasoneyourresume.Uniformityinthiscaseappliesnotonly totheaddress Name andaddress before month,sowritingadateonlyinnumberscanbeconfusing.Doesletterwrittenon4/7/09fromApril7th,orJuly4th?) choose tolisttheday, listitfirst,followedbythemonth,dateandyear, asfollows:Tuesday, commonlylisttheday December13,2008.(Europeans Placement ofthedate,whetherleftjustified,centeredoralignedtoright,isupyourdiscretion,buttaketime writeouttheentry. Ifyou Date Cover Letters The Vault MBA CareerBible Good morning: Good altogether: salutation the Omitting Sirs: 10 • Text indicatingyourrespect forthefirm’s accomplishments,history, status,productsorleaders. • A firstlinethattellsthereaderwhyyou’recontactinghimorher, and howyoucametoknowabouttheposition.Thisstatementshouldbequick, whom it may concertion: may it whom speeches about“therealyou”or long-windedtreatisesonyourcareerandphilosophyoflife. simple andcatchy. Ultimately, whatyou’retryingtocreateisadescriptiveline bywhichpeoplecancategorizeyou.Thismeans no transcendental Since theworkforceisfullofwomen,avoidthisoutdatedgreeting. ir or M ir Fax number Phone number Company address Company name Title ofcontact Name ofcontact adam: A sensibleapproachthatisgainingpopularity. Formal andfusty, butitworks. A bitfrosty, buteffective. Effective, butmaylooktooinformal. © 2009Vault.com Inc. Customized for: Erin ([email protected]) And thusakillerfirstparagraphisborn. Middle paragraph(s) It wouldbemorethananhonortomeetwithyou. much: too Way Thank youforyourreviewofmyqualifications. Thank youforyourconsideration. Thank youforreviewingmyqualifications. Thank youforyourtime. sentences: you Thank can bereached.Here’s somesamplesentencesforyourconclusion. the letter. Here,tellyour readersyou’repleasedtheygotsofardownthepage.Tell themyoulookforwardtohearingfromthem.Tell themhowyou The finalparagraphisyourfondfarewell,summation,atestament toyoureleganceandsocialgrace.Thisshouldbethes Final paragraph mother” istouching,butwillnotnecessarilyimpressemployers. capital opportunity”or“IplantorelocateWisconsinshortly.” Donotgetoverlypersonal—”Idroppedoutofbusinessschooltocareformysick distinct areas,oryouneedtoexplainsomethingthatisnotevidentonyourresume,suchas“Idecidedleavelawschool pursue anexcitingventure Some coverletterwritersuseanotherparagraphtodescribetheiraccomplishments.Thismakessenseif,forexample,yourexpe rience liesintwo offer ageneralrange(“inthe$40,000s”).Putsalaryrequirementatendofparagraph,notinyourfirstsentence. Thesafestbetis to pegged atalowersalarythanyoumightotherwisehavebeenoffered.Ifmustgiverequirement,beasgeneralpossible. route—any numberyougivemightpriceoutofajob(beforehavethechancetonegotiateface-to-faceataninterview).Alternatively, youmightbe and thismaybethesafest Many advertisementsaskyoutonameyoursalaryrequirements.Someavoidtheproblemaltogetherbyignoringthisrequirement, Davidson ManagementprovidedmewiththemultitaskingexperienceneededtoexcelasafinancialanalystatWhittierFinance.” Or, “Meetingthedemandsofafull-timeundergraduateeducation,positionasstudentgovernmentaccountantand20-hour-a-week internshipwith four yearsofretailbicyclesaleswouldmakemeastrongadditiontoGwinnCycles’marketingteam.” Comments shouldbebackedupbyspecificreferences.Try somethingalongthelinesof“Mypostgraduatedegreeinmarketing,combined withmy multitasking willbetheultimateassettoyourcompany.” “Myenergetic does notmeanmakinggeneral,unqualifiedstatementsaboutyourgreatness,suchas“I’mgoingtobethebestyou’veeverhad” or Tell theemployerinthisparagraphhow, basedonconcretereferencestoyourpreviousperformances,youwillperformindesiredposition.This offers youtheopportunitytomentionanyconnectionorpriorexperiencethatmayhavewithcompany. are andwhatskillsyoubringtothejob.Thisisanotheropportunityexplicitlysummarizekeyfactsofyourjobhistory. Themiddleparagraphalso The middleparagraphallowsyoutomovebeyondyourinitialdeclarativesentences,andintomoreexpansiverevealingstatementsaboutwho • A lastlinethatgivesaverybriefsynopsisofwhoyouareandwhywanttheposition.Thebestwaytodothis,ifdon’t alreadyhaveamore • career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com personal connectionwiththepersonyou’recontacting,istolayitout: for insidercompany profiles,expert advice, I am interested in (what position you’re looking for) looking you’re position (what in interested am I I have (your years of experience or education) or experience of years (your have I I have worked in (your area of expertise) of area (your in worked have I I am a (your identifying characteristic) identifying (your a am I I am a (your profession) (your a am I + + + + The Vault MBA CareerBible hortest paragraphof Cover Letters 11 Customized for: Erin ([email protected]) Call metomorrow, please. top: the Over I lookforwardtoyourcall. I lookforwardtoyourresponse. I lookforwardtohearingfromyou. callback: a in I lookforwardtoyourreply. confidence of note A Cover Letters The Vault MBA CareerBible 12 © 2009Vault.com Inc. Customized for: Erin ([email protected]) MBA SUMMERINTERNSHIPCOVERLETTER career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com [email protected] New York, NY10007 314 Broadway, Apt.15 Laura Haley Sincerely, Thank youforyourtimeandconsideration.Ilookforwardtohearingfromyou. summer internshipslaterthismonth,andIwouldgreatlyappreciatebeingincludedonyourinvitationallist. I haveenclosedmyresumeforyourreview. IwelcometheopportunitytomeetwithyouwhenrecruitatSBSfor finance. intrigued bytheshareholdervaluefocusofHexagonalConsulting’s methodology, sinceit fitswellwithmyexperiencein to performwellinaconsultingcareer, andwillallowmetomakeasignificantcontributionatyourfirm.Iamparticularly abilities gainedthroughmyemploymentandacademicexperiencehaveprovidedmewiththetoolsskillsnecessary I amexcitedbythestrongpotentialfitseewithHexagonalConsulting.feelthatanalytical,leadershipandteamwork new hires. leadership role,managingthedailyworkoffivejuniormembersourteamandtakinganactiveroleintrainingfor market myworktomiddleanduppermanagement.Finally, duringmylastyearofemployment,Itookonateam our processes.Ialsofine-tunedmycommunicationandconsensusbuildingskills,asoftenneededtopresent responsible foridentifyingandresolvingfinancialreportingissues,aswellgeneratinginnovativemethodstoimprove of AutoCo,awell-knownautomotivemanufacturer. Igainedsolidanalyticalandproblem-solvingskillsthere.was After graduatingfromNorthernCollegewithadegreeinaccounting,Iworkedasanassociatethefinancedepartment position. in HexagonalConsulting,andIamnowwritingtorequestaninvitationinterviewforasummerassociateconsulting your firmbytalkingwithWilliam Fieldandseveralothersummerinterns.Mydiscussionswiththemconfirmedmyinterest to managementconsultingafterattendingthepresentationgivenbyyourfirmearlierthisyear. Ialsolearnedmoreabout I amafirst-yearMBAstudentatStateBusinessSchool.wasextremelyimpressedwithHexagonalConsulting’s approach Dear Ms.Sharpe, New York, NY10010 13th Floor 666 Avenue oftheAmericas Hexagonal Consulting Kimberly Sharpe,RecruitingManager February 1,2009 for insidercompany profiles,expert advice, The Vault MBA CareerBible Cover Letters 13 Customized for: Erin ([email protected]) MBA FULL-TIMECOVERLETTER Cover Letters The Vault MBA CareerBible 14 [email protected] Boston, MA02111 100 Wellany Way Michael A.Thomas Sincerely, Thank youforyourtime,andIlookforwardtohearingfromsoon. review. particularly interestedinpositionstheSanFranciscoandChicagooffices,Ihaveenclosedmyresumeforyour accelerated careergrowthopportunities.Pleaseconsidermeforyourinvitationalcampusinterviewsthisfall.Iam Mainstream appealstomeoverotherfirmsbecauseofitsfocusonpurestrategyprojects,smallfirmatmosphereand analysis andclientfocusarerewarded. an effectivecontributorinaconsultingenvironment,whereindustryknowledge,creativeproblem-solvingskills,fact-based services strategy. Iledtheindustryanalysisandmarketopportunityassessment.Thisexperienceshowedmethatam is indeedtherightcareerforme.Ourprojectteamhelpedamajortelecommunicationsproviderformulatewirelessdata As atelecommunicationsstrategyinternatGlobalConsultingAssociatesthissummer, Iconfirmedthatstrategyconsulting implementation ofcutting-edgetechnologystrategies. valuable teamleadershipexperienceatSmartBrothers,guidingmanyprojectteamsthroughthesuccessfuldesignand me howtoeffectivelypartnerwithclientsthroughoutthevariousphasesofbusinesstransformation.Inaddition,Igained more effectiveandefficient.Creatingtheseresultsfortraders,financialanalystsseniormanagementtaught as atechnologyprojectleaderatSmartBrothersInvestmentBank,whereIfocusedonmakingbusinessprocessesfaster, an analytic,creativemindgearedtowardssolvingcomplexproblems.Iappliedandenhancedmyproblem-solvingskills My backgroundfitswellwithapositioninstrategyconsulting.AsMidwayUniversityphysicsundergraduate,Ideveloped challenging firmatwhichtobuildmycareer. School campus.Havingspokenwithyourcolleaguesattheevent,IbelievethatMainstreamwouldbeanexcitingand It wasapleasuretomeetyouinpersonlastweekattheMainstreamConsultinginvitationallunchonBostonBusiness Dear Ms.Jones: November 19,2008 Boston, Massachusetts02145 123 21stStreet Mainstream ConsultingGroup Ms. MargaretJones,RecruitingManager © 2009Vault.com Inc. Customized for: Erin ([email protected]) students prepareforthesetypesofinterviews,wediscusscaseandfinanceinterviewsindetailthenexttwosections. industry, choosetodeliberatelymakeinterviewsstressfulinorderassesshowbusinessschoolstudentsrespond situations.)To help answers forthesetypesofinterviewsastheycanbehavior-based interviews.(Infact,someinterviewers,mostnotoriouslyintheinvestmentbanking Case interviewsandtechnicalfinancecanbeparticularlystress-inducing,asstudentscannoteasilypredictquestionsprepare specific knowledge(suchastheabilitytopriceabondforfixed-incomefinanceposition). business situationandaskthejobseekertoworkthroughacourseofactionoutloud.Andmorethanone-thirdusequestionthatmeasureposition- recruiters. Morethanhalfoftherecruiterssurveyeduse“case”orsituationalinterviewsinwhichinterviewersdescribe a hypotheticalorreal used byMBA leading ateamormanagingdifficultemployee)areusedbythevastmajorityofrecruiters,andmostcommontechnique Survey surveyofmorethan1,000MBAemployers,behavior-based interviews(duringwhichcandidatesdescribespecificexamplesof skillssuchas Interviewers useavarietyoftechniquestoteststudents.AccordingtheGraduateManagementAdmissionCouncil’s Recruiters (GMAC)Corporate www.vault.com. Vault publishes50-pageemployerprofilesofmajorMBAemployers,aswell“snapshots”thousandsotheremployers online at difficult bythelargenumberofcompanieswithwhichmanystudentsinterview. To helpstudentspreparefortheirinterviewswithspecificcompanies, afeatmade more requires studentstoresearchtheemployersasthoroughlypossibleinordermaketheircasesconvincinglymanycompanies, that studentshavespecificinterestandknowledgeofthecompanieswithwhichtheyareinterviewing.Thiscrucialelementinterviewperformance At eachinterview, studentsworktoconvinceinterviewersthattheyrepresentagood“fit”withthecompany. Partofbeingagood fit,ofcourse,means students interviewwithadozenormorecompanieswithinfewweekperiod,allwhilemaintainingbusyclassschedule. of interviewing: some Interviewing duringon-campusMBArecruitingcanbeaharrowingprocessforseveralreasons.First,thereisthesheervolume Interviews professionalism andexcellence. Thecaseinterviewhasevolvedasamethodforevaluatingthese characteristics. All thesefactorsnecessitateaunique interviewstructurefocusedonassessingacandidate’s circumstanceswith abilitytomanagetheseparticular administrative assistance,faxing andphotocopying,thecamaraderiethatdevelopsamongco-workers assignedtothesamebusinessunit. of thetraditionalworkplacestandards:apermanentworking space, theabilitytoreturnhomeeachnight,easilyaccessedservicessuchas Consultants areoftenstaffedinsmallgroupsfar-flung well,withoutmany areas.Asa result, theindividualmustbeabletofunction,andfunction personal andprofessional. understand thesmallestaspectsofaproblem(whilesimultaneously seeingthebigpicture),andhaveabilitytomaintaina balance betweenthe factors mandatethatanindividualbecoolunderpressure, influentialwithoutbeingcondescending,behighlyanalytical,havetheabilityto turbulent. Therearenonstopco-workerchanges,hostileclient environments,countlesspoliticalmachinations,andnear-perpetual travel.These Consultants musthaveaselectsetofpersonalityandleadership traitsinordertobesuccessful.Theconsultant’s workenvironmentisextremely business dayinteractingwithclientsandcolleaguesmustthemselves constantlyinterviewclientemployeesandexecutives. candidates. Theinterviewprocessisespeciallypertinentinthe consultingindustry, sinceconsultingprofessionalsspendthe lion’s shareoftheir And becauseconsultingfirmsdependonemployingthosemulti-faceted, dynamicpeople,thefirmsrelyheavilyoncaseinterview toscreen is onlyatwo-dimensionalrepresentationofmultifaceted,dynamicperson. Yourresume, atitsvery best, impressive resumemaygetyouaninterviewwithaconsultingfirm,butitwon’tthejob.Consultantsknowthat Why thecase? or questions.Makethemcount! and behavioralquestionsfiveminutesofyouaskingaboutthecompany. Thisleavesfiveto15minutesforyourcase interviewquestion The interviewwithaconsultingcompanynormallylastsabouthalfanhour. Ofthistime,aboutfiveto10minutesistakenupwithpreliminarychat business worldexperiencereceivecasequestionsthatrequireadeeperunderstandingofmodelsandprocesses. knowledge oftheindustrycoveredbycasequestionisabonusbutnotnecessary. significant Businessschoolstudentsandcandidateswith interviewer islookingforathoughtprocessthatbothanalyticalandcreative(whatconsultantslovetocall“out-of-the-box”thinking).Specific a detailedrecommendation.Themajorityofcaseinterviewersdon’thavespecificanswerthatyou,thecandidate,areexpecte d togive.Whatthe will presentyouwithabusinessproblemandaskforyouropinion.Your willpermityouto make jobistoasktheinterviewerlogicalquestionsthat Simply put,acaseinterviewistheanalysisofbusinessquestion.Unlikemostotherquestions,itaninteractiveprocess.Your interviewer What isacaseinterview? CASE INTERVIEWS 15 Customized for: Erin ([email protected]) at workthenextdayalert,perky andreadytogo.Ifyoumust,drinklotsofcoffeeuseeyedrops—just beenergized. zest andenergy—firmhandshake, sincereandwarmsmile,brighteyes.Rememberthatconsulting firmsexpectyoutotakealongflightandshowup lookfor Even themostqualifiedandanalytical hirewon’tbemuchgoodifshequitsat5p.m.duringalong andarduousengagement.Interviewers Energy babble. Asktheinterviewertorestateinformationifnecessary. speaking, slowdownandsmile.Ifaskedaquestionthattemporarily stumpsyou,takeadeepbreathandpause.It’s alwaysbettertopausethan see ifyoustumbleoverwords,useinadvisablefillerslike“um”or “like”frequently, orappearjitteryunderclosequestioning.Remember:Whenyou’re of action,theymustpresenttheirfindingsandrecommendations totheircaseteamandclients.Interviewerswillbewatchingyouclosely Presenting youranalysisisanessentialpartofconsulting.Once consultants haveanalyzedtheircaseengagementanddecided on thepropercourse skills Presentation or recommendation.You shoulddisplaythisskillthroughyourefficient, on-targetandaccuratequestionswhilewrestlingyourcasetoasolution. The corecompetencyofconsultingisanalysis—breakingdowndata, formulatingitintoapatternthatmakessense,andderiving a sensibleconclusion skills Analytical previous leadershipexperiencewillprobablymoststronglyconveyyourability, yourdemeanorinthecaseinterviewcanhelp. case interview. Askyourquestionsconfidently. Inquirewhetherthecaseinterviewrelatesto theinterviewer’s ownexperience. Whileyourresumeand work independently, shapeprojectswithverylittledirectionanddirectothers.You shoulddemonstrate yourleadershipskillsbytakingchargeofthe beginning consultantsareconsignedtoindependentnumber-crunching andresearch.Thefactis,however, thatconsultantsareoftencalleduponto You’ll hearthisfromeveryconsultingfirmoutthere—theywantleaders.Why, youmightask, wouldaconsultingfirmneedleader?Afterall,many skills Leadership insiders, interviewerswillbekeepinganeyeoutforasyouworkthroughthecaseinterview: traits andabilities,asktheinterviewertoassesscandidateagainstlist.Followingisalistofthesespecialtraitsthat,accordingconsulting Following yourcaseinterview, includealistofqualities, yourconsultinginterviewerwillcompleteawrittenevaluationform.Theformsoften Skills assessedinthecaseinterview thinking, aswellgraceunderpressure. Brainteasers arenormallylogicpuzzlesorriddles.Theymaybetimed.Often,brainteasersmeanttotestbothanalytican d “out-of-the-box” Brainteasers guesstimates—guesstimates givenindependentlyofacase. should comeclose—hencetheguesstimate.Non-businessschoolstudentsandotherswhoappeartobeweakquantitativelymay get for thewardrobesoftwareasafirststepindetermininghowtoenterEuropeanmarket.)You willnotbeexpectedtogettheexactnumber, butyou out themarketsize what themarketsizeforanewcomputerprogramthatorganizesyourwardrobemightbe.(Forexample,youneedtofigure of thecaseinterview. Aspartofaguesstimate,youmightbeaskedtoestimatehowmanywatermelonsaresoldintheUnitedStateseachyear, or isanessential part Whether freestandingoraspartofacase,learninghowtomake“back-of-the-envelope”calculations(rough,yetbasicallyaccurate) Guesstimates on caseinterviews,youaremostlikelytocomeacrossthetraditional,mano-a-manointerview. told tosolveacasecooperatively. forthesevariations Consultantsfromthefirmwatchassilentobservers.Thoughyoushouldcertainlybeprepared what’s onthehandout.)Anothervariation thecaseinterviewisgroupinterview, wherethreetosixcandidatesaregroupedtogetherand or slides,andafew(likeMonitorCompany’s) areentirelywritten.(Inawrittencase,theinterviewerwillnotcontributeanyotherinformationbesides involve handouts with abusinessscenarioandaskedtoanalyzeitmakerecommendations.Mostcasesarepresentedinoralform,thoughsome Case interviewsvarysomewhatintheirformat.Theclassicandmostcommontypeofcaseinterviewisthebusinesscase,whichyou’represented case Business Case interviewsvarywidely, butingeneraltheyfallintothreegroups:businesscases,guesstimatesandbrainteasers. for you. assessment. Thismeansthatthecaseinterviewisyourstolose.Triumph overyourcaseinterviewsandchancesarethataslot atthefirmwillopen stage, takeadeepbreath—theconsultingfirmhasalreadyweighedyourbackground,GPA andexperience,foundyouworthyofadeeperskill What caseinterviewsarenotdesignedtodoisexploreeducational,professionalorexperientialqualifications.Ifyou’ve reached thecaseinterview Types ofcaseinterviews Interviews The Vault MBA CareerBible 16 © 2009Vault.com Inc. stand-alone Customized for: Erin ([email protected]) Interviewer: You: Interviewer: services? You: Whoa! Betterfindoutmoreaboutthisprepaidphonecardfirstbefore youevenbegintothinkaboutrecommendingit. this agoodidea? You areadvisingacreditcardcompany thatwantstomarketaprepaidphonecarditscustomers.Is SAMPLE CASE “it makessensetofollowuponyourfieldin advertising stafffortheschoolnewspaper, youmightbegivenaquestionaboutinvestinginadvertisingagencies.”Forthisreason,adviseconsultants, “ifyouwereonthe do islookatyourresumeandgiveyouacasequestionthatrelatestopastexperience.“Forexample,”saysoneconsultant, you havetomakethesamerecommendation—butyou’dbetterbeablebackupyourreasoning!Alternatively, onethingcaseinterviewersloveto may positsomethingfromherownexperience—knowingwhatcourseofactiontheconsultancyactuallyendeduprecommending. Thisdoesn’tmean For abusinessschoolstudentorgraduate,thecasequestionwillprobablybelessopen-endedanddrivetowardanactualsolution.Your interviewer While there’s nowaytotellforsurewhatcasequestionyou’llget,therearesomethingsthatcantipyouoffthekindofreceive. What kindofcasewillIget? elementary (orirrelevant)concept20timeswillnotdoyouanyfavors. looking stupid—smartpeoplelearnbyaskingquestionsandassimilatingnewinformation.Atthesametime,yourinterviewer torepeatan Rather straightforward—consultinginterviewersarelookingforquicknessofanalysisanddepthinsight.Don’tbeafraidtoaskquestionsfear horsepower” “mental a/k/a Intelligence, the interviewerseemsreceptive. answer thequestion,“Howoldareyou?”)Eliminategiggling,fidgetingandreferencestoawesomefraternityeventsyoumayhav e attended,evenif Consultants mustoftenworkwithexecutivesandcompanyofficialsdecadesolderthantheyare.(Thisiswhyconsultantsaretaught therightwayto Maturity as Isaidearlier?”)andthenwatchhowquicklyyou’reabletoalteryourthinking. let’s saythefactoriesmustbeopenedeither inCanadaorChina”)flipthetermsofcaseinterview(“Whatifthislabor mirrored intestsformentalflexibility. To testyourgraspofacaseinterview, theinterviewermaysuddenlyintroduceanewpieceofinformation(“OK, Consultants mayhavetoarriveattheofficeonedayandbepackedoffWinnipegforsixmonthsnext.Thiskindofflexibility ofscheduleis Flexibility case questionorseparately. of numbersandyourabilitytomanipulatethem.Manyinterviewerswillassessquantitativeskillsbygivingyoua“guesstimate,”eitherwithinthe test yourgrasp Those spreadsheetsyou’llbeworkingwithasamanagementconsultantneednumberstofillthem.Consultinginterviewswillinevitably skills Quantitative materials. You mustarriveontime. up foryourinterviewprepared.You’ll mustaskforthese wanttotakenotes,sobringapadofpaperandpen.Interviewersnoticewhencandidates all overtheworldmustbeextremelyorganized.You candisplaythisskillthroughadisciplined,logicalapproachtoyourcasesolutionand byshowing Consultants mustbeaspainstakingscientistsintheirattentiontodetail.Andconsultantswhojuggletwoormoreflights a weekandengagements detail/organization to Attention most peoplecanmakeareasonableassumptionofnumbers. going onyou’llbethatmuchmoreimpressive.”Someguesstimates,likefiguringoutthetotalworldwiderevenueofTarzan, broadenoughsothat are career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com What areourexpensesconnectedwiththecard? What istheroleofourcompany?Dowesimplymarketcard ormustwecreatethemourselves?Areexpectedtoprovidethetelephone We mustpay15centsforeveryminutewesell.We alsohavetopay$1asastartup costforthecardandsystems. This cardwillbeco-marketedwithanoutsidephonecompany. We donotneedtoperformtelecommunications functions. for insidercompany profiles,expert advice, The Wall Street Journal Street Wall The because youmaybeaskedaboutrecentdevelopmentsinit.Ifknowwhat’s contractisnotguaranteed, The Vault MBA CareerBible Interviews 17 Customized for: Erin ([email protected]) such questions.Atotherfirms, interview roundsmaybeinterspersedwithseeminglycasualand friendlydinners.Don’tletdown yourguard!While interview). Somefirmsmayaskyou specificanddetailedquestionsaboutyourgradesincollegeor businessschool,evenifyour schoolpolicyprohibits Investment bankingandfinance interviews arealsoknownforbeingdeliberatelystressful(asopposed totheattendantnervousnessthatgoeswithany three orfourrounds(sometimes asmanysixormorerounds),andtheseroundscanhaveup to sixinterviewseach,especiallyinthelaterrounds. in theinterview. Infact,insiderssaythat occasionally, aninterviewer willyellatanapplicanttoseehowheorshe react. Interviewsnormallygo Investment bankingpositionsandotherfinancearesome ofthemorestressfulanddemandingpositionsonplanet,thisisreflected FINANCE INTERVIEWS feet ofpizzaeateneverymonth.To summarize: 10 incheslong,thenthesliceis30squareofpizza.Sofourpizzasliceswouldbe120inches.Therefore,thereareabillion eats pizzatwiceamonth,andtwoslicesattime.That’s fourslicesamonth.Iftheaveragesliceofpizzaisperhapssixinchesatbaseand Take yourfigureof300millionpeopleinAmerica. Howmanypeopleeatpizza?Let’s say200 million.Nowlet’s pizza-eatingperson saytheaverage How manysquarefeetofpizzaareeatenintheUnitedStateseachmonth? SAMPLE GUESSTIMATE Interviews The Vault MBA CareerBible these cardsmightbefrequenttravelersandcouldtargetedforotherpromotions our costsareheldconstant,wemaylosemoney. Ofcourse,wecanlearnmorefrommarketingthesecards.Itcouldbethatthe peoplelikelytobuy You Interviewer: Whataresomeotherissuesyoumightwanttoconsider?(Noticehowtheinterviewerisnudgingaddyouranalysis.) worth selling. could slicethecostofenvelopeattachmentsapennyorso,sellcardfor$35,convinceourco-marketertoreducecosts,itmightbe 1,000 cardswouldbe$20,000.We shouldn’tmarketthiscard,unlesswecanfurthercutourmarketingcostsorincreasethepriceofcard.If We make$20profitoneachcard.Butevenusingthecheapestpromotionalvehicle,atprofit,wewouldonlybreakeven,becauseour aren’t veryreliable,wewillneedtocontact800,000peopleusingthatmethod.Butat5centseach,itcostsonly$20,000sell1,000cards. envelopeinserts use directmail,wewouldhavetocontact200,000thousandpeople,which,at40centspermailing,costsus$80,000.Since the You: Interviewer: You: Interviewer: You: Andwhatisourexpectedrevenueonaone-hourphonecard?Whatthecurrentmarketratefor60-minute Interviewer: You: I’mgoingtoassumewewillsellone-hourphonecards.Thatcostus$9fortheminutesandadollarpercard—soeachcard costsus$10. rate ofresponse.Ourpaymentattachmentshavea0.25percentresponse,butonlycostus5centseach. Interviewer: You: a directmailinginseparateenvelope.Orwecanhavetelemarketerscallselectedcustomers. Interviewer: We normallyuseslipsofpaperthatareattachedtothebacksourcreditcardpaymentenvelopes.We sometimesalsosendcus You: 18 : We shouldalsoconsiderthecompetitivelandscapeforthisbusiness.Isper-minute ratefor callingcardminutesexpectedtofall?Ifso,and • Your total:200millionsquarefeetamonth. • Four piecesx30squareinches=120(onefootis144inches),solet’s assumeonesquarefootperperson. • The averageAmericaneatsfourslicesofpizzaamonth. • The averagesliceofpizzaissixinchesatthebaseand10long=30square(heightxhalf base). • Perhaps 200millioneatpizza. • There are300millionpeopleinAmerica. So ifwesellthecardsfor$30,havea$20profit,minusourexpendituresonmarketing. OK, let’s figurethisout.To sell1,000cardsthroughtelemarketing,wewouldneedtocontact 50,000people.Thatwouldcostus$50,000.To What’s thecostofeachthesemarketingtechniques, andwhatistheirresponserate? What areourmarketingexpenses? Telemarketers havea2percentresponserateandcost$1percall.Directmailingsus41centsmailing0.50 What’s ourcoststructurelooklike? Assume it’s 50centsaminute. OK, thatsoundsreasonable. © 2009Vault.com Inc. tomers Customized for: Erin ([email protected]) attitude towardsworkislike,howinterestedyouareinacareertheindustry, andhowinterestedyouareinthejobforwhichapplying. on yourabilitytoportrayyourselfasagoodfitaninvestmentbanker, assetmanager, etc.Inotherwords,interviewerswilltrytofigureoutwhatyour And whileyourperformanceinthefitinterviewpartlydepends—asairporttestsuggests—onhowwellyougelwithinterviewer, italsodepends have reputationsforbeingaggressiveindividuals,don’tactthatwayinyourinterview. interview orthebehavioralinterview. Itmeans:“Couldyoustandtobestrandedinanairportforeighthourswiththisperson?”Althoughbankersmay They callittheO’Hareairporttest,Atlantaorwhatever-city-you-happen-to-be-applying-in Theyalsocallitthefit airporttest. The fitinterview a goodfit. As yougothroughrecruitinginfinanceinterviews,understandthatcompetewithyourself.Mostfirmsareflexibleenough to hirepeoplethatare you areeither(1)notinterestedintheposition,(2)competentenoughtohandlejob.Animportantpartofinterviewiswhatcalled“fit.” will believe(rightly) that judge youranalyticalandtechnicalskills.Ifyoudon’tknowthebasicconceptsoffinanceaccounting,interviewers There aregenerallytwopartstothefinancehiringprocess:fitpartandtechnicalpart.Inaskingquestions,interviewerwants too much.) these dinnersareagoodopportunitytomeetyourprospectiveco-workers,seeminglygenialhostsscrutinizingyouaswell.(Hint:Don’tdrink alumni and(forthoseinbusiness school)second-yearsarealsogoodwaystogetanswerssome ofyourquestions. strongly suggestyouhaveanswers beforeinterviewing.Makeapointtoattendrecruitingpresentations byfirms.Your informational interviewswith You questionstowhichwe shouldusetheopportunityofnonevaluative settings(i.e.,notaninterview)togetanswersthese questions.Theseare thepositionandindustry.should youknowthisforyourown sake(thisisyourfuture,afterall),butinterviewerswantto knowthatyouunderstand you actuallywanttobeininvestmentbanking,commercial venturecapital,etc.Inshort,youshouldknowwhatyou’re When youreviewcareeroptions,don’tdiscounttheamountoftime ittakestoprepareforfinanceinterviews.Firstofall,you shouldevaluatewhether Preparing forfinanceinterviews ability—previous workexperience,volunteeractivities,etc. Yeah, youcanbreakoutthoseglorydaysstoriesaboutthewinningtouchdown pass,butlotsofothersituationscanalsohelpdescribeyourteamwork inteamsituations. working withmarketersatacorporation.Interviewerswillaskquestions tomakesurethatyouhaveexperience,andexcelled, for research)requiresthatanemployeeworkcloselywithothers—whether thisbeintheformofinvestmentbankingdealteams,orfinanceofficials Teamwork isthebuzzwordofthesedaysnotjustforinvestmentbankingindustry, butforeveryemployer. (except,perhaps, Everyfinanceposition T-E-A-M! Goteam! strengths. old Englishmajor. You’ve gottohaveareallylogical,mathematicalhead.”Makesureyou have examplesofyourproblem-solving andanalytic does meanthatyouhavetoananalyticmindifaresucceed.Explainsoneinsideratanumbers-heavyWall Streetfirm,“You can’tbeany The worldoffinanceislargelyaboutnumbercrunchingandanalyticalability. Whilethisdoesn’tmeanyouhavetobeaworld-class mathematician,it A mindtopickthingsapart Make sureyoubringupexamplesoftakingresponsibility. people withsafehandsaretheoneswhoadvanceincompany.most competent.” Theyarenotnecessarilythehardestworkersbutthey andcorrectly?’The about safehands.“Theideais:‘CanIgivethispersonanalysistodoandfeelcomfortablethattheywillexecuteitpromptly An interviewerwilltryandfigureoutifyou’vegotsafehandswon’tbedroppingtheball.“ThisisacriticalI-bankingconcept,”saysonebanker (In manycaseswithfinancepositions,thatresponsibilitywillmeanmakingdecisionsmillionsorbillionsofdollarsatstake.) As withalljobinterviews,thoseforfinancepositionswilllargelybeaboutfiguringoutwhetheryoucanhandletheresponsibilityrequiredofposition. Got safehands? in thefreezingcold,byallmeans,talkaboutit.Andifyouputyourselfthroughschoolworkingtwojobs,mentionthat,too. part ofthejob,andconvinceyourinterviewerthatyoucanhandleitwell.Forexample,ifwereincrewhadtowakeup at5a.m.everymorning bankers andothersinfinancewhattheydislikemostabouttheirjobs,willlikelytalkthelonghours.Behonestthisunpleasant such blatantlying.SaysoneI-bankinginterviewer, “Ifsomebodyactedtooenthusiasticaboutthehours,that’dbeweird.”Ifyouaskinvestment don’t havetomakethingsuporpretendthatthere’s nothingyou’dwantmorethantowork100-hourweeks.Infact,interviewers aresuretoseethrough of workandpain.YouAs ageneralrule,youshouldemphasizehowhardhaveworkedinthepast,givingevidenceofyourabilitytotakeonlot I’m ahardworker career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible gettinginto.Notonly Interviews 19 Customized for: Erin ([email protected]) Times who arelookingintofinancecareers.Teams of four tosixworkquitewellforthisresearchprocess. up withotherstudents to practiceinterviews.Ifyouareinbusinessschool,yourschoolwillundoubtedlyhavesuchaclub,ormaywantteam of materialtocover, anditisnotpossibletodoallbyyourself.Formteamsforresearchingindustriesfirms.Later, youcanusethesameteams Insiders atbusinessschoolwhohavegonethroughtherecruitingprocesssuggestthatyouformresearchandinterviewpractice teams. Thereisalot their topthreeweaknesses.Answering withyouractualweaknessesisnotagoodidea.Sowhen Iidentifyastudent’s theyare weakerpoint—maybe Mock interviewersalsocoachstudents onappropriateanswers.“Forexample,”explainsonemock interviewer, “many candidates areaskedtoname idea totakenotesonthisfeedback. into theinterviewingmindset.”Afterwards,interviewerwillgo overthesession,assessingcandidate’sweaknesses. It’s strengthsand agood To takefulladvantageoftheirmockinterviews,careercounselorssay, students shouldtakethemasseriouslypossible.Dressprofessionally“toget too much”—somakesureyou’renotmakinganyclaimsforcompetency youcan’tbackupwithrelevantexperience. While there’s nousedemurringwhenexplicatingyourgoodpoints,careercenterprofessionalswarnthat“there isalsoadangeroftootingyourhorn say. Anotherproblem isthatmanystudentsapparently“can’telaboratetheirstrengths.Theyhavethem,butcan’tsellthem.aretoomodest.” able todescribetheirbackgroundandcareerhistory, orless,careercounselors andmakeapitchaboutwhytheyareinterestedinfirm,allminute have theirstorydown.Theycan’telaboratewhytheycametobusiness school,andwhytheywanttoworkintheindustry.” The bestcandidates are What mistakesarecommonlyunearthedbythevideotapedinterview? Onebusinessschoolcareercounselorsaysthathefinds“mostMBAsdon’t interview they’dliketoreceive:finance,consulting,etc. students. Themockintervieweesaregiventhevideotapeoftheir critiquetowatchathome(againandagain).Studentsmaychoosewhatkindof mock interviews,whicharenormallyvideotaped.Thesepracticesessionsconductedeitherbyprofessionalcareercounselors orbysecond-year classmates, orbytakingadvantageofinterviewtrainingofferedyourschool.ManyMBAcareercentersofferstudentstheopportunity toperform One ofthebestwaystoprepareanswersthesequestionsisusemock/practiceinterviews.You canpracticebyrole-playing withyourfriendsand solution? You don’twanttobecursingyourselfafteraninterview, thinkingaboutwhatyoushouldhavesaid,orexamplescouldbrought up. need tofillintheblanks.What’s thehardestthingyou’veeverhadtodo?Canyougivemeanexampleofatimewhencame upwithacreative important toprepareforfitquestionseveniftherearenorightorwronganswers.We cansteeryouontotherightpathwith While thismaybeeasiestfortechnicalquestionsandbrainteasers(afterall,wecanhelpyoutonailthosewiththe rightanswers),itisalso You should prepareanswerstocommonquestionsgivenatfinanceinterviews—whethertheybefitquestions,technicalorbrainteasers. Practice yourinterviews and and tobeknowledgeableforyourinterviews.Goodsourcesresearchareeasilyaccessiblepublicationslike Once you’veansweredquestionsabouttheindustry, youshouldbegintonarrowyourresearchspecificfirms—bothknowwhich firmstotarget, Research individualfirms As forwrittenmaterials,youcanstartwithgeneralbusinesspublicationslike Interviews The Vault MBA CareerBible Dealers’ Digest Dealers’ Investor Here aresomequestionsaboutfinancepositionsyoushouldaskbeforehaveyourfirstinterview: yourself adingifyoudon’thandlemeetingorphoneconversationcorrectly. Your interactionwithalumnicanhavedirectresults.Theresultsbegoodifyouprepareproperlybeforecontactingthem.You canalsoassure 20 Fortune • What aretheexit opportunitiesafter10yearsintheindustry?Aftertwoyears? • What isthecultureofanI-bankingfirmascomparedtoaFortune500company?Comparedstartup? • What issoexcitingaboutthisjob? • What isthecareertrackinindustry?skillsarerequiredatwhatstage? • What isthefutureofindustryfornextfewyears?Howwillchange?marginsThereturnonequity? • What arethethingsI-bankers(orcommercialbankers,venturecapitalists,etc.)likeabouttheirjobs?wouldtheytochange? • What kindofmoneydopeoplemakeintheindustry? • How dopeoplecopewiththelifestyleissuesinindustry? • What arethehoursinindustryreallylike?Arethey100everyweekorotherweek?Isitsameforfirm? • Whatisatypicaldaylike? . Fromthere,youcanmoveontotradepublicationsthatwillgivemoreindustry-specificnewsandanalysis. , Investment Dealers’ Digest Dealers’ Investment . Ifyouhavetheresources(perhapsataschoollibrary),canalsoreadthroughrecentissuesoftradepublicationslike . and The Daily Deal Daily The are someexamples. The Wall Street Journal Street Wall The , The Economist The The Wall Street Journal, BusinessWeek Journal, Street Wall The , BusinessWeek American Banker American these questions,butyou’ll © 2009Vault.com Inc. and The Financial The , Institutional Investment Customized for: Erin ([email protected]) capital expenditures;(c)other. What happenstoeachofthethreeprimaryfinancialstatementswhenyouchange(a)grossmargin;(b) SAMPLE FINANCEINTERVIEW QUESTIONS questions. hasn’t doneresearchandisnotcuriousabouttheopportunities.Readfirms,readindustries,preparesomeintelligent Finally, don’tforgetthatfinanceinterviewersoftenaskcandidateswhethertheyhaveanyquestions.Don’tgetcaughtlookinglikeajobapplicantwho Prepare questions that theydohearidenticalanswerstocertainquestions,”saysoneinsider. “Myadvicetostudentsisalwaysputanswersintotheirownwords.” schools—not mine!— Do interviewersthusenduphearingthesamecannedanswersoverandagain?“Idohearfromsomeatcertain there arethreeareasinwhichIstillhaveroomtogrow,’ andthenchoosethreeareasthatarenotdeal-breakers.” weak onrealteamworkexperience—westrategizeanappropriateanswer. It’s bettertosaysomethinglike‘Iwouldn’tcallthem weaknesses,but be moreorlessriskythanbefore. Answer: D.Itdependsonthestock. Inmodernportfoliotheory, ifyouaddariskystockintoportfoliothatisalreadyrisky, theresulting portfoliomay d. Itdependsonthestock c. Overallriskisunaffected b. Itbecomeslessrisky a. Itbecomesriskier If youaddariskystockintoportfoliothat is alreadyrisky, how istheoverallportfolioriskaffected? instances becauseitislessdependentontheassumedgrowthrate (g). a multipleofterminalyearcashflows,anddiscountingthatback to thepresentarriveatananswer. Thisalternativemethodmightbeusedinsome companybytaking Here “g”isanassumedgrowthrateandrdthediscountrate. Rememberthatyoucouldalsocalculatetheterminalvalueofa the terminalyear(inourcase,Year 10)continuingforeverwiththefollowingformula: The valueoftheterminalyearcashflows(usuallycalculatedfor10yearsinfuture)isbycalculatingpresentfrom How doyoucalculatetheterminalvalueofacompany? statements bothtodayandinthefuture. all theother (c) Justbesureyouunderstandtheinterplaybetweenthreesheets.Rememberthatchangingonesheethasramifications on equity inthefuture. statement, thedepreciationexpensewouldbelowerinsubsequentyears,sonetincomehigher, whichwouldincreasecashandshareholder’s increase thelevelofcashonbalancesheet,butdecreaseproperty, plantandequipment,sototalassetsstay (b) Ifcapitalexpenditureweretosay, decrease,thenfirst,thelevelofcapitalexpenditureswoulddecreaseonStatementCashFlows.This have lesscash.Goingtothebalancesheet,youwouldnotonlycash,butthateffect,lower shareholder’s equity. thesame,youwould you wouldhavelowernetincome.Thistranslatetothecashflowstatementontopline.Ifeverythingelseremained (a) Ifgrossmarginweretosay, decrease,thenyourincomestatementwouldfirstbeaffected.You wouldpaylowertaxes,butifnothingelsechanged, This problemtestsyourunderstandingoftheinterconnectionbetweenallthreestatements. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com Calculation for insidercompany profiles,expert advice, TY FCF= FCF10 (1+g) (rd –g) the same.Onincome The Vault MBA CareerBible Interviews 21 Customized for: Erin ([email protected]) The dollarwillstrengthenrelativetotheruble. exchange ratebetweenthedollarandruble? If inflationratesintheU.S.fallsrelativetorateRussia,whatwillhappen decide toissueequitypaydownthedebt. ratio. Thisratioinpartdeterminesacompany’s bondrating.Ifacompany’s bondratingispoorbecauseitstrugglingwithlargedebts,theymay is diffusedamongthecompany’s shareholders. Athirdreasonforacompanytoraisemoneybysellingequityisifitwants change itsdebt-to-equity theriskof the venture their ventureswillprobablynotgeneratepredictablecashflows,whichisneededtomakeregulardebtpayments,andalsosothat immediate future.Asimpleexampleofthisisastartupcompany. takeondebtbecause Theownersofstartupsgenerallywillissuestockratherthan good terms)byissuingstock.Thesecondiswhentheprojectsforwhichmoneybeingraisedmaynotgeneratepredictable cashflowsinthe canraisemoney (onvery There areseveralreasonsforacompanytoissuestockratherthandebt.Ifthebelievesitspriceisinflatedit When shouldacompanyissuestockratherthandebttofunditsoperations? that stockcorrelateswiththeotherstocksinportfolio. then theriskinessofportfoliooverallcouldbesignificantlylower. Sotheriskeffectofaddinganewstocktoanexisti For example,aportfoliowithtwohigh-techstocksmightatfirstglancebeconsideredrisky, butifthosetwostockstendstomoveinoppositedirections, A portfolio’s overallriskisdeterminednotjust bytheriskinessofitsindividualpositions,butalsohowthosepositionsarecorrelatedwitheachother. Interviews The Vault MBA CareerBible 22 ng portfoliodependsonhow © 2009Vault.com Inc. Customized for: Erin ([email protected]) DIVERSITY The Vault MBACareerBible Customized for: Erin ([email protected]) 162-59462_Shallow_Vault.indd 1 36USC220506 Member ofDeloitteTouche Tohmatsu Limited Copyright ©2010DeloitteDevelopmentLLC. rightsreserved. All sex, religion, color,national origin,oranyotherbasisprotected byfederal, state,orlocallaw. race, to regard without employment for consideration structure of Deloitte LLP and its subsidiaries. All qualified applicants will receive legal the of description detailed a www.deloitte.com/us/aboutfor see Please subsidiaries. its and LLP Deloitte means “Deloitte” document, this in used As If you’re thekindofpersonwhoexpectstotakeleadroles, adviseseniorpeople, person. We offerwhatleaderslikeyouneedtothrive—from theeverydayrush of workingoncomplex,meaningfulprojects toourapprentice-like environment and make a difference far beyond your cubicle walls, you’re farbeyondyourcubiclewalls, and makeadifference aDeloittekindof that helpsyouadvancequickly. Diveinatwww.deloitte.com/us/careers. Around here, there is no shallow end 9/8/10 5:10:17PM Customized for: Erin ([email protected]) above you(orwithfourormoreyearsofexperienceatthecompany). least twolevels skills andconfidence.Ifyouseeksomeonewhowillbeyouradvocateatperformancepromotionreviews,lookfor who’s donejustthatatyourcompany. Your work/lifebalancementor, however, maynotbethesamepersonwhocanhelpyoupolish yourpresentation Do youneedhelponbalancingyourfamilylifeandcareerwithoutsacrificingviability?You helpfromamentor couldprobablyusesome Have manymentorsforreasons women mentorsarescarceingeneral,findenlightenedmen.” advises, “Because is becausetherewerepeoplewhowantedtokeepmehere.”Mhatreestimatesthatshehas“foursix”mentorsatthefirm,and with keepingheratthefirm.“I’venowbeenBoozAllenforsixyears,whichisunusualanyconsultant.OneofmainreasonsIamstillhere After severalyearsattheprestigiousconsultingfirmBoozAllenHamilton,CathyMhatrehadherfirstchild.creditshermentors Mentors cankeepyouwithanemployer with luckymentees(someonewhoismentored).Heresomeadviceonhowtomakethesevaluablerelationshipsworkforyou. success isbridgedbymentorships.Mentorsarepeoplewhosharetheirgeneralbusinessknowledge,aswellknowledgeofaspecificcompany, What makesthedifferencebetweenacareerthatthrivesandonestalls?Formanywomenminorities,narrowgapbet THE IMPORTANCE OFMENTORS of beingseenasanappendageorsidekick,notafullprofessional.Wheneverpossible,seekmentorshipfromwidevarietypeople. Cunningham eventuallyleftthefirm.Evenwhenshadowofromancedoesn’tenteraclosementorship,menteeswithonlyone advisor runtherisk rapidly throughtheranksofBendix,Cunningham,a1979graduateHarvardBusinessSchool,wasaccusedsleeping withherm One-on-one mentorshiphasitspitfalls.CorporatehistoriansmayrecallthecaseofMaryCunninghamandWilliamAgeeatBendix Be carefulofhavingonlyonementor should Isoftenitforyou?’” most successfulwomenwerenotopentohelpingotherout.Itwasalmostasiftheysaying,‘Imadeitwhen toughonme.Why and closethedoorbehindyou”ethosisstillinexistence.“WhenIwasworking,”saysLanchiVenator, aNYUSternMBAgraduate,“itseemedthat While it’s terrifictohavementorsthatshareyourethnicityorgender, it’s nosurething.SomeoftheMBAswespoketoindicate thattheold“succeed Don’t expectyourmentortosharebackground share theirexperienceandskillswithyoutakesaninterestinyourcareer, itislikelythattheywouldliketomentoryouinsomeway. At thesametime,mostvaluablementorsarenormallyonesthatevolvefromeverydayworkingrelationships.Ifsomeone appearswillingto so on.Makesuretotakeadvantageofthesementors,whohavespecificallyvolunteeredserveasresources. to otherindustriesaswell.Someconsultingfirmshaveentirementorfamilytrees—witha“founder”mentor, theirmentees,and hisorhermentees, Increasingly, employersassignmentorstoincomingassociates—apracticethathasbeencommonatlawfirmsforsometimeandisspreadingrapidly Find outifyouremployerassignsyouamentor—thenkeeplooking career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com relationship. It’s notenoughtofindagoodmentor—it’s justasimportanttousethem correctly. Hereareafewtipstomakethemostofyour mentor Tips forMentees • Don’t approachsomeoneandformallyaskthemtobeyour mentor. Thiskindofartificialityisakintohandingyourbusiness • Find mentorsatalllevelsofthecompany. • Theclassic mentorissomeoneafewlevelsaboveyouinanorganization—closeenough that factthroughtheinterestthey takeinyou. to someoneandaskingthem be yourcontact—it’s tooartificialtotakeroot.Ifsomeonewantsbe yourmentor, theywillindicate mentors. from mentorsatyourlevelandothercompaniesaswell.Your business schoolprofessorsareanotherinvaluablesetofpotential to yourexperienceguideyouupwardsintheranks,experienced enoughtohavesomepull.Butyoucanalsogainexperience for insidercompany profiles,expert advice, The Vault MBA CareerBible Corp.Afterrising ween failureand card Diversity entor. 25 Customized for: Erin ([email protected]) systems and more. He took time out to talk to Vault a bit about being a minority MBA and working at Honeywell at working and MBA minority a being about bit a Vault to talk to out time took He more. and systems fire solutions, security solutions, fire controls, environmental including units business strategic different seven encompassing division billion $8 an division, (ACS) Ingersoll-Rand before getting an MBA. He currently works in Minneapolis as a financial analyst with Honeywell’s Automation and Control Solutions Control and Automation Honeywell’s with analyst financial a as Minneapolis in works currently He MBA. an getting before Ingersoll-Rand Pipasu Soni is a graduate of the Johnson School of Management at Cornell University. A former engineer of Indian descent, he previously worked at worked previously he descent, Indian of engineer former A University. Cornell at Management of School Johnson the of graduate a is Soni Pipasu VAULT DIVERSITYQ&A:PIPASU SONI,FINANCIALANALYST, HONEYWELL Diversity The Vault MBA CareerBible and instructsyouontrainingshouldpursue. onperformance In addition,youreceivementoringthroughworkingwithmanagers onassignments.Also,yoursupervisorgivesyouregularfeedback provide acontactthatcangivemeinsightandadviceasImove throughout mycareer. others. Myparticularbusinessesassistedmeinidentifyingaformal mentoratthebeginningofmyassignment.Themainfocus ofmymentoristo Soni: Vault: areas—Six SigmaandTechnology. AttheendofassignmentI’llmove intoanoperationalfinanceroleatabusinessunitlevel. consists ofworkinginthecorporatefinancegroupsupporting annualoperatingplan,strategiccorporateinitiatives,andotherfunctional of two18-monthassignmentsacrossdifferentHoneywellbusinesses. I’minmyfirstrotation,whichendsthisDecember. Mycurrentassignment Soni: IwashiredintoHoneywell’s FinancePathwaysProgram.It’s oneoftheircareerdevelopmentprogramsforMBAgraduates. Theprogram consists Vault: a greatplacetoleveragemypastexperiencewithIngersoll-Rand. Honeywellwouldbe part oftheday-to-dayoperationsanorganizationwhereIcouldinfluenceperformanceandvisiblyseeproduct.knew Soni: Vault: Finance PathwaysProgramandthefactthatfinancegroupatHoneywellisoneofkeystoimplementingstrategicvisionorganization. But asanengineer, Ienjoyedthetechnicalsideoffinanceandroleitplayedwithinanorganization.Whencametorecruiting,reallyliked and Iwasinterestedinexploringthemarketing/productmanagementaspect,togetmoreofageneralperspective. product developmentforIngersoll-Rand.There’s alwayssometensionbetweentheengineeringandmarketingsideduringnewproduct introduction, Soni: Vault: 26 Actually, Iwasinitiallyinterestedingoingintomarketing,butaftertheveryfirstsemester, myfocusshiftedtofinance.PreviouslyIworkedinnew No actually, Iinternedwithaconsultingfirm.wantedtofindoutmoreaboutthefield,anddecideditwasn’tforme.enjoyedbeing No, not“formal.”MentoringtakesseveralformsatHoneywell. Allemployeesareencouragedtoseekoutmentorsaswelloffermentor Is thereaformalmentorshipprogramwiththePathwaysprogram? What sortofprogramwereyouhiredinto? Did youinternatHoneywell? How didyouendupinyourcurrentposition?Didgotobusinessschoolknowingwanteddofinance? • Don’t passuptheopportunitytohaveamentor. Havingamentorcanmakemajordifferenceinyourcareerpathandself- • Find yourownmentees.Mentorshipisatwo-waystreet.Assoonaspossible,startfindingpeoplewhoarewillingtolearn Have realisticexpectations.Your mentorisanadvisorandadvocate—notsomeonetodoyourcareernetworkingforyou,orsomeone • • Establish trust.Everythingyoudiscusswithyourmentorisbetweenthetwoofyou. • Keep intouchwithyourmentors.Mentorshipisarelationship,andrelationshipsarebuiltfromfrequent,informalcontact. This confidence. you. You neverknowwhenthementeewillbecomementor! to coveryourerrors. mentor there. is importantevenwhenyourmentorassignedtoyoubycompany. Ifyoumoveonfromacompany, stayintouchwithyour . © 2009Vault.com Inc. from Customized for: Erin ([email protected]) hired intocommerciallendingas knew Iwantedtobealender. Inmycase,titleisrelationshipmanager. ismoreofahiringtitle. “Executiveassociate” Silverman: Vault: that veryseriously. this experienceandthechancetocontributeinmeaningfulways. AndM&T’s missionemphasizesbeingreally involvedinthecommunity, andItake have opportunitiesforbusinessdevelopmentandclientinteraction earlierratherthanlaterandasmaller, regionalbankseemedthebestplacetoget Silverman: Vault: area thatcontributestothebusinessesincommunityand communityatlarge.” until Ihadaprofessionthathitspeople’s wallets.WhenIlookedatthelandscapeouttherethought,“Wow, isreallyawonderful commercialbanking Silverman: Vault: I wantedaregionalbank. finance] therewere.OnceIgotintobusinessschoolandunderstoodmore,knewthatcommercialbankinginparticularwaswha t Iwanted,andthat been agreatexperience,andIfeellikeI’mgoingtothenextlevelinmyabilityleadteamsdriveresults. You learn aboutmetricsinbusinessschoolandusingtodriveperformance,butyoudon’trealizethesignificanceuntilactuallyuseit.It’s communication gettingpeopletomeetdeadlinesandgoals. been invaluableinreviewingbusinessunitresults.Theclassesleading,communicatingandteambuildinghavealsoval uable inday-to-day to talk with Vault about her choice of regional banking and about being a woman professional in finance. in professional woman a being about and banking regional of choice her about Vault with talk to and ended up choosing to join the executive associate program at M&T Bank in the Washington, D.C. metro area after graduation. She took time out time took She graduation. after area metro D.C. Washington, the in Bank M&T at program associate executive the join to choosing up ended and Institution in New York prior to business school. She decided to get an MBA in order to have a greater impact on the community in which she lives she which in community the on impact greater a have to order in MBA an get to decided She school. business to prior York New in Institution r at the Smithsonian the at r develope exhibition and manager project a was Silverman Ann Pennsylvania, of University the at School Wharton the of graduate A VAULT DIVERSITYQ&A:ANNSILVERMAN, M&TBANK Silverman: Vault: Soni: Vault: before joininganditseemsthatourperspectiveofHoneywellisverysimilar. program members MBAs, andabilitytoswitchroles—fromfinancemarketingifdesired.IspokewithseveralCornellalumniotherPathway forall incoming Other thingsuniquetoHoneywellincludedtheabilityworkacrossseveralfunctions,mandatorygreen-belttrainingandcertification analysis atthecorporatelevelallowedmetounderstandstrategicvisionoforganizationbeforemovingintoabusinessunitrole. Soni: Vault: With thatsaid,Honeywell’s incomingPathways classisadiversegroupsimilartowhatyouwouldfindintypicalMBAclass. cultural backgroundandworkexperience. defines diversitymoreasindividualuniqueness.Idon’tthinkit’s justgender, raceandethnicbackground,butalsothingssuch as educationaland Soni: Vault: Black EmployeesNetwork. a guestspeakerpresentation.Honeywellalsohasseveralotherminorityemployeegroupsthroughoutthecompany, liketheHispanic Networkandthe Soni: Vault: career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com In mycurrentassignment,finance,accountingandleadershipclasseshavebeenthemosthelpful.Theinan No, Idon’tthinkHoneywellspecificallytargetsminorities,butfocusesonrecruitingindividualsthataretherightfitwithcompany. Honeywell Yes, there’s houror anIndianandAsianAssociationthatmeetsonaregularbasis.Thesegroupsusuallymeetoncemonthfornetworking The thingsthatattractedmethemostwerepeopleandjobassignments.Forme,havingafirstassignmentinfinancialplanning Can youdescribetheprogramthat youwerehiredinto?Isitarotationalprogram? Why didyouchooseM&T? What inparticularaboutregionalbanksandcommercialbanking appealstoyou? Going intobusinessschool,didyouknowthatwantedtogofinanceandcommercialbanking? What aspectsofyourMBAeducationdoyouthinkhaveprovedmosthelpfulinexperiencesofaratHoneywell? What attractedyoutoHoneywell? Did yougetthefeelingduringrecruitingthatHoneywelltargetsminoritiesandwomenfordiversityhiringpurposes? Are therediversityorganizationsforyouatHoneywell? M&T haswhat’s calledtheexecutiveassociateprogram.It’s position. Iwas notreallyaformalrotationprogram;you’rehiredintofunctional Looking atallofthemergersandacquisitionsactivitythathavegone oninthebankingindustry, Ireallywantedtofindaplacewherewould At the Smithsonian, one of the things I loved most was the community impact of the job, but I felt that I wasn’t going to have a realimpact At theSmithsonian,oneofthingsIlovedmostwascommunity impactofthejob,butIfeltthatwasn’tgoingtohave I knewthatwantedtogointofinance,butsupposecomingfromsuchadifferentbackground,didn’tknowwhatindividualbuckets [in for insidercompany profiles,expert advice, The Vault MBA CareerBible d financehave Diversity 27 Customized for: Erin ([email protected]) Diversity The Vault MBA CareerBible those groups,andaredefinitelyresourcesItapinto. Silverman: Vault: that myeveningsarequitefull. etc.Let’sthe externalintroductionsyouneed.Therearemanybusinessorganizations inthecountythathavebreakfasts,lunches,dinners, justsay sureyouget with accountantsandlawyersintheregionothersthatworkbusinesses.Peoplebankareverygenerousaboutmaking Silverman: Vault: everything underthesun. diverse. Therearelotsoflifesciencesandbiotechnologycompanies,theregovernmentrelatedcontractors,hightechnolog y companies.Just Silverman: Vault: evidenced bytheformationofthisgroup.Theideathatyou’vereallygottogrowandnurturethat,itdoesn’thappenovernight. senior committeeofthebank.Particularlyasbankhasgrowninlastthreeyears,itmadeanefforttotakesissuesdiversityseriously, as One thingthatwasimportanttomeaboutM&Tisithasadiversitycouncil.It’s abank-wideinitiativethat’s headedup by agentlemanonthe Silverman: Vault: friends witharegoingintofinance,sothere’s continuedprogress. certainly gonebeforeme,andweneedtokeepthatmomentum.Taking mypeergroupatWhartonasanexample,manyofthewomen that Iwas With theissueofrepresentationwomeninfinance,it’s onlygoingtochangeasmoreofuscomeintothefield.Therearealotwomenwhohave regardless ofwhereIwentintofinance.don’tfeelthatthere’s adifferencebetweeninvestmentbankingandcommercialbanking. Silverman: management? business schoolclassmates,thatcommercialbankingisanybetterthanotherareasoffinance,suchasinvestmentorinvestment Vault: Silverman: Vault: across thebank. departments throughoutthebank.Thisway, andstaffthatwork yougetachancetomeettheotherEAsthatyou’vebeenhiredwithandmanagers time, there’s alunchwithoneofthemembers oftheexecutivecommittee,andbookendingthatinmorningafternoonarepresentationsfrom Silverman: Vault: lender, everythingfromthefinancialandindustryanalysisbusinessdevelopmentskillstointegratingyourselfintocommunity. The firstyearhasreallybeenamixofbothprojectwork,whichgivesyouexposuretopeoplethroughoutthebank,andlearningskillsbeing Silverman: Vault: 28 Do youworkwithprofessionalgroupsforwomenrespectto business developmentinitiatives? And howdoyougoaboutdevelopingbusinesswiththeseorganizations? What typesofcompaniesandorganizationsareyouworkingwithasalender? How manywomenarethereinyourexecutiveassociateclassatM&T? How manyexecutiveassociateswerethereinyourclass? Are theretrainingsessionsforexecutiveassociatesoutsideofon-the-jobtraining? How longareyouintheexecutiveassociateprogram? Did youhaveanyconcernsaboutgoingintofinance,whichisnotoriouslymale-dominated?Anddofind,incomparingnoteswith your One ofthewaysthatwegetalotbusinessisthroughreferrals.Andonetodomakesureyou’rereallywellnetworked In thefirstyear, wehaveseminars.Almostonceamonth,alltheMBAsarebroughttogetheratbank’s headquartersinBuffalo. Each There werethreeofus.Iknowthemquitewell—wespeakfrequentlyandtrytofostercloserelationshipswitheachother. I believetherewere21thathiredinmyclass. The firstyearisthemoredefinedpartofprogram,thoughbankdoestrackusasexecutiveassociatesthroughoutourcareer. Oh, yes.IntheD.C.region,there’s agroupcalledWomen inBio,there’s onecalledWomen inInformationTechnology—there arealotof I wouldagreethatfinanceisanareawherewomenareunderrepresented.knewbepartoftheworld enter We servicemiddlemarketcompanies,whicharecompaniesthathaverevenuesabove$10million.TheeconomyinD.C.isincredibly © 2009Vault.com Inc. Customized for: Erin ([email protected]) ROTATIONAL PROGRAMS The Vault MBACareerBible Customized for: Erin ([email protected]) 32 © 2009Vault.com Inc. Customized for: Erin ([email protected]) finishing up his second rotation, he spoke with Vault about why he chose a rotational program and his experience with it. it. with experience his and program rotational a chose he why about Vault with spoke he rotation, second his up finishing Management Associate program with the company’s North American credit card division. The program consists of two one-year rotations. Now rotations. one-year two of consists program The division. card credit American North company’s the with program Associate Management Upon graduating from the University of Maryland’s Robert H. Smith School of Business, Federico Sercovich, joined Citigroup’s rotational MBA rotational Citigroup’s joined Sercovich, Federico Business, of School Smith H. Robert Maryland’s of University the from graduating Upon VAULT Q&A:FEDERICOSERCOVICH,CITIGROUP The followingVault Q&Aswillhelpgiveyouasenseofhowsometheserotationalprogramswork. units atalargeorganization. different business function (forexample,treasuryvs.riskmanagementinfinance).RotationsalsoallowfornewMBAhirestogainexperiencewith withinthe broader rotational programsarehiredintoaspecificfunctionsuchasfinanceormarketing,butthencanrotatethroughdifferentspecialties Some majoremployersproviderotationalMBAhiringprogramsfornewbusinessschoolgraduatesthatjustthisopportunity. MBAswhojoin variety ofpositions? company. totryyourhandata Whatifyou’renowinyoursecondyearandlookingforfirstpositionafterbusinessschool,butstillwouldlike The internshipafterthefirstyearofbusinessschoolisagreatopportunityforMBAstudentstoexperimentbitandgettastespecificjobor MBA ROTATIONS of thealternatelendingfranchise. Theproductsareunsecuredpersonalloans. Sercovich: Vault: career choices—yougettodecide forwhichopportunitiesyouwanttointerview. you startaninterviewprocess.You meetwithdifferentmanagersand network.Ithinkit’s prettycoolbecauseyou arecompletelyinchargeofyour it works—youknowyouhaveajob,butinitiallydon’tin whichbusinessyou’regoingtobeworking.Whenit’s closer to thepointofjoining, At theendofsummer, Theway attheendofmyperformanceevaluationIwasofferedapositioninMAProgram,whichhappilyaccepted. department, workingwiththestrategicalliancesteamvarious partnersondifferentcross-sellinitiatives. Sercovich: Vault: Didyouknowthatweregoingtotypeofpositionwhen joinedthemanagementassociatesprogram? the paymentlandscapeandconsumer’s behavioratthepointofsale. credit cardsaspaymentinstruments.Duringsaidrotation,Ihad theopportunitytoleveragemyB2Bskills,anditprovidedmewithabroadviewof acquiring business.Withthatgroup,thecustomerisnotcardholder—unlike therestofNorthAmericaCards,it’s merchantswhowanttotake Sercovich: Vault: Sotellmealittlebitabouttheprogramandrotationsthatyou’vedone. go aheadanddothesekindsofthings. comfort zone.IwasencouragedtotaketheriskandI’veseenotherpeopledoingitsucceedingatit.Theprogramgivesyouopportunity For example,duringmycurrentrotationwhichI’mfinishingupthisweek,inaCFOrolesupportingnewproductfunction clearlyoutsidemy doing formorethan12months,ithasadefinedterm,whichallowsyoutogobeyondyourprofessionalcomfortzone Sercovich: Vault: Whatdoyoumeanbya“safeenvironment?” While marketingisstillmypassion,I’veexpandedskillbasetoachievelong-termaspirations. functions. The managementassociateprogramatCitigroupallowedme—inarather“safeenvironment”—togainmoreexperienceindifferent business path. Sercovich: Vault: DidyouwanttodoacareerchangefrommarketingwhenwentgetyourMBA? telecom. worked withthecountry’s largestglobaladvertisingfirm,BBDO,thenatL’Oreal inbrandmanagement, thenwithB2Bmarketingforasmallerregional Sercovich: Vault: Tell mealittlebitaboutyourpre-businessschool background. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com So whataboutyoursecondrotation, yourcurrentrole. Overall, theideaofdoingMBAwasopportunitytoexpandmyskillsetandmoveonamoregeneralmanagement-oriented career I wasactuallyfirstasummerassociateduringthebetween myfirstandsecondyearsofbusinessschool.Iwasinthee-business You know it’s aone-yeartermjob,andsoyouget tolearnalotandaddvalueatthesametime.Howeverit’s notsomethingyouwillbe It’s theumbrella aCFOrole inanareacalledcross-sell.Iprovidefinancialplanningandanalysis supportforanewsetofproductsunder I’m originallyfromArgentina.IspentfouryearsdoingmarketinginChile,avarietyofindustriesandfunctionswithinmarketing.First It’s atwo-yearprogram,withtwoone-yearrotationsindifferentareas.Myfirstrotationwasmarketing/strategyroleourmerchant for insidercompany profiles,expert advice, The Vault MBA CareerBible Rotational Programs 33 Customized for: Erin ([email protected]) to 60 years. years. 60 to to the company’s corporate headquarters in California to oversee the program. She talked to us about the program, which has been around for close for around been has which program, the about us to talked She program. the oversee to California in headquarters corporate company’s the to program, one of several MBA hiring programs maintained by the company. After stints in London and Houston in a variety of roles, Preston returned Preston roles, of variety a in Houston and London in stints After company. the by maintained programs hiring MBA several of one program, elopment dev MBA finance Chevron’s joined Preston Rebecca School, Business Michigan of University the from MBA her with graduating After VAULT Q&A:REBECCAPRESTON, CHEVRON analysis, differentpracticesandproducts,takingalookatwhat’s beensuccessfulinNorthAmericawhichcouldberolledoutelsewhere. Sercovich: Vault: Sowhatwillyoubedoingoncefinishthisrotation? associate. It’s sortofweirdsometimestobetalkingwith theseseniorleaderswhoarededicatingpartoftheirvaluabletimetogivingcareer advicetoamanagement a seniormemberoftheorganizationandaskthemforsometimeintheircalendar. Theyareopentohelpyou,andtheygiveyou wisecareeradvice. youcanjustcallup company forawhile.ButIthinkthereishugecomponentthattotallyinformal.AsanMA,manydoorsareopen,times Sercovich: Vault: used everymonth. straightforward—but itwasdefinitelyagoodchallenge.Iabletoputtogetherfromscratchtheforecastingmodelsfor business,whicharenow Sercovich: Vault: The valueIcontributetothebusinessisclearandtangible. Sercovich: Vault: I havebeensolelyinchargeofthedevelopment2006financialplanfortheseproducts. These arenewproducts,andthisisafunctionIhaven’tbeenexposedtoinmypast.Inrole,dofinancialforecastingprofitabilityanalyses, Rotational Programs The Vault MBA CareerBible Preston: Vault: Preston: Vault: from sixtoeight;theotherprogramsdobetweentwoandfour. MBA program,andprocurementhiresintheneighborhoodoffour. EverygrouphasMBAsummerinterns.Financealsoincreased itsinterntarget, does aboutfour, themarketingprogramhiresaboutfour, supplyandtradingoutofHoustonhiresaboutthree,globalgasisconsideringstarting Preston: Vault: HowmanyMBAsdoesChevronhireayear? Preston: Vault: Inwhattypesofrolesandlocations areincomingMBAhiresforthefinanceprogramplaced? a verycomplexindustry, sogettingfluencyoutsideofyourdisciplineisimportant. University ofTulsa, lectureabouttopicsfromhowtheearthwasformedandoilcreatedthroughtodrilling andproductionofresources.It’s general industryorcompanyknowledge.Forexample,webring inexternalinstructors—lastweekwehadageophysicsprofessor, Dr. Hinesfrom Preston: Vault: strategic businessunitsareofftheprogram;comptroller, thetreasurer, they’reallfromtheprogram. (exploration andproduction),vicepresidentofgovernment publicaffairs,andourCFOareallprogramalumni.Thefinance headsformajor 34 Is thereaformalmentorshipprogramcomponenttotheprogram? As aroleoutsideofyour“comfortzone”howhaveyoufoundthisexperience? I’d imaginethatwouldmeanalotofthecompany’s leadershavecomethroughtheprogram. How longhasthefinanceMBAprogrambeenrunning? Is thereanycrossoverbetweenthevariousMBAprogramsinterms ofrotations? So whatareyoudrawingontodoyourjob,giventhatbackgroundisinmarketing? Not intermsofrotations.Functionallytheprogramsarequitedifferent. However, wedosomejointevents.Typically these would bearound The programstartedin1946.We’ll be60yearsoldnextyear. Theotherprogramsaremorerecent. I’ve goteightpeoplecominginthis year. Sixarestarting hereinCalifornia,twoareoverseas… For thefinanceprogram,wejustincreasedtargetthisyear. Historicallyit’s beensixtoeightandit’s TheHRprogram noweightto10. Yes. Theformerchairmancamethroughtheprogram.current vicechairmanisofftheprogram,ourheadofinternationalupstream Well, it’s definitelystressful,butveryexciting.ThenumbersIreportrollupallthewaytoCEOofCitiCardsandthat’s abigresponsibility. Last year, wejoinedtheoverallCitiCardsmentorshipprogram,throughwhichMAsarepairedupwithamentorwhohasbeenin I haveacceptedaroleinCitigroupInternationalCards,willbeworkingonstrategicinitiativeswithdifferentregions—globalcompetitor It’s partbusinessschooltheory, parton-the-jobtraining,andalotofcommonsense.It’s notrocketscience—themathisfai © 2009Vault.com Inc. rly Customized for: Erin ([email protected]) sustain youoverthelongrun. they dothejob?We’re lookingforeveryhiretobeacareer hire.We have90percent retentionover10years.Fitandmotivationiswhat’s goingto something they’repassionateabout?Willtheythriveinourculture orclashwithit?Ithenusethesecondroundtopushontechnicalskills.Can Preston: Vault: Butwheninterviewing,you’retryingtomakesuretheyareinterested intheindustry. as engineeringorgeosciences.Alotofpeoplehavefinancebackgrounds oreconomicsbackgrounds. Preston: Vault: Domostofthepeoplewhojoinprogramhaveenergyindustry experience? program, becauseyou’rebuildingupabroadbaseofexperience. with aprogrammember’s individualinterestsanddevelopmentgoals.It’s you’reoffthe quitecommontomoveevery18monthsthreeyearsafter There’s brisk,briskdemandforprogramgraduatesoncetheir24monthsontheisover. therightopportunity Abigpartofmyjobismatching their teams. respect fortheprogramanditsmembers.They’reabletoperformatahighlevelquicklysopeopleareclamoringmembers toworkon there’sBringing inpeoplewithstrongteamworkorientation,combineddemonstratedperformance,meansthatratherthanresentment, alotof short periodoftime(sixmonthsorlessfortherotations).Fitisveryimportant—wehaveahighlycollaborativeandcooperativecultureatChevron. from theexperiencedpeoplearoundyou.You alsohavetobeverycapablesothatyoucantaketheselearningsandproducesuperiorresultsina behumbleandlearn But thathasn’thappenedbecausewe’rehighlyselectiveinwhowebringin.Ourindustryisenormouslycomplex,soyouhaveto Preston: Vault: Isthereanyresentmentamongotherfinanceprofessionalstowardwhatmightbethoughtofasanelitegroup? Angola, Venezuela… About aquarterofthealumniareinternationalnow. TherearealumniinMoscow, Kuwait,London,Singapore,Scotland,Barbados, Beijing,Bogotá, year wedotheholidayluncheonandthatpullsinallalumniaswell.ThesearetypicallyBayArea. people meettheinternsandnewhires.Thisyear, people.Andevery theCFOwasthere,headofinvestorrelationsandothersenior information. We havetwotothreeeventsayearthatpullinallthealumni.We doa“familypicnic”everyyear. We cocktail,where haveasummer Preston: Vault: opportunities inRussia. might besupportingcommercialteamslookingfornewopportunities.Forexample,youateamthat’s negotiatingfornew business units—developingtheplan,strategicplanfororganization,withinoverallcorporatestrategy. Thebusinessdevelopmentroles Preston: Vault: Whatsortofrotationswouldtheydooutsidefinance? We encouragepeopletodoarotationoutsideofthefinancediscipline,too,andwehavehadmanycrossoverinpastyears. and whatopportunitieshavecomein. businesses allovertheworldlookingfortalent.EverymonthIsendoutanupdatethatshowswhereeveryoneinprogram isinthecompany, We alwaystrytomaximizethediversityofexperiencewithdifferentbusinessunits,andfinancefunctions.IgetcontactedfromChevron people whohaveinternedhere.Othermightfeelstronglytheyneedtoseefourdifferentareaswhileontheprogram. assignments willbelonger, andsomeonemayelecttodothreerotationswithalonger, isparticularlytrueof morein-depthexperienceoverseas.This Preston: Vault: Howlongistheprogramandhowmanyrotationsdoemployeesdo? is increasinglyimportant. right offthebat.One’s inAberdeen[Scotland] intheNorthSea,andanother’s inSingaporewithourtreasuryfunction.Theinternationalcomponent Preston: Vault: You’re alreadysendingthemoverseasfortheirfirstpositions? career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com With theprogramhavingbeeninplaceforsolong,theremustbealotofalumnifromprogram. Not necessarily. I’dsay it’sbackgrounds, such lessthanaquarterthathavedirectindustry experience,althoughalotofthemhavetechnical There’s itseffectiveness. definitelytheriskofitbecomingsortanelitistgroup,andifthatweretohappen,programwouldlosemuch These two are returning interns. If they’ve had an internship at HQ and so grounding with us, we’re comfortable in sending them overseas These twoarereturninginterns.Ifthey’vehadaninternshipatHQandsogroundingwithus,we’recomfortableinsendingthem That’s veryimportant.Inthefirstroundforfull-timehires,Ispendalmostalloftimetryingtounderstand fitandmotivation—is energy Yes. There areabout150alumniandwe’vegotaveryactivenetworkfortheprogram.AsprogrammanagerImaintain all that Typically peoplecrossoverintotwoareas:planningandbusinessdevelopment.Therolesarecorporatestrategywithinthe It’s atwo-yearprogram.Theydothreeor four rotations.Domesticrotationsaretypicallysixmonthslong.Sometimestheint for insidercompany profiles,expert advice, The Vault MBA CareerBible Rotational Programs ernational 35 Customized for: Erin ([email protected]) Rotational Programs The Vault MBA CareerBible them witha“buddy,” someonewho’s currentlyontheprogramandcanhelpthemevaluateusasafull-timeemployer. to programmembers.Ifacilitateconnectionsandourmembersfinddiversesuccessfulmentoringrelationshipsthatway. For internswedomatch Preston: Vault: 36 Is thereaformalmentoringprogram? We donotaformalmentormatchinginthefinanceprogram,butsomeofotherprogramsdo.Instead,ouralumniareveryreceptive © 2009Vault.com Inc. Customized for: Erin ([email protected]) INDUSTRY OVERVIEWS The Vault MBACareerBible Customized for: Erin ([email protected]) 38 © 2009Vault.com Inc. Customized for: Erin ([email protected]) and submarine-builderNorthropGrumman,GeneralDynamics,Raytheon,BAESystemsUnitedTechnologies. Daimler-Benz allproduceaircraftengines.CompaniesthatareonlylockedintomilitaryprojectsincludecontractleaderLockheedMartin,andship- both commercialandmilitaryaircrafttechnology. Pratt&Whitney, asubsidiaryofUnitedTechnologies, Westinghouse RollsRoyce,and andGE, archrival AirbusispartlyownedbyEADS,theEuropeanAeronauticDefenseandSpaceCompany. EmbraerandBombardieralsohaveinterestsin This appliestomostofthecompaniesinvolvedincivilianaircraftmanufacture—Boeingderivesnearlyhalfitsrevenuefromgovernmentcontracts,while both commercialandmilitaryproduction. armsthat handle skill sets,anddefensecontractsareagenerallyrecession-proofformofrevenue,nearlyallaerospacecompanieshave give ortaketheoddhundredmillionallottedforspecialitemsduringyear. Sincemakingfighterjetsandcargoplanesdoesn’t requirewildlydifferent The lucrativenatureofdefensecontractsshouldn'tbeunderestimated,either:theU.S.governmentspentabout$200billiononin2008— Cessna), EmbraerandBombardier airline companiespurchasenewplanes.ThetopnamesinthesegmentareBoeingandAirbus,withsmallerplayersaswell,likeTextron (whichowns therate atwhich the priceofairlineticketsandterrorism(orthreatthereof)canalsoaffectnumberpeoplewhotravelbyair—andhence with planesforbusinessorpleasure.Thecommercialairlineindustryisnotoriouslycyclical,operatingatthemercyof cycle;factorslike The aerospaceindustrymakesmostofitsmoney($20.9billion,onrevenue$204billionin2008)bysupplyingindividualsandcommercialcarriers explosives andotherweapons.Theseindustriesarecloselyallied,withcompaniesfrequentlyparticipatinginbothspheres. industry producesacomplementarygroupofgoods,includingsatellites,shipsandsubmarines,tanksarmoredvehicles,guns, bullets, The aerospaceindustryconsistsofcompaniesthatproduceaircraft,spaceshipsandthejets,enginesrocketspropelthem.defense The Wright stuff INDUSTRY OVERVIEW Aerospace andDefense replaced intheeventtheyaredamaged. Moreover, if amachineisshotdown,nopilotsorothersoldiersarehurt—abig plus, to saytheleast.In Automation isalsoagrowingtrend. Machines,unlikehumans,neverneedtosleeporeat,arealways payingattention,andcan be easilyrepairedor fielded byagovernment.Ofcourse, thismeansthatenormoustanksareout—andsmaller, fasterandlighterequipment isin. protracted conflictgoingoninIraq andAfghanistan),futurebattlesarelesslikelytobefoughton atraditionalbattlefieldagainstprofessionalarmy theagonizingand as wellashiftinthewaywarsarefought—changespracticalities ofwarfare.Ascurrentengagementshaveshown(i.e., Speaking ofinternationalrelations,thedefensesideindustry hasbeenaffectedontwofronts.Itweatheredasustainedwaveoflargemergers, DE-fence! has itssightssetonproducinglargejetsfortheinternationalmarket. see itsrapidlygrowingmarketforairtransport—expectedtocreate ademandfor1,500planesby2010—farmedouttoforeigncompanies,andAVIC of airtravelinChinathatcancarryabout80people;itisscheduled toenterservicein2009.Butthat'snotall.TheChinese governmentisloathto aircraft manufacturer. Already, AVIC (theChinaAviation IndustryCorporation I)hasproducedtheARJ-21,ashort-haulplanetailoredtovagaries tolaunchitsown Boeing andAirbusmayfaceathirdcompetitorintheyearstocome. Chinaisrevelinginitsnewfoundindustrialmight,andplans A newplayerentersthegame airliner’s planewasthefastest-sellerinaviationhistory. windows andhighercabinpressurehumidity. commercial AllofthesewerefactorsinthewildenthusiasmthatinitiallygreetedDreamliner—the become savvieraboutcomparison-shoppingfortickets.Thecompositestructurealsoallowsseveralpassenger-pleasing features,likelarger fatigue (thedamagedonetometalbycyclicalloadingandotherweartear).Thisisaboontheairlines,whosemarginshavefallenascustomers The planeislighter, andhencemorefuelefficient;theconstructionalsomeansthatplanerequireslessmaintenanceisn’taspronetometal comparatively smallernumbersofpassengers—onlyabouthalfasmanytheA380—butitscarbon-compositeconstructionoffers severaladvantages. travel andcarriers’capacitypullback);it’s nowscheduledthefirstproductdeliveryforhalfof2010.Theplanewasdesignedtoferry Boeing’s newestoffering,the787Dreamliner, slumpingdemand for wassettodebutinJuly2007,buthassuffereditsownsetbacks(alaborstrike, like theproven747,whichseatsabout400. problems withitsassemblyandwiring,whichdelayedreleasebytwoyears,drivingAirbusintothered—andcustomersto Boeing’s products, major airportswithitsA380,adouble-deckerplaneofBrobdingnagianproportions.Itseats500passengers,giveortake,buthasbeenplaguedby 2007 sawthembattlingitoutwiththeirnewestofferings.Airbushopestotemptbuyersfromtheairlinesthatferrylargenumbersofpeoplebetween andsummer one, betweenU.S.-basedBoeingandEuropean-ownedAirbus.Thesecompaniesarethetwolargestsuppliersoflargejetstoairlines, isaninternational The commercialaircraftmarket(worth$86.6billionin2008)isdominatedbyBoeingandAirbus.biggestrivalrytheindustry Plane dealing 39 Customized for: Erin ([email protected]) clearances, andmustsubmitto having theirbackgroundsthoroughlysearchedinordertoobtain it. interviewee’s eligibilityforsecurityclearance,anecessaryattributewhenworkinginsomedefensesectors.Only U.S.citizens canbegrantedsecurity or asmanythree,andthesevaryfromaninformalchatonthe phonewitharecruitertopanelinterview. relatestothe Anothercommonquestion as littleoneinterview challenge withoutallofthenecessaryinformation?Ifso,howdid you findoutwhatneededtoknow?”Companiescangive outcome?” Whilesomeengineersreportbeinggiventechnicalquestions totesttheirexpertise:“Haveyoueverhadresolvea complextechnical Whatwasthe about atimewhenyouwereworkingingroupandsomething when wrong.Whatwentwrong?wasyourroleinthesituation? So you’veelectronicallynetworkedyourwayintoaninterview. like,“Tell Now what? Insidersreportthatquestionsincludebehavioral me Roger, niner positions afterafewyears. message itsrecruiters,whileRollsRoyce’s enginedepartmentestablishedafast-trackmanagementprogram topromotenewhiresintomanagement promise ofashotatwinninganiPod,aswellsponsoringFacebook groupforformerinterns.Lockheedallowspotentialjobseekerstoinstant their newesthires,majoraerospacefirmslikeBoeingandLockheedMartintookaWeb jobseekerswiththe 2.0-typeapproach.Boeingluredpotential Companies aretryingtorecruitthelatestcropofyoung‘uns,asaquarterworkforcewassaidberetirement-readyin2008.Inorderwoo Giving thekidstheirwings candidate isofhighmoralcaliber. must beaU.S.citizen.Critically, heorshemustundergoathoroughinvestigationofhisherbackground,theresultwhichshow thegovernment),and top securityclearances.Inordertoobtainthisstatus,acandidatemustbesponsoredbyanemployer(eithercorporationor like mechanicalandelectricalengineering.Inadditiontoengineeringaptitude,defenseindustrycompaniesperenniallyseekemployeeswhocangain According totheBureauofLaborStatistics,aerospaceindustryhasahigher-than-average numberofpeoplewithadvanceddegreesinsubjects to $67,000annually). half ofthosejobswereinmanufacturing.Theaveragewagefortheseworkersisalmost$30perhour(atatypical43.5workweek,thistranslates According totheAIA(AerospaceIndustriesAssociation),655,000peoplewereemployedinaerospaceindustry2008,and butonlyaboutone- SKY’S THELIMIT Astrium, thespacewingofEuropeandefensegiant,announcedin2007thatitwouldbeoffering1.5-minutestintsaweightlessenvironmentfor After RichardBranson,ownerofanumberVirginproperties,announcedthathewouldbeofferingspacetoursviaGalacticin2004,EADS Then, ofcourse,there’s space,thefinalfrontier, whichissoontobecomeascrammedwithtouristsTimes Squaretheweekend beforeChristmas. Spatial relations defense industrywillprobablystaybusy. Spendingonweaponsprocurementrosefrom$54billionin2001to$146through2008. In addition,thoughPresidentObamapledgedtopullalltroopsoutofIraqbyAugust2010,theU.S.isincreasingitspresenceinAfghanistan,so to seeovertreesandotherobstacles,allowrangersmonitorthemovementsofpeopleasfarawayseveralmiles. immigration, thebordersecurityconsistsofaseriestowersoutfittedwithradar, cameras,loudspeakersanddatalinks.Th Also in2007,Boeingsetupitsfirst27-milestretchofmonitoredborderbetweentheU.S.andMexico.Aimedatpreventingsmuggling andillegal Remotely operatedsensorsarealsothelatesttrendinbordersurveillance. can hoverinchesaboveasuspectedbomb,allowingittobemorecloselyexamined,orclimbabout10,000feetforsurveillanceoflargerarea. a breadbox,consistsoffanincylindricalhousing(whichprovideslift)aswellsmallpayloadwirelesscamerasand othersensors.TheMAV 2007, Honeywell'sMAV (MicroAirVehicle) aboutthesizeof wassenttoIraqhelptroopsidentifyanddefusebombsotherthreats.Thedevice, Aerospace andDefense The Vault MBA CareerBible fiction novel. outsideofascience activities intotheirlong-terminvestmentplans,eventhoughshootingforthestarswon’tturncashflowpositiveinanytimeframe involved inthesectorincludeBoeing,NorthropGrummanandLockheedMartin.Majoraerospacedefensecompaniescontinue tobuildspace and, assuch,thetwogroups(whichcan’tseemtolaunchsatellitesfastenough)havebeenattachingtheirtechcivilianbirds.Othercompanies Sciences andArianespace,adivisionofEADS.Governmentmilitarydemandforsatellitebandwidthisexpectedtoquadrupleinthenextdecade— communications, weatherpredictionandresearch,televisionradio.SpecializedleadersinthisfieldincludeAlcatelSpace, Astrium,Orbital More prosaically, mosteffortinthespacedivisionofaerospaceisdevotedtodesign,launchingandmaintenancesatellitesforGPSdevices, 40 200,000. Thespaceship,whichhasyettobebuilt,wouldtakeofflikeanordinaryjetbeforelightingitsrocket. e towersaretallenough © 2009Vault.com Inc. Customized for: Erin ([email protected]) growth indefensewillcontinueatasimilarleveluntil2012orso. priority todomesticsecurityissues.Furthermore,projectsandspendingarelargelylockedinthroughfiscalyear2010,the AIAexpectsthatsales On themilitaryfront,fortimebeingatleast,politiciansareunlikelytoreducetheircommitmentdefensespendinglest theyappeartogivelow economic downturnintheU.S.orEurope,whichstillaccountformajorityofairlinecustomers,butitwillbetemperedbyexpansionAsia. by 2025—twicethenumberthatflyskiestoday, andsomeone’s temperedbyan gottobuildallthoseplanes.Growthinthissectormightbe In thelongterm,bothaerospaceanddefenseindustriesarepoisedtogrow. Worldwide airtravelisforecasttoincrease ninebillionpassengers Looking up career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Aerospace andDefense 41 Customized for: Erin ([email protected]) www.cdzodiac.com Fax: (714)934-0088 Phone: (714)934-0000 Huntington Beach,CA92647 5701 BolsaAvenue C&D Zodiac,Inc. www.boeing.com Fax: (312)544-2082 Phone: (312)544-2000 Chicago, IL60606 100 NorthRiversidePlaza The BoeingCompany www.ballaerospace.com Fax: (303)939-5100 Phone: (303)939-4000 Boulder, CO80301 1600 CommerceStreet Corporation Ball Aerospace&Technologies www.baesystems.com Fax: +441252383000 Phone: +441252373232 United Kingdom London SW1Y5AD 6 CarltonGardens BAE Systems www.airbus.com Phone: +335619333 France 31707 BlagnacCedex 1, RondpointMauriceBellonte Airbus S.A.S. www.aarcorp.com Toll free:(800)422-2213 Fax: (630)227-2039 Phone: (630)227-2000 Wood Dale,IL60191 1100 NorthWood DaleRoad AAR Corp. EMPLOYER DIRECTORY Aerospace andDefense The Vault MBA CareerBible 42 www.gencorp.com Fax: (916)351-8668 Phone: (916)355-4000 Rancho Cordova,CA95742 Highway 50andAerojetRoad GenCorp, Inc. www.esterline.com Fax: (425)453-2916 Phone: (425)453-9400 Bellevue, WA 98004 500 108thAvenue NE,Suite 1500 City CenterBellevue Esterline Technologies Corporation www.dyn-intl.com Fax: (571)722-0252 Phone: (571)722-0210 Falls Church,VA 22042 3190 FairviewParkDrive,Suite700 DynCorp InternationalInc. Fax: (973)898-4730 Phone: (973)898-1500 Parsippany, NJ07054 5 SylvanWay DRS Technologies, Inc. www.curtisswright.com Fax: (973)597-4799 Phone: (973)597-4700 Roseland, NJ07068 4 BeckerFarmRoad,3rdFloor Curtiss-Wright Corporation www.cessna.com Toll free:(800)423-7762 Fax: (316)517-5669 Phone: (316)517-6000 Wichita, KS67215 1 CessnaBoulevard Cessna AircraftCompany www.hamiltonsundstrand.com Phone: (860)654-6000 Windsor Locks,CT06095 1 HamiltonRoad Hamilton SundstrandCorporation www.goodrich.com Fax: (704)423-5540 Phone: (704)423-7000 Charlotte, NC28217 2730 West Tyvola Road 4 ColiseumCentre Goodrich Corporation www.gendyn.com Fax: (703)876-3125 Phone: (703)876-3000 Falls Church,VA 22042-4513 2941 FairviewParkDrive,Suite100 General DynamicsCorporation www.jacobstechnology.com Fax: (931)393-6389 Phone: (931)455-6400 Tullahoma, TN37388 600 William NorthernBoulevard Jacobs Technology Inc. www.itt.com Fax: (914)696-2950 Phone: (914)641-2000 White Plains,NY10604 4 West OakLane ITT Corporation www.honeywell.com Toll free:(800) 601-3099 Fax: (973)455-4807 Phone: (973)455-2000 Morristown, NJ07962 101 ColumbiaRoad Honeywell InternationalInc. © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.lockheedmartin.com Fax: (301)897-6704 Phone: (301)897-6000 Bethesda, MD20817-1877 6801 RockledgeDrive Lockheed Martin www.L-3Com.com Fax: (212)805-5477 Phone: (212)697-1111 New York, NY10016 600 3rdAvenue L-3 CommunicationsHoldings EMPLOYER DIRECTORY (CONT.) www.parker.com Fax: (216)896-4000 Phone: (216)896-3000 Cleveland, OH44124-4141 6035 ParklandBoulevard Parker HannifinCorporation www.orbital.com Fax: (703)406-3502 Phone: (703)406-5000 Dulles, VA 20166 21839 AtlanticBoulevard Orbital SciencesCorporation www.northropgrumman.com Fax: (310)553-2076 Phone: (310)553-6262 Los Angeles,CA90067-2199 1840 CenturyParkEast Northrop GrummanCorporation www.moog.com Fax: (716)687-5969 Phone: (716)687-4567 Aurora, NY14052 Plant 4,JamisonRoadEast Moog Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.teledyne.com Fax: (805)373-4775 Phone: (805)373-4545 Thousand Oaks,CA91360 1049 CaminoDosRios Teledyne Technologies Incorporated www.sequa.com Fax: (212)370-1969 Phone: (212)986-5500 New York, NY10166 200 ParkAvenue Sequa Corporation www.rolls-royce.com Fax: +442072279178 Phone: +442072229020 United Kingdom London SW1E6AT 65 BuckinghamGate Rolls-Royce Corporation www.rockwellcollins.com Fax: (319)295-1523 Phone: (319)295-1000 Cedar Rapids,IA52498 400 CollinsRoadNE Rockwell Collins,Inc. www.raytheon.com Fax: (781)522-3001 Phone: (781)522-3000 Waltham, MA02451-1449 870 Winter Street Raytheon Company www.pratt-whitney.com Fax: (860)5655442 Phone: (860)565-4321 Hartford, CT06108 400 MainStreetEast Pratt &Whitney www.unitedspaceallliance.com Fax: (281)212-6177 Phone: (281)212-6200 Houston, TX77058 1150 GeminiStreet United SpaceAlliance www.triumphgroup.com Fax: (610)251-1555 Phone: (610)251-1000 Wayne, PA 19087 1550 LibertyRidgeDrive,Suite100 Triumph Group,Inc. www.textron.com Fax: (401)457-2220 Phone: (401)421-2800 Providence, RI02903-2596 40 Westminster Street Textron Inc. www.utc.com Fax: (860)565-5400 Phone: (860)728-7000 Hartford, CT06103 1 FinancialPlaza United Technologies Corporation The Vault MBA CareerBible Aerospace andDefense 43 Customized for: Erin ([email protected]) 44 © 2009Vault.com Inc. Customized for: Erin ([email protected]) 2008 GDPisaheftychunkofchange—$14,264,600,000,000,accordingtotheInternationalMonetaryFund. unsurprisingly, 1percentofthe ishuge,accountingfor1percentofU.S.grossdomesticproduct(GDP).Thatmightseemlikesmallpotatoes,but products, asareanimalbyproducts,ornamentalplants,tobacco,lumberandthevariousfruitsgrainsusedtoproducealcohol.Theindustry, Agriculture’s notjustaboutedibles,though; ratheritcoverseverythingthatisgrownorraisedforconsumption.Cottonandwoolareagricultural cattle and378,000hogsareslaughteredeverydayintheU.S. harvest inU.S.history(thebiggestcropwasproduced2007,thelargestsince1944).To feedtheprotein-ravenousmasses,morethan100,000 production increased17percentover2007’s harvest,whilecornproductionwasdownnearly7percent,whichstilltranslatedto that ofGermany—weredevotedtoplantingcorn,withwheatproductiontakingup60millionacresandsoybeansanother75acres.Soybean Looking atthenumbers,agricultureindustryisamassiveundertaking.In2008,morethan87millionacresofland—anareaslightlylarger transportation, pesticidesandfertilizers,processorsthattransformrawproductsintocomestibles. while improvingprofitmarginsforfood-relatedbusinesses.Alliedindustriesprovidetheinfrastructurethatmakesthispossible,includingrailandroad businesspeople whokeepitallrunning.ThevariousdisciplineswithintheindustryseekwaystofeedEarth’s ever-growing moreefficiently population The agricultureindustry’s broadscopeincludes everyonefromfarmersandrancherstothescientistswhodevisenewbetterfoods Feed me INDUSTRY OVERVIEW Agriculture shortages andthegreenhouseeffect. MixedwithgasolinetocreateE85(85percentethanol, 15percentgasoline),ethanolpromises toreplace produced fromfermentingcorn, beets, wheat,oranyothersugar-bearing feedstock—hasquicklybecome theposterchildforAmerica’s solutiontogas fuel Demand forbiofuelhasmadethe pastfewyearsaboomtimeforcornproducerslikeArcher DanielsMidland.Ethanol—thealcohol-based Fueling agreenerfuture coatings, flavoringagents,dairyandmeatproducts. and mayonnaise,whileCargillisahighlydiversifiedagricultural productsprocessor, makingsuchitemsassoywaxes,vitamins, pharmaceutical from wallboardtoglue)andethanol.Bungeistheworld’s largestprocessorofoilseeds,turningtheminto such productsasbiofuels, livestockmeal nuts intofoodproductslikeflour, sweetenersandemulsifiers,aswellplant-derivedwoodpreservatives,industrialstarches(whichbecomeeverything corn byproducts.ArcherDanielsMidlandisoneofthelargestagricultural processorsintheworld,turningoilseeds(likesoybeans),corn,wheatand corn chipsorsweetsoda.It’s unlikelythatyouwouldconsiderpostagestamps,aspirinorimitationsilk,butall ofthesegoodsaremanufacturedusing butter,When youthinkofcorn,whatinitiallycomestomindisprobably something edible:creamycornonthecobdrippingwithgolden orcrisp,salty Little. Yellow. Different. genetic engineeringfield. Dow andDuPontallhaveastakeinbiotech,fungicidespesticides, eachwithitsowncropsciencesdivision.AndMonsantoisaleaderinthe time amajorfarmingfirm,iscurrentlydivestingitsagriculturalbusinesstofocusonbrandedandvalue-addedpackagedfoods. Meanwhile,Bayer, such asCargill,ArcherDanielsMidland,Tyson, Perdue, BungeandPilgrim’s Pride(whichfiled forbankruptcyprotectionin2008). ConAgra,atone All oftheissuesdetailedabovehaveforcedconsolidationfarmsandprocessingfirms.Today, therealplayersinindustry areallbigcompanies low indomesticmarketsandaroundtheworld. also affecttheequation.Designedtohedgerisksandlessenfarmers’financialburden,thesesubsidieskeepagriculturalcommoditypricesartificially productivity andprofithasplaguedagribusinessfordecades.Governmentsubsidiescorn,wheat,milk,cottonanumberofotherfarmproducts suppresses thepriceofacommodityandlowersprofits,whilepooroneraisespricesbutcausesshortages.Thisinverserela tionship between Further complicatingmattersisthefactthatcommoditiessuchascorn,soybeansandwheataresubjecttomarketforces.To agoodharvest wit: during summer2008destroyedabout10percentoftheharvest. per-bushel costofcornin2006wentup28percent,toatwo-yearhigh,duehot,dryspelltheMidwestJulythatyear. Inaddition,flooding upprices:the on yieldsand,inextremecircumstances,canevenleadtofamine.Theweatherdoesn’thavebeespeciallydramatic drive of plantscanmitigatetheserisks,they, ofcourse,cannotbeentirelycontrolled.Heat,drought,flooding,stormsandother “acts ofGod”wreakhavoc Farmers arealsoatthemercyofpests,plantdiseasesandweather, thekingofallX-factors.Whileinsecticidesandpest- disease-resistantstrains labor-intensive harvestingmakesthelikelihoodoffarmersbreakingeveninfirstfewyearsunlikely. economically unfeasible.Fruitsandvegetablesofferhigherreturnsonloweracreage,buttheinvestmentinplants,soilpreparation andthenecessary wheat andcorn,areverylow, farming sotheseplantsarefrequentlygrownonlarge,industrialfarms,astinyreturnsperacremakesmall-scale Despite itssignificantcontributiontotheGDP,for cropssuchassoybeans, agricultureisveryriskyandoftenunprofitable. Profitmargins,especially The farmer’s dilemma thesecond-largest 45 Customized for: Erin ([email protected]) since 2003. cloned toimprovethebreeding stock ofcattle.Petfishimplantedwithgenesthatproduceluminescent proteinshavebeenavailableforpurchase maturity. Geneticallymodifiedvarietiesofcatfishandtilapia—designed togrowfaster—arealreadyforsaleinsomecountries, whilebullsarebeing Scientists arealsobeginningtoexplore thesemethodsforuseonanimals,seekingtoincreaseegg andmilkproduction,changefatcontentspeed and 80percentofthecorngrowninU.S.isgeneticallymodified, asis86percentofcottonyields. CropScience’s LibertyLinkcorn,whichare,respectively, resistant totheproprietaryherbicidesRoundupandLiberty. Today,nearly allthesoybeans countries possible.Genetictinkeringhasproducedplantssuch asMonsanto’s RoundupReadycorn,canola, soybeansandcotton, plants promisesalessexpensivemethodthantraditionalvaccine production,andwouldmakelarge-scalevaccinationofthepopulationspoorer Researchers arelookingintogrowingoralvaccinesforhepatitis B andHIVintomatoes,bananas,potatoeseventobacco.Embeddingdrugs and evendeathinchildren. the grain,aboonforcultureswherericeisstaplecropand varieddietisoftenaluxury. Insufficientquantitiesofvitamin Acancauseblindness individual genestoexpressspecifictraits.Geneticengineeringhas producedGoldenRice,designedtoaccumulatevitaminAintheedibleportionof we arenowabletomanipulate crops forhigheryield,greaterdiseaseresistance,betterflavorand otherdesirablequalitiesforthelast12,000-oddyears, Beyond antibioticsandhormones,recentbiotechadvanceshave becomemajorissuesintheagricultureindustry. Whilefarmershavebeenselecting Begun, thisclonewarhas transferred topeoplewhoeatraworundercookedmeat. antibiotics atthefirstsignofeverysniffle).Withoutcompetition,resistantbacteriacanspreadrapidlythroughoutapopulationandsubsequentlybe not largeenoughtocureaninfection,apracticethatencouragestheproliferationofantibiotic-resistantbacteria(muchaswith ahumanwhotakes feedlot dietofcorncandistresstheirdigestivetractsandleadtofatalinfections.Antibioticsaremorewidelyusedinsubtherapeuticdoses,ordoses with theinfectedindividualbyaddingantibioticstoanimals’drinkingwater. Feedlot-fattened,corn-fedcattlemustbegivenantibiotics,too;the poultry flocks,forinstance,aresolargethatsickanimalsfrequentlycannotbeisolated,producerstreatallthebirdsthatmayhavecomeintocontact Antibiotics aregiventoanimalscureillnesses—afrequentoccurrencewhenlivestockiskeptincloseconditionsandfedanunnaturaldiet.Modern chemical that,innature,causesfruitstoripen. fruit longdistances,itmustbepickedbeforeisfullyripetowithstandthejourney. Onceitreachesitsdestination,istreatedwithethylene,the the animal’s ear, causeittogainweightand,incows,improvemilkproduction.Hormonesarealsoappliedfruitsandvegetables.Inordership Steroids uptherateatwhichmeatanimalstransformfeedintomuscle,whilehormones,whenadministeredthroughslow-release pelletsimplantedin as everyotherindustrythesedays.Steroids,hormonesandantibiotics,forexample,areroutinelyadministeredtoU.S.meat anddairyanimals. You’re inforashockif“agriculture”bringstomindamberwavesofgrainandfruitedplains.Rather, agribusinessisastech-focused andcuttingedge Not exactlyAmericanPastoral production ofthecovetedbeanisexpectedtoincreaserapidly. oil flavorintact.However, theconversiontolow-linolenicsoybeansisn’tfarenoughalongreplacetraditional,high-linolenicbeans,although are lowinlinolenicacid(asubstancethatcausessoybeanoiltogorancid),therebyeliminatingtheneedforhydrogenationwhilekeeping outright banslikeNewYork’s December2006decision tocuttransfatsfromitsrestaurants.Soybeanfarmersarebeingpressured togrowbeansthat excess. Fast-foodrestaurantsandjunkfoodmanufacturersarecuttingtransfatsoutoftheirproductsinresponsetogrowing consumer concernand cookies andfishsticks)producesthemuch-loathedtransfats,whicharebelievedtoclogarteriesraisecholesterollevelswhenconsumedin process ofhydrogenationthatsoybeanoilundergoestolengthenitsshelf-life(andtheproductsit’s usedin,including somebrandsofcrackers, American foods. The Biodiesel aside,soybeanshavetakenabitofbeatinglate,duetothesuddenandresoundingcondemnationtransfatsin Bean there,donethat million gallonsfortheyear. increased byafactoroffivefrom2005to2007(490milliongallons!).Thefirst10months2008yielded570gallons,onpacehit700 The growingpopularityandpotentialofbiodieselhasincreaseddemandforsoybeans(whoseoilisacommonlyusedbase),asproduction ofthefuel blockbuster forairlines—ahandfulofthemajoraircarriersexperimentedwithbiofuelbyconductingtestrunsduring2008.) technology involvedtoscareoffnewconsumers—aslongasamachinerunsondiesel,it’llrunbiodiesel.(That'swhatmakes itapotential restaurants. Initspurestform,biodieselreleases75percentlesscarbondioxidethanpetroleumdiesel.Additionally, there’s noconversionornew Another biofuelseeinggrowthisbiodiesel,whichcanbeproducedfromvegetableoils,animalfatandeventheleftover, greaseusedin artery-clogging us. were plantedtosupplydepletedalliesinEurope.Thetotaldipped87.3millionacresfor2008,whichisstill 46 © 2009Vault.com Inc. and Bayer Customized for: Erin ([email protected]) March 2007duetotaintedwheat glutenfromChina,andanotherhugescandalin2008(largelylimited toAsia)involvingproductsmadewithpowdered of-origin labelingonmeat,produce andnuts.However, inlightofrecentscaresregardingimportedfoods—includingthe massivepetfoodrecallin of suchlabelingwouldoverburden theindustry, andthey havesuccessfullylimitedsuchlabelingtoseafooddespite2002 legislation requiringcountry- that JoeAmericanhastherightto knowifthebeefonhisplatewasslaughteredforeignsoil.Opponents (namely, the meat lobby) saythatthecost imports $65billioninfoodayear, ordoubletheamountitimported10yearsago.Consumergroupswantclearlabelingon food,arguing means arecertaintodifferfromcountrycountry, orcouldevenbeabsentaltogether. business. Inaddition,thoughorganicproducecanbesourcedfromforeigncountries(fromChina,forinstance),regulationsstipulatingwhat“organic” some drawbacks.Facedwithpricecompetition,retailerswillinevitablydemandlowerpricesfromorganicfarmers,whichcould products in2006.Whilesuchproduce’s widespread availabilitywillcertainlyhavetangiblebenefitsfortheenvironmentandcustomers,thereare organic produce,hasthehighestprofitmarginpersquarefootofanygrocerystore.Atotherendspectrum,Wal-Mart beganofferingorganic Many businessesaretakingadvantageofthissurgeinorganicinterest.ThesupermarketchainWholeFoods,onethemorepopularpurveyors That year, organicproductsaccountedfor2.8percentofallretailfoodssold. according totheOrganicTrade Association,Americansspentaround$24billiononorganicproductsin2008,anincreaseof40percentover2006. thepremium price: demanding organic,ethicallytreated,free-range,andantibiotic-hormone-freefoodproducts.Andtheyappearwillingtopay Consumers, motivatedbyconcernsabouttheabove,aswellfactoryfarming,animalcrueltyandhealthofenvironment, areincreasingly The organicgreengiant 2009, theEuropeanUnionallowedAustriaandHungarytocontinuetheirbansongrowinggeneticallymodifiedcornderivedbyMonsanto. warehouses.And inMarch from theU.S.,sniffingoutunapprovedgeneticallymodifiedricein1.1milliontonsofshort-andmedium-grainits companies fromplantinggeneticallymodifiedcornwithinitsbordersinOctober2006.Thatsamemonth,Japanincreasedtestingofriceimported undergone completeenvironmentalimpacttestingbeforeits2005release.Thedebaterageson,nowonaglobalscale:Mexicobarred biotech a smallvictoryinMarch2007,whenfederaljudgehaltedtheplantingofMonsanto’s RoundupReadyalfalfaonthegroundsthatplanthadnot advocacygroups won remain inthetissuesofresistantplantvarieties,orthatengineeredgenesmightcrossintowildpopulations.Environmental manipulation couldproduceharmfulsideeffectsthatsimplehybridizationandcrossbreedingwouldnot.Otherswarnherbicideresiduemight However, suchtinkeringhasspawnedanumberofadvocacygroupsthatfearunforeseenconsequences.Manyarguedirectgenetic Another boneofcontentioninthebattleoverFarmBillhad to dowiththeinfluxofimportedfood.According meaning thatthey’llpopupmoreoftenintheAmericandietthan nonsubsidizedcrops. wheat, soybeans,corn,andcorn-derivedsugarsfats.Allof those cropsaresubsidizedbythegovernment,makingthemlessexpensivetogrow, One exampleofhowgovernmentsubsidiesaffecttheU.S.isin ubiquityofjunkfood,muchwhichhasingredientliststhatareheavilybasedon the U.S.,aswellsecurityconcernsandinfluenceoflobbyists. were includedwithinit,andevenincreasedinsomecases.The reasons forthatareseveral-fold,andincludeadesiretokeepagriculturaljobswithin to easethecostU.S.taxpayer, andtoencouragefreetradearoundtheglobe.WhenbillwaspassedbyCongress,however, thesubsidies to recordfoodpricesandanever-increasing demandforbiofuelcrops, therewasasubstantialbodyoffeelingthatfarmsubsid One ofthemostcontroversialissuesatstakein2008billwas thatoffarmsubsidies.Giventhebumpercroppricesbeingreapedbyfarmersdue is effectivethrough2013(orpossiblylonger, giventhelengthoftimeitcantaketopasssuchagargantuanpiecelegislation). world. Thisisonlyexacerbatedbythefactthatprovisionsofbillwillshapeagricultureindustryforyearstocome. The2008bill,forexample, legislation. And,althougheasilyignored,thedecisionsofwhattoincludewithinbillhaveseriousramificationsnotonlyinU.S.,butaround Washington, possibledealoutofthe pittingspecialinterestgroupsandlobbyistsagainstlegislators(andoneanother),aseachattemptstogetthebest law whenCongressoverturnedaPresidentialvetoofthebill.Inmanyways,FarmBillprovidessnapshothowpolit ical sceneworksin In termsofcontroversy, onlybecoming the2008incarnation(alsoknownasFood,ConservationandEnergyActof2008)liveduptoexpectations, contentiousFarmBill. Every sooftenUncleSamtakesalookatthecurrentpoliciesaimedaidingagricultureindustryinformofhighly Picking upthebill raids anddwindlingapplicants. illegal immigrantsachancetoobtainlegalstatuswasdefeatedintheSenateJune2007,makingmeatpackersandfarmersworr y aboutincreased which, coupledwithlostproduction,costthecompany$45million.Asolutiontoproblemremainselusive;animmigration billthatwouldgive (Swift isthethird-largestmeatpackerinnation,behindCargillandTyson Foods)nettedmorethan1,200illegalimmigrants—the replacementof the agricultureindustryhasstruggledtofindandkeepcheaplabor. InDecember2006,immigrationraidsatSwift&Company’s meatprocessingplants that moreprosperousAmericansdon’twant.However, asthesanctityofnation’s homeland security, bordershascometotheforeinthiseraof touch. Unskilledmigrantandimmigrantlaborershaveprovidedthisnecessarymusclepowerforrelativelylowpaydecades, often fillingpositions Despite theincreasingrelianceonmachinerytodogruntworkofU.S.agricultureindustry, therearestillsomejobsthatrequirehuman You justcan’t get goodhelpthesedays… career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The New York Times York New The The Vault MBA CareerBible ies shouldbecut,both put themoutof , theU.S. Agriculture 47 Customized for: Erin ([email protected]) tion. posi his about Vault with spoke Barbee Ill., Decatur, in headquarters ADM’s From process. development the through products new As a product manager in Archer Daniels Midland Company’s (ADM) Specialty Food Ingredients division, Darryl Barbee is responsible for shepherding for responsible is Barbee Darryl division, Ingredients Food Specialty (ADM) Company’s Midland Daniels Archer in manager product a As VAULT Q&A:DARRYL BARBEE,ARCHERDANIELSMIDLAND agricultural scientistandengineerindustries,specifically, areexpectedtogrowby14percentbetween2004and2014. environmental impact.Dependingonthecareerpaththeywishtopursue,thesepeoplegenerallyhaveadvanceddegrees.TheBLS reportedthatthe whatever otherspecialfunctionisrequiredofanorganism.Agriculturalengineersdesignfarmequipmentforincreasedefficie ncy andreduced processing companies.Bioengineerstweakgeneticcodestocreateherbicide-resistantplants,Mexicanjumpingbeansthatcan do theLindyhop,or orfood Agricultural scientistsdevisenewfood-processingmethods,studysoilandanimalmanagement,frequentlyconsultforthe government scientists whocreatethem.Chemistscomeupwithnewcoloringandflavoringagents,discoverinnovativeusesforagricultural byproducts. Although agriculturehasbeenaroundsince,oh,say, thedawnofmodernman,industryisconstantlytrollingforadvancedtechnologies andthe usual jobsinHR,salesandIT, lawyersandMBAs areneededtokeepgoodbusinesspracticesandmakesureeveryoneplaysbytherules. experts getthestufffromwhereit’s growntowhereit’s going,whileveterinarianskeepthelivestockhealthy(untilit’s tokillit).Along withthe time disciplines involvingagriculture)oftenstarttheircareerswithabachelor’s degree, andmanyhavedoctoratestoperform“pure” research.Logistics has grownmoreconcernedabouttheenvironmentalimpactoffactoryfarmingonlandandecosystems.Agronomists(researcher s inthemany to buyandsellgrain,cocoaotherarticlesofcommerceensureaconsistentsupply. Ecologistsconsultforthefarmingworldasgovernment The agricultureindustryhasplentyofopportunitiesforthosewhowanttoavoidgettingtheirhandsdirty, aswell.Commoditiesmerchantsareneeded storage. Inaddition,agriculturalgraderssortproducts,suchasfruitsandeggs,inspectorsevaluatethecleanlinessofprocessingfacilities. or specialty. Theseprofessionalsincludemanagersand,inparticular, farmandranchowners,aswellthosewhooperateripeningfacilitiesorcold aparticularfield A numberofpositionsintheindustryrequiremoreexperienceandeducation,includinganagriculturedegreeabackground in variety, isexpectedtogrow. that moreefficientmachinerywillreducethenumberofsuchjobsinfuture.Onotherhand,small-scalefarming,especially oftheorganic and more.Farmworkers(whoaccountfor90percentofindustryemployees)requireminimaltraining,buttheBureauLaborStatistics(BLS)expects slaughterhouses you considerthenumberofdifferentsegmentsitencompasses.Operationsincludefishhatcheries,appleorchards,flowernurseries, An enormousrangeofman-andwomanpowerisrequiredtokeepagriculturehummingalong.Theindustryexceptiona lly diversewhen From farmhandtofinance WORKING INTHEINDUSTRY The problem?Subsidies(surprise!)thatallowU.S.productsapriceadvantageinthemarketplace,therebydisadvantagingpoorercountries. trade, thebillmetasignificantamountofoppositionfromforeignleaderswhocomplainedthatittakesglobalagriculturalpolicy inthewrongdirection. While thebillcausedcontroversywithinU.S.,drubbingitreceivedabroadwasperhapsevenmoresignificant.Criticizedasbeinganti-free (i.e., non-corn-basedbiofuels). guarantees—for drivingthebiofuelindustryforward.Asignificantamountofmoneywassetasideforresearchandproductionofadvancedbiofuels andloan That wasn’ttheonlyeco-friendlypieceoflegislation,though.Thebillalsocontainedaraftmeasures—includinggrants,subsidies energy systemsinplace. for researchinorganicfarming,andtheestablishmentofincentivesgrantstoencouragefarmsincreaseenergyefficiencyputrenewable locally sourcedfoodoverseastodonatepoorcountriesratherthanshippingAmericancrops.Onthe“green”side,billincludedextrafunding Other provisionsinthe2008FarmBill,meanwhile,includedextensionstofoodstampsprogram,andapilotaidprogram in thebilltoplacecountryoforiginonallmeats,produceandcertaintypesnuts. milk developedinChina—thosecallingforenforcedlabelingofimportedfoodfoundmoresympatheticearsCongress,andaprovisionwasincluded Agriculture The Vault MBA CareerBible them orwhatcouldbechanged. as itisimportanttokeepopenlines ofcommunicationwithourcustomers,Iwillgooutonsales calls toseewhatADMproducts areworkingbestfor company. I’llperform market research,aswellfindthecurrentpricedomesticallyandinternationally. atcompetition.Also, Itakealook Barbee: Vault: 48 Tell mealittlebitaboutyourpositionatADM. I primarilyworkonnewbusinessdevelopment,lookingatthepossibility ofnewproductsinmydivisiontoseewhatwillbeprofitable forthe thatinvolvesbuying © 2009Vault.com Inc. Customized for: Erin ([email protected]) dependents. Atthatwellnesscenter, thereisalsoamedical facilitywithanon-sitedoctorthatemployeescanuse. There arealsobenefitsworking at theheadquartersofalargeorganization.There’s agymonsitethat’s freetoall employees, theirspousesand ADM tendstoattractandhirethe bestpeople. Barbee: Vault: a newproductasopposedtomanagingthat’s alreadyonthemarket. managing this allwithoutanypreexistingdata,somyMBA,maybemorethan anythingelse,hasgivenmetheconfidencetohandlethosechallenges launching anewproduct.You’re with.You’re lookingatestimatingpackagingcosts, whattypeofpackaging,howmuchdoweneedtostartoff doing Barbee: Vault: Barbee: Vault: logo andsalesliteratureasneeded.I’llalsoworkwithmarketingtotalkthetradepublicationsletthemknowwe’recomingoutanewproduct. I getR&D,sales,marketingandregulatoryaffairstogether. We allmakesurewe’reonthesamepage.Withmarketing,I’llassistindevelopingabrand, to helpmeettheneedsoftodayandtomorrowforourcustomers. I’m alsoworkingwithR&D.passingalonginformationIamgatheringfromthecustomersaboutproduct.Ourmaingoalistouseourresources timeline andmakesurewe’rekeepingup. Barbee: Vault: you’re doingagoodjob.Thereareusuallyabouteightto10productsinthepipeline. Barbee: Vault: Barbee: Vault: manager, I’mnotonlyinsales,butalsousingmyfinancebackground,asworkingalotwithnumbers—P&L’s, etc.Itwasaperfectfit. pursue.Asaproduct me Iwasinthewrongprofession,andthatneededtogetsales.WhenjoinedADM,directionwanted Barbee: Vault: product managerforlecithin,areleaseagentyoucanfindincookingsprayandchocolates,amongotherthings. Barbee: Vault: Barbee: Vault: Barbee: Vault: products. Withpurchasing,Idiscussthepriceofour Barbee: Vault: products, soasacompanywehavecustomersinallofthosemarkets. Barbee: Vault: career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com How doyoufindworkingforalargeemployerlikeADM? What sortofclassesfrombusinessschooldoyoufindmosthelpful withwhatyou’redoingrightnow? What isthemostrecentproductyoulaunched? Does yourinvolvementwithaproductendoncetheisapproved? And howmanywouldyoureleaseinayear? So whatistheprojectcyclelike?Howlongdoesittaketolaunchanewproduct? How didyouenduptransitioningfromyourfinancebackgroundintocurrentposition?Were youlookingforachange? Was itafull-timeorpart-timeprogram? Tell mealittlebitaboutyourbackground.WheredidyouearnMBA? Is thereaparticularproductsetyouworkon? As aproductmanager, whattypesofpositionsareyourmaincustomercontacts? Who arethesecustomers? It waspart-time.Atthetime,Iworkingforadifferentcompanyasfinancialanalyst.OnceearnedmyMBA,joinedADM asanassistant Calcium citrate.It’s usedinorangejuice,andit’s alsousedintablets. It takesabout18monthstotwoyearsgetanewproductout. I receivedmyMBAfromIndianaWesleyan inIndianapolisMay2002. Yes. They’recalledacidulants,whichcoverscitricacidandlacticacid.Theseareadditivesthatgointofoodindustrialproducts. No. Fromthereaplantisbuilt,andwhilethebeingIinteractwithtomakesureeverythingOK. I keeptrackofthe Actually, hetold whenIwasingraduateschool,oneofmyprofessorsaskedmewhatcurrentlydoing.Astoldhimfinance, I’d sayaboutone.Productscanbetweakedmanydifferenttimesbeforetheyarereleased.Iwouldsay, ifyougetoneproductoutayear, Our division’s customersaretypicallymajor bakingandbeveragecompanies.ADMproductsgointofood,animalfeed,fuelindustrial I wouldprobablysaymarketingandfinance.Also,justbeinga leaderinagroup.Mycostaccountingskillsdefinitelyplay hugerolein I interactwithresearchanddevelopment,aswellpurchasing.speakR&Dtofindoutwhattheirlikesdislikesareaboutthe ADM isaFortune50company, sowhenItalktopeople aboutworkingforADM,theyknowIamalarge,successful company. for insidercompany profiles,expert advice, The Vault MBA CareerBible Agriculture 49 Customized for: Erin ([email protected]) www.admworld.com Toll free:(800)637-5843 Fax: (217)424-6196 Phone: (217)424-5200 Decatur, IL62525 P.O. Box1470 4666 FariesParkway (ADM) Archer DanielsMidlandCompany www.alafarm.com Fax: (256)350-1770 Phone: (256)353-6843 Decatur, AL35601 121 SomervilleRoadSE Alabama FarmersCooperative,Inc. www.agribeef.com Toll free:(800) 657-6305 Fax: (208)338-2605 Phone: (208)338-2500 Boise, ID83702 1555 ShorelineDrive,3rdFloor Agri BeefCo. www.agp.com Toll free:(800)247-1345 Fax: (402)498-2215 Phone: (402)496-7809 Omaha, NE68154 12700 West DodgeRoad Ag ProcessingInc www.duda.com Fax: (407)365-2010 Phone: (407)365-2111 Oviedo, FL32765 1200 DudaTerrace A. Duda&Sons,Inc EMPLOYER DIRECTORY Agriculture The Vault MBA CareerBible 50 www.chsinc.com Phone: (651)355-6000 Inver GroveHeights,MN55077 5500 CenexDrive CHS Inc. www.chiquita.com Fax: (513)784-8030 Phone: (513)784-8000 Cincinnati, OH45202 250 East5thStreet Chiquita Brands,International,Inc. www.cargill.com Toll free:(800) 227-4455 Fax: (952)742-7393 Phone: (952)742-7575 Wayzata, MN55391 15407 McGintyRoadWest Cargill www.bunge.com Fax: (914)684-3497 Phone: (914)684-2800 Bermuda Hamilton HM11 2 ChurchStreet Bunge Limited www.bluediamond.com Fax: (916)446-8461 Phone: (916)442-0771 Sacramento, CA95814 1802 CStreet Blue DiamondGrowers www.abf.co.uk Fax: +442073996580 Phone: +442073996500 United Kingdom London W1K4QY 10 GrosvenorStreet Weston Centre Associated BritishFoodsplc www.andyboy.com Fax: (831)424-3136 Phone: (831)424-3955 Salinas, CA93908 383 West MarketStreet D’Arrigo Bros.Company www.cornproducts.com Toll free:(800)443-2746 Fax: (708)551-2570 Phone: (708)551-2600 Westchester, IL60154 5 Westbrook CorporateCenter Corn ProductsInternational,Inc. www.conagra.com Fax: (402)595-4707 Phone: (402)595-4000 Omaha, NE68102-5001 1 ConAgraDrive ConAgra Foods,Inc. www.giffinind.com Fax: (859)572-2575 Phone: (859)781-2010 Cold Spring,KY41076 4221 AlexandriaPike Griffin Industries,Inc. www.goldenpeanut.com Fax: (770)752-8306 Phone: (770)752-8205 Alpharetta, GA30022 100 NorthPointCenterEast,Suite400 Golden PeanutCompany, LLC www.dunavant.com Fax: (901)369-1608 Phone: (901)369-1500 Memphis, TN38118 3797 NewGetwellRoad Dunavant Enterprises,Inc. © 2009Vault.com Inc. Customized for: Erin ([email protected]) Toll free:(888)511-4500 Fax: (319)627-6334 Phone: (319)627-2126 West Liberty, IA52776 207 West 2ndStreet Iowa Turkey GrowersCooperative www.jgbowelltomato.com Fax: (626)583-3090 Phone: (626)583-3000 Pasadena, CA91103 101 West Walnut Street J.G. BoswellCompany EMPLOYER DIRECTORY (CONT.) www.murphybrownllc.com Fax: (910)289-6400 Phone: (910)293-3434 Warsaw, NC28398 2822 Highway24West Murphy-Brown LLC Toll free:(800) 227-4455 Fax: (952)742-7393 Phone: (952)742-7575 Wayzata, MN55391 10900 Wilshire Boulevard, Suite1600 Murdock HoldingCompany www.monsanto.com Fax: (314)694-8394 Phone: (314)694-1000 St. Louis,MO63167 800 NorthLindberghBoulevard Monsanto Company www.mfaincorporated.com Fax: (573)876-5430 Phone: (573)874-5111 Columbia, MO65201 201 RayYoung Drive MFA Incorporated career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.smithfieldfoods.com Fax: (757)365-3017 Phone: (757)365-3000 Smithfield, VA 23430 200 CommerceStreet Smithfield Foods,Inc. www.pioneer.com Toll free:(800)247-6803 Fax: (515)334-4515 Phone: (515)270-3200 Johnston, IA50131 7100 NW62ndAvenue Pioneer Hi-BredInternational,Inc. www.pilgrimspride.com Fax: (903)856-7505 Phone: (903)855-1000 Pittsburg, TX75686-0093 4845 U.S.Highway271North Pilgrim’s PrideCorporation www.perdue.com Toll free:(800) 473-7383 Fax: (410)543-3292 Phone: (410)543-3000 Salisbury, MD21804 31149 OldOceanCityRoad Perdue FarmsIncorporated www.orscheln.com Fax: (660)269-3500 Phone: (660)263-4335 Moberly, MO65270 101 West CoatesStreet Orscheln FarmandHomeLLC www.nationalgrape.com Fax: (716)326-5494 Phone: (716)326-5200 Westfield, NY14787 2 SouthPortageStreet Association, Inc. National GrapeCooperative www.syngenta.com Fax: (302)425-2001 Phone: (302)425-2000 Wilmington, DE19803 2200 ConcordPike Syngenta Corporation www.sun-world.com Fax: (661)392-5092 Phone: (661)392-5000 Bakersfield, CA93308 16350 DriverRoad Sun World International,LLC www.southernstates.com Fax: (804)281-1413 Phone: (804)281-1000 Richmond, VA 23230 6606 West BroadStreet Incorporated Southern StatesCooperative, www.bolthouse.com Fax: (661)366-9236 Phone: (661)366-7270 Bakersfield, CA93307 7200 EastBrundageLane Wm. BolthouseFarms,Inc. www.westernfarmservice.com Fax: (559)436-2949 Phone: (559)436-2800 Fresno, CA93711 3705 West BeechwoodAvenue Western FarmService,Inc. www.tysonfoodsinc.com Fax: (479)290-4061 Phone: (479)290-4000 Springdale, AR72762-6999 2210 West OaklawnDrive Tyson Foods,Inc. The Vault MBA CareerBible Agriculture 51 Customized for: Erin ([email protected]) 52 © 2009Vault.com Inc. Customized for: Erin ([email protected]) disconnect whenthetargetaudiencefailstoresponditorfindsundesirable. the brandimage,sinceabrand’sexperience a imagecanbeaffectedbyallmannerofscandal,rumorandnegativepress.Thebrandalso feelings arealsocoloredbypreviousexperienceswiththeproduct.Ofcourse,therecanbeconsiderabledisconnectbetweenth e brandidentityand on howwellitdeliversthosepromises.Effectivebrandscommunicatewithconsumersanemotionallevelthroughadvertisi ng, andabuyer’s efficient ormorepopular. Thenthere’s theideaofbrandthatactuallyexistsinmindsconsumers,calledimage, whichdepends consumers, calledthebrandidentity, wherethebrandpromises(amongotherthings)tomakeconsumerfeelhappier, more moresuccessful, “brand” hastwomaincomponents.First,there’s theassociationwithbrandthatmarketersandadvertiserswishtocultivateinmindsof Brands existostensiblyasawayforconsumerstodifferentiateonemanufacturer’s goodsfromanother—but,ofcourse,theymeansomuchmore.A majority aresoldunderabrandname. long they’reintendedtolast,andwhetherconsumersneedthemornot,thesedisparateproductsallhaveonethingincommon:the overwhelming products thatarestaplesandthosediscretionary—thedifferencebetweenwhatconsumersneedthey’dliketohave. Buthowever expectancy offewerthanthreeyears,likesoap,clothing,personalcareitemsandcleaningsupplies.Others,however, breaktheindustrydowninto of itemswith(relative)stayingpower, likehomefurnishings,jewelryandelectronics.Thelatterincludesmoreephemeralmerchandisewithalife To getahandleonthemarket,analystsoftendivideitintotwocategories:durableandnondurablegoods.Asnamesimply, theformeriscomprised cream, chewinggumtowashingmachines—andeverythinginbetween. The consumerproductsindustryproducesandmarketspracticallyeveryitemanindividualcanpossiblypurchase:fromcannedsouptoshaving Ask foritbyname CONSUMER GOODS Brand Management/ConsumerGoods a veryprofitableenterprise. few penniesapiece.Whiletheprofit onsuchitemsmightbemerefractionsofacent,theysellin largeenoughvolumestomak packetsfora market, consumerproductscompanies sellproductsliketoothpaste,laundrydetergent,shampoo, deodorantandmoisturizerinsmall their liveseasierandmorepleasant, andarewillingtoshellout(withintheirmeans)forlittleluxuries. So,totapthishuge,profitableandunderserved percent, bysomeestimates—mayliveonabout$2,000peryearor less.Still,theyarejustlikeconsumerseverywhere:desireproductsthatmake developing nationsenjoyspendingpowerandastandardofliving roughlyonparwiththatofWestern thepopulation—95 countries,themajorityof theelitein The economicclimateinaparticularcountryisanotherhurdle that consumerproductscompaniesmustsometimesovercome.While legislative scrutinytotheissue. chemicals, anddefectivetiresthatallegedlycausedfatalaccidents ledtomultiplerecallsofChinese-madeimportsandbrought heavymediaand contaminated withmelaminekilledhouse-petsintheUnitedStates. Inaddition,cutetoyscoatedinleadpaint,counterfeittoothpaste fulloflethal China In addition,regulationofconsumerproductsindevelopingmarkets maybenotablyabsent,asinearly2007whenfoodproductsfrom the market. may havespurredasurprisinglyhighgrowthrate,it’s stillacommunistcountry, operatingunderthedubiouspremisethatbureaucracycanharness transport—may besporadicallyorentirelyabsent,leadingtomanufacturing difficultiesandfragilesupplychains.WhileChina’s economicliberalization maintained orabsententirely:utilitiesnecessaryforthesmoothoperationofbusiness—suchaselectricity, cleanwaterandreliable modesof prone tocronyismandcorruption,impedingtheprofitabilityfunctionsofbusinesses.Moreover, developingcountries’infrastructure maybepoorly 2002. To furthercomplicatematters,emergingeconomies oftenplaybydifferentrulesthandevelopedones.Governmentsinthesecountriescanbe a routetoguaranteedgains.Emergingeconomiesareunstableandpronesuddenfinancialcrises,asinRussiathelate1990s andArgentinain home. Thereareanumberoffactorsthatcompaniesmustconsiderbeforetakingonanemergingeconomy. Doingsoisariskyendeavor, andisnot But reachingcustomersinthesedynamiceconomiesisnotsimplyamatterofshippingproductstostoresandadvertisingthatthey’rereadybetaken developing world. estimate that,by2030,whatitdefinesasthemiddleclasswilltripletoinclude1.2billionpeople—andoverwhelmingmajo rity willliveinthe value ofpubliccompaniesin25developingnationsincreasednearly250percent.Onereasonforthisphenomenalgrowthistied totheWorld Bank’s ofthe These growingmarketsareacashcowforconsumerproductsmanufacturers.Between2003and2007,anindexcompiledbyMorgan Stanley so-called BRIC(Brazil,Russia,India,China),Turkey andEasternEurope. increasingly saturatedandcompetitive,manufacturersofconsumerproductsareturningtowardemergingmarketsinboomnations likethoseinthe alone. Inaddition,consumerproductsaremakinginroadsintothefurthestreachesofglobe.AsAmericanandEuropean marketsbecome accounts fortwo-thirdsofthevolumetradeineconomy, andyearlyspendingonconsumableshoversaround$7trillionin the UnitedStates Regardless, brandingthesedaysdrivesanenormousamountofconsumption.Thenumbersarestaggering—spendingon consumer products Internationalists e servingthismarket 53 Customized for: Erin ([email protected]) products) havebothbeenaround forseveraldecades,andarenowreapingthebenefitsofearlier investments.Evencompaniesthatappealtothe clothing topped$2.5billionin2008. TheHainCelestialGroupandDeanFoods(segmentleaders whenitcomestoorganic,naturaland/orsoy-based growing segmentin2006,and,also in2006,Levi’s broughtoutjeansmade fromorganiccotton—asmoothmove,consideringsalesof cotton currently amajorforcedrivingconsumptive activity, and evenWal-Mart’s gottenonthegreen-wagon.Thegreenenergydivision ofGEwasitsfastest- Philanthropy isn’ttheonlywaythat brandsaregrabbingconsumers’attention.Theoverwhelming interestinallthingsgreen,organicandnaturalis It’s anatural one) togiveemployeestimeoffforvolunteerwork. marketing budget.Butsuchphilanthropicgoalsneedn’tbesopublic; thesedays,it’s (Unileveris notuncommonforaconsumer productscompany funded thedistributionofAIDSmedicationinAfrica.Needlessto say, thecampaignsparkedsomebacklash,especiallyinrelation toits$100 million campaign co-foundedbyrockmusicianBono.Aportionofprofits fromcertainitems(T-shirts, MP3players,sneakers) stockedacharitythatthen in eachyear. Similarly, ahumanitarian in2006,Apple,Armani,GapandConverseallembarkedonaco-brandinginitiative withProduct(Red), consumers shellout.Procter&Gamblehaslonghadanassociation withtheSpecialOlympics,andhighlightsthatfactacoupon promotiontie- As themidmarketbecomesincreasinglysaturatedwithluxuryproducts, somebrandshavebegunappealingtopeople’s consciencesinordertomake box) wasthebest-sellingfront-loadingwasherin2006andcontinues tosellstrong. objects canstillbeconsideredluxuryitems:Whirlpool’s sleeklydesignedDuetwasher(pricedatabout$1,000 morethanyourrun-of-the-millwhite retail channelsJCPenneyandKohl’s byallowingthelower-priced brandstofeedoffthehalooftheirhigher-end cousins.However, readilyavailable buy them.Polomaintainsitsstrongwhiffofupper-crust appeal,evenwhileexpandingsomelinesintodecidedlymidmarket—even(gasp)discount— Several otherhigh-endbrands—Gucci,Rolex,Nokia’s Vertu—clamp downonthenumberofstoresthatselltheirwaressoonly group ofstores. litter onsomeNewYork Citystreets,managestomaintainitshighprofilebysponsoringAmerica’s Cupraces,andonlysellsitswaresthroughasmall aura ofluxuryaboutthem.Brandscultivatesuchanimageinanumberways.LouisVuitton,whoselogo-splashedbagsare more commonthan growing dramatically, andthenumberofmillionaireshasdoubledinpast10years.Asaresult,moreconsumersaredemandingproductswithan It’s atime-honoredadagethatthericharegettingricherandpoorpoorer. highend have been IntheUnitedStates,incomesat Trading up dealing with“soda”or“thirst.” entered intoYouTube’s searchwindow;soPepsi,forexample,couldconceivablybidtheopportunitytoshowanadwhenpeopleclips In 2008,YouTube openeditsarmstoconsumerproductscompaniesasneverbefore,allowingthempresentvideoadskeyedspecific terms American Apparel,adidasandDell,havesetuppresencesinthevirtualworldSecondLife,hopingtocommunicatewithconsumers wherevertheygo. promote toothwhiteningstripsin2006,whileUnileverpromoteditsAxebrandofmen’s bodysprayonMySpace.Severalotherfirms,including to drawtheattentionofbright,youngthingswithplentydisposableincome.Procter&Gamblebeganusingsocialnetworking siteFacebookto Companies nowalsocustomarilyenterthepublic’s space—MySpace,thatis.Scoresofcompanieshavesetupcampaignsonsocialnetworkingsites homemade adsforitsworld-famousketchup. 2007 SuperBowlandtheOscars,respectively. AndHeinzchoseawinnerinApril2008fromover2,000entriesrespondingtocall onitswebsitefor participants’ irewhenitaltereditsrules.Unilever’s DoveandPepsi’s FritoLayhadbetterluckwithentriessubmittedtor documentarians promptlyreturnedcommentaryonthecars’gasmileageandeffectenvironment.AcontestsponsoredbyMalibu Rumsparked product, withmixedresults.ChevroletgaveinternetdenizensstockfootageoftheTahoe tocraftintoadsin2006,andamateur muck-racking products industryacutthroatworld.Onerecenttrendhasfoundcompaniesrunninginternetcontestsinwhichaudiencescreatetheirownadsforthe the consumer In ordertoovercomeconsumers’jadedattitudes,marketerstryfindnewandcleverwaysattracteyeballsProductX,making consumers arebecomingincreasinglyimmunetotheireffects. TiVo owners willattest.Whiletraditionalmarketingtechniques—catchyjingles,cleverpatter, inyearspast, happyhousewives,etc.—haveworked 3,000 adsperday, andmostignorethemcompletelyorviewasanuisance,somethingtowhichusersofad-blockingsoftwarefast-forwarding difficult, asthepeoplelivingindevelopednationsareinundatedwithadvertising.It’s estimatedthatAmericans,forexample,seebetween600and the majorityofthesecompanies’income.ButdivertingnewcustomersfromEuropeandUnitedStatesawayotherproductsisincreasingly That said,despitethedevelopingworld’s growing importanceintheconsumerproductsindustry, productsalesinWestern countriesstillaccountfor Plan ofad-tack foods totheextentthatUnitedStateshas. for thetask.InIndia,Whirlpoolsellsmicrowavesthatcanshallow-fryandsauté—cookingmethodsacountryhasn’tyet 54 un incovetedslotsduringthe © 2009Vault.com Inc. theselectfewcan Customized for: Erin ([email protected]) statements ontheirproductsaboutpossiblecarcinogens. California AttorneyGeneralfiledsuitagainstfourcompanies(includingHainsubsidiaryAvalon Naturals)inanattempttoforcethemappendwarning there isnogovernmentalbodythatgovernslipsticksandfacecreams.However, theendofMay2008didbringoneauthoritativestatement: The mainproblemisthatthereareanumberofentitiescertifyproductsasorganic,butnoonedefinitiveauthority.contrast tothefoodindustry, In components aremadebytreatingthemwithpetrochemicalsandothersuspectedcarcinogens. consumer productsgroupsHainCelestial,KissMyFace,StellaMcCartneyAmerica,EstéeLauderandWholeFoods.Dr. Bronner’s c advertising byclaimingtheirpersonalcareproductsareorganic;itsubsequentlyfiledalawsuitinCaliforniaonMay1,2008 against thelikesof cow’s milk.”)Thetopiccameupagainin 2008:Dr. Bronner’s MagicSoaps(officiallynamedAllOneGodFaith)accused13companiesoffalse promotes alistofnaturalingredients,suchasblackcurrantoilandbuttermilk,whichispraisedforbeing“richerinfats emollientsthanwhole to voluntarilybancertainingredientsfromitemssoldas“natural,”likesodiumlaurethsulfateandp-thalates.(Itsinitiative,calledTheGreaterGood, This occurredonlyafewmonthsafternaturalcosmeticscompanyBurt’s Beesintroducedaninitiativecallingformanufacturers of naturalcosmetics present excludesonlytheuseofartificialcolors,flavorsandingredients. chicken fromdryingoutwhencooked.TheprocessorspetitionedtheU.S.DepartmentofAgriculturetoupdateitsdefinition “natural,” whichat been treatedwithsuchsubstancesassaltwater,to preventthe chickenbrothandcarrageenan,athickenerderivedfromseaweedthatisadded mean. In2007,anumberofpoultryprocessors,includingSandersonFarms,objectedtotheuseword“natural”onchickenproductsthathad However, asconsumerinterestinproductsdesignated“natural”and“organic”increases,there’s somefudgefactoraboutwhat thesetermsactually vegetables) andKashi(cereals)areactuallycogsinthelargermachineryofGeneralMillsKellogg’s, respectively. of thetrendhasn’tbeenlostontopconsumerproductscompanies;mostconsumersdon’trealizethatCascadianFarms(frozenfruitsand 2007, aroundthesametimeCoca-Colacameoutwithavitamin-enhancedDietCokeandboughtparentofVitaminwater, Glaceau. Thesignificance Novartis inJuly sweet toothhaveleanedtowardthe“nutritional”ifnot“natural”;Nestléacquiredmedicalnutritionbusinessofdrugcompany rung up,andsimilarlypoorresults intheretailsector. They alsocutoutimpulsebuysandbigger-ticket otherbasic needstook purchasesasfoodand Research alsoshowedthatconsumers, tosaveongas,beganactivelycurtailtheirdriving,which translatedtofewershopping trips,fewerproducts annualized rate),andshopperswere oftenturningtoprivate-labelitemscope. According totheU.S.Bureauof LaborStatistics,inthefirsteightmonthsof2008,groceryprices increasedby7.5percent(aseasonallyadjusted Lauder), usuallyimmunetotheeffectsoffinancialstress,wasaffected, showingthelargestone-quartersalesdeclinesince1997duringspring2008. has keptcerealpriceswheretheywere,itmadeitsboxessmaller tocompensate.Eventhebeautymarket(withincludesbiggiesL’Oreal andEstée Newell Rubbermaid,KimberlyClarkandSmucker’s werejustafewofthearmycompaniesraisingpricesduringsummer2008.ThoughKellogg’s plastics, cleanersandpackaging—havealsodrivenupcosts.The priceofbasicingredients,frompeanutstofruit,hasclimbedaswell.DelMonte, products. Escalatingenergycostshaveraisedshippingexpenses, andpetroleum-relatedproducts—integraltotheprocessformakingdiapers, What maysomedaybereferredtoas“TheGreatEconomicTurmoilso thanconsumer of2008”hasaffectedanumberindustries, perhaps nonemore As goestheeconomicclimate,sogoconsumer products three. afactoroftwoor however—P&G broughtoutitsHispanic-aimedeffortin1999,and typicallyoutspendsUnileveronaddollarsaimedatHispanicsby Mejor, acampaignfeaturing awebsite,magazineandTVadspromotingUnilever’s brands.Unilevertrails P&Ginreachingthisimportant market, and highbloodpressure,conditionsfromwhichHispanicconsumersarelikelytosuffer. Amonthlater, UnileverputitsmarketingmusclebehindVive intolerance Beginnings/Un ComienzoSaludable.Theprogrammarriesamagazinepromotinghealthyeatingtofreescreeningsfordiabetes, lactose All thebigplayershopetogainatoeholdinthisandsimilarsegments.InApril2007,Kellogglaunchedbilingualprogram called Healthy nearly athird,accordingtoACNielsen.It’s currentlyataround$930billion,andisprojectedtoreach$1.2trillionby2012. this groupincreased United Statesandalsothefastest-growingone,accordingtoU.S.Census.Between20012006,disposableincomeof manufacturers. DuetostrongimmigrationfromLatinAmericancountriesandahigherthanaveragebirthrate,thisgroupisthelargestminorityin Oldsters aren’ttheonlygrowinggroup,however. TheHispanicmarketintheUnitedStatesisincreasinglyimportanttoconsumerproducts $2 trillion,some$50billionofwhichisspentonpackagedgoods. year theyspendaround This group,whichcomprisesalmostathirdoftheU.S.population,haslargequantitiescapital—analystsestimatethateach members ofthebabyboombegintoentertheir60stowardbackend2000s,theyareparticularinterestconsumerproductscompanies. 80-million-odd Aside fromthesetraditionalmarkets,increasinglyimportantdemographicgroupsincludebabyboomersandHispanicpeople.As the microwaveable dinnersandbrowniemix,tobackseatentertainmentsystems. disposable income.Familiesareanothergroupwithstrongsellingpotential.Harriedparentsgratefulforanythingtomaketheirliveseasier, from targeted, asadvertisersbelievethatbrandloyaltyiscultivatedatage;also,teenagersandcollegestudentsfrequentlyhavelargeamountsof In ordertosellmosteffectively, brandsgenerallytrytotargetaspecificcornerofthemarket.Traditionally, teenagersand 20-somethingshavebeen Divide andconquer career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, Brand Management/ConsumerGoods The Vault MBA CareerBible laims thatcertain 55 Customized for: Erin ([email protected]) in otherfunctionswhoshowpromise arepluckedfromtheirpositionsandputintothedepartment. At somecompanies,marketingis thetraininggroundforgeneralmanagement.AtGeneralMills, marketing isconsideredsoimportantthatemployees or operationsmattersatafirmwillinfluencenotonlytheindependence andauthorityofmarketingmanagers,butalsopotential marketingcareerpaths. Company, aredrivenas muchbyfinancialanalysesofproductioncostsoroperationsconsiderationsasmarketing.Thelevelemphasisonfinance Finally, FordMotor consumergoods companiesplacevaryinglevelsofimportanceontheirbrandormarketingdepartments.Some,suchasthe protecting andenhancingthevalueofbrand,ensuringa consistentproductandmessageworldwide. advertising, etc.Now, withthegoalof companieshaveestablishedtighterguidelines on whatcanbedonewithregardtoabrandaroundtheworld, from countrytocountry. Inthepast,individualcountrymanagershavehadmorediscretionandleewaytomakedecisionsabout a brand’s packaging, truly globalpresenceofcertainbrands,companieshavesought to imposemorecentralizationandtightercontrolsonthemarketing ofthosebrands andthe global plansthataredeliveredtothem,andtweakthemforlocal consumers.Alsoknowthatwiththeincreasingtrendtowardglobalization focusonexecuting and developingproductofferingsthatcanberolledoutintosubsidiaries. Localbrandmanagersaremoretactical. brandequity management issometimessplitintotwopositions.Globalbrandmanagers aremorestrategic,concentratingonissuessuchasprotecting we produce?”or“Howisourdistributionnetworkaffectingsales?” ratherthan“Whatdowewantourbrandidentitytobe?”)International of internationalbrandmanagersoftenleanmoretowardquestionsoperations,ratherthanstrategyormarketing.(“Howmuchshould International brandmanagershavehistoricallyheldmoreswaythaninthecompany’s homemarket,butkeepinmindthatthedailytasks of theproduct’s consumption(plasticbottles,casesofaluminumcansandsoforth). managers atsuchcompanieswillinsteadbefocusedonmarketingtoaparticulardemographicorgeographicgroup,perhaps handling oneaspect recently hiredassistantbrandmanageratCoca-Colacomments:“They’renotgoingtotakeanMBAandsay, ‘Okay, you’reincharge ofSprite.’”Brand great dealofpoweroveraspecificbrand.Atcompanieswithfewcoreproducts,brandmanagerswillfocusonnarroweraspectsAsone brands. Foracompanywithhundredsofdifferentbrands—Nabisco,forexample—brandmanagers,orevenassistantbrand mayhavea Consider thecompanytodeterminelevelofbrandmanagerresponsibility. Thefirstfactoristhesizeofcompanyrelativetoitsnumber How importantistheindividualbrandmanager? toward marketing. on thesizeofcompanyrelativetonumberbrandsithas,locationbrandgroupandmostimportantly company’s attitude brand manager—responsibilityforallmattersrelevanttotheirproductorproducts.Whetherthisresponsibilityis,infact,completedependssomewhat framework givesabrand“group”or“team”—generallycomprisedofseveralassistantmarketingmanagers and onesupervising management managers areoftenusedintechindustries.“Brandmanagement”impliesmorecompletesupervisionofaproduct.Thetypical brand companies useonetitle,othersanother. product Marketingmanagerstendtobeusedinindustriesotherthanconsumerpackagedgoods; The titlesofbrandmanager, productmanagerand,toalesserextent,marketingareoftenuseddescribethesamefunction—some channels andtechnologies—makemarketersevenmorevaluable. Today’s businesschallenges—thequestforcompanygrowth,industryconsolidationandderegulation, economicwebs,andtheemergencyofnew drive shareholdervalue,andthatcompaniescannolongermakefundamentalstrategydecisionswithouttrulyunderstandinghow to marketaproduct. marketingprograms Careers withinthemarketing/brandingarenaarehighprofile.Thebusinessworldisnowrealizingthatstrongbrandsandsolid product orservicemarketingiscalledthebrandmanager—hesherulerofthatuniverse. customer needsanddesirestranslatethoseintosomekindofmarketingcommunication,advertisingcampaignorsaleseffort.Themanager marketing strategy. Whatmarketingpositionshaveincommonisthesenseofownershipoverproductorservice,aswell the drivetounderstand Marketing encompassesawidevarietyofmeaningsandactivities.Somemarketingpositionsareveryclosetosales,whileotherssetoverarching What isamarketer?Theallureofbrandmanagement BRAND MANAGEMENT help thefirms’bottomline,asmanyofproductsarecheapertomanufactureandprovidehighermarginsthantop-lineitems. choice, these ploysalso in favorofitslowcost(lessthanaquarterperglass!).Asidefrommakingshoppersfeelsmarterformoresensible $6 markforaboxinmanymetropolitan-areagrocerystores.Thedairyindustrytoutedmilkwithnewseriesofadsthatignoreditsnutritionalaspects basic cerealproductslikeRiceKrispiesandCornFlakes—cheaperbyfarthanitsmorestridentlycoloredsugar-laden products, which approachedthe Campbell SoupandKraftlinkeduptopromoteeconomicalmealsofsoupgrilledcheesesandwiches,allthings.Kellogg’s focusedonitsmore Tohad characterizedcompanymessagesuntilrecently—morethanafewfirmsbegantoemphasizethe“value”aspectoftheirof 56 © 2009Vault.com Inc. Customized for: Erin ([email protected]) in ordertooptimizetheperformanceofhisorherbrandproductline. manufacturing, R&D,etc.Itisthebrandmanager’s jobtoinfluencetheperformance ofthosegroups—overwhomheorshehasno Some likenabrandmanagertohubatthecenterofandspokesystem,withspokesgoingoutdepartments likefinance, sales, target oftheadvertising. traditional print,radioandTVadvertising.Advertisingisusuallyproducedbyoutsideagencies,althoughbrandinsidersdeterminetheemphasis brands havebenefitedfromashiftinbrandidentity, andconsequently, ashiftintheirmarket.Brandidentityisnormallycreatedandconfirmedthrough underwent atransformationfromanoutdooradventurestorethatsoldactualArmy-Navysurplustoupscale,chicclothingstore.Inbothcases,the youth asahigh-caffeinebeverageinto“brandidentity”ofcutting-edgebravadothathasboostedmarketshare,whiletheBananaRepublicchain Brand groupsthenfigureouthowtoexploitbrandstrategyor, insomecases,howtochangeit.PepsiCo’s MountainDewhasbuiltits popularityamong target andwhattypesofadvertisingspecialpromotionstouse.Andattheveryheartbrandstrategyisidentifyingaproduct’s “brandidentity.” The coreofbrandworkisstrategy. Brandmanagersmustdecidehowtoincreasemarketshare,whichmarketsanddemographicgroups expert ontampons!)andtomanagetheresponsibilityofrunningabusinessinfluencingitsperformance. profit andlossresponsibility. Brandmanagementoffersaterrificwaytolearnintensivelyaboutparticularproductcategory(youcouldberecognized responsible forkeygeneralmanagementdecisions,suchaslong-termbusinessstrategy, pricing,productdevelopmentdirectionand,insomecases, expertise inareassuchasmanufacturing,sales,researchanddevelopment,communications.Inbrandmanagement,themarketingfunctionis functional expertise(e.g.,you’reanassistantbrandmanagerforCheerios).Thisstructureenablesyoutobethe“masterofalltrades,”acquiring In atypicalbrandmanagementorganizationalstructure,positionsaredevelopedaroundresponsibilityforparticularproductratherthanspecific Brand management to lie. Taking chargeofabrandinvolvestacklingmanydiversejobfunctions—anddifferentsubspecialties.Decidewhereyou’dlikeyour mainconcentration CAREERS INMARKETING of aproductsoldbythemillions can makehugedifferencesinrevenue—assumingthepricerisedoesn’t causeequivalentmillionslessoftheproducts other hand,brandmanagersalways havesomepricingleewaythatcangreatlyaffectmarketshare andprofitability. Anincrease ofanickelintheprice Pricing islargelydrivenbymarket pressure.Mostpeople,forexample,won’tpaymorethan$2 forahamburgerinfast-foodrestaurant.Onthe Price marketing/salesforecasting true totheirownbrandimages. make surethatallSixFlagsthemeparkshaveaPepsiride,then marketersneedtoensurebothpartiesgetwhattheyoutofthedealandstay Marketers mustmanagetherelationshipbetweenanytwoentities. IfDisneywantstopromotethecartoondujourwithMcDonald’s, orPepsiwantsto release ofeachnewmovie.L’Oreal workswithcelebrities,likeHeatherLocklear, andsponsorsevents,suchastheannualAcademyAwards. relationship withMcDonald’s; cutetoysfromtheentertainmentcompany’s latestflickareoftenpackagedwithMcDonald’s Happy Meals uponthe For instance,NikehasmarketingrelationshipswiththeNBA, NFL andavarietyofindividualathletesathleticteams.Disneyhasstrong If you’reworkingwithamajorbrandcompanylikeNike,Disney, PepsiorL’Oreal, chancesareyou’lldoalotofcross-promotion,or“affiliatemarketing.” Affiliate/property marketing to purchaseoraction(clickingonalink,forexample)thanconventionalmaildirectmarketingprograms. easieraccess agreed toreceivepromotionaloffersoncertainsubjects—marketerscanthensendthemtargetedemailmessagesthatallowfor much of customers.Theycanthenserveupcustomizedbanneradvertisementsthataremuchmorelikelytoberelavantthem.Many consumershave habitsandbehavior store promotions.Directmarketershaveapowerfulnewtoolintheirarsenal—theInternet.Marketersareabletotracktheonline It’s importanttonotethatdirectmarketingisn’tjustdonethroughsnailmail.Itoperatesinmultiplemedia,suchastheWeb, telemarketingandin- incentive. a couponforAdvilafterbuyingbottleofTylenol, offeringyouamonetary chancesareadirectmarketeristryingtoconvinceyouswitchbrandsby ofthesupermarketandgot who fitatargetsetofcriteriabutarenotcurrentlyusingtheirparticularproduct.Forinstance,ifyou’veevercheckedout Direct marketershavetwomainobjectives:tostayintouchwiththeircurrentconsumerbaseandtrygeneratemorebusiness byfindingindividuals inception toout-the-doordistribution. individual consumerswhofitwithintheirtargetmarket,goafterthemwithapersonalapproachandmanagetheproductionproce ss fromstrategy bought yourcarin1993?You canthankdirectmarketers.Directmarketersaremastersinone-to-onemarketing.Theyassembledatabasesof yearssinceyou Ever wonderwhoisresponsibleformakingthosecouponsyoureceiveinthemail?OrSaabvideotapeyou’vereceivedevery two Direct marketing career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, Brand Management/ConsumerGoods The Vault MBA CareerBible directauthority— 57 Customized for: Erin ([email protected]) partners focusedonmarketingstrategybeyondsimpleadvertising. certain productcategorieslikebeverages,healthcareandretail. Allmajoradagenciesarealsoattemptingtoreinventthemselves asmarketing two generalstrategyfirmsthathavebeguntohiremarketingspecialists. Otherboutiquemarketingconsultingfirms,suchasKurtSalmon,focuson who havebeensuccessfulmarketingmanagersandlivedthrough thefullrangeofbusinessissuesfrominside.McKinseyandMonitorare marketing, pricingstrategyandbusiness-to-businessmarketing—theytendtohirepeoplewithpreviousmarketingexperience value consultants experts thatfocusonmarketingissues.Thesefirmsneedpeoplewithexpertiseintheareasofbranding,marketresearch,cont inuous relationship Although mostwell-knownconsultingfirmsareknownfortheirexpertiseingeneralstrategy, manyconsultingfirmsnowhireindustry orfunctional Marketing consulting drive upsalesbyaddingalemonaroma. relate totheirproducts.Researcherswhofindthatconsumersassociatelemonscentswithcleanliness,forexample,maysuggest thatcleanserscould monitors, psychographicanddemographicmodels,trial/repurchaseestimationsareallmethodsresearchersusetounderstand howconsumers a varietyofdifferentqualitativeandquantitativeresearchtechniquestounderstandconsumers.Surveys,trackingsystems,focus groups,satisfaction A productismuchmoreeffectivewhenacompanyunderstandstheconsumerittargeting.That’s wheremarketresearcherscome If youareananalyticalpersonwholikesnumbersandanalysis,enjoystrackingconsumerbehavior, thenmarketresearchmaybethefieldforyou. Market research may bemorechallengingtounderstandhowconsumersrelatetheproduct.Inventoryanddistributionissuestracked differently. become moreconsumer-oriented (seeMicrosoft’s X-Box).Marketingaserviceorsoftwareproductversusmoretangibleisbitdifferent.It heavily branded“bunnypeople.”Marketinginthehigh-techworldwillcontinuetogrowimportanceovernextdecade,astechnologycompanies to purchasebooks(andotherproducts)online.Intelbecameperhapsthefirstsemiconductorcompanyreadilyidentifiable publicthroughits more. Amazon’s extensivemarketingcampaignin1998helpedbrandthatcompanythemindofconsumersstillnewtoe-commerceas Technology companieslikeIntel,DellandMicrosoft haverecognizedthepowerofbrandingandareutilizingtraditionalmarketingtacticsmore much oftheirtimeunderstandingresearchanddevelopmentissues,workingonnewproductlaunches. the worldinasophisticatedway, marketersspend ratherthanspendtimeunderstandingwhathaircolorteenagersfindmostappealing.High-tech interactswith and technologiesthatreshapeimprovetheworldaroundus.Thesemarketersfeeltheywouldratherchangewayaperson Not everyonemarketsapplesauceforaliving.Manypeoplechoosetoentertheworldofhigh-techmarketingbecausetheywanttoworkwithproducts High-tech marketing budget; yougetthebudget,andthendetermineproduction.” international brandmanageratoneoftheworld’s biggestconsumergoodscompaniesputsit:“You don’tdeterminetheproduction andthengetthat finance folksthattheyabsolutelyneedamount,getlessthanaskfor, andthenreworktheirbudgetstofitthegivenbudget.Asone determine productionlevels.Onceayear, brandgroupsdrawupbudgetsfortheirproduction,advertisingandpromotioncosts,trytoconvincethe pertaining toone’s product,butalsoanticipating responsestomarketingcampaignsandproductlaunchesorchanges.Theforecasts areusedto Another largepartofthegeneralmanagementdutiesbrandmanagersisforecastingproductsales.Thismeansnotonlykeepingtracksalestrends customer. It’s verydifficulttoimplementthatinthecomputersystem.” marketing manageratalong-distancephonecompany(anindustrywithnotoriouslytangledpricingplans):“It’s veryeasytooffer somethingtothe those withcomplexpricingsystems,andpromotionaloffersmaybelimitedtowhattheoperationalsalessystemcanhandle. Explainsone Brand andmarketingmanagersdon’talwayshavefreereignoverpricing.Atsomecompanies,suchasthosethatselllargelythrough mailorder, or research. Papertowels,forexample,maybemuchmoreprice-sensitivethanaluxuryitemlikeengagementringsorsmokedsalmon. Sometimes itmakesmoresensetowinmarketsharewhiletakinglowerprofits.Howdobrandmanagersjustifytheirprices?Throughextensive to besold.Brandmanagersneedfigureouttheoptimalpricingstrategyfortheirproduct,thoughit’s notalwaysacaseofmakingthemostmoney. Brand Management/ConsumerGoods The Vault MBA CareerBible 58 © 2009Vault.com Inc. in.Theyemploy Customized for: Erin ([email protected]) epniiiisPercentageoftimeperday Analysis/data tracking Meetings Responsibilities managers mustlearnhowtobalanceyourtimeandprioritize.Here’s alookathowtheirtimemightbespent: You canoftenspottheassistantbrandmanagersbecausetheyareonesrunningaroundlikeachickenwithitsheadcutoff. Assistant brand A DAY INTHELIFE:ASSISTANT BRANDMANAGER 12:00 p.m.:Afancylunchwitha to yourbrandmanageratthestatusmeetingyouhavescheduledforendofday. and financiallyjustified.Asalways,veryfewpeopleagree.You andpresenttheissues decidetosummarizeallthecostsandbenefitsproject some advertisingeffort(andmoremoney)toexplainthechangesconsumer. Thegroupmustdecidewhetherthesechangesare strategically advantage ofnewtechnology. Thisnewtechnologymayraiseyourproduct’s andwill take performancelevels,butitwillcostmoretomanufacture 10:30 a.m.:You head tothelong-awaitedproductdevelopmentmeeting.Your teamhasrecentlydiscussedreformulatingyourproducttotake might needtocancelaninstantredeemablecouponoralocalpromotioninpoorlyperformingmarket. 10:00 a.m.:Budgetmeetingtodeterminehowyouwillbespendingsecondquarterfunds.Giventhedecisionspendmoremoneyonresearch, you design anotherroundofresearch—butwhere’s themoneygoingtocomefrom? people arenotrepurchasingyourproduct,butyoudon’tfeelthatthedatapresentedactuallyanswersquestions.You thatyou’llneed to decide 9:00 a.m.:Meetwithmarketresearchdepartmenttodiscussspecificsofyourlatestroundquantitativeresearch.You why aretryingtounderstand produces orhassomerelationshipwith!) to findoutwhat’s happening“onthestreet.”Gotocafeteriaandgrabbreakfast.(Ofcourse,you’reonlyeatingproducts thatyourcompany and aheadache.Wherecanyoufindthemoneytoadd how itcanprovideyouwiththeextendedreachneedtocommunicatepotentialnewusers.You leavelunchwithafancy possibilities. You promisetotypeallideas upanddistributethemtothegrouplaterinweek. they agreewiththeagencyon the strategygoingforward.Thefollowing45minutesisacreative brainstormingsessionthatofferswonderful campaign inthetop-20performingmarketscountry. You onaconcept, wanttomakesurethatbeforeyougetthepromotionspeopleworking 3:15 p.m.:Keeptheadagencyonphoneandbringinin-housepromotions department.Thisadcampaignwillbeintroducedintoapr at yourstatusmeetinglaterintheday. the agencyhasproduced.You brandmanager reviewthechangeswithagencyvia conferencecallandpromisetopresentthenewworkyour work. You andyourbrandmanagermadecommentstothestoryboard (adrawingthatexplainsacommercial)andnowyouareanxioustoseewhat 2:30 p.m.:Time toreviewchangesthelatestadvertisingcampaign.Your adagencypresentedanewconceptaboutthreeweeks agothatn people arehomeanyway. Butisn’tthatyourproduct’s peakpurchase cycle?Decisions,decisions. 20 percentofyourtargetgroup,andtohaveacontinuouspresence onTV).MaybeyoucancutouttwoweeksofTVadvertisingin Julywhennotmany of yourmediabudget.You goals(toreach nowmustmeetwiththemediadepartment todeterminehowcutmediafundswithoutsacrificingyour 1:30 p.m.:Mediaplanningmeeting.Becausesalesofyourproducthavecome inslightlyunderbudget,youhavebeenforcedtogiveup10percent who areveryfocusedontheirjobs,grablunchatacorporatecafeteriaandtakeitbacktodesks.) happens occasionally, thedaysofmostbrandmanagersarepacked,withouttimetospendschmoozingwithadreps.Moreoften, brandmanagers, advertised in Writing memos Interfacing withotherdepartments Answering managementqueries Actually marketing 8:30 a.m.:Getintowork.Listentovoicemails.Checkemails.Printoutcalendaroftoday’s events.Skimthemarketssectionof A morerealisticlookatadayinthelifeofbrandmanager it. new opportunities.AlthoughtheroleofanABMismostlyonemaintenance,ifyouwanttobea“star,” youmustshapeyourbrand,notjustmaintain you feellikeyou’vejustbeenpushingpaperandtryingtostayafloat.Itisveryeasygetcomfortablemaintainingthebusinessesratherthancreating willgo bywhere Although thisisahumoroustakeonthedayofanABM(talkaboutgiving150percent),theresometruthtoit.Daysandweeks career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com People . Duringlunch,therepresenativeexplainstoyouhowpublicationcaneffectivelyreach18percentofyourtargetaudience and for insidercompany profiles,expert advice, People magazine salesperson.Formonthsthehastriedtoconvinceyouthatyourproductshouldbe 30 percent 30 percent 30 percent 30 percent 30 percent Optional People to yourmediaplan?Let’s askthemediadepartment(Note:Whilelunchwithadreps Brand Management/ConsumerGoods The Vault MBA CareerBible The Wall Street Journal Street Wall The People backpack omotional eeded 59 Customized for: Erin ([email protected]) you’ll blockoutsometimetomakeprogress. through your“inbox”toreadanydocumentsrelevantproduct.You starttoattackalloftheworkyouhavedoandpromise thattomorrow 6:00 p.m.:Endoftheday. You spendanhourcheckingthe23email/voicemailmessagesyoureceivedduringdaybutfailedtoreturn. You go and youropinion,discussthesewithboss.Thetwoofyoudecideonthenextsteps. product developmentissue.You alsoreviewthelatestadvertisingchangesandtomediaplan.You aggressively presentyourdata 5:00 p.m.:Statusmeetingwithbrandmanager. You presentyourproposalforincreasedresearchexpendingaswelltheimplicationsof new promotions. Onceyouhearhisideas,starttopriceoptionsandseeifthisispossiblewithinyour(reduced)currentbudget. You meetwiththeregionalsalesmanagertounderstandwhattypesofstrategiesmightworkgetbettershelfspaceandmoreconsistent in-store 4:00 p.m.:Strategydevelopmentwithsalesmanager. Your categorymanagerisinsistingthatallbrandsworktogainabetterpresenceinsupermarkets. Brand Management/ConsumerGoods The Vault MBA CareerBible 60 © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.thecloroxcompany.com Fax: (510)832-1463 Phone: (510)271-7000 Oakland, CA94612-1888 1221 Broadway The CloroxCompany www.campbellsoup.com Fax: (856)342-3878 Phone: (856)342-4800 Camden, NJ08103-1799 1 CampbellPlace Campbell SoupCompany www.cadbury.com Fax: +441895615001 Phone: +441895615000 United Kingdom Uxbridge UB81DH Sanderson Road Cadbury House,UxbridgeBusinessPark Cadbury plc www.bose.com Fax: (508)766-7543 Phone: (508)879-7330 Framingham, MA01701 The Mountain Bose Corporation www.avoncompany.com Fax: (212)282-6049 Phone: (212)282-5000 New York, NY10105-0196 1345 Avenue oftheAmericas Avon Products,Inc. www.anheuser-busch.com Fax: (314)577-2900 Phone: (314)577-2000 St. Louis,MO63118 1 BuschPlace Anheuser-Busch Companies,Inc. EMPLOYER DIRECTORY (CONT.) Brand Management/ConsumerGoods The Vault MBA CareerBible 62 www.kodak.com Fax: (585)724-0663 Phone: (585)724-4000 Rochester, NY14650 343 StateStreet Eastman KodakCompany www.diageo.com Fax: +442125713050 Phone: +442128155133 United Kingdom London W1G0NB 8 HenriettaPlace Diageo PLC www.delmonte.com Fax: (415)347-3565 Phone: (415)247-3000 San Francisco,CA94105 1 MarketatTheLandmark Del MonteFoodsCompany www.conagra.com Fax: (402)595-4707 Phone: (402)595-4000 Omaha, NE68102-5001 1 ConAgraDrive ConAgra FoodsIncorporated www.colgate.com Fax: (212)310-3284 Phone: (212)310-2000 New York, NY10022 300 ParkAvenue Colgate-Palmolive Company www.thecoca-colacompany.com Fax: (404)676-6792 Phone: (404)676-2121 Atlanta, GA30313 1 Coca-ColaPlaza The Coca-ColaCompany www.heinz.com Fax: (412)456-6015 Phone: (412)456-5700 Pittsburgh, PA 15219 600 GrantStreet H. J.HeinzCompany www.generalmills.com Fax: (763)764-7384 Phone: (763)764-7600 Minneapolis, MN55426 1 GeneralMillsBoulevard General MillsIncorporated www.ge.com Fax: (203)373-3131 Phone: (203)373-2211 Fairfield, CT06828 3135 EastonTurnpike General ElectricCompany www.thehersheycompany.com Fax: (717)534-7873 Phone: (717)534-4200 Hershey, PA 17033-0810 100 CrystalADrive The HersheyCompany www.henkel.com Fax: +492117982484 Phone: +492117970 Germany D-40191 Düsseldorf Henkelstrasse 67 Henkel KGaA www.hasbro.com Fax: (401)727-5544 Phone: (401)431-8697 Pawtucket, RI02862-1059 1027 NewportAvenue Hasbro, Inc. © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.smuckers.com Fax: (330)684-3026 Phone: (330)682-3000 Orrville, OH44667 1 StrawberryLane The J.M.SmuckerCompany www.hormelfoods.com Fax: (507)437-5489 Phone: (507)437-5611 Austin, MN55912-3680 1 HormelPlace Hormel Foods EMPLOYER DIRECTORY (CONT.) www.kraft.com Fax: (847)646-6005 Phone: (847)646-2000 Northfield, IL60093 3 LakesDrive Kraft Foods,Inc. www.kimberly-clark.com Fax: (972)281-1435 Phone: (972)281-1200 Irving, TX75038 351 PhelpsDrive Kimberly-Clark Corporation www.kelloggcompany.com Fax: (269)961-2871 Phone: (269)961-2000 Battle Creek,MI49016 1 KelloggSquare Kellogg Company www.jnj.com Fax: (732)214-0332 Phone: (732)524-0400 New Brunswick,NJ08933 1 Johnson&Plaza Johnson & www.jockey.com Fax: (262)658-1812 Phone: (262)658-8111 Kenosha, WI53141 2300 60thStreet Jockey International,Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.molsoncoors.com Fax: (303)277-5415 Phone: (303)279-6565 Golden, CO80401-0030 311 10thStreet Molson CoorsBrewingCompany www.millerbrewing.com Fax: (303)277-5415 Phone: (303)279-6565 Denver, CO80202 1225 17thStreet MillerCoors LLC www.mccormick.com Fax: (410)527-8214 Phone: (410)771-7301 Sparks, MD21152 18 LovetonCircle McCormick &Company, Inc. www.mattel.com Fax: (310)252-2179 Phone: (310)252-2000 El Segundo,CA90245-5012 333 ContinentalBoulevard Mattel, Inc. www.website.com Fax: (703)448-9678 Phone: (703)821-4900 McLean, VA 22101 6885 ElmStreet MARS, Incorporated www.landolakesinc.com Fax: (651)481-2000 Phone: (651)481-2222 North ArdenHills,MN55112 4001 LexingtonAvenue Land O’Lakes,Inc. www.pepsico.com Fax: (914)253-2070 Phone: (914)253-2000 Purchase, NY10577 700 AndersonHillRoad PepsiCo, Inc. www.newellrubbermaid.com Fax: (770)407-3986 Phone: (770)407-3800 Atlanta, GA30328 10B GlenlakeParkway, Suite300 Newell Rubbermaid,Inc. www.nestle.com Fax: +41219226334 Phone: +41219242596 Switzerland 1800 Vevey Avenue Nestle55 Nestlé SA www.saralee.com Fax: (630)598-8482 Phone: (630)598-6000 Downers Grove,IL60515 3500 LaceyRoad Sara LeeCorporation www.scjohnson.com Fax: (262)260-6004 Phone: (262)260-2000 Racine, WI53403-5011 1525 HoweStreet S.C. Johnson&Son,Inc. www.philips.com Fax: +312059770710 Phone: +3120597771 The Netherlands 1070 MXAmsterdam P.O. Box77900 Breitner Center Amstelplein 2 Royal PhilipsElectronics Brand Management/ConsumerGoods The Vault MBA CareerBible 63 Customized for: Erin ([email protected]) www.tupperwarebrands.com Fax: (407)826-8874 Phone: (407)826-5050 Orlando, FL32837 14901 SouthOrangeBlossomTrail Tupperware BrandsCorporation www.sony.net Fax: +18135448224 Phone: +18135448211 Japan Minato-Ku, Tokyo 108-0075 1-7-1 Konan Sony Corporation EMPLOYER DIRECTORY (CONT.) Brand Management/ConsumerGoods The Vault MBA CareerBible 64 www.unilever.com Fax: +442078226907 Phone: +442078225252 United Kingdom London EC4Y0DY Blackfriars P.O. Box 68 Unilever PLCHouse www.tyson.com Fax: (479)290-4061 Phone: (479)290-4000 Springdale, AR72762-6999 P.O. Box 2020 2210 West OaklawnDrive Tyson Foods,Inc. www.wrigley.com Fax: (312)644-0015 Phone: (312)644-2121 Chicago, IL60611 410 NorthMichiganAvenue Wm. WrigleyJr. Company www.whirlpoolcorp.com Fax: (269)923-5154 Phone: (269)923-5000 Benton Harbor, MI49022 2000 NorthM-63 Whirlpool Corporation © 2009Vault.com Inc. Customized for: Erin ([email protected]) According tothe Besides mc WHAT ISTHEENERGYSECTOR? Energy/Oil andGas to expandtheirreserves,buying up rightstooilfieldsinSaudiArabia(abargainat$50,000). higher. Alsoduringthattime,theoilgiantsturnedtoTexas toseektheirfortunes.Soonthereafter, Chevron,Texaco, ExxonandMobilwentoverseas As publicworksprojectsinthe1930s improvedthecountry’s transportation infrastructure, Americanstooktotheroadanddemandforoilgushed ever Exxon). Standard wasdividedinto34companies,includingmanywhosedescendants arestillaroundtoday, likeMobil,Chevron,Shelland Esso(laterrenamed John D.RockefellerfoundedStandardOilin1870.By1880, refined95percentofalloilintheU.S.Brandedanillegalmonopoly1911, The modernoilindustryintheUnitedStateswasbornlate 19thcentury, when,afterinvestinginaClevelandoilrefineryduringtheCivilWar, Richer Rockefellers companies drillalotandmakeofmoney, sobusinessvolumeandrevenueincreasefortheircontractors. annual revenue,comparabletothescaleofamidsizedoilcompany. Thefortunesofthesecompaniesfollowthepriceoil:whenoilisexpensive, facilities orpetroleumrefineriesaswell.Pipelinecompaniesare nothouseholdnames;nonetheless,thelargestonestakein several billiondollarsin naturalgasstorage (and naturalgas)pipelines.Manyalsooperateoilintaketerminals, engageincommoditiestradingandenergymarketing,own engineering servicesandconstruction/installationoftheirequipment. Pipelineoperatorsownandmanagetensofthousandsmilespetroleum boilers, compressors,pollutioncontroldevices,well-drillingand pipelineconstructionequipment,softwarecontrolsystems,andsomeprovide abroad, andcanfeelverymuchlikeworkingforanoilcompany, giventhesimilarityinissuesandactivities.Equipmentmanufacturersmaketurbines, instance, theymayrentoutoilrigs,conductseismictestingortransportequipment.Workingworking inTexas foroneoftheseprobablymeans or Aside fromthesearethesectorsandbusinessesthatfeedoffofoil.Oilservicescompaniesprovidearangeoutsourcedoperational support;for inputs andrevenuefromrefinedproductoutputs. means thatnewrefineriesarerarelybuilt,andtherefinerybusinessismostlyaboutmanagingrazor-thin marginsbetweenpurchasedcrudeoil like gasoline,jetfuel,solventsandasphalt.Refineriesare,intheory, builttolast40years,butsomehavebeenaroundfor aslong80years.That exclusively onmidstreamanddownstreamactivities.Theyoperaterefineriestodistillcrudeoilintoitsmanycommerciallyuseful petroleumderivatives, involve heavyinternationalwork;manyemployeesaresentofftonewpostingsaroundtheworldeverythreeyearsorso.Some companiesfocus exploration andproduction.Upstreamisconsideredtheglamorousplacetobe,asitwhereallbigdecisionsaremade. Upstreamjobsalso involvedin along theentirespectrumfromexplorationtogasstations.Smalleroilcompanies,knownas“independents,”areoftenexclusively businessoperations wholesale andretaildistribution(“downstream”).Thelargestcompanies,knownasthe“majors,”areverticallyintegrated,with Oil companiesengageinexplorationandproductionofoil(“upstream”activities),transportationrefining(“midstream”), andpetroleumproduct of Venezuela andNigeria. (Russia) andConocoPhillips.Intermsofoil-equivalentreserves,they’redwarfedbytheMiddleEast’s nationalizedenergycompanies,aswellthose crayons. Leadingcompanies,rankedaccordingtosalesbyForbes,areExxonMobil,RoyalDutch/Shell,BP, TOTAL S.A.,ChevronTexaco, Gazprom States goestowardgasoline,accordingtotheNPRA.Otherproductsincludeasphalt,solvents,andevenwaxusedinthingslikechewinggum of transportation,thecostallgoodsandservices,availabilitybasicslikefoodshelter. NearlyhalfofpetroleumproductionintheUnited The priceofoilsendsarippleeffectthroughouttheworld’s economy, affectingnotonlydriverswhohavetoshelloutatthepump,butalsootherforms Big oil far morethanbanking,hightechortelecommunications. theU.S.workforce— of the$20trillionearnedbyallU.S.businesses.Energy-relatedbusinessesemployaboutthreemillionpeople—or2percent inrevenueannually,Just howbigistheindustrythatcomprisesallthosediverseactivities?Companiesinenergysectortakeover$1trillion out the other, withouttoomuchcrossover. economics ofthetwofields—andregulationsthatgovernthem—arequitedistinct.Generally, inonecampor peoplemaketheirenergycareers In contrast,theelectricpowerbusinessrevolvesaroundconvertingfueltoelectricityinplantsanddistributingthatelectricityconsumers.The for abouthalfofthebusinessjobsacrossbothsectors.“Oilandgas”referstoexplorationfor, andextractionprocessing ofoilandnaturalgas. There isagreatdividebetweentheoilandgasindustriesnetworkofcompaniesthatproduceelectricalpower, eventhough eachsideaccounts supported byavarietyofservicefirms,investorsandequipmentproviders. sources are machines. Andtoachievethesethings,thecompanieswhoareproducing,transporting,convertinganddistributingenergy to makeheatandelectricity. Wind,flowingwaterandsunlightareconvertedintoelectricity. Oilisrefinedtopropelcars, producing suchpower.” Theenergysectorproduces,convertsanddistributesfuelsforheat,lightpropulsion.Oil,natural gasandcoalareburned 2 Merriam-Webster Dictionary Merriam-Webster , whatisenergy? , energycanbedefinedas“usablepower”or, asisthecaseinenergyindustry, “theresourcesfor planesandindustrial 65 Customized for: Erin ([email protected]) been developedinrecentyearsand negotiationsareunderwayforothers.Similarmeasures under considerationfornaturalgas. Exports arelimitedbythecapacity ofthepipelinesystemcrisscrossingvasttundra,thoughnew networks,suchastheBalticPipelineSystem,have by aninefficientinfrastructure,including governmentcorruptionandthelegacyofSovietcollapse. Russiaposesageographicalchallenge,aswell. in office,formerPresidentandcurrent PrimeMinisterPutinmadeenergythecenterpieceofRussia’s growthstrategy. promiseisdampened Butthis has yettobeinstalled.)Analysts saythecountryhasgreatpotential,andcouldeventuallyproduce 10millionbarrelsofoilperdayby2010,andwhile a bidthat,somesaidinitially, signaledastatetakeoveroftheconcern.(Thepartiescametoanunderstanding,but,asFebruary 2009,anew CEO BP staffers’visaswerenotrenewed,theventure’s RussianinvestorsforcedouttheBP-supportedchiefexecutive andothermanagementpersonnelin with Russia’s fourth-largestoilcompany, TNK.Thatinvestment,now worth$45billion,isperhapsatadunsteady—duringsummer2008,aftersome energy sectoraccountedforjustover20percentofRussia’s GDP. InFebruary 2003,BPinvested$6.8billioninRussia,creatinganewjointventure working withthemajorRussianoilcompaniesinrecentyears,and thecountry’s economyisbecomingincreasingly reliantonoil exports—in2007,the world’s largestnaturalgasreserves(andisalsoitsexporter).Internationaloilservicescompanieslike HalliburtonandBakerHugheshavebegun taking stepstomodernizeitsoilinfrastructure.Withprovenreserves of60billionbarrels,mostlysituatedinWestern Russiaalsoholdsthe Siberia, With oilresourcesnaturallylimited,theindustryconstantlyhasto searchfornewsupplies.SincethecollapseofSoviet Union,Russiahasbeen Russia, rebelsrising issue ascontinuedunrestinIraq(nottomentioninstabilitypockets oftheMiddleEast)haspreventedexportingcrudeoilfromthatcountry. back downtoEarth—producerswillcontinueseepressureasenvironmentalconcernsbecomemorepronounced.Supplymay alsobecomean beforecoming Though theindustryoverallhasrecovered—oilpricesroseskyhighasIraqwardraggedon,topping$147abarrelinJuly2008 Phillips PetroleumtobecomeConocoPhillips.)Manysmallindependentcompaniesweren’tsolucky, andwentintobankruptcy. the well-knownExxon-MobilandChevron-Texaco marriages.(BritishPetroleumalsomergedwithAmocoandArcotoformBP, andConocojoinedwith At theendof1990s,followingAsiancrisis,industrywitnessedseveralmegamergersamongmajorinternationaloilc ompanies, including in Asia—pricessankto$10abarrel.By2000,theyhadclimbedbackupover$30 had recovered,thoughtheyneverregainedthehighlevelsofpreviousdecade.Anothercollapseoccurredin1998following economic instability sharply. Afterapeakinpricestheearlypartof1980s,marketsawsharpdeclinefollowedbycollapse1986.By1990s, The 1970ssawtwocrisesinoilpricing:anArabembargo1973andtheoutbreakofIranianrevolution1979.Inboth cases,oilpricesrose Troubled timeslead toalliances percent ofthecrudeoilitusesinrefiningprocess. other nations.Infact,accordingtoNPRA,for2006,while96percentofrefinedpetroleumproductisproduceddomestically, the U.S.imports60 For avarietyofreasons(mostobviouslypricingconcernsandthefactthatU.S.demandoutstripssupply),nationimports portionofitsoilfrom the worlddemandforoilwillcloseon90millionbarrelsperdayby2010,andit’sbarrels perdayby2020. predictedtorisemorethan103million in 2008was19.4millionbarrelsperday. Backin1981,therewere325refineries,capableofproducing18.6millionbarrelsper day. OPECestimates with aggregatecrudeoilprocessingcapacityof17.6millionbarrelsperday(abarrelis42gallons).Total U.S.demandforfinished petroleumproducts by 60companies, According totheNationalPetrochemicalsandRefinersAssociation(NPRA),thereare155refineriesinUnitedStates,owned backyard”) attitudeamongthepublic—haveallbutscuttledpossibilityofanynewrefineriestimesoon. near water, anddisastersliketheExxonValdez oil spillhavecontributedtowhat,accordingindustrypundits,translatesintoaNIMBY(“Notinmy And althoughahandfulmorecouldhelpdeliverlowergasprices,therisksandcontroversysurroundingtheirconstruction—refineriesneedtobebuilt times, trueenvironmentalconcernsholdsway;takeasacaseinpointthefactthatlastoilrefinerybuiltUnitedStateswascompleted1976. in2001.But atother million acresintheGulfofMexico,offcoastFlorida,thisamountwasreducedatbehestFloridaGovernorJebBush spring 2008;moreonthatlater.) Manyofthesedecisionsrestonpoliticsandpower—whiletheClintonadministrationhadproposedsellingsomesix presidential electionandcontinuestosurfaceatsemi-regularintervals.(Drillingtherewasproposedasameansrelievepressureongaspricesin production alwaysgarnerplentyofattention.TheissuedrillingintheArcticNationalWildlifeRefuge,forinstance,was a hugetopicinthe2000 withextraction and Oil iscertainlyaslipperysubjectintheUnitedStates,wherehighpricesatgaspumpandenvironmentalissuesassociated Oil stateside fall—a situationthatOPECclaimshurtsbothproducersand,eventually, consumers(intheformofinflation).Surely, consumerswouldbegtodiffer. and Energy/Oil andGas The Vault MBA CareerBible 66 © 2009Vault.com Inc. Customized for: Erin ([email protected]) and Canadaaretoutedasoptions,butexpensiveunwieldyones. falls byroughly2percentayear. Importinggasfromothercountries,includingRussia,QatarandTrinidad, andbuildingpipelinesinplaceslikeAlaska per cubicfootofnaturalgas.ButtheUnitedStateshaslimiteddomesticresourcesforgasproduction.Assupply on thesaleofpower. Thesemerchantseventuallymanufactureda“shortage”inelectricitythatsentpricessoaring,whichturnaffectedtheprice the infamousEnron,whichsetouttopurchasenaturalgascheaply, convertitintoelectricityandreapprofitsfromthe“sparkspread”—themarkup is fueledbynaturalgas.Asdemandforelectricityboomedinthe1990s,marketrevvedup,andwithitcameentryof“energymerchants”like same way, butithasalsogainedimportanceasaprimaryfuelforgeneratingelectricity. Today, aboutathirdoftheenergyusedinUnitedStates Natural gasisonesourcethatbridgestheoil/gasvs.electricitydivide—itextractedfromearthtogetherwithoiland can beusedinmuchthe “Classical” gas every dayduetosuchattacks.AbouthalfofNigeria’s outputof2.1millionbarrelsadayisprocessedbythecompany. installations. InMay2008,RoyalDutchcalculatedthatitwaslosingtheequivalentof30,000barrelscrudeoil(translation:almost$3.5million) plagued withdifficultiesatitsoperationsinNigeria’s area,andattacksonits NigerDeltaduetoclashesbetweensoldiersandmilitantgroupsinthe But companiesthatdobusinessonthecontinentaresometimesvulnerabletodramaticpoliticalunrestandviolence.RoyalDutch/Shellhasbeen Africa isalsobecomingamoresignificantsourceoftheU.S.oilsupply, withimportsincreasingmorethan40percentinthefirsthalfofdecade. 2003, crudeoilproductionbeganforthefirsttimeinnationofChad,resultWorld Bank’s singlelargestinvestment insub-SaharanAfrica. Africa isanothersourceforoilreserves.InFebruary2004,ExxonMobilbegana$3billiondevelopmentprojectoffthecoastof Angola;andinJuly credits in“payment”forexcessemissions (theschemeissometimesreferredtoas“cap-and-trade”). It’s possiblethatthismethod willbeintroduced that’s topurchaseoffset justone waytogo—otherplayersarepushingforcarboncapsthatwould limitcarbondioxideemissionsandforcecompanies tougher restrictionsonwhatcan go intofuelinordertoreducepotentiallyharmfulemissions,restrictions thatcompaniessaycostthemmillions).But demand, andaclearerpolicyfor individual statesadoptingrequirementsforfuelformulations(California, ConnecticutandNewYork, forinstance,have include taxincentivesfornewand existingrefinerycapacity, reasonableenvironmentalregulationsthatbalancetheneed forcleaner fuelwithmarket Today, theU.S.oilindustryspendsalotoftimelobbyingCongressfor “comprehensiveenergypolicy.” AccordingtotheNPRA,suchapolicycould increased environmentalconcern). progress—as consumersareabandoninggas-guzzlingtrucksand SUVsatanalarmingrate(whichisjustasmuchafactorofinflatedgasprices efficient—note theincreasingnewsaccountsonhybridand ethanol-powered vehicles,andthebattery-poweredVolt, GMChevrolet’s work-in- morefuel- emissions reductiongoals.Evenautomobilecompaniesarestarting tocomearound;FordandGMhavebegunmaketheirautomobiles and subsidiarieslaunchedtheChicagoClimateExchange,atrading programallowingparticipatingmemberstoearnredeemablecreditsforexceeding Meanwhile, corporationshavetakentheirownbabystepstoease the environmentalimpactoftheirproducts.InJanuary2003,14 U.S.oilcorporations wind, solarcells,biofuelsandfuelcellswasup40percent, on tracktotriple$254billionoverthenext10years. trend. In2007,SanFrancisco’s CleanEdge,whichmonitorssuchactivity, foundthatrevenuegrowthforcompaniesinvolvedinpowergeneratedby environmentalists, whoseetheUnitedStates’energypolicyastoo accommodatingofcorporateinterests.Nonetheless,“cleanenergy”isagrowing emissions by7percenttheyears2008to2012.Thatadministration’s responsetotheglobalwarmingproblemhasraisedireofmany administration decidednottosignontheprotocol,whichwouldhaverequiredUnitedStatesreduceits1990levels ofgreenhousegas The nations overthelastdecadetolimitgreenhousegasemissions,wasahottopicasBushadministrationcameintopower in2000. warming phenomena,atrendthatthreatensmajorenvironmentalrepercussionsincomingdecades.TheKyotoprotocol,developed byagroupof So-called “greenhousegases,”producedthroughtheburningoffossilfuels,areincreasinglyacknowledgedtobeamajorfactor Green concerns they stillsuffertheNIMBYeffect;word“nuclear”conjuresupdangersignalsinmindsofmostAmericans. can beusedaswell,thoughit’s regainingground,but messyandcontributestopollutinggreenhousegases.Nuclearplants,alsorelativelyclean,are (hydroelectric plants),andbelow-groundstoresofheatsteam(geothermal)areusedinthemostenvironmentallyuncomplicat ed methods.Coal Companies produceelectricityinavarietyofways,fromthesimpleandnaturaltocomplex.Solarsources(andphoto-voltaic cells),water investor-owned utilitiesinthecountry, butindustryinsiderspredictthatinafewyearsmergers mayresultinasfew10. companies orfinancialinstitutions.Thus,there’s beenamassiveconsolidationamongutilityholdingcompanies.Therearepresentlyabout50 independent powerplants.Astheelectricitymarketfellapartstartingin2001,mostIPPssoldofftheirassetspiecemealto large utilityholding power linesastheirprimaryassets,whileothersmayownlargeamountsofregulatedplants,andalsononutilitygeneratorsorindividual may differgreatlyintermsoftheirlinesbusiness.Somehavesoldoffmostgenerationassetsandareprimarilydistributioncompanieswith owned utilities,municipalpowercompanies,ruralelectricco-opsandindependentproducers(IPPs),ornonutilitygenerators(NUGs).Utilities course. “Utility”isactuallyaloosetermthatreferstoalltypesofcompaniesprovideenergyconsumers:investor-ow commercial consumer)are,bydefinition,locatedalloverthecountry—everyonehastogettheirelectricityand(natural)gas from somewhere,of Public utilities,whichareinvolvedinpowergeneration,transmission(fromgeneratortosubstation)anddistributionsubstationresidentialor Big sparks career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible ned utilities,government- shrinks,U.S.production behind theglobal Energy/Oil andGas 67 Customized for: Erin ([email protected]) representatives werenotsoeasilydistracted,anddugintotheexecsaboutthishighsalariesothercompensation. However,and OPEC,werenotundertheircontrol(thatsameargumentdoesn’tquiteworkwhentalkingaboutastronomicalprofits,though). the the ArcticNationalWildlifeRefugeinAlaska(alwaysatopicofcontroversy).Theyalsofloatedideathathighpriceswere aresultofmarketforces Before thecommittee,fortheirpart,oilmencalledpermissionmoreexplorationanddrillinginAtlantic,Pacific,GulfofMexico bring downcostsfortheaveragecitizen. Judiciary CommitteeinMay2008.Whilesomesortofgovernmental“input”maybeinevitable,it’s ameasurewillhelp notclearhoworevenifsuch 2008 DemocraticpresidentialcandidateBarackObama,andBigOil’s top-fiveexecswererakedoverthecoalsbyDemocraticmembersforSenate company continuedtoresetrecordsin2007and2008(withprofitsof$45.2billion).Theissueoilearningswasamajor talkingpointfor a tighteningeconomy. Politiciansstartedtossingaroundtheideaofa“windfallprofits”taxonoilindustry, asuggestionthatgainedforceasthe profit everforanAmericanfirm—andhadtoholdelectronicnewsconference“explain”itsrobustearningsbudget-challenged consumersin hostile fireforits2005financialresults—theyweremuchtoohigh.Thecompanyreportedawhoppingprofitof$36.1billion—thelargestsingle-year traders thattheoilcompanyseesalltime.Asgasolinepriceswerebeginningtotakeoffforgoodin2005,ExxonMobilcameunderincreasingly analysts, financeassociates,marketing managers,economicmodelersandoperationsconsultants, tonameafewroles. U.S., about90percentofthem are blue-collarjobsortechnicalpositions.Evenso,theremany energy-relatedbusinessjobs outthere:business who drivelocalutilityrepairtrucks, laborersonoilrigsandgasstationattendants),comparedtoother industries.Ofthe millions ofenergyjobsinthe far morethanbanking,hightech ortelecommunications.Energycompaniesasawholeemploy a highpercentageofproductionworkers (thepeople theU.S.workforce— of the$20trillionearnedbyallU.S.businesses.Energy-related businesses employaboutthreemillionpeople—or2percentof inrevenueannually,Just howbigistheindustrythatcomprisesallthosediverseactivities? Companiesintheenergysectortakeover$1trillion out the other, withouttoomuch crossover. The economicsofthetwofields,andregulationsthatgovern them, arequitedistinct.Generally, peoplemaketheirenergy careersinonecamp or that electricitytoconsumers. gas. Incontrast,theelectricpowerbusinessrevolvesaroundconverting fueltoelectricityinpowerplantsanddistributing for abouthalfofthebusinessjobsacrossbothsector. “Oilandgas”referstotheexplorationfor, ofoilandnatural andextraction andprocessing There isagreatdividebetweentheoilandgasindustries network ofcompaniesthatproduceelectricalpower, eventhough eachsideaccounts firms, investorsandequipmentproviders. these things,thecompanieswhoareproducing,transporting,converting anddistributingtheseenergysourcesaresupportedbyavarietyofservice electricity. Wind,flowing waterandsunlightareconvertedintoelectricity. Oilisrefinedtopropelcars,planes andindustrialmachines.Andtoachieve The energysectorproduces,convertsanddistributesfuelsforheat,lightpropulsion.Oil,naturalgascoalareburne d tomakeheatand But aspricesleveledoff,thenfell,wind,andtheinitialinvestmentsrequiredtogrowbusiness,nolongerlookedattractive. Speaking ofwhich,industryanalystsweresettochristenthewindpowersegmentenergy’s nextgreathopewhilepricesforothertypesoffuelsoared. to branchoffice.Otherjobreductionsseemedaffectmanufacturersofwindpowerequipment:DMIIndustries,GamesaandL.M. Glasfiber. may havedriedupabit,butthat’s all.Onlyonemajorcompany, Chesapeake,laidoffworkers,andthatwasduetoafacilitydownsizefromregionhub Thus far, theenergysectorhasmostlyavoidedfeelinganyofeffectsglobaleconomicdownturnthatgainedforcein2008—acquisitiveactions Braving thewind… by politicalinstabilityinthearea. half oftheworld’s petroleumreserveswillbeownedandcontrolledbycountriesintheMiddleEast,afactthatcouldonlyheightenproblemswrought depletion, around2010.Already, about65percentofknownoilreservesintheUnitedStateshavebeenusedup.Soon,AEIwarns,morethan a raceagainsttime.AccordingtotheAlternativeEnergyInstitute,world’s supplyofoilwillreachitsmaximumproduction,andthemidpoint In additiontoalternativesalreadyinuse,suchassolar, windandgeothermalenergysystems,newtechnologiesareconstantly in development,butit’s The bottomlineisthatoilanonrenewableresource,andexpertswarnthereanurgentneedforlarge-scalealternativeenergyinfrastructure. Tick, tick,tick… If, underthecap-and-tradesystem, Gone withthewindfall? of what of nuclearfacilities(sinceenergywillbecheapertoproduce).Lastly, itwoulddriveupelectricitypricesfortheconsumer, whileincreasingthepossibility puts thematadistinctpriceadvantageoverfirmsthatwillhavetobuycredits).Further, cap-and-tradewouldpavethewayfor advancesinthenumber Exelon andEntergy—and,toalesserextent,naturalgas-firedgenerators,sincetheirfacilitiesdon’tsendoutlargequantities ofcarbondioxide(which in Congressduringits2009sessions.Suchamovewouldgreatlybenefittheelectricity-makingnuclearplantoperators—especiallytwolargest, Energy/Oil andGas The Vault MBA CareerBible year inprofitbeforeinterest,taxes,depreciationandamortization.) (Assuming anoffsetpriceof$25permillionmetrictonscarbonoutput,Exelonestimatedthatthesystemcouldbringitsome$2billionextraeach 68 The Wall Street Journal Street Wall The called “supernormalprofitsfornuclearoperatorsinmarketswhereratesarederegulatedandhavemoreabilitytorise.” The Wall Street Journal Street Wall The 's predictioncametobe,itcouldbringthesamekindoflegislativescrutinycertainpower © 2009Vault.com Inc. Customized for: Erin ([email protected]) in onecompany, orsynonymouswithstrategicplanninginanother. and productpromotion,whereas“marketing”inanothercanmeancommoditiestrading.Similarly, “businessdevelopment”canbemore akintosales Different companiescanhavewidelyvaryingnamesbywhichtheyrefertotheseroles.Forexample,“marketing”inonecompany involvesadvertising business jobsintheenergysector: Your functionhasalotmoreimpactonthenatureofyourjobthandoestypecompanyinwhichyouwork.You canhaveawidevarietyof In ordertopursueajobintheenergysector, yourfirstdecisioniswhattypeofpositionyouwant—inotherwords,functional roleyouwanttoplay. WHICH JOBFUNCTION? graduates torisethroughtherankswithoutgoingbackschool. dominated bypeoplewithgraduatebusinessdegreesassomeotherpopulararenas.Thereisplentyofopportunityforsmart,well-trainedcollege on threetimesthenumberofnewMBAsasdoesenergysector. Whatthismeansforyouasajobseekeristhattheenergysectornot and accountingcapture22percentofgraduates,consultingabsorbsanother14percent.Eventhesignificantlysmallerhigh-techindustrytakes Energy sectorpositionscaptureabout4percentofnewMBAgraduates,anamountroughlyproportionaltotheindustry’s size.Incontrast,thefinance career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com Trading; energymarketing Quantitative analytics;riskmanagement Corporate finance Asset development Job Function Investment analysis Strategy andplanning Banking Business development Consulting Economic andpolicyanalysis • Economicsandpolicyanalysis • Strategyandplanning • Banking • Businessdevelopment • Consulting • Investmentanalysis • Trading, energymarketing • Quantitativeanalytics,riskmanagement • Corporatefinance • Assetdevelopment for insidercompany profiles,expert advice, Possible EmployerTypes Utility; oilcompany;pipelineoperator;energyservicesfirm Investment fund;bank Utility; oilcompany;pipelineoperator;investmentfund;bank investment fund;bank Utility; oilcompany;transmissiongridoperator;pipeline Utility; pipelineoperator;oilcompany;equipmentmanufacturer Consulting firm;oilservicescompany Government agency;nonprofitgroup; consultingfirm equipment manufacturer Utility; oilcompany;pipelineoperator;services Bank operator; energyservicesfirm Equipment manufacturer;utility;oilservicescompany;pipeline The Vault MBA CareerBible Energy/Oil andGas 69 Customized for: Erin ([email protected]) holding companiesorfinancialinstitutions. or individualindependentpower plants.Astheelectricitymarketfellapartstartingin2001,most IPPssoldofftheirassetspiecemealtolargeutility generators companies withpowerlinesastheir primaryassets.Othersmayownlargenumbersofregulatedpower plants,andmayalsoownnonutility (NUGs). Utilitiesdiffergreatlyin termsoftheirlinesbusiness:somehavesoldoffmost generationassetsandareprimarilydistribution generators government-owned utilities,municipal powercompanies,ruralelectricco-opsandindependent powerproducers(IPPs)ornonutility investor-owned“Utility” isactuallyaloosetermthatweusetosuccinctlyrefer gasutilitiesandalltypesofpowergenerationcompanies: utilities, of opportunitytodayforyoungjobseekers. “graying” oftheutilityindustryisawell-documentedtrend;60percent ofcurrentutilityemployeesareexpectedtoretireby2015,meaningthere’s lots presently about50investor-owned utilitiesinthecountry, butindustryinsiderspredictthatinafewyearsmergersmayleaveuswithas10.The of massiveconsolidationamongutilityholdingcompanies,the corporate officesforyourlocalutilitymaynotnecessarilybethatlocal.Thereare Utilities are,bydefinition,locatedalloverthecountry—everyone hastogettheirelectricityandgasfromsomewhere,ofcourse. However, as a result Utilities revenue, comparabletothescaleofamedium-sizedoilcompany. major oilcompanies,pipelineoperationcompaniesarenothousehold names—nonetheless,thelargestonestakeinseveralbillion dollarsinannual terminals, engageincommoditiestradingandenergymarketing, andownnaturalgasstoragefacilitiesorpetroleumrefineries, as well.Unlikethe Pipeline operatorsownandmanagetensofthousandsmilespetroleumproductsnaturalgaspipelines.Manythemals o operateoilintake Pipeline operators probably meansworkinginTexas orinternationally, andcanfeelverymuchlikeworkingforanoilcompany, giventhesimilarity inissuesandactivities. drill alotandmakeofmoney, sobusinessvolumeandrevenueincreasefortheiroilservicescontractors.Working foran oilservicescompany oilcompanies conducting seismictestingandtransportingequipment.Thefortunesofthesecompaniesfollowthepriceoil:whenoilisexpensive, Oil servicescompaniesprovideaverywiderangeofoutsourcedoperationalsupporttooilcompanies,suchasowningand renting outoilrigs, Oil servicescompanies companies drillalotandmakeofmoney, sobusinessvolumeandrevenueincreasefortheircontractors. revenue, comparabletothescaleofamedium-sizedoilcompany. Thefortunesofthesecompaniesfollowthepriceoil:whenoilisexpensive, facilities) orpetroleumrefineriesaswell.Pipelinecompaniesarenothouseholdnames;nonetheless,thelargestonestakeinseveralbillionannual (and naturalgas)pipelines.Manyalsooperateoilintaketerminals,engageincommoditiestradingandenergymarketing,owngasstorage engineering servicesandconstruction/installationoftheirequipment.Pipelineoperatorsownmanagetensthousands milesofpetroleum boilers, compressors,pollutioncontroldevices,welldrillingandpipelineconstructionequipment,softwaresystems, andsomeprovide abroad, andcanfeelverymuchlikeworkingforanoilcompany, giventhesimilarityinissuesandactivities.Equipmentmanufacturersmaketurbines, instance, theymayrentoutoilrigs,conductseismictestingortransportequipment.Workingworking inTexas foroneoftheseprobablymeans or Aside fromthesearethesectorsandbusinessesthatfeedoffofoil.Oilservicescompaniesprovidearangeoutsourcedoperational support;for International hotspotsincludeLondon,CalgaryandtheMiddleEast. inHouston. company operatingprofitsaredramaticallyimpacted,andlayoffsfairlycommon.Americanoiljobsoverwhelminglyconcentrated independents forgoodsalaries.Oilcompaniespaywellingeneral,butjobsarenotnecessarilyasstableonemightthink.Whenoilpricesdrop, The majorsareknownforexcellentrotationaltrainingprograms,andafairnumberofpeopletakeadvantagethoseprogramsndthenjumpoverto revenue fromrefinedproductoutputs. that newrefineriesarerarelybuilt,andtherefinerybusinessismostlyaboutmanagingrazor-thin marginsbetweenpurchasedcrude oilinputsand gasoline, jetfuel,solventsandasphalt.Refineriesare,intheory, builttolast40years,butsomehavebeenaroundforas long as80years.Thatmeans on midstreamanddownstreamactivities.Theyoperaterefineriestodistillcrudeoilintoitsmanycommerciallyusefulpetroleum derivatives,like heavy internationalwork,withmanyemployeessentofftonewpostingsaroundtheworldeverythreeyearsorso.Somecompanies focusexclusively exploration andproduction.Upstreamisconsideredtheglamorousplacetobe,whereallbigdecisionsaremade. along theentirespectrumfromexplorationtogasstations.Smalleroilcompanies,knownas“independents,”areoftenexclusiv business operations wholesale andretaildistribution(“downstream”).Thelargestcompanies,knownasthe“majors,”areverticallyintegrated,with Oil companiesengageinexplorationandproductionofoil(“upstream”activities),transportationrefining(“midstream”), andpetroleumproduct Oil companies the majorenergysectoremployertypes. cell manufacturer, orchoosebetweenassetdevelopmentandtradingwith Energy/Oil andGas The Vault MBA CareerBible 70 © 2009Vault.com Inc. jobs alsoinvolve ely involvedin Customized for: Erin ([email protected]) Private equityfirmshirejustafewpeoplestraightoutofcollegeorMBAprograms,andmanyothersfromtheranksinvestmentbankingalumni. firms specializeinenergyinvesting,andmanymoredooccasionaldealsthespaceaspartofabroadertechnologyormanufacturingfocus. A fewprivateequity look atspecificoperatingissues,identifyingconcreteareaswheretheportfoliocompanycanlowercostsorenhancerevenue. are notfollowingthestockmarketorincorporatingperceptionissuesintoyourvaluationsandrecommendations;instead, company’s boardofdirectors.Asaresult,ananalyst’s workataprivateequityfundisvastlydifferentfromthatmutual fundorhedgefund.You Private equityfundsinvestmoneyinprivate(i.e.,notpubliclytraded)companies,oftenalsoobtainingoperatinginfluencethrough aseatontheportfolio as buyingstocks.Whilesomehedgefundsmayfocusexclusivelyonenergy, mostaregeneralistandopportunisticwithrespectto theirtargetsectors. that theirvaluationapproachissodifferent,investinghorizonmuchshorter, andtheirorientationmanytimesis towards short-selling,aswell get jobs.Hedgefundsoftenhirepeopleoutofinvestmentbankinganalystprograms.Theytendnottothemutualfundworld,given The numberofhedgefundsintheU.S.hasbeengrowingataphenomenalratepastfewyears,buttheyarestillnotoriously difficultplacesto graduating undergradsaresought. resources, consumergoods)tothefundmanagers.However, therearealotofotherfinance-relatedpositionsinsidethesemassive firmsforwhich Mutual fundshirestockanalystsprimarilyoutofMBAprogramstotrack,valueandrecommendstocksinaparticularsector(e.g ., energy, natural concentrated inBoston,NewYork andSanFrancisco,buttherearesmallfundsdottedalloverthecountry, aswell. Investment fundsareadiversebunch:mutualfunds,privateequityandhedgefunds.Aswhole,theinvestmentfundworldisfairly Investment funds geographic area,thoughofcoursemanytheoilbusiness-orientedoneshavemajorofficesinTexas. makers areoftencharacterizedas“oilservices”firms.Theequipmentmanufacturersintheenergyindustrynotparticularly concentratedinone major gasturbinemanufacturers,forexample,alsoofferengineering,procurementandconstructionofentirepowerplants.Oil-relatedequipment control systems,pumpsandindustrialbatteries.Manyofthemalsoprovideengineeringservicesconstruction/installation of theirequipment.The Equipment manufacturersmaketurbines,boilers,compressors,pollutioncontroldevices,welldrillingandpipelineconstructionequipment,software Equipment manufacturers engineers andothergenerallyquantitativeanalyticaloperationsstaff. such thatsupplyanddemandareequalateverymoment.Thisisanextremelycomplexprocess,necessitatestheanalyticalskills ofelectrical dispatch functiontoaregionalelectricitymarket.Theydon’townthetransmissionlines,butcoordinatehowmuchpowerisge Transmission gridoperators,knownasindependentsystemoperators(ISO)orregionaltransmission(RTO), provideapowergeneration Transmission gridoperators on anexplicitadvocacyrole.Nonprofits arefundedbyindividualdonationsandgrantsfromfoundations, andaccordinglyasubstantialportionoftheir phenomenon, althoughtheconcept isslowlycatchingoninothercountries.Somethinktanksare independentandnonpartisan,whereassometake generate researchandopinionpapers toinformthepublic,policy-makersandmediaoncurrentissues. Interestingly, tank isprimarilyaU.S. the think mainlybyPhDswho cover corporatefinancialresponsibilityandinvestorprotectionissues. Thinktanksarepublicpolicyresearchinstitutes,staffed thoughsomealso to influencepoliticiansenactorchangelegislation.Mostofthe energy-relatedadvocacygroupsfocusonenvironmentaltopics, may focusondevelopinggrassrootssupportforpublicpolicychanges, publicizingpublicinterestissuesorproblemsthroughdirectactions,working Nonprofit groupsaretax-exemptcorporations(pursuanttoIRScode 501(c)3)engagedinissueadvocacyorpublicinterestresearch. Advocacygroups Nonprofit groups energy sectorstaffmaybelocatedinHouston,Washington, D.C.andNewYork. exposure toenergysectorbusinessissues,aswellgoodtraining. Businessconsultingfirmofficesarelocatedinmostmajor cities,butmuchofthe Consulting firmsareofteninterestedinhiringpeoplewithgoodfunctional skillsratherthanrequiringspecificindustryexpertiseandprovideabroad or technical,scientificissues)isdoneatthreetypesoffirms:management consultancies,riskconsultinggroupsandeconomicshops. Consulting firmsofferrichopportunitiesforthoseinterestedinthe energyindustry. Consultingonbusinessissues(ratherthaninformationtechnology Consulting firms overwhelmingly centeredinNewYork (andLondon),withsomesmallerbranchesinChicagoandSanFrancisco. worldis other peopletolendthemoney).InvestmentbanksmanageIPOs,andmergersacquisitions(M&A)activities,aswell.The banking investment analysisgroups.Commercialandbanksarrangeforloanstoenergycompanies,aswellsyndicate forthem(i.e.,find Banks areprimarilyinvolvedinlendingmoneytocompanies,buttheyalsohavetheirowntradingoperations,privatewealth management and Banks career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible nerated whenandwhere, youaretakingahard Energy/Oil andGas 71 Customized for: Erin ([email protected]) know that their industry is not typically considered as hot and glamorous as some other industries, and they can therefore often beskepticalabout know thattheirindustryisnottypically consideredashotandglamoroussomeotherindustries, andtheycanthereforeoften In fact,theenergysectoroffersparticularly richopportunitiesforstudentsfromsecond-tierundergraduate andgraduateschools.Energycompanies candidate thanonefromWharton. want tomoveto,forexample,Houston orAtlanta.Thiscanmeanthat,foraHoustonoilcompany position,anMBAfromRiceis a moreattractive aboutwhytheywould region inwhichthecompanyislocated.Thesecompaniesliketo hireforthelongterm,sowilloftengrillout-of-statecandidates Apart fromacademicbackground,traditionalenergyemployersare alsokeenlyinterestedinpeoplewhohaveastrongconnection to thegeographic Where you’recomingfrom passion andcommitmenttoadvocacyworkbeforetheylookfortechnical background. in termsoftheirbusinessstrategies,andusuallythiscomesacross intheirapproachtohiringaswell.Inaddition,nonprofits typicallyfirstlookfor energy companiesareoftenheavilyfilledwithpeoplewhostudied liberalarts,economicsandgovernmentincollege.Thesecompaniesareprogressive consulting, bankingandinvestingjobsoftenscreenfornothing different thantheircounterpartsinotherindustries.Similarly, thenewer, alternative quickly.Many oftheservicejobsinenergyareinterestedsimplyhiring smartpeoplewhodemonstrateanabilitytolearnanewindustry Energy will haveestablishedyourcredibility. of geology, electricalengineering orchemistry. Onceyouhaveacoupleyearsofexperienceintheindustry, thatservesasadegree equivalentandyou if youareapplyingforafinance,economicsoraccountingjobwithdegreeinthosefields,alsolesssubjecttoscrutinyaboutyourknowledge a compellingstoryaboutwhyyouarepassionateanddeeplyunderstandtheenergyworld,yourdegreebecomesfarlessrelevant. Inaddition, in anywayshutyououtofenergysectorcareerpath;itsimplymakesslightlymoreunusualtheeyessomeinterviewers.Ifcancraft However, therearecertainlymanypeoplewithliberalartsbackgroundsdoinggreatworkatthesetypesofcompanies.Anontechnicaldegreedoesnot undergraduate degreesorpre-MBAworkinenergyanothertechnicalfield. people whocanmasterthejargonquickly, andwhocanfitintotheirculture.EvenforMBAhires,thesecompaniesoften look fortechnical manufacturers, energyservicescompaniesandutilities.Thesefirmswanttohirepeoplewhohavetheirheadsaroundhow technologies work— operators,equipment This tendencyismostcharacteristicofhiringpreferencesamongoilcompanies,servicesfirms,refineries,pipelines,grid school thattheycanlearntheinsandoutsofacomplexsubjectarea. underpinning thepreferenceforpeoplewithcertainacademicbackgrounds—engineerscommunicatebestotherengineers, andhaveprovenin of technicalpeopleisalsoself-reinforcing;inotherwords,engineersliketohireengineers.Therearguablya n elementofreality energy sectortomakeittheircareerwereusuallyalsointerestedenoughinrelatedtopicsfocusonthemacademically. Ontopofthat,theprevalence In manyenergyjobs,theprevalenceofpeoplewithtechnicalpedigreesissomewhatafunctionself-selection;individualsinterestedenoughin downturns, whencompaniesactmoreconservativelyandhavebargainingpowerintermsofnewhires. correlates tohavingacertaindegree.Thispickinessaboutyourundergraduatemajorormaster’s degreefieldgetsevenstrongerduringeconomic or PhDinengineering,hardsciencesandmath).Whetherit’s trueornot,traditionalenergycompanyemployersoftenfeelthatsuccessinajob As inothertechnology-intensivesectors,theenergysectorispopulatedbyadisproportionatenumberofpeoplewithtechnicaldegrees(e.g.,BS,MS WHO GETSHIRED? client. Thesefirmsarelocatedacrossthecountry, withafewofthelargestclusteredinBoston. adjacent tothefactory. Often,theenergyservicesfirmreceivespaymentfortheseinformofasharenetcostsavingsto the HVAC (heating,ventilation,airconditioning)system,negotiatingbetterrateswiththeutilitysuppliersordevelopingacogenerationpowerplant measures “insidethefence”ofclientcompany. Thiscaninvolveinvestmentsandactivitiessuchasputtinglightbulbsonmotionsensors,upgrading understand whereacompanyspendsmoneyonenergy:electricity, heatandindustrialprocesses.Then,thefirmactuallyimplementsenergy-saving consulting—except thatyougomuchfurtherdownthepathofimplementation.Typically, anenergyservicesfirmfirstconducts an energyauditto Energy servicesfirmshelpcompanies(inanysector)reducetheirenergycosts.Working foranenergyservicesfirmissimilar inmanyrespectsto Energy servicesfirms a policyofhiringpeoplewithgeneralbusinessandmanagementeducationexperience. or managementofsubcontractors.Theenergyagenciestendtohirepeoplewithenvironmentalengineeringbackgrounds,andar are mostlylocatedinWashington, D.C.,andeachstatehasstaffinthecapital.Jobscanincludepolicyanalysis,research projectmanagement Government agenciesatthefederalandstatelevelsregulateenergymarketsdefinepublicenvironmentalpolicy. Federalagencies Government agencies many ofthemhavesmallregionalofficesorgrassrootsworkersspreadou 72 © 2009Vault.com Inc. e latelyfollowing Customized for: Erin ([email protected]) more sensitivetotheissue. term playforthecompany(whetheryoutrulyareornot).Thisistruewheninterviewingwithanyfirm,butlarge,traditionalenergyfirmscertainly a lotofdifferentjobsonyourresume,youshouldmakesuretohavegoodstoryexplainthenecessityjob-hopping, andwhyyouarelong- One caveatforthosewhomovefromonefirmtoanotherpositionthemselvesafuturejob:traditionalenergyemployerslikestability. Ifyouhave road—in otherwords,forexample,it’s relativelyeasytogofromanenergyconsultingroleintoacorporatejobatotherfirms. don’t dosoyourfirstyearoutofschool).Asaresult,thesejobsareanexcellentwaytogetintotheenergysector, andoffer lotsofoptionsdownthe they havetheirownintransigenceabouthiringpeoplelaterallyfromotherfunctionalareas,i.e.,it’s awfullyhardtogetintoconsultingorbankingifyou employers aremoreinterestedinfunctionalknowledgeandpurebrainpower, oranother(though ratherthanatrackrecordinoneparticularindustry nonprofits). These This reluctancetohirelaterallyfromotherindustriesisfarlesscommonintheservicessector(consulting,banking,investing, role—so ifyouhadjustgraduatedandneverspentthosecoupleofyearsinrealestate,you’dhaveabettershotatthejob. experience intoacorporatefinancerole,butwouldbeveryunlikelytohiresomeonewithcoupleofyearsof,say, experienceintothatsame realestate ofgeneral banking or functionalexperienceacompanyneeds.Forexample,pipelinemightrealisticallyhiresomeonewithcoupleyears of anewfield.Lateralhirespeoplefewyearsoutcollegeorpost-MBAarerelativelyrare,unlessyouhavesomespecificindustrybackground energy companiesexpectlessinthewayofindustryexperiencefrompeoplewhohavejustgraduated,soit’syour footinthedoor agoodtimetoget In general,thebesttimetojumpintoenergysectorisrightoutofundergraduateorgraduate(MA/MS,MBAPhD)school.Likemostemployers, employers, regardlessofwhethertheyvisityourcampusortargetpeoplefromalmamater. of themostintellectuallychallenging,influentialarenasinwhichtowork!Ifyouwantworksector, youcancertainlyseekouttheenergy second-tier schoolsandconcentratingononlyalimitedsetoftopschools.Ofcourse,thoseintheknowarewellawarethattheenergysectorisone recruiting at on first-tierschools—atthesametimeasservicecompanieslikeconsultingandbankingfirmsreactedtoasloweconomybycanceling Moreover, duringthepastfewyearsofoursluggisheconomy, andreducedfocus manytraditionalenergycompaniestightenedtheirrecruitingbudgets brand schoolsthansomeotherindustries,e.g.,consulting,lawandbanking. recruiting fromname-brandundergraduateandgraduateschools.Thebottomlineisthatenergy, asanindustry, issimplyless hung uponname- career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Energy/Oil andGas 73 Customized for: Erin ([email protected]) www.bakerhughes.com Fax: (713)439-8699 Phone: (713)439-8600 Houston, TX77019-2118 2929 AllenParkway, Suite2100 Baker HughesIncorporated www.anadarko.com Fax: (832)636-8220 Phone: (832)636-1000 The Woodlands, TX77380-1046 1201 LakeRobbinsDrive Anadarko PetroleumCorporation www.aep.com Fax: (614)716-1823 Phone: (614)716-1000 Columbus, OH43215-2372 1 RiversidePlaza Inc. American ElectricPowerCompany, www.alliantenergy.com Fax: (608)458-4824 Phone: (608)458-3311 Madison, WI53718 4902 NorthBiltmoreLane Alliant EnergyCorporation www.allete.com Fax: (218)720-2502 Phone: (218)279-5000 Duluth, MN55802 30 West SuperiorStreet ALLETE, Inc. www.aes.com Fax: (703)528-4510 Phone: (703)522-1315 Arlington, VA 22203 4300 Wilson Boulevard,11thFloor The AESCorporation EMPLOYER DIRECTORY Energy/Oil andGas The Vault MBA CareerBible 74 www.conedison.com Fax: (212)982-7816 Phone: (212)460-4600 New York, NY10003 4 IrvingPlace Consolidated Edison,Inc. www.conocophillips.com Fax: (281)293-1440 Phone: (281)293-1000 Houston, TX77079 600 NorthDairyAshfordRoad ConocoPhillips Company www.chevrontexaco.com Fax: (925)842-3530 Phone: (925)842-1000 San Ramon,CA94583 6001 BollingerCanyonRoad Chevron Corp. www.c-a-m.com Fax: (713)513-3456 Phone: (713)513-3300 Houston, TX77027 1333 West Loop,Suite1700 Cameron InternationalCorporation www.bp.com Fax: +442074964630 Phone: +442074964000 United Kingdom London SW1Y4PD 1 StJames’s Square BP p.l.c. www.bjservices.com Fax: (713)513-3456 Phone: (713)513-3300 Houston, TX77027 4601 Westway ParkBoulevard BJ ServicesCompany www.edison.com Fax: (626)302-2517 Phone: (626)302-1212 Rosemead, CA91770 2244 Walnut GroveAvenue Edison International www.eaton.com Fax: (216)523-4787 Phone: (216)523-5000 Cleveland, OH44114-2584 1111 SuperiorAvenue Eaton Center Eaton Corporation www.duke-energy.com Fax: (704)382-3814 Phone: (704)594-6200 Charlotte, NC28202 526 SouthChurchStreet Duke EnergyCorporation www.exterran.com Fax: (281)854-3051 Phone: (713)335-7000 Houston, TX77041 4444 BrittmooreRoad Exterran Partners,L.P. www.exeloncorp.com Fax: (312)394-7945 Phone: (312)394-7398 Chicago, IL60680-5379 10 SouthDearbornStreet,37thFloor Exelon Corporation www.entergy.com Fax: (504)576-4428 Phone: (504)576-4000 New Orleans,LA70113 689 LoyolaAvenue Entergy Corporation © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.firstenergycorp.com Fax: (330)384-3866 Phone: (800)646-0400 Akron, OH44308 76 SouthMainStreet FirstEnergy Corp. www.exxonmobil.com Fax: (972)444-1350 Phone: (972)444-1000 Irving, TX75039-2298 5959 LasColinasBoulevard Exxon MobilCorporation EMPLOYER DIRECTORY (CONT.) www.halliburton.com Fax: (713)759-2635 Phone: (713)759-2600 Houston, TX77020 1401 McKinney, Suite2400 5 HoustonCenter Halliburton www.gepower.com Fax: (678)844-6690 Phone: (678)844-6000 Atlanta, GA30339 4200 Wildwood Parkway GE Energy www.fmctechnologies.com Fax: (281)591-4102 Phone: (281)591-4000 Houston, TX77067 1803 GearsRoad FMC Technologies, Inc. www.fpl.com Fax: (561)694-4620 Phone: (561)694-4000 Juno Beach,FL33408 700 UniverseBoulevard FPL Group,Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.nov.com Toll free:(888)262-8645 Fax: (713)435-2195 Phone: (713)346-7500 Houston, TX77036 7909 ParkwoodCircleDrive National OilwellVarco, Inc. www.nabors.com Fax: (713)232-7027 Phone: (713)232-7500 Houston, TX77067 515 West GreensRoad,Suite1000 Nabors DrillingUSA,LP www.mdu.com Fax: (701)530-1698 Phone: (701)530-1000 Bismarck, ND58506 1200 West CenturyAvenue MDU ResourcesGroup,Inc. www.marathon.com Fax: (713)296-2952 Phone: (713)629-6600 Houston, TX77056 5555 SanFelipeRoad Marathon OilCorporation www.kochind.com Fax: (316)828-5739 Phone: (316)828-5500 North Wichita, KS67220 4111 East37thStreet Koch Industries,Inc. www.hess.com Fax: (212)536-8593 Phone: (212)997-8500 New York, NY10036 1185 Avenue oftheAmericas Hess Corporation www.pplweb.com Fax: (610)774-4198 Phone: (610)774-5151 Allentown, PA 18101 2 North9thStreet PPL Corporation www.pge.com Fax: (415)2677268 Phone: (415)9737000 San Francisco,CA94177 77 BealeStreet Pacific GasandElectricCompany www.oxy.com Fax: (310)443-6690 Phone: (310)208-8800 Los Angeles,CA90024 10889 Wilshire Boulevard Occidental PetroleumCorporation www.slb.com Phone: (713)513-2000 Houston, TX77056 5599 SanFelipe,17thFloor Schlumberger Limited www.prepa.com Fax: (787)289-4120 Phone: (787)289-3434 17½ Santurce,PR00909 Avenida PoncedeLeón Puerto RicoElectricPowerAuthority www.progress-energy.com Fax: (919)546-2920 Phone: (919)546-6111 Raleigh, NC27601 410 SouthWilmington Street Progress Energy, Inc. The Vault MBA CareerBible Energy/Oil andGas 75 Customized for: Erin ([email protected]) www.southernco.com Fax: (404)506-0455 Phone: (404)506-5000 Atlanta, GA30308 30 IvanAllenJr. BoulevardNW Southern Company www.smith.com Toll free:(800) 877-6484 Fax: (281)233-5199 Phone: (281)443-3370 Houston, TX77032 16740 EastHardyRoad Smith International,Inc. www.shellus.com Fax: (713)241-4044 Phone: (713)241-6161 Houston, TX77002 910 LouisanaStreet 1 ShellPlaza Shell OilCompany www.sempra.com Toll free:(877)736-7721 Fax: (619)696-2374 Phone: (619)696-2000 San Diego,CA92101 101 AshStreet Sempra Energy EMPLOYER DIRECTORY (CONT.) Energy/Oil andGas The Vault MBA CareerBible 76 www.weatherford.com Toll free:(800) 257-3826 Fax: (713)693-4323 Phone: (713)693-4000 Houston, TX77027 515 PostOakBoulevard Weatherford International, Ltd. www.valero.com Toll free:(800) 531-7911 Fax: (210)345-2646 Phone: (210)345-2000 San Antonio,TX78249 1 Valero Way Valero EnergyCorporation www.deepwater.com Fax: (713)232-7027 Phone: (713)232-7500 Houston, TX77046 4 GreenwayPlaza Transocean Inc. www.sunocoinc.com Toll free:(800)786-6261 Fax: (215)977-3409 Phone: (215)977-3000 Philadelphia, PA 19103-7583 1735 MarketStreet,SuiteLL Sunoco, Inc. www.xcelenergy.com Toll free:(800)328-8226 Fax: (800)895-2895 Phone: (612)330-5500 Minneapolis, MN55401 414 NicolletMall Xcel EnergyInc. www.williams.com Fax: (918)573-6714 Phone: (918)573-2000 Tulsa, OK74172 1 Williams Center The WilliamsCompaniesInc. © 2009Vault.com Inc. Customized for: Erin ([email protected]) internal consultinggroupforGap.Team membersmayworkwithoutsideconsultantsandvendors. assurance servicesinvolvesfinancial/operationalanalysis,processanalysisanddesignprojectmanagement.Basically, thisgroupactsasan Shor.growth (usuallywithafocusonnewopportunities).“Strategyinvolvesbrandmanagement,research,aswellplanning,”says Consultingand The strategyandbusinessdevelopmentgroupatGapidentifies,developsdriveslonger-term strategiesandinitiativesthatwillresult inprofitable experience (suchasconsumerproducts,goodsorretail).SomeofourcandidatescomefromconsultingfirmssuchA.T. KearneyandMcKinsey.” “We actuallylookatwhatacandidatedidpriortobusinessschool.Thestrategyandconsultinggroupsforcandidateswith consultingorindustry small (about20to30peoplepergroup).AlmostallcandidateshaveanMBA,althoughmanyarenothireddirectlyasMBAgraduates. Shorsays, Hillary ShorrecruitsforthestrategyandbusinessdevelopmentconsultingassuranceservicesgroupsofGap,Inc.These groupsarerelatively include Cartier, LVMH, Macy’s andtheGap. Very fewapparelcompanieshaveestablishedprogramstospecificallyhireMBAs.AthatdoMBAsforthemorecreativepositions hire forfinance,supplychainissuesorCRM.Typically, youneedaconsulting,financeormarketingbackgroundtogetpost-MBA jobintheindustry. won’t caremuchaboutyourMBAunlessit’s alargecorporation,suchasGap,LeviStrauss,EddieBauer, LimitedorNike.These companies tendto but don’thavethepreviousexperience,getapart-timejobinsalesormerchandisingforanintroductiontoindustry. Unfortunately, mostcompanies Like theentertainmentindustry, thefashionindustryconsiderseducationtobelessimportantthanexperience.So,ifyouwantgointo FASHION ANDTHEMBA Fashion internship inplanningatMacy’s West. Sheworkedthereforthreemonthsinthesummerandisnow fulltime. came forinterviews.Throughthe database,shefoundalumniandcontactedthemtospeak about theirexperiences.Changlandedasummer and RetailAssociationbegan todoherresearchsothatshecouldmergeinterestsand careergoals.Oncampus,Macy’s andNeutrogena Armani Exchangeduringcollege and enjoyedit—butdidn’tthinkthatfashionwouldbeapractical careerchoice.AtAnderson,shejoinedtheFashion At theAndersonSchool,heremphasis wasmarketing,anditthefirsttimeshebegantoseriously considerafashioncareer. Shehadworkedat have lookedatmyresumeandquestionedinterest.” careers, gettinganMBAisessential.WithoutmyMBA,Idon’tthink Iwouldhavebeenabletoswitchcareerssuccessfully. Fashioncompanieswould windshield specifications).IcametoAndersonknowingthatwanted todosomethingtotallydifferent.”Shealsosays,“Ifyoureallywantchange of aparticularprogramintheautomotiveplants.Changsays, “I wouldworkonprogramlaunchesforeachcarmodelyearandstyle (forspecific operations engineeringfromtheUniversityofMichigan.Aftercollege, sheworkedasaprogrammanagerforDaimlerChryslerto coordinate thelaunch Judy ChanggraduatedfromtheAndersonSchoolatUCLAwitha MBAin2002.HerpreviouseducationincludedaBSandmaster’s industrialand in VAULT PROFILE:JUDYCHANG,FASHION MBA companies willnotreleasethisinformationand,becausethesejobs arenotnecessarilygearedtowardMBAs,thesalariesnotstandard. best waytolearnallsidesofthebusinessisexperienceityourself.Thepayinfashionindustrymorenegotiablethan otherindustries.Most will helpyoumanageyourownbusiness.Forexample,ifwanttoopenjewelrystore,getajobmerchandisingor selling jewelry. The are twooptions—youworktogettheexperienceorlearnenoughstartyourownbusiness.Ifyouthinkingoflatter, gainexperiencethat mark, thougharegionalmanagerordirectorofsalescanmakemorethan$100,000,pluswardrobeallowanceandstockoptions. Ingeneral,there MBA jobsinthefashionindustrymaynotpaywellcomparisonwithothergraduateoptions.Entry-levelsalarieshoveraround$50,000 PAY ANDPERKS planning, financeorstrategy. Guide totheCaseInterviewformoreinformationonthistypeofbusinessinterview.) OtherjobsatfashioncompaniesforMBAgraduatesmayinclude position, morethanlikelyitwillresembleatraditionalconsultinginterview. You maybegivenacasestudyaspartoftheinterview. (See theVault The Gap,LimitedandEddieBauerallhaveinternalconsultinggroupsthattraditionallyhireMBAs.Ifyouareinterviewingforan there whenhewas18. president ofGucciusedtoworkasviceatRichardTyler. HewasyoungwhenheleftRichardTylerhad startedworking forGucci,buthe positions. Manyofthepeoplewhoworkatthesecompaniesmayhavegonetotradeschoolsorbeeninindustryforalongti merchandising, marketing,productionandsoon.Becausemanyofthecompaniesaresmall,therearen’tverytraditionalMB A “management” Build yourresumecorrectlyandyoucangettheinterviewsneed.Inapparel,mostofjobfunctionsareveryspecific, suchasdesign, GETTING HIRED me. Forexample,the 77 Customized for: Erin ([email protected]) you happy, youshoulddoit—eveninthisdifficulteconomy.” only 10percentmen.AtDaimlerChrysler, Iusedtoworkwith90percentmenand10women.Ifthereissomethingyoureally thinkwillmake and veryfriendly. Macy’s wasaverydifferentexperienceforher. Changsays,“AtMacy’s, percentwomenand itseemedliketheworkforcewas90 During herinternship,Changwasexcitedtogoworkeveryday(especiallycomparedpreviousposition).Shefoundeveryonebesupportive planners toanalyzethesalesbycolorandbuyer. Macy’s couldnowseewhichcolorsoldduringanyaone-weekperiod. although eachbuyerbought“red,”reditemcouldbeacompletelydifferentshade.Changcreatedcolortrackingsystemthat allowedthe a groupofbuyers.Eachbuyerusedanindividualcolorcodingsystem.Macy’s hadnowayoftrackingsalesbycolororacross used Macy’s salesdataaswellactivevisits totheMacy’s colorsacross floortomakeherrecommendations.Hersecondprojectwasstandardize regular stock. She number ofstylesboughtforeachclusterstores,availabletablespacethehandbagsanddiscountedhandbagsalesversus during theinternship.Herfirstprojectwasabouthandbagassortments.goaltofigureoptimumassortmentlevel.Sheanalyzed East isheadquarteredinNYC,whileMacy’s West isbasedinSanFrancisco.)To hersurprise,Chang’s operationsexperiencewasextremelyrelevant At Macy’s West, Changdidtwoprojectsoverthesummer. (ThedepartmentstoreMacy’s issplitintotworegionsandruncompletely separately. Macy’s Fashion The Vault MBA CareerBible 78 categories. Forexample, © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.adidas-group.com Fax: +499132842241 Phone: +499132840 Germany 91074 Herzogenaurach Adi-Dassler-Strasse 1-2 adidas AG www.abercrombie.com Fax: (614)283-6710 Phone: (614)283-6500 New Albany, OH43054 6301 FitchPath Abercrombie &FitchCo. EMPLOYER DIRECTORY www.chanel.com Phone: +33146434000 France 92521 Neuilly-sur-Seine Cedex 135, Avenue CharlesdeGaulle Chanel S.A. www.carters.com Fax: (404)892-0968 Phone: (404)745-2700 Atlanta, GA30309 1170 PeachtreeStreetNE,Suite900 The Proscenium Carter’s, Inc. www.avoncompany.com Fax: (212)282-6049 Phone: (212)282-5000 New York, NY10105-0196 1345 Avenue oftheAmericas Avon Products,Inc. www.anntaylor.com Fax: (212)541-3379 Phone: (212)541-3300 New York, NY10036 7 Times Square, 15thFloor Ann Taylor StoresCorporation career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.eddiebauer.com Fax: (425)755-7696 Phone: (425)755-6100 Redmond, WA 98052 15010 NE36thStreet Eddie Bauer, Inc. www.donnakaran.com Fax: (212)921-3526 Phone: (212)789-1500 New York, NY10018 550 7thAvenue Donna KaranInternationalInc. www.dolcegabbana.it Fax: +3902760600 Phone: +3902774271 Italy 20122 Milan Via SantaCecilia,7 Dolce &GabbanaSPA www.columbia.com Fax: (503)985-5800 Phone: (503)985-4000 Portland, OR97229-5418 14375 NWScienceParkDrive Columbia SportswearCompany www.coach.com Fax: (212)594-1682 Phone: (212)594-1850 New York, NY10001 516 West 34thStreet Coach, Inc. www.dior.com Fax: +33144132786 Phone: +33144132498 France 75008 Paris 30 Avenue Montaigne Christian Dior, S.A. www.guess.com Phone: (213)744-7838 Phone: (213)765-3100 Los Angeles,CA90021 1444 SouthAlamedaStreet Guess?, Inc. www.gapinc.com Fax: (415)427-2553 Phone: (650)952-4400 San Francisco,CA94105 2 FolsomStreet Gap Inc. www.elcompanies.com Fax: (212)572-3941 Phone: (212)572-4200 New York, NY10153 767 5thAvenue The EstéeLauderCompanies,Inc. www.tommy.com New York, NY10018 25 West 39thStreet,14thFloor Tommy Hilfiger www.jonesapparel.com Fax: (215)785-1795 Phone: (212)642-3860 New York, NY10018 1411 Broadway Jones ApparelGroup,Inc. www.jordachecorporate.com Fax: (212)239-0063 Phone: (212)944-1330 New York, NY10018 1400 Broadway, 15thFloor Jordache Enterprises,Inc. www.jcrew.com Fax: (212)209-2666 Phone: (212)209-2500 New York, NY10003 770 Broadway J. CrewGroupInc. The Vault MBA CareerBible Fashion 79 Customized for: Erin ([email protected]) www.lizclaiborneinc.com Fax: (212)626-3416 Phone: (212)354-4900 New York, NY10018 1441 Broadway Liz Claiborne,Inc. www.limited.com Fax: (614)415-7440 Phone: (614)415-7000 Columbus, OH43216 3 LimitedParkway Limited Brands www.levistrauss.com Fax: (415)501-7112 Phone: (415)501-6000 San Francisco,CA94111 1155 BatteryStreet Levi Strauss&Co. www.loreal.com Fax: +33147568642 Phone: +33147568265 France 92117 Clichy 41, rueMartreCentreEugeneSchueller L’Oréal www.kennethcole.com Fax: (212)830-7422 Phone: (212)265-1500 New York, NY10019 603 West 50thStreet Kenneth ColeProductions,Inc. www.kellwood.com Fax: (314)576-3460 Phone: (314)576-3100 Chesterfield, MO63017 600 KellwoodParkwway Kellwood Company EMPLOYER DIRECTORY (CONT.) Fashion The Vault MBA CareerBible 80 www.oxfordinc.com Fax: (404)653-1545 Phone: (404)659-2424 Atlanta, GA30308 222 PiedmontAvenue NE Oxford Industries,Inc www.ninewest.com Toll free:(800)999-1877 Fax: (914)640-1676 Phone: (914)640-6400 White Plains,NY10604 1129 Westchester Avenue Nine West GroupInc. www.nikebiz.com Toll free:(800) 344-6543 Fax: (503)671-6300 Phone: (503)671-6453 Beaverton, OR97005-6453 1 BowermanDrive Nike, Inc. www.newbalance.com Fax: (617)787-9355 Phone: (617)783-4000 Boston, MA02135-2088 20 GuestStreet Brighton Landing New BalanceAthleticShoe,Inc. www.marykay.com Fax: (972)687-1642 Phone: (972)687-6300 Dallas, TX75001 16251 DallasParkway Mary KayInc. www.lvmh.com Fax: +33144132119 Phone: +331441322 France 75008 Paris 22 Avenue Montaigne SA LVMH MoëtHennessyLouisVuitton www.pvh.com Fax: (212)381-3950 Phone: (212)381-3500 New York, NY10016 200 MadisonAvenue Phillips-Van HeusenCorporation www.ralphlauren.com Toll free:(800)377-7656 Fax: (212)888-5780 Phone: (212)318-7000 New York, NY10222 650 MadisonAvenue Polo RalphLaurenCorporation www.pery.com Fax: (305)594-2307 Phone: (305)592-2830 Miami, FL33172 3000 NW107Avenue Perry EllisInternational,Inc. www.revlon.com Phone: (212)527-4000 New York, NY10017 237 ParkAvenue Revlon Inc. www.reebok.com Fax: (781)401-7402 Phone: (781)401-5000 Canton, MA02021 1895 J.W. FosterBoulevard Reebok InternationalLtd. www.quiksilver.com Fax: (714)889-3700 Phone: (714)889-2200 Huntington Beach,CA92649 15202 GrahamStreet Quiksilver, Inc. www.polo.com Fax: (212)888-5780 Phone: (212)318-7000 New York, NY10022 650 MadisonAvenue Polo RalphLaurenCorporation © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.vfc.com Fax: (336)424-7631 Phone: (336)424-6000 Greensboro, NC27408 105 CorporateCenterBoulevard V.F. Corporation www.timberland.com Fax: (603)773-1640 Phone: (603)772-9500 Stratham, NH03885 200 DomainDrive The Timberland Company EMPLOYER DIRECTORY (CONT.) career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.warnerco.com Toll free:(800)759-4219 Fax: (212)971-2250 Phone: (212)563-2000 New York, NY10018 501 7thAvenue The Warnaco Group,Inc. The Vault MBA CareerBible Fashion 81 Customized for: Erin ([email protected]) Looming large CREDIT CARDSERVICES century. Although theevolutionoffinancialservicesbusinesshasbeenalongandstoriedone,itsdevelopmentexpansioncontinues wellintothis in adifferentchapter.) (Noticeably missingcategoriesincludeaccounting,investmentbanking,commercialbankingandmanagement—allofwhicharecovered operate inoneofthefollowingcategories:creditcards,insurance,mortgages,autofinancing,ratings,financialdataservicesordiversifiedfinancials. prospective clientele.Butwhilethetradeisavastone,itssubdivisionsarespecializedtomeetindividuals’fiscalneeds, and themajorfirmsprimarily Like abazaarthatofferssomethingtosatisfyeverycustomer’s potentialneeds,thefinancialservicesindustrypresentsalittlebitofeverythingto STATE OFTHEINDUSTRY Financial ServicesandInsurance April 2008report. a30percentjumpversusits U.S. banksadmittedtostiffening theiroveralllendingpracticesoverthecourseofyearasaresult ofthecreditcrisis, that 65percentof wasn’t theendofmarketbacklash. InJuly2008,theSeniorLoanOfficerOpinionSurveyon BankLendingPracticereported the trendofmoreandmiddle-class citizensbeingforcedtoliveintheircarsduetheforeclosures broughtonbythesubprimecrisis.Andthat the U.S.wouldbehardesthit throughout2008.Sadly, hispredictionsseemedtobefulfilledquickly—byJune2008, TheGuardianreportedon Ratopredicted market inmanyways,andthosetheU.S.tookbruntof fallout.Inlate2007,InternationalMonetaryFundDirectorRodrigo Credit cardcompanieswerehardlytheonlyonestofeelpinch ofthecreditcrunch.Consumersworldwidefeltbreakdownsubprime Consumer creditpurgatory a practicethatwillcontinuefor12quarters.Meanwhile,Visa,in itssettlement,ispayingAmericanExpressatotalof$2.25billion. distributing cardsthroughAmericanExpress.Inthethirdquarter of2008,MasterCardwillmakeitsfirst$150millionpaymenttoAmericanExpress— settlement stemmingfroma2004lawsuitcontendingthatMasterCard—along withcompetitorVisa—hadbarredsomefinancialcompaniesfrom $746 millionlossforthesecondquarterofyear, dueinnosmallparttothe$1.8billioncompanyendeduppayingAmericanExpressa Potential legislationagainstVisaandMasterCardwasonlythetip oftheicebergcreditcardcompanies’difficultiesin2008.MasterCardposteda Credit UnionAdministration. legislation, calledthe“CreditCardFairFeeActof2008,”asspearheadedbyFederalReserve,OfficeThriftandSupervision,National which wouldshieldconsumersfromhighinterestratesandletmerchantswhotakecreditcardsnegotiatetheirtransactionfees. Theproposed In thefirstquarterof2008,VisaandMasterCardspent$860,000$720,000apieceinordertoattemptcombatproposed federalregulations, A bumpyride skyrocket throughoutthecourseofyearandbeyond. histories. Balancetransferratesforcardsalsoincreased,andindustrywatcherssaythere’s arelikelytocontinue notalotofreliefinsight—rates withstrongcredit Credit cards’annualinterestratesalsocontinuedtoriseinto2009,evenincludinglow-interestoncardsofferedthose and theirbalancesleftunpaid(intheUnitedStates,thereareabout$5trillioninoutstandingcreditcardlines). another $2.5billionwillgoin2010.Theconcernhasalsobeenraisedthatcreditcards,onceusedasacashmanagementtool,havebecomeoverused that creditcards’problemsaremoreimminentthanpreviouslyexpected.Sheestimated$2trillionincardlineswillbecut2009,and related issues.Top bankinganalystMeredithWhitney (nowworkingforhereponymousfirmafterleavingOppenheimer&Co.)saidinMarch2009 anumberofrecession- Credit cards,whichsawtheavailabilityoftheirlinestoconsumersrapidlydiminishovercourse2008,aredealingwith Credit crunch by AmericanExpressandJapan-basedJCBcard(bothofwhichhadunknownshares). share,followed percent andDiscoverwith6percent.Onaglobalscale,Visaaccountedfor65ofthemarket,MasterCardhad30 percent U.S.marketsharebasedoncreditcardreceivablesoutstandingin2007,followedbyMasterCardwith36percent,America n Expresswith12 Visahada46 to Reuters,asof2007,thereweremorethan640millioncreditcardsincirculationtheU.S.AndaccordingCreditCards.com, seller. Thoughyou’remostlikelyfamiliarwithhowcreditanddebitcardswork,youmightnotbejustlarge theindustryis.According on aninstallmentbasis.Viathedebitcard,peopleavoiddebtbywithdrawingpurchaseamountfromtheirbankaccountsand transferringittothe date,ormakepayments individuals withthefundsrequiredtopurchasegoodsandservices,inreturn,repayfullbalanceatalater Issuing creditcardsisoneofthemostcommonwaysinwhichfinancialservicesfirmsprovidetoindividuals.Via card,firmsprovide 83 Customized for: Erin ([email protected]) together, controlatleast80percentoftheU.S.creditcard purchasevolume(asofJuly2007),accordingtotheNational RetailFederation. that, with thethousandsofbanksthatissueVisaandMasterCard.This allowsAmexandDiscovertogaingroundonthetwocreditpowerhouses ending thetwocompanies’rulesthathadpreventedbanksfromissuing cardsonrivalnetworks.Asaresult,AmexandDiscoverbecamefreetopartner In October2004,theU.S.SupremeCourtdecidednottohearVisa andMasterCard’s appealinthegovernment’s them,effectively antitrustsuitagainst cards tobeillegalandharmfulcompetition.MasterCardwas forced topay$2billionindamagesandVisapaid$1billion. court foundVisaandMasterCardrulespreventingthecompanies’ memberbanksfromalsoissuingAmericanExpressandMorganStanley’s Discover In September2003,afederalcourtupheldlowerruling that costcreditcardpowerhousesVisaandMasterCardacombined$3billion.The And thentherewerefour in fullforceduringtheearlypartofnewmillennium.In2003alone,MBNA—called“TheKingPlasticFrontier”by took adipinthelate1990s—accordingtosomeindustryexperts,thiswasbecauseissuershadexhaustedmostlucrativepartners—they returned offer discountsforusingthecard(thinkCitibank’s AAdvantagecardsandAmericanExpress’MileageRewardsprogram).Althoughcobranded witharetailerto a totalof$1.4trillion.)The1990salsowitnessedthesurgecobrandedandaffinitycards,whichmatchupcreditcardcompany in 2002.(AccordingtothePackagedFactsreport“DebitCardsU.S.,”therewere28milliondebitcardtransactionstheU.S.2007,worth The 1990ssawthedebitcardriseinpopularity. billiontransactions Thedebitcardgrewfromaccountingfor274milliontransactionsin1990to8.15 The debutofthedebit,climbcobrand (Automatic Teller Machine)begantosurface,giving cardholders24-houraccesstocash. cardholder’s information.Thisprocessgaveauthorizationsandprocessedsettlement agreementsinamatterofminutes.Inthe1980s,ATM on thebackofcreditcardsallowedretailerstoswipecustomer’s creditcard throughadial-upterminal,whichaccessedtheissuingbank authorizations, beginningintheearly1970s,allowedmerchantstoapprovetransactions24hoursaday. Bytheendofdecade, magneticstrips Cutting thecostoftransactionprocessinganddecreasingcreditcardfraudwerenextinnovationsintroducedtoindustr y. Electronic either theMasterCharge(whichchangeditsnametoMasterCardin1979)orBankAmericardwasrenamedVisa1977). California formedtheWestern StatesBankcardAssociationandintroducedtheMasterCharge.By1969,mostcreditcardshadbeen convertedto began issuinglicensingagreementsthatallowedotherbankstoissueBankAmericards.To competewiththeBankAmericard,fourbanks from Bank ofAmericamastermindedcreditcardinnovationsinthe1960swithintroductionbankassociation.In1965, BankofAmerica The associationandtheMaster cards waslesscostlythanmaintainingtheircreditcardprograms. discovered thatcreditcardcustomersusuallyspentmorethaniftheyhadtopaywithcash.Additionally, retailersfoundthathandlingbank-issued other bankssoonbeganintroducingsimilarcards.Banksfoundthatcardholderslikedtheconvenienceandcreditlinecards offered,andretailers At alaterdate,thebankwouldreimburseretailerandthencollectdebtfromconsumer. Actinguponthesuccessof Franklin’s Charge-It, thenclosing thesale. allowed consumerstomakepurchasesatlocalretailestablishments,withtheretailerobtainingauthorizationfrombankand In 1951,NewYork’s FranklinNationalBankcreatedacreditsystemcalledCharge-It,whichwasverysimilartothemoderncard.Charge-It Charge-it could payforthesethingsoncreditthatotherwisetheycouldn’taffordtobuywithcash. expensive modernconveniencessuchaskitchenappliancesandwashingmachines.Asaresult,thecreditcardboomedinpopularity, asconsumers After thewar, though,cardswerebackontrack.Modesoftravelmoreadvancedandaccessible,peoplebeginningtobuy the beginningofWorld War II,when“RegulationW”restrictedtheuseofcards,andasaresult,stalledtheirgrowth. Then, companiesissuedthecards,processedtransactionsandcollecteddebtsfromcustomer. Thepopularityofthesecardsgrewuntil services, andbythelate1930s,departmentstores,communicationcompanies,traveldeliverycompanieshadallbegantointroducesuchcards. interest-free, deferred-paymentprivileges.Ten yearslater, GeneralPetroleumCorporationissuedthefirstmetalmoneyforgasoline andautomotive The creditcardtracesitsrootsbackto1914whenWestern Unionbegandolingoutmetalcards,called“metalmoney,” whichgavepreferredcustomers Heavy metal and StarwoodHotelsResorts.(In2005,MBNAwasacquired byBankofAmerica.) companies andorganizationssuchasA.G.Edwards&Sons,the Massachusetts InstituteofTechnology, ArsenalFootballClub(U.K.),CharlesSchwab organizations, includingtheNationalFootballLeagueandUniversityofMichigan.In2004,MBNAsignedagreementswith numerous other some 400newdealswithvariouscompaniessuchasMerrillLynch, RoyalCaribbeanandAirCanada.Additionally, itreneweddeals withanother1,400 Financial ServicesandInsurance The Vault MBA CareerBible 84 BusinessWeek © 2009Vault.com Inc. —struck Customized for: Erin ([email protected]) in reachbyajudgewhoalsorejectedallegationsfromDiscoverthatMasterCardwasexcludingdistributingdebitcards. wasdeemed limited from dealingwithafewroadblocks.InAugust2008,lawsuitDiscoverassertingconspiracybetweenMasterCardandVisa exempted Discover the secondquarter2008was$234.15million,upfrom$209.24millionin2007.Beingitsownentityhashardly As anautonomousfirm,DiscoverisnowledbyCEODavidW. Nelms,andasofAugust2008,itsstockwastradingat$15.52ashare.Netincomefor to be$13billionatthetime. to growmorequickly. ThedealwasfinallycompletedinJune2007,andthoughfinancialtermsweren’tdisclosed,analystsestimatedDiscover’s worth billion in2006,MorganStanleyannouncedthesameyearthatitplannedtospinoffDiscover, whichsomeanalystssaidwouldallow bothbusinesses But despitethekindwords,therewasultimatelyachangeofheartforMorganStanley. AlthoughDiscoverdeliveredrecordbefore-taxearningsof$16 substantial cashflow, diversifiesthecompany’s earningsandbroadensourscalecapitalbase.” “It isaunique,successfulfranchisewithgrowthopportunitiesthatgivesMorganStanleyconsistentstreamofstable,high-q Purcell hadtalkedofsellingoff.“Discoverisnotonlyastrongbusiness,butalsoanattractiveassetforMorganStanley,”Mack saidinastatement. However, newCEOJohnMack’s firstbigaftertakingoverthereinsinmid-2005wastoreversecourseonDiscoverbusiness,which predecessor Analysts alsodisagreedoverwhetherornotthespin-offwouldmaximizeshareholdervalue. Soon aftertheannouncement,analystsbeganestimatingStreetvalueofhugecreditcardunit.Therangefellbetween$9 billionand$16billion. Morgan StanleyCEOPhilipPurcellreasonedthatDiscover“willbemoreproperlyvaluedasastand-aloneentity”thanpiece ofMorganStanley. In themidstofMorganStanley’s cardunit.Former greatpersonnel exodusofMarch2005,thefirmannouncedplanstospinoffitsDiscovercredit Re-Discovering thepossibilities contending thatthecompanieshadbarredsomefinancial fromdistributingcardsthroughAmericanExpress. announced thattheywouldbepayingAmericanExpress$1.8billion and$2.25billion,respectively, inasettlementstemmingfrom a2004lawsuit The road,however, has beenrockyasMasterCardandVisahaverecentlyweatheredsomestorms.InNovember2007, trading foraround$74ashare. under thesymbol‘V’)closedat$56.50,a28.4percentincrease fromitsopeningprice.AsofSeptember2008,Visa’s stockwas stillgoingstrong, increased 35percentto$59.50almostimmediatelyupongoing public. Attheendoffirstdaytrading,Visa’s shares(which tradeontheNYSE at $44eachforabout$1.8billion.)Thefirm’s shareswereinitiallyvaluedat$44pershare—higherthan theexpected$37to$42range—and billion initsinitialpublicoffering.(Thedealgotevenbiggerwhen Visa’s buy40.6millionmoreshares underwritersdecidedtoexercisetheir optionto MasterCard wasn’ttheonlypieceofplasticthat’s dazzledIPOinvestors.OnMarch19,2008,Visasetarecord forstatesideIPOswhenitraised$17.9 while transactionsprocessedwentup13.6percentto5.2billion. 2008, 951millionMasterCardcardswereissued,up11percent.MasterCard’s worldwidepurchasevolumewentup12.8percentto $655 billion, huge success.AsofAugust2008,thestockhadzoomedtoover$234pershare,thanksinpartsolidgrowthrates.During the secondquarter the IPOhasbeena open inthe$40to$43range,butMasterCardwasat$39afteraseriesofsetbacksdelayedprocess.Butbymostaccounts, stockholders,” RobertSelander, thecompany’s presidentandchiefexecutiveofficer, told theAssociatedPress.Themarkethadexpectedissueto NYSE marksamajormilestoneforMasterCardandreinforcesourcommitmenttocontinuedgrowthbuildingvalue our customersand On May25,2006,MasterCardfinallywentpublic,andbegantradingontheNewYork “Listingonthe StockExchange(NYSE)undertheticker‘MA.’ At theendofAugust2005,MasterCard,whichbecameaprivatesharecorporationin2002,announcedplanstobecomepublicly-t raded company. The bigIPOs management. $3.3 billionacquisition,completedinJuly2007,helpedBofAstrengthenitscapabilitiesservinghigh-net-worthclientsand In November2006,BofAannouncedthatithadagreedtoacquireUSTrust, thewealthmanagementsubsidiaryofCharlesSchwabCorporation. The unrelated cuts,thebankannouncedplanstoslash7,500jobsinitsmortgage,home-equityandinsurancegroupssummer2008). tax, fullyrealizedin2007,andarestructuringchargeof$1.25billionafter-tax. Costreductionscamefromarangeofsources,includinglayoffs.(In affinity relationshipswithmorethan5,000partnerorganizationsandfinancialinstitutions.Itachievedoverallexpenseefficienciesof$850millionafter- in managedoutstandingbalancesand40millionactiveaccounts.BankofAmericaaddedmorethan20newcustomer accountsaswell purchase ofFleetBostonFinancialin2003.TheMBNAmadeBankAmericaonethelargestcardissuersU.S., with$143billion In June2005,BofAannounceditsacquisitionofcreditcardbehemothMBNAina$35billiondeal,followingcloselyontheheels ofits$49billion The bigbuy career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, Financial ServicesandInsurance The Vault MBA CareerBible increaseitsassetsunder uality earningsand 85 Customized for: Erin ([email protected]) insured againstextraordinarylosses. and ChubbareothernotableAmerican insurers. France’s AXA, Lloyd’s (betterknownbysomeasLloyd’s ofLondon)andItaly’s Group,Progressive AssicurazioniGenerali.Nationwide,LibertyMutual and Travelers. MetLife, PrudentialFinancialandNewYork LifeInsurancearethetopfirms inlife/health.LeadersabroadincludeGermany’s Allianz, Institute), thetop-fiveU.S.property/casualty insurancecompaniesareBerkshireHathaway, AmericanInternationalGroup (AIG),StateFarm,Allstate though, thatthosetworegionsonly hold7percentoftheplanet’s population.)Rankedby2007revenue datafromtheIII(Insurance Information terms ofinsurancecoverage,asevidencedbyits40+percentshare ofthetotalfigure;andUnitedStatesrepresents33percenttotal.(Note, Insurance isatrulyglobalindustry—worldinsurancepremiumsreached $4.1trillionin2007.Europeis,onaverage,aheadoftheresttheworld The stateoftheinsuranceworld by MaryHartofTV’s other suchpoliciesdoindeedexist.Infact,thephrase“million dollar legs”comesfromBettyGrable’s policy forthatamount(asimilarpolicyisheld tobeunfounded, policies alwaysgetalotofpress:thoughrumorsthatJenniferLopez hadinsuredhermostfamous,um,assetfor$1billionproved 2005. Celebrity for pets.Animalhealthinsuranceisprojectedtogenerate$550 millioninpremiumsby2010,upfroma$160market These days,though,youcanfindinsuranceforjustaboutanything: weddings,barmitzvahs,thechanceofweatherruiningavacation—even policies jewelry ormusicalinstruments),whilehealthismadeupofsubsetsthatincludedisabilityandlong-termcare. by ahomeownerorrenter, andcancoverland,thebuildingstructurepersonalincidentalproperty(likeelectronics,clothes, importantpapers, U.S. premiums($1.3billion).Thebiggercategoriescanbesubdividedintosmallergroups;apersonalpropertypolicy, forinstance, maybepurchased and withinthose,eitherpersonal(individualconsumers)orcommercial(business).Lifedominatesthemix,accountsforab out 60percentofall and property/casualty,just aboutanyothermisfortuneyoucanname.Theinsuranceindustryiscommonlydividedintocategories,suchaslife/health individuals andbusinessesforfuturelosses,thustakingontheriskofpersonalinjury, death,damagetoproperty, unexpected financialdisasterand The insuranceindustryisamultitrillion-dollarmarketdealinginrisk.Inexchangeforfee(the“premium”),insurerspromi se tocompensate Risky business INSURANCE for consumerstowatchwheretheyusetheircards. shops. TheFTChasn’tcalledthecompany’s Eitherway, actionsillegal,butitdidallegethatthecompanywasn’tupfrontaboutitsactions. it maypay cardholders’ transactions,reducingthecreditlimitsofcustomerswhousedtheircardsatmarriagecounselors,tireshops,billiardhallsandpawn some creditcardcompanies.CompuScore,whichmarketsVisacards,cameunderfirefromtheFederalTrade CommissioninAugust2008forprofiling But isitpreferabletoputcollegepaymentsonacreditcardratherthanluxuryitemsthatwouldotherwisebeoutofreach?Itmaybe,according Americans’ creditcardswithoutasecondthought—swimmingpoolsandcarpaymentsarenolongerraritytocharge. while studentsputabout$2,500ontheirplastic.Besidesbig-ticketitemslikeeducation,otheraccoutermentsofwealtharealsofrequently released inAugust2008revealedthatparentsofcollegestudentswhoborrowedoncreditcardsputanaveragemorethan$5,800 ontheircards will onlycontinuetofalldeeperintocreditissues.AndthosedebtissuesalreadyrundeepwithAmericansbeginwith.ASallieMae/Galluppoll points thantheyhadbefore,someanalystspointedoutthatthemainconcernwithsuchaprogramiscreditcardownerswhoarealreadyindebt pay theirmonthlymortgageorrentwithacreditcard.Althoughthecompaniessaidthatcustomershavepotentialtoearnexponentially morebonus has continuedtotank.Maybebecauseofthistrend—orinspiteit—AmericanExpressandVisabeganarewardsprogramthatallowscustomers There’s beenanumberofreportsdetailingthe disturbingtrendofcash-strappedhomeownersdecliningtopaytheirmortgagesastheU.S.economy A worryingtrend supermarkets suchasAlbertsonsandPigglyWiggly. on akeypadandyourpaymentismade;fingerprintsarelinkedupwithcreditordebitcards.Thesystemalreadyinplaceat hundredsofU.S. asyourphone number payment information.Allyouhavetodoispressyourfinger(itsprint)againstadevice,entersomepersonalinformation,such Another no-contactcreditpaymentsystemisnowinplace:thepay-by-fingersystem,whichindividuals’fingersarescannedand linkedtotheir Other thannothavingtorunthecardsthroughamachine,anotherbenefitisthatnosignaturerequiredforpurchaseslessthan$25. circulation by2011. only expectedtoskyrocket.AccordingmarketresearchfirmPackagedFacts,therewillbeapproximately109millioncardsin machine. Thepopularityofcontactlesscreditanddebitcards—whichcanbeusedatnumerousretailerssuchasMcDonald’s, andCVS—is 7-Eleven 2007, bankshadissuedabout27milliondebitandcreditcardsthatcouldbescannedviaaradar-like beam,ratherthanhavingtobe runthrougha “Contactless” cardsandfinger-swiping systemsarethelatestadvancesinworldofplasticpurchasing.AccordingtoCreditCards.com, bymid- No contactcredit million) andthesmileofAmericaFerrara(television’s Financial ServicesandInsurance The Vault MBA CareerBible 86 Entertainment Tonight Entertainment ); othernotablecontemporarypoliciesincludeBruceSpringsteen’s voice(reportedlycoveredataround$6 Ugly Betty Ugly ) for$10million.Andthroughreinsurance,insurancecompanies themselvescanbe © 2009Vault.com Inc. Customized for: Erin ([email protected]) Virtual agent banking companieshaveenteredtheinsurancearena,creatingheightenedcompetition. companies arefreetopartnerupwithcommercialbanks,securitiesfirmsandotherfinancialentities.Ofcourse,theconverseisalsotrue,some other’s industries,andtheGrammLeach-BlileyActof1999,whichfurtherdefinedpermissibleactsforfinancialholdingcompanies.Today, insurance financial servicesfollowsthe1999repealofGlass-SteagallAct,whichbarredinsurancecompanies,banksandbrokeragesfromenteringeach mutual funds,healthcaremanagement,employeebenefitsandadministration,realestatebrokerageevenconsumerbanking.Themovetowards insurance. Theworld’s securities, topcompanieshave broadenedtheirarrayoffinancialservicestoincludeinvestmentmanagement,annuities, Japan hasbroughtinsurersclosertodirectcompetitionwithfinancialservicesfirms.Indeed,thebusinessofinsuranceindustrydoesn’tend in focustomanaginginvestmentriskratherthanthe(obviouslyinevitable)ofmortality. Moreover, increasedderegulationintheUnitedStatesand The lastquarter-century hasseenamoveawayfromlifeinsurance(ofwhichthereare1,190firmstoday)towardannuityproducts—reflecting ashift “demutualization,” promisestoraisecapitalforinsurancecompaniesindulgeinacquisitions. knownas (or thoseownedbypolicyholders—e.g.,StateFarm),tostockinsurersheldshareholders—e.g.,Allstate).Thisprocess, insurers accountfornearlyhalfofallpremiumswritten.Someinsurancecompanieshavealsobeguntoreconfigurethemselvesfrommutual it’s commonforthefatterfirmslikeAIGto ownscadsofsmallerinsurers,eachcateringtoaparticularmarket.Thus,thetop-10 property/casualty According totheIII,therewere2,723property/casualtyinsurancecompaniesinUnitedStates2007;however, ismisleading,since thisnumber unspectacular. record of2005.Weather watchersagainpredictedan above-normal hurricaneseasonfor2007and2008;butthose wereboth,than tornadoes, hurricanes,terrorism, winterstorms,earthquakes,wind/hail/floodandfire)wereestimated at$9.2billion—afarcryfromthe$61.8billion season withparticularlystrongstorms, yetonlyonesub-hurricaneeventmanagedtoinflictdamage. Fortheyear, insured catastrophelosses(including For 2006,NationalOceanicandAtmosphericAdministration(NOAA) predictionsindicatedan80percentchanceof“abovenormal” hurricane and severity. respectively. Insurers feared thatcyclicalweatherpatterns—aswellas,manybelieve,globalwarming—auguredanincreaseinhurricanenumbers against some$40billionofinsuredproperty. HurricanesRitaandWilma(whicheachreachedcategory5)damagedtheGulfCoastSouthFlorida, billion indamages—twicethoseofHurricaneAndrew, acategory-5storm thathittheSoutheastin1992.Morethanonemillionclaimswerefiled destructive ofthesewasKatrina,acategory-3stormthatdevastated NewOrleansandtheGulfCoastatendofAugust2005 caused$100 Themost paled incomparisontothatof2005—themostactiverecorded history—duringwhich15differenthurricanesformedintheAtlantic. estimated at$23billion.The2004seasonalsobroughtonmore thantwomillionseparateinsuranceclaims.However, the2004hurricaneseason Nature. Thehurricaneseasonof2004,duringwhichasuccession offourhurricanesbatteredtheSoutheast,rackedupinsuredproperty losses Despite thecatastrophicdestructionofSeptember11th,nation’s mostconsistentlyexpensiveinsurance incidentscomestraightfromMother When disasterstrikes December 31,2014. date isnowsetat terrorism-related event,andin2007,thedeductiblewassetat$100million.Theactextendedonceagain,itssunset must causebeforethegovernmentstepsinoverlifeofbill—in2006,aterroristacthadto$50milliondamage tobecertifiedasa government's exposure,puttingmoreoftheburdenonprivateinsurers.Theextendedactmandatedincreasesinamount of damage anevent Just daysbeforetheexpirationofact,TRIAwasextendedfortwoyearsinDecember2005.However, reducedthe provisionsoftheextension potential riskfromterrorism-relateddisasters. implementation wasshort,andrecordkeepinglogisticalquestionsabounded—theindustryacknowledgedthattheplanat leastquantifiedthe deductible beforefederalassistancebecameavailable.Whilethemeasuremetwithmuchgrumblingfromallpartiesinvolved—the timeframefor a three-yearperiod.Participationwasmandatory, andintheeventthatsuchanepisodeoccurred,eachcompanywasresponsibleforpayinga event asonewithaminimumof$5millionindamages,andprovidedforthesharingriskbetweenprivateinsurersfederalgovernmentover a terrorism-related in November2002,aimedtodealwiththenearlyincalculableriskposedbysuchathreat.Amongotherthings,lawdefined they wouldhandletherisksassociatedwithpossiblefutureterroristacts.TheTerrorism lawbyPresidentBush RiskInsuranceAct(TRIA),signedinto property- andliability-relatedlosses$36billioninotherassociatedclaims,butitalsocausedinsurersreinsurerstotakeahardlookathow The September11terroristattackssentshockwavesthroughtheinsuranceindustry. $32billionin Notonlydidthetragedycostinsurersroughly A newcauseofloss:terrorism moved to100percentonlinevendingoftheirpolicies,thevastmajorityhavefoundithelpfulprovidequotesonwebsites. Esurance wasfoundedasanentirelyonlineautoinsurancecompany, andhasgrowndramaticallyinitsshort10-yearhistory. Thoughfewinsurershave reap thebenefitsoflowersalescostsandcustomerserviceexpenses,alongwithamoreexpedientwaygettinginformationto (andfrom)consumers. distributed byindependentagents(businesspeoplepaidoncommission)orexclusive(paidemployees).Butinsurerswh o sellovertheWeb Like otherindustries,theinsurancemarkethasbeentransformedinrecentyearsbyinternet.Traditionally, insuranceproductshavebeen career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, Financial ServicesandInsurance The Vault MBA CareerBible kfully, 87 Customized for: Erin ([email protected]) approved wheretheyareneeded. However, measurestobe accordingto theNationalCouncilonCompensationInsurance,currentpoliticalclimateoftenmakesithardforthese brought relief—excludingthestatefromcountrywidedataraised thenationalcombinedratio(by10pointsin2006andfive2007). yearsagohave workers’ compensationdisbursementstoincrease,evenasthefrequency ofclaimsisdeclining.ReformsenactedinCaliforniaseveral expensescause outstripping wagehikesandthemedicalconsumerpriceindex. Indemnitycostsarerising,too,butatamuchslowerrate.These of 12percentayear, according toExpressScripts,Inc.);andmedicalcoveragehasalsobeenthedrivingforceforescalatingcorporatepremiums, The problemsplaguingworkers’compensationarestillthere,though. Medicalcostsincreasedby100percentbetween2000and2006(anaverage and expenses.Thus,anythingleftaftersubtractingthatnumber from100representsprofit.For2007,theratioslippedto99percent. showing inthreedecades,witha96.5combinedratio(on$46billion inpremium).Thecombinedratioisthepercentofpremiumspaidoutaslosses coverage; althoughit’s thelargestcommercialsector, ithasn’tshown anunderwritingprofitsince1995.But2006wasdifferent,infact,itthebest that generatesalotofheatamongfirms,regulatorsandthegeneral public.Annualresultshaverarelybeenupliftingforthecompaniesthatwrite Workers’ anothersegment compensationinsurance, whichpaysforlostwages(termed“indemnity”)andmedicalcostsinjuredemployees,isyet The highcostof(not)working Monitor showedthat93percentofinsurers’rateswerestableordecreasing,comparedto84theprioryear. in statesbothwithandwithouttortreformmeasuresonthebooks.Also,a2008studyinvolving700policyquotesconductedbyMedicalLiability there aresignsthatthemedicalmalpracticeinsurancecrisisiswaning—inyearssincestudy, theannualnumberofsuch suitsfiledhasdeclined the study’s methodology, claimingitfailedtotakeintoaccounttheadditionalcoststhatinsurersface,suchasunderwriting.Thegoodnewsis Insurersblasted amount ofmoneypaidinclaimsincreasedbyapaltry5.7percent,andthesurplusescollectedinsurers33percent. A July2005studybytheCenterforJusticeandDemocracyfoundthatmalpracticeratesincreased120percentbetween2000 and 2004, whilethe entirely ratherthanshouldertherisk. malpractice claims,whichhaveskyrocketedinrecentyears,asatruecrisis.AccordingtotheIII,someinsurersquitwriting malpracticepolicies technologies. Isthisreputationdeserved?Itdependsonwhoyouask,buttheindustryhasitsownbattlesinhealthcare.Forexample,itseesmedical plenty ofairtimetohorrorstoriesaboutmanagedcarecompaniesslightingcriticallyillpatientsandinsurersrefusingcover necessarytreatmentsor companies wereratedaslesstrustworthy.) Themediaandpoliticians—neitherofwhichthepublicconsidersverytrustworthy, for thatmatter—give “generally honestandtrustworthy,” andonly5percentofrespondentsthoughtthatHMOshadsimilarqualities.(Infact,tobaccooil companies were Health insurersgenerallygetabadrapfromthepublic:in2005,only9percentofthosepolledthoughtthathealthinsurance Unhealthy healthcare value andamountoflostproperty, orwhencaraccidentvictimspaddamageclaimstocovertheirdeductibles). burglaries overstatethe the coverage;whilesoftfraudcoverspolicyholders’andclaimants’exaggerationoflegitimateclaims(suchaswhenvictims Fraud comesintwoflavors,“hard”and“soft.”Hardfraudisadeliberateinventionorstagingofanaccident,fireothertype ofinsuredlosstoreap affected byfraudulentactivity. of allclaims,adding$300totheaverageconsumer’s insurancebilleveryyear. Auto,healthcareandworkers’compensationarethesegmentsmost National InsuranceCrimeBureaushowsthatproperty/casualtyinsurancefraudrunsnear$30billionannually, andcomprisesasmuch as10percent estimated $85to$120billionperyear. Butthisconisnotperpetratedbyrogueexecutives,butJohnQ.Public.ThedatafromtheIIIand Fraud isanissuethatcontinuestochallengetheinsuranceindustry. AccordingtotheIII,itcostscompanies(and,downline,consumers)an I’ll takefraudfor$100billion,please rates areblamedforthesignificantpricejumps,whichinstigatedalarge-scalerippleeffectthroughouthousingindustry. reinsurance premiums; ratesinFloridacommonlyhavesurgedasmuch200percentsince2005.Updateddisasterpredictionmodelsandhigher (tornadoes notwithstanding),tobalanceouttheriskierinsureds.Theinsurersstillwritingpoliciesforcoastalregionschargeastronomicallyhigher As anothercost-cuttingstrategy, othercompaniesconcentratedonwooingpolicyholdersintheMidwest,anarealesspronetonaturaldisasters and sentencedtofiveyearsinprisonJune2008,Katrinainsurancevictimcasescontinueappearsettletoday. convicted ofbribery the arrangementsalsoforcedre-evaluationofthousandspolicies,35,000themfromAllstatealone.ThoughScruggswas represented manyofthem,hadmanagedsettlementswithAllstate,StateFarm,NationwideandMetropolitanProperty&Casualtyfor millionsofdollars; (in LouisianaandMississippi)accusedtheirinsurersofinappropriatelydenyingclaims.Asmid-2007,attorneyRichardScruggs,who houses incoastalregions,anindustrypracticeknownasredlining,wh Financial ServicesandInsurance The Vault MBA CareerBible 88 © 2009Vault.com Inc. Customized for: Erin ([email protected]) son. million tobepaidbackinsuredsoverthenextfouryears.OnecasualtyofdebaclewascompanychairmanandCEOJeffrey Greenberg—Hank’s McLennan, wasaccusedofmanipulatingbidsandreceivingkickbacksforfunnelingbusiness,butthefirmlatersettledwithNew York statefor$850 company ofoverchargingonaquartermillionpoliciesoverfive-yearperiod.InOctober2004,theworld’s largestinsurancebroker, Marsh& In June2005,Allstateagreedtopay$34millioninrestitutionandfinessettleclaimsfromCaliforniainsuranceregulators, whohadaccusedthe billion. ThelawsuitwenttocourtinSeptember2008. to NewYork stateandtheSecuritiesExchangeCommission.ThatDecember, AIGtriedtorecoversomeofitslossesbysuing Greenberg for$1 funds,inadditionto penalties settled thecase,andasaresult,AIGhandedovertotalof$1.6billioninrestitutiontopolicyholders,investorsstate accusations ofsecuritiesfraud,commonlawfraudandanumberviolationsinsurancelaws.InFebruary2006,SpitzerAIG to steerthecompany. ThatMay, then-NewYork StateAttorneyGeneralEliotSpitzerfiledacomplaintagainstAIG,GreenbergandSmith,over down fromhispostinMarch2005afternearlyfourdecadesonthejob.GreenberghadbeenpersonallypickedbyAIGfounderCorneliusVander Starr the misstatementswerelargelyfoundtobefaultofformerCEOMaurice“Hank”GreenbergandCFOHowardSmith,Greenbergstepped AIG’s accountingpracticesrevealed problemsthatforcedthecompanytoreducereportedprofitsbyover$3.5billion overfiveyears.After Since 2005,lifeatthetophasbeenlessthanperfectforanumberofinsuranceheavyweights.Aninvestigationbyfederaland stateprosecutorsinto Under thescope for theCharteredProperty-Casualty Underwriters). the actuarialsocieties(oneforlife, oneforproperty/casualty).Underwritershavetheirownsetoftests administeredbytheAICPCU(AmericanInstitute loss andincorporatecompanyexpenses intopremiumrates.Advancementinthatcareercomes withsuccessfulcompletionofexamssponsoredby basics andstateregulations;authorizationtoselladditional financial instrumentsmeansadditionaltests.Actuariescalculatetheprobabilityofa testoninsurance agent, oranyonewhosellsinsurance,isobligedtogetalicense, whichusuallydemandsacourseofstudyandpassingwritten specialists. However, several ofthesejobfunctionsrequire(oratleaststronglyencourage)specializedtrainingand/orprofessional certification. An experts; customerservicerepresentatives;insurancesalesagents; underwriters;lawyers;computersystemsanalysts,programmers andsupport Common jobsintheindustryincludeclaimsadjusters,appraisers, examinersandinvestigators;marketingsalesmanagers;actuaries;losscontrol industry sectors. banking institutions,non-depositoryinstitutionsorsecurityand commodity brokers.Medicalandhealthinsuranceareamongthe fastest-growing agentsalsoworkfor or propertyandcasualtyinsurance.Butagrowingnumberofmultiline agentssellalllinesofinsurance.Agrowingnumber workforce ismadeupofself-employedprofessionals,typicallyindependent salesagents.Mostinsuranceagentsspecializeinlifeandhealth ofthe 60 percentworkforinsurancecarriers,andtheremainderisemployed byagencies,brokeragesandotheremployers.Asmallproportion According totheU.S.BureauofLaborStatistics(BLS),insurance industryemployedapproximately2.2millionpeoplein2006.Ofthese,around Ensuring thefuture Journal Street Wall The AIG owedsomeWall Streetfirmsasmuch$10billionforspeculativetradesonmortgageassetsandcorporatedebtthatwentsouth,insiderstold able toendurethebankruptcyofLehman,couldnothandleliquidationAIG. pass hadledsomeindustryobserverstobelievethatAIGwouldsufferasimilarfate.Butatthe11thhour, theFedsdecidedthatmarkets,seemingly government decidednottobailoutcrumblingNewYork-based investmentbankLehmanBrothers,whichcausedtofileforChapter11.This Willumstad tobesucceededbyEdwardLiddy, theformerheadoffellowinsurancegiant,Allstate.TheagreementarrivedtwodaysafterU.S. billion inloansreturnforconvertiblewarrants.Thisdealgavegovernmentan80percentstaketheinsurer, andcalled for AIGCEORobert hands ofthegovernmentforfirsttimeever, andplacingU.S.taxpayerdollarsatrisk—theFederalReserveTreasury Department promised$85 second-largest lifeinsurerintheUnitedStates.Undertermsofdeal—onemostradicalU.S.history, puttingaprivateinsurerintothe born inSeptember2008.Onthenightof17th,U.S.governmentseizedcontrolAIG,oneworld’s largestinsurancefirmsand But thatwasn’tthelastheardfromAIG—infact,whathappenednextwasoneofdefiningmomentsbankingandeconomic crisisthatwas Reports ofourdeath…arenotgreatlyexaggerated hoping toselloffsomeofitsarmsgeneratecashandisolateriskycontracts,butit’s notatallclearwhetheranytakerswillmaterialize. assets. Forthefullyear, AIG’s incomestatementwassimilarlydismal—thefirmlost$99.3billion,comparedwitha$6.2billion profitin2007.AIGis $5.3 billionlossinthefourthquarterof2007).Duringthatperiod,firmtooka$21tax-relatedchargeandwrote downalmost$26billionin $30 billiontoAIG.Simultaneously, thefirmreporteda$62billionlossforfourthquarterof2008(staggering,especiallywhencomparedwith After twomoreadjustmentstothepackagethatbroughttotalup$150billion,inMarch2009U.S.governmentsaiditwouldofferanadditional of AIG’s bailoutpackage,andtheFederalReserve“hasnoimmediateplanstohelpAIGpay[them]off.” spokesman forAIGsaidthetradeswerenotspeculativebut“creditprotectioninstruments.”Nomatterhowthey’reclassified,lossesfalloutside a conservativeinsurersellingprotectionagainstdefaultsonseeminglylow-risksecurities,putbillionsofdollarsthecompany’s moneyatrisk.”A career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com in December2008.Accordingtothe for insidercompany profiles,expert advice, Journal , “AIG’s financialproductsunit,operatingmorelikeaWall Streettradingfirmthan Financial ServicesandInsurance The Vault MBA CareerBible 89 Customized for: Erin ([email protected]) by neglectingtomention“materialfactsthatcausedbondinsurers inConnecticuttopurchasebondsathigherinterestrates.” bond insuranceaswellelevatedinterestrates.Additionally, BlumenthalsaidtheagenciesranafoulofConnecticutUnfair Trade PracticesAct Fitch, Moody’s andS&P, allegingthatthefirmsgavemunicipalbonds falsely lowratingsand,consequently, payforunneeded causedcustomersto alawsuitagainst The problemsfortheratingagenciesdidn’tendwithSEC.In July2008,ConnecticutAttorneyGeneralRichardBlumenthalfiled high rankingstomortgage-backedsecuritiesandsomedebtproducts. appropriate procedureswerefollowedforratingscompanieslike Moody’s andS&P. TheSEChasallegedthatsomeratingsagenciesgaveunnaturally helped contributetothesubprimemortgagecrisis.Inlate2007, theSecuritiesandExchangeCommission(SEC)begananinquiryintowhether Rating agencieshaverecentlycomeunderseverescrutinyfortheirratingsofmortgage-backedsecurities—specifically, whetherornottheseratings Suspect practices first ratingagencytohaveafull-servicewebsiteforcustomers. institutions, publicfinanceandstructureddivisions.Thefirmpridesitselfonbeing“theleadingratingagencyinCanada”aswellthe DBRS, aninternationalratingsagency, isheadquarteredinToronto intocorporate,financial andgivesratingstoborrowingentities.Thecompanyissplit for theirinvestorsandadvisors. institutions—including 19ofthetop20securitiesfirms,13banks,and11lifeinsurancecompanies—license itsresearch network ofcreditratingsanalysts,anditsequityresearchdivisionistheworld’s largestproducerofindependentequityresearch.Morethan1,000 theworld’strillion ininvestorassetswasdirectlytiedtoS&PindicesasofJune2008,morethanallothercombined.Thefirmhas largest Standard &Poor’s operatesthroughsixmaindivisions:creditratings,dataservices, equityresearch,funds,indicesandrisksolutions.Nearly$1.5 government issuersaswellinstitutionalinvestors,banks,creditorsandcommercialbanks. structured finance,corporatefinancialinstitutionsandsovereignriskpublicfinance.Thefirm’s includecorporateand primaryclients 11,000 companyinsurers,25,000publicfinanceissuersand70,000structuredobligations.Moody’s offourgroups: ratingsbusinessconsists software tofinancialinstitutions,with9,000accountsat2,400institutionsworldwide.Thefirm’s ratingsandanalysestrack100sovereignnations, and securities.Inaddition,Moody’s providescorporateandgovernmentcreditassessmenttrainingservices, servicesandcredit Moody’s, foundedin1900,isoneofthemostprominentandwidelyutilizedsourcesforcreditratings,researchriskanalysis ondebtinstruments Service, Standard&Poor’s andDBRS),istheleaderinprovidingratingsondebt issuedbycompanies,coveringentitiesinmorethan80countries. in 1924,hasbecomethestandardforfinancialcommunity. Fitch,oneofthefourmajorcredit-ratingagencies(theothers are Moody’s Investors Publishing Companyin1913,Fitchwasoneoftheearlyleadersprovidingfinancialstatistics.Theratingsystem“ Credit ratingisanothersectorofthefinancialservicesindustrythatservesahighlyspecificpurpose.FoundedbyJohnKnowles Fitchasthe Making thegrade other byratingsomederivativesartificiallyhigh. brought aboutduetothesubprimehousingcrisis,ispartofasetreformsdesignedstopbond-ratingcompaniesfromcompetingagainsteach & Poor’s andFitch—struckanagreementtorevampthemethodagenciesusecollectfeesratemortgage-backedsecurities. Theagreement, Regulators seemedtoagreewiththisassessment.In2008,NewYork AttorneyGeneralAndrewCuomoandthreeratingsagencies—Moody’s, Standard ratings tosubprimemortgage-backedsecurities,helpedplayapartintheinstabilityofcreditmarkets. the UnitedStatesintorecessioninfirstplace.Someindustrywatchershavesaidthatratingscompanies,manyofwhichgaveinvestment-grade Without adoubt,ratingsagencieswereaffectedbytherecession.Butsomehavearguedthatitwasagencies’initial actionsthatpushed RATINGS (less thanthe11percentestimatedforallindustries). purchase healthandmedicalinsurance.StilltheBLSprojectswagesalaryemploymentforindustrywillgrowbyonly7percentthrough2016 moreAmericans will are expectedasolderworkersleaveorretire.Furthermore,theaverageageofU.S.populationincreases,isexpected, Although corporatedownsizingandchangesinbusinesspracticeswilllimitgrowththeindustryovernextfewyears,anu Financial ServicesandInsurance The Vault MBA CareerBible 90 AAA” to“D,”introduced mber ofjobopenings © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.americredit.com Toll free:(800)284-2271 Phone: (817)302-7000 Fort Worth, TX76102 801 CherryStreet,Suite3900 AmeriCredit www.amfam.com Phone: (608)249-2111 Madison, WI53783-0001 6000 AmericanParkway American FamilyInsuranceGroup www.americanexpress.com Phone: (212)640-2000 New York, NY10285 200 Vesey Street World FinancialCenter American Express www.allstate.com Toll free:(847) 402-5000 Fax: (847)326-7519 Phone: (847)402-5000 Northbrook, IL60062-6127 2775 SandersRoad The AllstateCorporation www.alliancedata.com Fax: (972)348-5335 Phone: (972)348-5100 Dallas, TX75252 17655 Waterview Parkway Corporation) Alliance Data(AllianceSystems www.aflac.com Fax: (706)324-6330 Phone: (706)323-3431 Columbus, GA31999 1932 Wynnton Road Assurance Company) Aflac (AmericanFamilyLife EMPLOYER DIRECTORY (CONT.) Financial ServicesandInsurance The Vault MBA CareerBible 92 www.cbre.com Fax: (949)809-4357 Phone: (310)606-4700 El Segundo,CA90245 Suite 1050 100 NorthSepulvedaBoulevard CB RichardEllisGroup,Inc. www.capitalone.com Phone: (703)720-1000 McLean, VA 22012 1680 CapitalOneDrive Capital OneFinancial www.berkshirehathaway.com Fax: (402)346-3375 Phone: (402)346-1400 Omaha, NE68131 1440 KiewitPlaza Berkshire HathawayInc. www.assurant.com Fax: (212)859-5893 Phone: (212)859-7000 New York, NY10005 1 ChaseManhattanPlaza Assurant www.ajg.com Fax: (630)285-4000 Phone: (630)773-3800 Itasca, IL60143-3141 2 PiercePlace The GallagherCentre Arthur J.Gallagher&Co. www.aon.com Fax: (312)381-6032 Phone: (312)381-1000 Chicago, IL60601 200 EastRandolphStreet Aon Center Aon Corporation www.countrywide.com Fax: (818)225-4051 Phone: (818)225-3000 Calabasas, CA91302-1613 4500 ParkGranada Countrywide FinancialCorp. www.citigroup.com Fax: (212)793-3946 Phone: (212)559-1000 New York, NY10043 399 ParkAvenue Citigroup www.chubb.com Fax: (908)903-2027 Phone: (908)903-2000 Warren, NJ07059 15 MountainView Road The ChubbCorporation www.dstsystems.com Fax: (816)435-8618 Phone: (816)435-1000 Kansas City, MO64105 333 West 11thStreet DST Systems www.discoverfinancial.com Fax: (224)405-4993 Phone: (224)405-0900 Riverwoods, IL60015 2500 LakeCookRoad Discover FinancialServices www.daimler-financialservices.com Fax: (248)957-2997 Phone: (248)991-6700 Farmington Hills,MI48331 36455 CorporateDrive Fax: +49302554 Phone: +493025540 Germany 10875 Berlin Eichhornstraße 3 Daimler FinancialServices © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.equifax.com Fax: (404)885-8055 Phone: (404)885-8000 Atlanta, GA30309 1550 PeachtreeStreetNW Equifax www.dnb.com Fax: (973)921-6056 Phone: (973)921-5500 Short Hills,NJ07078 103 JFKParkway The Dun&BradstreetCorporation EMPLOYER DIRECTORY (CONT.) www.fitchratings.com Fax: (212)480-4435 Phone: (212)908-0500 New York, NY10004 1 StateStreetPlaza Fitch Ratings www.fiserv.com Fax: (262)879-5013 Phone: (262)879-5000 Brookfield, WI53045 255 FiservDrive Fiserv www.firstdata.com Fax: (303)967-6701 Phone: (303)967-8000 Greenwood Village, CO80111 6200 SouthQuebecStreet First DataCorporation www.firstam.com Fax: (714)250-3000 Phone: (800)852-3643 Santa Ana,CA92707 1 FirstAmericanWay First AmericanCorp. www.fnf.com Phone: (888)934-3354 Jacksonville, FL32204 601 RiversideAvenue Fidelity NationalFinancial career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.libertymutualgroup.com Fax: (617)350-7648 Phone: (617)357-9500 Boston, MA02117 175 BerkeleyStreet Liberty Mutual www.leucadia.com Fax: (212)598-4869 Phone: (212)460-1900 New York, NY10010-3607 315 ParkAvenue South Leucadia NationalCorporation www.thehartford.com Fax: (860)547-2680 Phone: (860)547-5000 Hartford, CT06115-1900 690 AsylumAvenue Hartford Plaza Hartford FinancialServices www.guardianlife.com Fax: (212)919-2170 Phone: (212)598-8000 New York, NY10004-2616 7 HanoverSquare Insurance CompanyofAmerica) Guardian (TheLife www.gmacfs.com Fax: (313)556-5108 Phone: (313)556-5000 Detroit, MI48265 200 RenaissanceCenter GMAC FinancialServices www.genworth.com Fax: (804)662-2414 Phone: (804)281-6000 Richmond, VA 23230 6620 West BroadStreet Genworth FinancialInc. www.marshmac.com Fax: (212)345-4838 Phone: (212)345-5000 New York, NY10036-2774 1166 Avenue oftheAmericas Marsh &McLennanCompanies,Inc. www.loews.com Fax: (212)521-2525 Phone: (212)521-2000 New York, NY10021-8087 667 MadisonAvenue Loews Corporation www.lfg.com Fax: (215)448-3962 Phone: (215)448-1400 Philadelphia, PA 19102 1500 MarketStreet,Suite3900 Lincoln FinancialGroup www.nationwide.com Fax: (614)854-5036 Phone: (614)249-7111 Columbus, OH43215-2220 1 NationwidePlaza Nationwide www.moodys.com Fax: (212)553-4820 Phone: (212)553-0300 New York, NY10007 99 ChurchStreet Moody’s InvestorsServices www.mastercard.com Fax: (914)249-4206 Phone: (914)249-2000 Purchase, NY10577 2000 PurchaseStreet MasterCard Worldwide www.massmutual.com Fax: (413)744-6005 Phone: (413)744-1000 Springfield, MA01111-0001 1295 StateStreet MassMutual Financial ServicesandInsurance The Vault MBA CareerBible 93 Customized for: Erin ([email protected]) www.salliemae.com Fax: (703)984-5042 Phone: (703)810-3000 Reston, VA 20190 12061 BluemontWay Sallie Mae www.prudential.com Fax: (973)802-4479 Phone: (973)802-6000 Newark, NJ07102-3777 751 BroadStreet Prudential Financial,Inc. www.progressive.com Phone: (800)766-4737 Mayfield Village, OH44143 6300 Wilson MillsRoad The ProgressiveCorporation www.pacificlife.com Phone: (949)219-3011 Newport Beach,CA92660 700 NewportCenterDrive Pacific LifeInsuranceCompany www.newyorklife.com Fax: (212)576-8145 Phone: (212)576-7000 New York, NY10010 51 MadisonAvenue New York LifeInsuranceCompany EMPLOYER DIRECTORY (CONT.) Financial ServicesandInsurance The Vault MBA CareerBible 94 www.thornburgmortgage.com Fax: (505)989-8156 Phone: (505)989-1900 Santa Fe,NM87501 150 Washington Avenue, Suite302 Thornburg Mortgage www.sungard.com Phone: (800)825-2518 Wayne, PA 19087-1586 680 EastSwedesfordRoad SunGard DataSystems www.statefarm.com Fax: (309)766-3621 Phone: (309)766-2311 Bloomington, IL61710 1 StateFarmPlaza State Farm www.standardandpoors.com Fax: (212)438-7375 Phone: (212)438-2000 New York, NY10041 55 Water Street Standard &Poor’s www.scottrade.com Fax: (314)543-6222 Phone: (314)965-1555 St. Louis,MO63131-1834 12800 CorporateHillDrive Scottrade www.unum.com Fax: (423)294-3962 Phone: (423)294-1011 Chattanooga, TN37402 1 FountainSquare Unum www.travelers.com St. Paul,MN55102 385 Washington Street The Travelers Companies,Inc. www.toyotafinancial.com Fax: (310)468-7829 Phone: (310)468-1310 Torrance, CA90509 19001 SouthWestern Avenue Toyota FinancialServices www.usa.visa.com Fax: (650)432-3631 Phone: (650)432-3200 Foster City, CA94404 900 MetroCenterBoulevard Visa USA www.usaa.com Fax: (210)498-9940 Phone: (210)498-2211 San Antonio,TX78288 9800 FredericksburgRoad USAA © 2009Vault.com Inc. Customized for: Erin ([email protected]) specifically identifiedhiringMBAsasthefutureofdepartment. oftalentand With alargeproportionofseniordepartmentpersonnelscheduledtoretire,SecretaryChaomovedaggressivelycreatenewpipeline former SecretaryElaineChao(whoholdsanMBA)oftheU.S.DepartmentLaborlaunchedinitiativespecificallytorecruitMBAsdepartment. economy.a two-yearBusinessAssociateProgramthatteachesparticipantsaboutthesecuritiesindustryandroleSECplaysin In2002, (SEC)has In addition,federaldepartmentshavebeencreatingrotationalprogramsforrecentMBAgrads.TheSecuritiesandExchangeCommission as HotJobs.comand postingsites,such CIA haspromotedopportunitieswithMBAprogramsandadvertisedforMBAsaspartofitsfinancialanalysisteamsonpopularjob 2003 recruitingseason,theU.S.DepartmentofTreasury visitedselectcampusesseekingtofillinternshipsandfull-timepositions. Attimes,the begins toappreciatetheskillsandcapabilitiestheybringbear. Forexample,therehavebeenrecenteffortstorecruitonMBAcampuses.Inthe The changeatthetophasnotyettranslatedintowidespreadopportunitiesforMBAs,butgovernmentgrownmorereceptiv e toMBAsasit in thenextfewyears(adding100,000morejobsby2010,and120,0002012),parttohelpstimulateeconomy. Private sectorjobsarebecomingmoreanddifficulttofind(letaloneholdonto),thegovernmentplansincreaseitsworkforcedramatically allure ofworkingforournewpresidentthatmotivatespeopletoapply—publicserviceisalsogainingpopularitysimplybecauseit’s stableandhiring. worked fortheObamacampaignandhadrecentlyfoundthemselvesoutofajob,manyothersarejustpublicservicehopefuls. And it’s notjustthe applications—more than330,000peopleappliedfortopspotsintheObamaadministrationbyDecember2008.Whilemanyofthoseapplicantshad After theNovember2008electionof44thPresidentUnitedStates,BarackObama,federalgovernmentwasfloodedwithjob Making governmentcoolagain FEDERAL GOVERNMENT opportunities andsuccessfullyapplyforpositions. interests. ThesectionbelowcontainsaguidetoseveraloftheemploymentoptionsforMBAsinWashington alongwithadviceonhowtoidentify business schoolcampuses.Theonusremainsoninterestedstudentstoresearchappropriateopportunitiesandnetworkwithindividualssimilar Despite increasedinterestinhiringMBAsbymanyoftheseemployers,general,organizationshavelimitedandspottyrecruitingeffortson employers thatexistonlyinWashington, suchastheWorld Bank. heightened interestinemploymentwithnonprofitsandaburgeoningeffortbysomefederalagenciestorecruitMBAs.Additionally, thereareMBA hits “traditional”post-businessschoolcareertrackshard,MBAsarestartinglookingtoWashington forpositionsnotavailableelsewhere.Addtothis,a Washington, D.C.haslargelybeenanuntappedsourceofcareeropportunitiesforbusinessschoolstudentsandMBAs.However, as therecession Government andPolitics he says.“MBAswithaspecific interest shouldseekoutmanagersinthefederalgovernment,send themtheirresumes,andthentrytofollowup.” definitely seenasabenefit.“There arealotofhiringmanagerswhowillbereceptivetotalkingwith MBAssimplybecausethey holdthecredential,” theMBAis One MBAgraduatewhoreturned tothefederalgovernmentaftergraduationsaysthatwhilefinding governmentpositioncantakeeffort, already haveanapplicantinmind beforeapositionisposted. networking canpayoff,sinceultimately hiringdecisionsaremadewithinaspecificofficeforhigh-level candidates.Infact,manygovernmentmanagers level, itisfarmorefruitfultobegintheapplicationprocesswith officeonewishestojointhanwiththehumanresource andifso,theirpay process. Whileallapplicantsmusteventuallygothroughthehuman resourcesdepartmenttodeterminewhethertheyarequalified Applying forpositionscanalsobehighlybureaucratic,andagain, interestedapplicantsarewelladvisedtousetheirnetworks tobegintheapplication and nonprofitmanagement. Two goodwaystomakesuchcontactsarethroughMBAalumninetworksandstudent-orschool-sponsoredconferences focusingonthepublicsector already workinginthefederalgovernmentandwiththosenonprofits andotherentitiesthatregularlypartnerorinteract withthefederalagencies. According toseveralMBAsemployedbythefederalgovernment inWashington, thebestwaytoidentifyopportunitiesisbynetworking withthose only beconsideredastartingpointintheresearchprocess. types ofpositionsavailableandthegeneralsalaryranges.Still,even thepositiondescriptionscanbeoverlybureaucratic,andthereforesiteshould as meanstoexaminethe exclusively forajobsearchwiththefederalgovernmentwouldsell youreffortsshort.Instead,forMBAsitcanbebestused listing website,www.usacareers.com. However, researchtool,usingit awordofwarning:whilethesiteprovides usefulstartingpointandavaluable Since thefederalgovernmentisrequiredtopostnearlyallvacancies,onepotentialresourceuseinidentifyingappropriate by anycareercounselingoffice:identifyyourinterests,findoutthegeneralrequirementsforposition,network,andutilizeinternships. the humanresourcesquagmire.MBAsinterestedinfindinganappropriatepositionwithfederalgovernmentshouldapply toolsemphasized As wouldbeexpectedwiththefederalgovernment,bureaucracyruleshiringprocess.However, aswithanyorganization,therearepathsaround Finding apositionwiththefederalgovernment The Washington Post Washington The . s department.Thisiswhere opportunitiesisitscareer 95 Customized for: Erin ([email protected]) A September2007articlein employees hadtheoptiontotelework,analternativethatonly15percentofprivate-sectorenjoy. study foundthatteleworkadoptioninthefederalgovernmentoutpacedprivatesector. Thesurveydiscoveredthat44percentoffederal When itcomestoschedulesandworkingfromhome,thegovernmentmayoffermoreflexibilitythancorporateworld.A2007 CDWGovernment pensions astheirequalsintheprivatesector. Moreover, thearticleadds,typicalgovernmentpensionismuchmoregenerous. to getpromotedperiod.OnecivilianstafferwiththeAirForce,for example,feels,“Opportunitiesforadvancementarenotthere.” say it’s itisimpossible impossibletomoveupintheranksunlessyouchangejobs,becomeamanagerormove,andfewgovernment insiderssay overwhelms themissionofagency.” Anothercommongripeaboutworkingforthegovernmentisthatitcanbedifficulttoadvance.Someinsiders Sometimes workingforthegovernmentcanalsobepolitical.One insiderattheFCCsays,“I’vegenerallyenjoyedworkinghere,butfrequentlypolitics and thelimitedbudget,betweeninnovationthathasachieved the highestlevelsofqualitycareandburdenunmotivated bureaucracy.” doctor fortheDepartmentofVeterans professionalcare Affairs,forexample,says,“Thismedicalcenterisintensionbetweenthedesireexcellent theyencounter.Sources whoworkforthegovernment,likethoseany largeorganization,oftencomplainabouttheamountofredtape A If theyrestructureandeliminatejobs,thenmakeeveryeffort torelocatedisplacedworkers.Itistheultimateinjobsecurity.” Many federalworkersalsolikethesecurityofworkingforgovernment. OnesourceattheUSDAsays,“TheFederalgovernmentisextremelystable. the averageretentionbonuswasmorethan$5,000andtypical relocationincentivewasabout$11,500. included Defense,Agriculture,CommerceandVeterans Affairs.TheOPMreportaddedthattheaveragerecruitmentbonuswasmore than$8,000, paid morethan$140millioninbonusestorecruit,retainandrelocateemployeesduring2006.Departmentsthatofferedsuchcentives government agencies employees forhard-to-fillpositions.AccordingtoareportthattheOfficeofPersonnelManagementpreparedCongress,47 tuition assistanceandretirementbenefits.AccordingtoaFebruary2007articlein advancement opportunities.”Typically, benefitsforfull-timefederalworkersincludemedicalanddentalcoverage,lifeinsurance,vacation, sickleave, government salariesareslightlylowerthanintheprivatesector, “thesmallmonetarydifferenceiseasilyoffsetbyjobsecurity, flexibilityand that evenif Federal employeessayexcellentbenefitsareoneofthebigperkswhenitcomestoworkingforUncleSam.Onerespondent says Peace Corps,forexample,hasFSlevelsinsteadofGSemployees. 2009, thebasepayforexecutivesrangesfrom$139,600to$191,300.To complicatethingsfurther, someagencieshavetheirown payscales.The GS-9 level($40,949to$53,234in2009).There’s aseparatescaleforexecutives,whichrangesfromLevelI(thehighest)toVlowest).In to $21,944basesalaryin2009)andgoesupGS-15($98,156$127,6042009).Peoplewithmaster’s degreesgenerallystartoutatthe Often, governmentwagesarecompetitivewiththeprivatesectorsalaries.ManyfederaljobsuseGSpayscale.ThescalestartsatGS-1($17,540 The prosandconsofworkingforUncleSam library’s CongressionalResearchService. The CongressionalResearchEmployeesAssociation(CREA)representsmanyoftheprofessionalandnonprofessionalemployees whoworkforthe of Congress. Employees (NFFE).TheAmericanFederationofState,CountyandMunicipal(AFSCME)standsupforlibrariansattheLibrary Federation ofFederal D.C. governmentworkers,isthelargestfederalemployeeunion.AnotherunionthatrepresentsworkersNational Some federalworkersareunionized.TheAmericanFederationofGovernmentEmployees(AFGE),whichactsonbehalfabout600,000and employees haveacollegedegreeorhigher. federal workersaremen,and43percentwomen.About33ofthesemenwomenethnicminorities.45 offederal 57 percentof According totheOfficeofPersonnelManagement(OPM),averagefull-timegovernmentemployeeis47yearsold.TheOPMsays number ofagencieshireAmericanstoworkoverseas. work outsideofWashington, D.C.ThestatesthatboastthelargestnumberoffederaljobsareFlorida,Texas, California,MarylandandVirginia.A expected toincrease.Thismakesthefederalgovernmentsinglelargestemployerincountry. than80percent) Mostfederalemployees(more The federalgovernmentemploysover2.8millioncivilianworkers,excludingpeoplewhoworkfortheU.S.PostalService,andthat numberisonly Who worksforthegovernmenttoday? rewarding careerpaths.” doesn’t paywhattheprivatesectordoes,”hesays.“But,forthosewithastronginterestingovernmentwork,therearemanywaysand thatthegovernment just establish therightrecruitingpoliciestobringmorebusinessstudentsintofederalworkforce.“Thefactofmatteris toquickly The insideralsoconfirmedthatthereisagrowingawarenessofthevalueanMBA,butgovernmenthasn’tbeenfastenough Government andPolitics The Vault MBA CareerBible 96 The Washington Post Washington The discusses howsomefederalagenciesareincreasinglyofferingbonusestorecruitandretain USA Today USA , retiredgovernmentemployeesaretwiceaslikelytoget © 2009Vault.com Inc. Customized for: Erin ([email protected]) issues. ForeignServiceOfficersalsohavetopassasecuritybackgroundcheckandmedicalexam. then thesubsequentoralinterviews)requiresextensiveandintensiveknowledgeofU.S.worldhistory, internationalrelationsandmajorpolitical the exam (and of Stateisextremelydifficult,andstudyingfortheForeignServiceexaminationcanbeagruelingexercise.Successfullycompleting service don’tneedtotakeexams,buttheystillpassapre-employmentdrugtest.BecomingForeignServiceOfficerfor theU.S.Department number ofwrittenexaminationsfordifferentpositionssuchasmotorvehicleoperatororcitycarrier. Applicantsfortemporaryjobswiththepostal Service hasa Some governmentdepartmentsandagenciesalsohavespecialentranceexamsorotherrequirements.Forexample,theU.S.Postal evidence aspossible.” the Knowledge,SkillsandAbilities(KSA)wellenoughtogetaninterview. AddresseveryKSAintheaffirmative,andprovideasmuch supporting package withthecorrectformattingbeforeannouncementexpires…Thenextmostimportantanddifficultpartofhiring process isanswering The DepartmentofAgriculturesourcesays,“Itisextremelyimportanttoreadthejobannouncementandprovideeverythingrequestedinacomplete doesn’t have.Often,agenciesalsowantapplicantstosendwrittenknowledge,skillsandabilitiesassessmentscalledKSAs. fill outtheapplicationformsproperly. You’ll havetosubmitanapplicationformoraresumecontaininginformationthatyourexistingprobably official careerssite.Whenyou’reapplyingforapositionwiththefederalgovernment,it’s essentialtoreadthevacancyannouncementcarefullyand establish theirownqualificationrequirements.MostgovernmentagenciespostjobopeningsonUSAJOBS(www.usajobs.gov), thefederal government’s Within thefederalgovernment,therearetwoclassesofjobs.CompetitiveservicejobsfallunderOPM’s jurisdiction,andsomeserviceagencies preconceived stereotypes.Federalemployeesarethehardestworking,[most]caringandmostsatisfiedpeoplethatIknow.” istoforget allthe A U.S.DepartmentofAgricultureinsidersays,“TheonetipthatIhaveforsomeoneseekingfederalemploymentthefirsttime Finding apositionwiththefederalgovernment be theDepartmentofHomeland Security. SincetheHomeland SecurityDepartmentisfreeofsomethefederalemployment regulationsimposed process couldattempttolocatean analystpositionwiththeOfficeofManagementandBudget.Another potentialsourceofmanagementpositionswill out, andwilldependonwhatthe MBAhopestogainbyjoiningthefederalgovernment.Forexample, anMBAwithinterestinthefederalbudget There aremanyopportunitieswithin thefederalgovernmentforMBAstogainmanagementexperience. However, theseopportunities mustbe ferreted Management with organizationssuchasNetImpact,alumni,andbycontacting hiringmanagersdirectlytodiscussopportunities. specific missionofthedepartment,interestedcandidatesshould try tolearnabouteachdepartment’s operations andopportunitiesthroughnetworking Department ofTreasury, theU.S.DepartmentofCommerceandSmall BusinessAdministration.Sinceroleswithineachagency will varywiththe theU.S. There areseveralagencieswithinthefederalgovernmentthat havecommunityandeconomicdevelopmentfunctions.Theseinclude development andtheresourcesitmakesavailable. experience, gaincontactswithinthedevelopmentcommunity and gainanunderstandingofthegovernment’s roleincommunityand result ofcooperationamongpublicsector, aneffectivewaytobuild privatesectorandnonprofitentities,apositionwiththefederalgovernmentcanbe Community andeconomicdevelopmentisanareathathascaptured theinterestofMBAs.Sincecommunityandeconomicdevelopmentisoften Community andeconomicdevelopment need toadvanceintheirchosenprofessions.Thefollowingareareasofthefederalgovernmentthatprovidecareerenhancingopportunities. Since mostMBAsaren’tinterestedinbecominglifetimebureaucrats,theyusuallyconsiderspecificopportunitiesordertogain theexperiencethey AREAS OFINTERESTTOMBAS assistants toseniorofficials. WhiteHouseas Intern Program.TheWhiteHousehasahighlyselectivefellowshipprogram.Fellowsspendtwoyearsworkingin the for example,hasjobandinternshipopportunitieslawstudents.ProgramsincludetheAttorneyGeneral’s theSummerLaw HonorsProgramand In addition,manyagencieshavetheirowninternshipandjobprogramsforundergraduategraduatestudents.TheU.S.Depart ment ofJustice, The OPMalsohasaspecialwebsiteforstudents,www.studentjobs.gov. Program (SCEP).MoreinformationabouttheStudentEducationEmploymentisavailableonlineatwww.opm.gov/employ/stud Student EducationEmploymentProgram,whichincludestheTemporary EmploymentProgram(STEP),andtheStudentCareerExperience the PresidentialManagementFellows(PMF)Program,Workforce RecruitmentProgramForCollegeStudentsWithDisabilities(WRP)andthe The governmentalsohasanumberofinternshipandjobopportunitiesforstudents.Someprogramsofferedacrossthefederal government include Getting atasteofgovernmentservice career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Government andPolitics ents/index.asp. economic 97 Customized for: Erin ([email protected]) experience. Theoffice’s recruitmenteffortsincludepostingpositionopeningswithMBAcareerofficesandgeneraladvertising. or internationaltrade.ItisparticularlyinterestedinMBAswithstrongexperiencethebankingandfinancialservicesector, aswellinternational The U.S.DepartmentofTreasury’s OfficeofInternationalAffairsoftenrecruitsMBAsforfinancial analysispositionscoveringsuchissuesasdebtpolicy students willhavetonetworkwithbothon-campusandoutsideorganizationsuncoveropportunities. interested Since therearenoformalrecruitmentprogramsinplaceforMBAsinternationaldevelopmentpositionswiththefederalgovernment, dominated byeconomists. The federalgovernmentalsoprovidesoptionsforMBAstudentsinterestedininternationaldevelopment,afieldthathastraditionallyandstillremains International development Application informationisavailableonthedepartment’s websiteatwww.dol.gov. recruitment programsforthemselves.” putting upsimilar have beenverypleasedwiththeresults.Infact,severalotherofficeswithinfederalgovernmentapproachedusabout A seniorofficialworkingontheprogramglowsaboutitsinitialresults:“We didn’tknowwhattoexpectwhenwefistputtheprogram intoplace,butwe The permanentassignmentsarebasedontheneedsofdepartmentandlong-terminterestseachparticipant. Upon acceptanceintotheprogram,MBAswillbeallowedtorotatethroughseveraldifferentassignmentsbeforebeingplacedinapermanentposition. 9 level,thedepartmentisofferingotherincentives,includingrecruitmentbonusesandloanforgivenessprograms. in operation,thedepartment’s MBArecruitment programreportedreceivingmorethan250applicationsfor30openings.WhileMBAsstartattheGS- Additionally, theDepartmentofLaborhasbeguntoactivelyrecruitMBAsforgeneralmanagementpositionswithstrongresults. the GS-12gradelevel($51,500to$66,900).Fordetailedinformationonprogram,seeitswebsiteatwww.pmi.opm.gov. andare eligiblefor $55,800). Attheendofprogram,PMIprogramparticipantsmaybeconvertedtoapermanentpositionwithfederalgovernment with PMIsbeginningattheGS-9level(approximately$35,500to$46,100).Afteroneyear, GS-11level($42,900to theyareeligibleforpromotiontothe program lasts twoyears, director oftheiracademicprogram.Onceaccepted,PMIsmustfindanappropriatepositionwithinthefederalgovernment.The master’s ordoctoraldegrees.To beconsideredfortheprogram,studentsmustsubmitanapplicationandnominatedbydean, chairpersonorprogram One avenueforMBAsintothefederalgovernmentisthroughPresidentialManagementInternship(PMI)program,whichopentoallstudentspursuing in thefederalbureaucracy. MBAsneedtothinkcreativelyabouthowtheirskillsrelategovernmentmanagement. on virtuallyeveryotherfederalentity, theremaybemoreopportunitiesforMBAstoutilizetheirmanagementabilitiesagreaterdegreethanelsewhere Government andPolitics The Vault MBA CareerBible 98 For2002,itsfirstyear © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.democrats.org Phone: (202)863-8000 Washington, DC20003 430 SouthCapitolStreetSE Democratic NationalCommittee www.cia.gov Fax: (703)482-1739 Phone: (703)482-1100 McLean VA 22101 1423 ChainBridgeRoad Central IntelligenceAgency(CIA) EMPLOYER DIRECTORY www.ftc.gov Phone: (202)326-2222 Washington, DC20580 600 PennsylvaniaAvenue NW Federal Trade Commission (FTC) www.federalreserve.gov Phone: (202)452-3000 Washington, DC20551 20th StreetandConstitutionAvenue NW Federal ReserveSystem www.fbi.gov Phone: (202)324-3000 Washington, DC20535 935 PennsylvaniaAvenue NW J. EdgarHooverBuilding Federal BureauofInvestigation www.whitehouse.gov Fax: (202)456-2461 Phone: (202)456-1414 Washington, DC20500 1600 PennsylvaniaAvenue NW the UnitedStates Executive OfficeofthePresident www.epa.gov Phone: (202)272-0167 Washington, DC20460 1200 PennsylvaniaAvenue NW Ariel RiosBuilding (EPA) Environmental ProtectionAgency career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.doi.gov Phone: (202)208-3100 Washington, DC20240 1849 CStreetNW U.S. DepartmentoftheInterior www.dhs.gov Fax: (703)235-0442 Phone: (202)282-8000 Washington, DC20528 245 MurrayDrive Security U.S. DepartmentofHomeland www.ed.gov Fax: (202)401-0689 Phone: (202)401-2000 Washington, DC20202 400 MarylandAvenue SW U.S. DepartmentofEducation www.defenselink.mil Phone: (703)428-0711 Washington, DC20301 The Pentagon U.S. DepartmentofDefense www.rnc.org Fax: (202)863-8820 Phone: (202)863-8500 Washington, DC20003 310 1stStreetSE Republican NationalCommittee www.nsa.gov Fax: (301)688-6198 Phone: (301)688-6524 Fort Meade,MD20755 9800 SavageRoad National SecurityAgency www.irs.gov Fax: (202)622-4355 Phone: (202)622-5000 Washington, DC20224 1111 ConstitutionAvenue NW Internal RevenueService(IRS) www.state.gov Fax: (202)647-1558 Phone: (202)647-4000 Washington, DC20520 2201 CStreetNW U.S. DepartmentofState www.dol.gov Fax: (202)693-6111 Phone: (202)693-6000 Washington, DC20210 200 ConstitutionAvenue NW U.S. DepartmentofLabor www.usdoj.gov Fax: (202)307-6777 Phone: (202)514-2000 Washington, DC20530 950 PennsylvaniaAvenue NW U.S. DepartmentofJustice www.sec.gov Fax: (202)772-9295 Phone: (202)551-6551 Washington, DC20549 200 FStreetNE Commission (SEC) U.S. SecuritiesandExchange www.va.gov Phone: (202)273-5400 Washington, DC20420 810 Vermont Avenue NW U.S. DepartmentofVeterans Affairs www.dot.gov Phone: (202)366-4000 Washington, DC20590 4000 7thStreetSW U.S. DepartmentofTransportation www.ustreas.gov Fax: (202)622-6415 Phone: (202)622-2000 Washington, DC20220 1500 PennsylvaniaAvenue NW U.S. DepartmentoftheTreasury The Vault MBA CareerBible Government andPolitics 99 Customized for: Erin ([email protected]) 100 © 2009Vault.com Inc. Customized for: Erin ([email protected]) chance ofgrowinguptobeobeseadults. an80percent according todatafromtheCentersforDiseaseControlandPrevention;studieshaveshownthatchildrenwhowereoverweight had to disability, thatcanhaveprofoundeconomicconsequences.Moreworryingly, theincidenceofobesityinchildrenhastripled sincethe1970s, to defineconsistently;additionally, thereareanumberofsubtleeffects,likedepressedwagesfromweightdiscriminationand missedproductivitydue decade. Thenumberincludesbothdirectinsurercostsandindirecteffects,suchaslossofproductivity. However, theterm“overweight”isdifficult report peggedobesity’s costtosocietyatupwardsof$120billionperyear;andthenumberisundoubtedlymuchhighertoday, atthecloseof Economists arecontinuallytryingtofiguretheeconomicimpactofoverweightandobeseAmericans.Studiesbasedona2000U.S . SurgeonGeneral’s osteoarthritis, typeIIdiabetes,certaintypesofcancerandanumberotherlong-term(andexpensive)conditions,including but obesitydoesn’tjustimplyone’s likeheartdisease, trousersareatadsnug—overweightandobesepeopleincreasinglyatriskfordisorders with calories;100millionAmericansareadverselyaffectedbythe“obesityepidemic.”Carryingafewextrapoundswon’tbelisted asacauseofdeath, of bariatricandgeriatricpatients.Two-thirds ofadultsareoverweighttovaryingdegreesbecauseincreasinglysedentarylifestylesandadietliberal prevalence Another unhealthynumberisthegrowingquantityofpeoplewhowillneedmedicalattentionincomingdecades,duetoincreasing Big trouble estimated thatthepublicsectorwillpayfornearlyhalfofallhealthspendinginU.S.byyear—notahealthynumber. health carespendingwillmakeup18.7percentofthecountry’s GDPin2014,apercentageconsideredunsustainablebymanyanalysts.Itisalso a toughtimefiguringouthowtoturnprofitinsuchwaythatbenefitsbothprovidersandpatients—notmentionshareholders.Economistspredict trillion for2009,morethanwhatpeoplespendonhousingorfood.Despitetheawesomequantitiesofmoneyinvolvedinindustry, itsplayershave the sectorisasizeableone,makingup16.3percentofnation’s projectedat$2.5 grossdomesticproduct(GDP).U.S.healthcarespendingwas The sectorisaveritableRubeGoldbergmachineofpatientcareproviders,manufacturers,middlemenandinsurancecompanies.It’s nosecretthat You can’tlivewithitandyouwithoutit—thisprettymuchsumsuptheattitudemanyAmericanshavetowardtoday’s healthcareindustry. An industryinflux INDUSTRY OVERVIEW Health Care response, theAmericanMedical Association(AMA)announcedthatifcompensationforMedicare patientswasreduced,physicianswouldbeforced athird.In procedures. Compensationfor surgeries, suchashipandkneereplacementsvariouscardiac procedures,wascutbyasmuch Additional regulations,whichtook effectin2007,recalculatedtheratesatwhichMedicare compensates hospitalsandphysiciansforvarious administering PartD. worried theywerenotgettingthecoverageneeded.Befuddled seniorsnotwithstanding,insurancecompanieshavepostedrecordprofitsfrom flurry ofplanoptionsthroughvariousprivateinsurancecompanies. ButtheByzantineregulationsforprogramleftmanyseniorsconfusedand The Bushadministrationmadeseveralattemptstotweaktheprogram, withmixedresults.TherevisedMedicaredrugplanprovide benefit plan,wasenacted.(MedicarepartsA,BandCgovern hospital stays,doctor’s visitsandplansofferedthroughotherinsurers,respectively.) As moreAmericansreachtheagetoqualifyforMedicare,itisimportant thattheyreceiveadequatecoverage.In2006,PartD,aprescriptiondrug Let’s gotoPlanD thereafter, requiringlarge taxhikesanddeepcutsingovernmentspending. increase publiclyheldgovernmentdebtfrom37percentoftheGDP in2007to100percentofGDP2030,andthatitwouldincreaseastronomically health carecouldprecipitateabudgetarycrisisifnotswiftlyaddressed. Hepredictedthattheprograms,burdenedbybabyboomers,could 2007, BenBernanke,chairmanoftheFederalReserve,warnedin aSenatehearingthatthespiralingcostsofSocialSecurityandgovernment-funded As 77millionbabyboomersreachtheageof65andsignupforMedicare,governmentwillfootanevenlargershare healthcarebill.In spending. covering aroundoneinfourpeople,anddistributing$760billionbenefits2007—representingmorethan20percentof federal government care. Infact,rankedbysales,thegovernment’s ownCentersforMedicare&MedicaidServices(CMS)istheNo.1providerin insuranceindustry, looms largeinhealth through theiremployers,whiletheMedicareprogramservespeopleoverageof65.Becausethis,federalgovernment program isfundedbythefederalgovernmentbutadministeredstates,servinglow-incomeindividualswhodonothaveacce ss tohealthcare The UnitedStates’agingpopulationisalsoputtingpressureonthenation’s reimbursementsystemforseniorsandlow-incomepatients.TheMedicaid preventive caretoprogramspromotinghomeandassistedlivingasalternativesoft-dreadednursingcare. a profoundeffectonthedemandforanddeliveryofhealthcareservices.Thisshiftissparkinginterestinallissuesaffectingseniorhealth,from time ever. tohave Withapproximatelyonemillionpeopleturningage60eachmonthworldwide,thephenomenonknownas“globalaging”promises forthefirst Speaking ofadults,accordingtotheAmericanAssociationRetiredPersons(AARP),byyear2050,seniorswilloutnumber children Having aseniormoment havingastroke. d seniorswitha 101 Customized for: Erin ([email protected]) percent subsidytohelpthejobless paythehighcostofCOBRAcoverage. the AmericanRecoveryandReinvestment Actinjectedlife(intheformof$87billion)intostateMedicaid programs,andcontainedanine-month,65 have tocompetewithahostofother problems,economicandotherwise,in2009.Therewasahealth carecomponentintheeconomicstimulusbill; $50 billionto$65billion,will business. Asofearly2009,the push isstillinitsearlystages,butthereformeffort,estimated ontocostatleast burdenonsmall up, andsubjecttocontroversy(ofcourse),assomesaw“insurance forall”asasteptowardsocialismandfoistinganuntenable President BarackObamaalsotookupthemantleofhealthreform duringhiselectioncampaign.Infact,itwasanimportantbuilding blockoftherun- statewide carrier, was vetoed bySchwarzeneggerinOctober2008.Soalthoughthesubjecthasbeenwellcovered,nothingyetchanged. in favorofone health committeeinJanuary2008;anopposingbill(SB840),which proposedthecurrentfragmentedinsurersystembedismantled insurance companies;conservativescriedsocialism,andliberals claimedSchwarzeneggerstoletheiridea.Thebillwasrejected bythestatesenate business ownerssaidthatmandatedcoveragewasasneakyform oftaxationandwouldstunteconomicgrowth;anurses’groupsaiditpanderedto of 4percentgrossrevenueonhospitalsand2doctors topayforitall.Needlesssay, manygroupsopposedth be giventopeoplebelowacertainincomelevel.To defrayfuturecosts,thestatewouldsponsorinitiativesagainst obesitya cover them.Employersnotofferinginsurancewouldpay4percent ofpayrollintoastatefundforcoverage;governmentassistancecoveragewould individuals wouldberequiredtopurchaseinsurance,eitherprivately orthroughtheiremployers,andhealthinsurancecompanies wouldbeobligedto his state.Inplan, tenure aspresident.In2007,CaliforniaGovernorArnoldSchwarzenegger outlinedaplantoinsurethe36millionresidentsof notably reluctanttodealwiththeissueeversinceHillaryClinton’s attempttocreateauniversalcoverageplanwasshotdown earlyinherhusband’s Starting in2007andcontinuingthroughthe2008election,buzzoverhealthcarecrisishasgottenalittlestronger, but legislatorshavebeen The questforreform much less,andimmediatelystartstoalleviatethepatient’s pain. scads ofspecialistsforbackpain,gettinganMRIandfinallygoingtophysicaltherapy, therapy, patientsarenowsentdirectlytophysical whichcosts Mason andtheinsurancecompaniesreworkedpaymentschemeforhospitalsothatpatientsweretreatedmoreefficiently. Insteadofseeing atVirginia caregivers basedonhowmuchtheydotoapatient,asopposedeffective—orevennecessary—thetreatmentsare.The doctors checks frominsurers,whilesimple,equallyeffectiveprocedures,whichcostfarless,maycausehospitalstolosemoney. insurerspay Inshort, specialists. Oddly, thehospitalkeptlosingmoney, duetotheskewedwayinsurersreimburseprocedures.High-techoptions,likeMRIscans,netbig it costsignificantlymorethanotherhospitalsinthearea.VirginiaMasonwentonacost-cuttingcampaign,eliminatingpricey medicalequipmentand Medical ranintotroublewhentheinsurancecompaniesthatreferredpatientstherepointedoutthat,despitestellarqualityofcareitdelivered, Instead ofpointingfingersorcomplainingaboutthesituation,somepeoplearedoingsomethinghighhealthcarecosts.Seattle’s VirginiaMason deductibles andstingierreimbursementplans. many employersarefindingtheycannolongeraffordthisbenefit,andpassingmoreofthecostsontoemployeesinform ofhigherpremiums, The situationisn’tsorosyforconsumersfortunateenoughtohavecoverage,either. Asthecostofprovidinghealthcarecoveragecontinuestorise, since administrativecostsonlydriveupthepriceofservices. jockeying fortheirsliceoftheprofits,fragmentednatureindustryhasplayedaroleinincreasingamountthat The solutiontoAmerica’s healthcarewoesisnotassimpleforcingeveryonetopurchaseinsurance,however. Withsomanydifferentplayers for thesameproceduresprovidedtothosewithhealthcoverage,sincebiginsurancecompaniesareablenegotiatediscountsw ith providers. prices. Reportsalsoindicatethathealthcareismoreexpensiveoverallfortheuninsured.Forexample,hospitalsbilluninsuredclientsatahigherrate forced intobankruptcybymedicalbills.Inordertodefraythecostsofwhatisessentiallyprovidingfreecare,hospitals mustchargehigher ontheirdebts orare don’t havethefinancialreservestobuyhealthinsuranceinfirstplace,ahospitalstaycanbedevastating,andmanydefault medical problemsbeforetheybecomemajorissues,causingmanytoendupseekingtreatmentintheemergencyroom.Sinceofuninsured Uninsured individualsincreasepressureonthepriceofhealthcareinotherwaysaswell.Theyarelesslikelytogetregularcheckupsandtreatminor high costs,employersareincreasinglyunwillingorunabletopayinsuretheiremployees,furtherenlargingtheranksofuninsured. chronic conditionsorthosewhothinktheywillimminentlyneedexpensivemedicalcare—anactuarialnightmarethat’s drivinguppremiums.Atsuch other insuranceoptionschoosetoforegohealthinsurance,thepoolsofpeoplebuyingwillincreasinglyconsistpeoplewithexpensive, What’s more,thisnumber, alongwiththenumberofthosewhomustpurchaseinsuranceontheirown,willgrow. Health Care The Vault MBA CareerBible 102 patientsmustpayforcare, nd diabetes,andlevyafee © 2009Vault.com Inc. e plan.California insurance Customized for: Erin ([email protected]) insurance purchasershaverealizedcostsavingsduetochangesintortlaw.” as akeyelementinreformingtheU.S.healthcaresystem.”Andyetdataisinconclusive:HSRsays“norigorousresearchhexaminedwhether change inleadershiptheCongress.[Still],AmericanMedicalAssociationandnineotherphysicianorganizationscontinuetoidentifytortreform Liability looms incapacitated personisinnopositiontocomparisonshop. to makerational,informeddecisionsaboutwhichdoctorsvisit;intheeventofamedicalemergency, aseverelywounded,unconsciousorsimilarly whenoneisin aposition in excessofthousandsdollarsperyeartomanage.CDHCalsofailstakeintoaccountthatcompetitivepricingonlyworks from overconsumptionofmedicalcarebypeoplewhocanaffordit,butrathertreatingwithchronicconditions,whicheasilyrequire spending isnot as acovertoreduceemployeecompensation.WhatCDHCplansdonottakeintoaccountisthatthebulkofcosthealthcare will use CDHC inflation, sinceconsumerscanshoparoundandfindthebestcareforprice.Opponentsofplansuggestthatemployers Proponents ofCHDCpointoutthatthecostplasticsurgeryandotherelectiveproceduresnotcoveredbyinsurancehaseffectively keptpacewith health-related expenses. year, foranyfuture whichconsumerscanspendonvirtuallyanyhealthtreatmentormedicationtheywant;whateverisunusedremainsintheaccount inthe HSAeach along withlow-cost,high-deductibleinsuranceplans.Eitheremployeeoremployer(orboth)stowawayacertainamountofmoney (hopefully) increasingqualityofcarewhiledrivingdowncosts.AtthecruxCDHCarehealthsavingsaccounts(HSAs),ortax-freeoffered elegant intheory:ifconsumerscancontroltheirownhealthcarespending,providersandinsurerswillbeforcedtocompeteforbusiness,thus Another planforhealthcarethatgeneratedabuzzintheBushadministrationwasideaof“consumer-driven healthcare,”or CDHC.Theideais CDHC—the newwaveofcare? an increase in capital expended in this area. Among the approximately 6,100 hospitals in the U.S., a few tower over the rest. Eachyear,an increaseincapitalexpendedthisarea.Amongtheapproximately 6,100hospitalsintheU.S.,afewtoweroverrest. In 2007,$697billionwasspentoncareinhospitals.Growingdemand forhospitalservices,alongwithhigherratesfromprivateinsurers,haveledto Hot hospitals According toanarticlepublishedin example, whichwaslistedontheAMA’s liabilitylist,approvedaconstitutionalamendmentcappingawardsfornoneconomicdamagesat$250,000. themselves bysettingtheirownlimitsontheamountofmoneyamalpracticejudgmentcanreapforplaintiff.Voters inthestateofTexas, for providers forpoorcare.Meanwhile,astheindustrywaitsfederalgovernmenttocomeupwithasolution,stateshavebeguntackleissue advocates frametheissueasaDavid-versus-Goliathscenario,chargingthatmonolithicmedicalcommunitywantstolimitconsumers’rightssue alovedone?Patient For lawmakers,theissueisatoughone:howdoyousetcaponamountplaintiffcanreceiveforpreventabledeathof malpractice insurance(thethatcoversthem,shoulddisasterstrike)goesthroughtheroof. unfortunate sideeffectofthe“medicalliabilitycrisis”labelisthatdoctorsandotherhealthcareprovidersarepressuredtoleave,astheirown at all.Assuch,theinsurerswhohavestayedinmedicalliabilitymarketchargeapremiumprovidersincreasinglycan’taffordtopay. Another mistreated patients,makeheadlinesregularly. Thesejudgmentsthencauseliabilityinsurerstopanic,withmanyrefusingcoverhealthcareproviders It’s aseeminglyunendingloop:multimillion-dollarjudgmentsagainstproviders,broughtbysolidindustryoftriallawyersdevotedtorepresenting to insurmountablemedicalliabilitycosts. state’s neurosurgeons,41percentoforthopedicsurgeonsand36generalhavebeenforcedtolimitthescopetheirpracticedue because ofliabilityrisks.Onesuchstate,Massachusetts,isacaseinpoint:accordingtoMassachusettsMedicalSocietyresearch,50percentthe successful malpracticesuitsinthestate,andaftereffectsofthosecosts—namely, thatsomeprovidersarelimitingorhaltingcertainservices association hastakentoidentifyingstatesthatareina“medicalliabilitycrisis”owingexplodinginsurancepremiumscausedbythehighnumberof Another typeofreformthatgetsplentycongressionalbuzzismedicalmalpracticeliability, itstoppriority. whichthepowerfulAMAhasmade The Center andtheClevelandClinic. No. 1overall—apositiontheinstitutionhasheldfor18yearsrunning. TheMayoCliniccameinsecond,followedbytheRonald ReaganUCLAMedical specialties aswellotherfactorslikestaffing,morbidityratesand technology. In2008,themagazine’s listnamedBaltimore’s JohnsHopkinsHospital & World Report World & career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com publishes arankingofthenation’s tophospitals,surveyingdoctorsaroundthecountryabouthospitals’reputations in17medi for insidercompany profiles,expert advice, Health Services Research Services Health in December2008,“thecallforfederalmalpracticereformshascooledwiththe[2007] The Vault MBA CareerBible U.S. News U.S. Health Care 103 cal Customized for: Erin ([email protected]) hospitals, physicians,nurses,therapistsandtechnologists. Other levelsincludehomehealthcareandambulatorycare.These servicesareprovidedbyavarietyoforganizationsandindividualsincluding These programsprovidesocializationandmedicalservicesinthe caseofthemedicalmodeltoelderlyindividualswholiveinthecommunity. their ownwhorequiresupervisionandassistancewithactivities ofdailyliving.Adultdaycareprogramsmaybeamedicalmodelorsocialmodel. Assisted livingfacilitiesprovidealowerlevelofcarethannursing homes.Thesefacilitiesaregenerallyforelderlyresidentswhounabletoliveon homes maybefreestanding,partofaregionalornationalcompany orhospitalbased. clinical services.Nursinghomesorskillednursingfacilitiesprovide caretotheelderlyanddisabledothersrequiringlong-termcare.Nursing rehabilitation. Nursinghomesoperatesubacuteorshort-term units inwhichpatientsdischargedfromthehospitalreceiverehabilitationandother Sub acutecareisprovidedinhospitalandnursinghomes.Hospitalunitsareoftenreferredtoastransitionalwhichpatientsreceiveintense throughout thecountry. asunitsandfacilitiesopen hospital thatprovidecaretopatientswithchronicconditions.Thisisarelativelynewlevelofingrowthmode The nextlevelofcareonthecontinuumiscalledlong-termacute(LTAC). Thesearehospitalseitherfreestandingorunitswithinanacutecare programs, researchprogramsandacademicaffiliations. according toownershipandcontrol,numberofbeds,bythelevelstypesservicestheyprovidewhetherhave physician training areclassified and dozensorhundredsofsupervisorymanagementpersonnel.Hospitalsmaybefreestandingpartahealthsystem. They thousandsofemployees The highestlevelofcareisprovidedinacutehospitals.Hospitalsarelargecomplexorganizationswithhundredsoreven services. Alongwhatisreferredtoasthecontinuumofcare,organizationsprovidedifferentlevelsdirectcare. The organizationsinwhichhealthcaremanagersworkincludethosethatprovidedirectpatientandsupporttheprovisionof work ascliniciansforaperiodoftimebeforeenteringmanagement. developed theirskillsandcanreadilytransferthesetothehealthcareenvironment.Clinicalmanagers,includingnurses andphysicians,may upper-levelanother field, have managementpositioninahealthcareorganization.Managersprofessions,suchasfinance,oftenhaveworked managementor graduate degreesinmanagementgenerallyenterthefieldaftercompletionoftheirtrainingwithgoalobtainingamiddle managers, financialinformationsystemsandpublicrelationsmarketingmanagers.Individualswith undergraduateor administration, publicadministrationorbusinesstherearemanydifferentkindsofhealthcaremanagers.Thes e includeclinical Health caremanagerscomefromalargenumberofprofessions.Inadditiontothemajoritywhograduateprogra ms inhealthcare Who arehealthcaremanagersandwhatdotheydo? of managementwillremainconstant:creatingaworkenvironmentwithinanorganizationthatpromotestheaccomplishmentgoal s andobjectives. increase. Therolesandresponsibilitiesofhealthcaremanagersmaychangeasthesystemcontinuestodoso.Butprimaryobjective atall levels,will treatments andmedicationaremajorcontributorstothisgrowth.Assuch,theneedforhealthcareprofessionals,includingmanagers The healthcarefieldisoneofthemostrapidlygrowinginUnitedStatestoday. Anagingpopulation,longerlifeexpectancyandnewtechnology, development, performanceimprovement,medicalmanagementandbusinessdevelopment. developed. Theseincludespecialistsintherealmoffinancialmanagement,reimbursement,revenuecycleplanning,fundraisingand centers, homecare,occupationalhealth,assistedlivingandadultdaytonameafew, managementhave disciplinesinneedofprofessional disciplines thathealthcaremanagersoversee.Inadditiontoexpandingclinicalareasrequiringmanagers,suchasimagingcenters, ambulatorysurgery As thehealthcarefieldhasgrownthroughadvancesinmedicine,newtechnologyandtypesoffacilities,sonumber supervisors todirectorsandmiddlemanagers,executives. and individuals,fromphysiciangroupstohospitals,insurancecompaniesgovernmentagencies.Theirrolesarediverse,aswell,rangingline has evolvedoverthelast50yearsandcontinuestoevolveashealthcaredeliverysystemchanges.Healthmanagersworkfororganizations care. Itis a fieldthat managers areinvolvedinthedeliveryofhealthcareanddevelopmentpublicpolicyregardingfinancingaccessto Health care Health caremanagement,alsoknownashealthadministration,encompassesawiderangeofjobsinvarietyorganizations. What ishealthcaremanagement? MBAS INHEALTH CARE Health Care The Vault MBA CareerBible 104 © 2009Vault.com Inc. Customized for: Erin ([email protected]) ranks andalmostalwayshavegraduate degreesinhealthcaremanagement,businessadministration orasimilardiscipline. director forthetopmanagersreporting tothisindividual.Thosewhoholdthesepositionsmay have workedtheirwayupthrough themanagement individuals correspondtothefirst setoftitles.Anothertitlesdesignatesexecutivedirectoras the topperson,and associate andassistantexecutive and chiefexecutiveofficer, executiveandseniorvicepresidentspresidents.Forthemostpart,rolesresponsibilities ofthese structureispresident report tothisindividualandareresponsibleformultipledepartments and/orlargefunctionalareas.Acommonvariationofthis assistantadministrators titles, theadministratorishighestrankingexecutiveresponsible fortheentireorganization.Associateadministratorsand management level.Inthisscheme,thereareassociateadministrators andassistantadministrators.Inhospitalsnursinghomes thatusethese There areseveraldesignationsforexecutive-levelmanagementin health careorganizations.Onetitlesequenceusesadministrator tosignifythehighest Executive-level these positions. organization. Manyofthesephysician-executivesobtainmanagement degreesandattendmanagementtrainingcoursespriortoorafterachieving medical director, chief medicalofficer, directorofperformanceimprovement,clinicaleffectiveness andmedicaldirectorofamanagedcare head ofaclinicalsectioninlargehospital(e.g.,cardiology, innature,including urology)andvariouspositionsinhospitalsthatareadministrative Physicians assumemanagementroles,aswell.Theseincludetheheadofaclinicaldepartmentinhospital(e.g.,medicine,surgery, obstetrics),the Physicians managed careatasmallerhospitalsystemintheNewYork area,AtlanticHealth. who isinchargeofthisfunctionforallthehospitalsandotherfacilitiessystem.Anotherexampleacorporatedirector the titleofdirectorisoftenusedforindividualswithcorporateorsystemwideresponsibilityafunctionsuchasdirectormaterialsmanagement In healthcaresystemswithcorporatestructures,likeCommunityHealthSystemsandHospitalCorporationofAmerica(twonation al hospitalchains), oncology managerorregisteredrecordadministrator). (e.g.,certified specific areainmultipledepartmentsandoftenfortheentireorganization.Managerstheserolesmayhaveclinicalexperience the managementofabroadfunctionincompany, suchasdirectorofpublicrelationsorstaffdevelopment,whois responsiblefortheir The levelabovedepartmentmanagerisoftencalleddirector, althoughsomeorganizationsrefertotheirmanagersasdirectors.Directorusuallyimplies Director other thanmanagement. individuals haveformalmanagementtraining(abachelor’s ormaster’s degreeorothertrainingprogram)and/orcertificationintheirspecificdiscipline as medicalrecords)departmentheadinahospital,andprojectmanagerconsultingfirmareallatthismanagementlevel. Manyofthese nursing homeorotherhealthcareorganization.Anenvironmentalservicesmanagerinahome,informationmana gement (alsoknown The nextmanagementlevelisdepartmentmanager, inahospital, ordepartmenthead.Theseindividualsareresponsibleforanentire Manager have comeupthroughtheranks. managed carecompany. Manyoftheseindividualsaretrainedinaclinicalortechnicalfield,suchasX-raytechnology, ultrasoundornursing,and in ahospital,nursingsupervisorhome,foodservicesanassistedlivingfacilityandcasemanagement supervisors. Thesepeoplesupervisetheday-to-dayactivitiesofagroupemployees.Examplesthistypepositionarechemistrylabsupervisor As inanyorganization,therearedifferentlevelsofmanagementhealthcare.Entry-levelpositionsgenerally referredtoasline Levels ofhealthcaremanagement for adirectcareproviderpreviouslyorinanotherfield. Each oftheseentitiesplaysaroleinthedelivery, financingandregulationofhealthcareservices.Managersintheseorganizations mayhaveworked Organizations thatsupporttheprovisionofcaremaybeclassifiedintofollowingcategories: career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com • Regulatoryandgovernmentagencies • Researchorganizations,associationsandeducationalinstitutions • Healthrelatedcompanies • Healthcareinformationservicesorganizations • Publichealthandcommunityorganizations • Consultingfirms • Managementservicesorganizations • Managedcareorganizationsandinsurancecompanies for insidercompany profiles,expert advice, The Vault MBA CareerBible Health Care 105 Customized for: Erin ([email protected]) diversify foryearstocome. increase inthenumberofqualityimprovementprofessionalsandmanagers.Allthesefactorscontributetofieldthatisexpectedexpand willresultinan stimulate thegrowthofambulatorycare.Governmentreportingrequirementsforinfectionsratesandhospitalacquired infections willfurther for specificprocedures(e.g.,surgeries)andtreatments,reportingrequirementsinfectionrateshospitalacquired Government policyandregulationwillplayamajorroleinshapingnewmanagementpositionsnumberofways.LimitingMedicare reimbursement determined monthlypaymentperenrollee)basis. (pre- interdisciplinary teamdevelopscareplansforprogramenrollees,andMedicareMedicaidreimburseservicesprovidedon acapitation programs providecomprehensiveprimarycare,acutecareandlong-termservicestoindividualsasanalternativenursinghomeadmission.An elderly populationarebeingdevelopedandtested.OnesuchdemonstrationprojectisPACE (programsofall-inclusivecarefortheelderly).These ambulatory caresettingsAlternativestoinstitutionallong-termwillalsohaveanimpact.Newmodelsfortheprovisionofgrowing andmorein The needtocontrolescalatinghealthcarecostswillcontinueresultinlessprovidedexpensiveinpatientsettings in diagnosingandtreatingillness.Thepromotionofhealthylifestyleshasbecomeahighprioritywillcontinuetobedrivenbyhealtheducation. of careandhealthoutcomes.Healthinformationsystemsmanagerswillbeneededtodevelopwayscompile,storeshareth e datathatisused via theInternet,peoplehavemoreinformationonwhichtobasetheirhealthcaredecisions.Thiswillleadincreasedaccountability intermsofquality be inareasofoutcomesmanagement,healtheducation,informationsystemsandambulatoryservices.Asaccesstohealthcareincreases And thereisgoodreasontobelievethatasthehealthcaresystemcontinuesevolve,newrolesformanagerswillbecreated.Thesepositionsmay two examples. New rolesandpositionscontinuetoevolve.Administratorsmanagersfororganizationaleffectiveness,ofclinicaleffectivenessare Functional areas organization. Thehealthcareexecutivesatthehospitalorotherfacilitiesreporttotheseindividuals. In anacademicsetting,deansanduniversityvicepresidentsoftenhaveoverallresponsibilitiesforthehospitalsotherhealth carefacilitiesinthe practices, affiliatedhospitalsandprovidesvariousinsuranceplans. Manor Care,afor-profit chain,forexample,operateslong-termcarefacilitiesthroughoutthecountry. KaiserPermanenteiscomprisedofphysician comprised ofonetypehealthcarefacility, insurancecompanies. suchasanursinghome,ormanytypes,hospitals,physicianpracticesand and acorporatechieffinancialofficer. Thesecompaniesmayberegional,nationalorinternationalandeitherfor-profit Theymaybe ornonprofit. for theentireorganizationandusuallyhavetitlecorporatedirectororvicepresident.Thereisalsoapresidentchiefexecutiveofficer a corporatemanagementlevel.Theseexecutiveshavesystemresponsibilitiesfortheoperationsandspecificfunctions(e.g.,financialmanagement) centers,there isalso In healthsystems,multihospitalorganizationsorhospitalsoperatingotherfacilities,suchasnursinghomesandambulatorycare Corporate management Health Care The Vault MBA CareerBible 106 © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.amerigrp.com Fax: (757)222-2330 Phone: (757)490-6900 Virginia Beach,VA 23462 4425 CorporationLane AMERIGROUP Corporation www.aetna.com Toll free:(800)872-3862 Fax: (860)273-3971 Phone: (860)273-0123 Hartford, CT06156 151 FarmingtonAvenue Aetna Inc. EMPLOYER DIRECTORY www.caremark.com Fax: (205)733-9780 Phone: (615)743-6600 Nashville, TN37201 211 CommerceStreet,Suite800 Caremark PharmacyServices www.bcbs.com Fax: (312)297-6609 Phone: (312)297-6000 Chicago, IL60601-7680 225 NorthMichiganAvenue Association Blue CrossandShield www.berverlycares.com Phone: (479)201-2000 Fort Smith,AR72919-0001 1000 BeverlyWay Beverly Enterprises,Inc. www.beckman.com Toll free:(800) 233-4685 Fax: (714)773-8283 Phone: (714)871-4848 Fullerton, CA92834-3100 4300 NorthHarborBoulevard Beckman Coulter, Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.hcahealthcare.com Fax: (615)344-2266 Phone: (615)344-9551 Nashville, TN37203 1 ParkPlaza HCA Inc. www.express-scripts.com Phone: (314)996-0900 St. Louis,MO63121 1 ExpressWay Express Scripts,Inc. www.davita.com Toll free:(800) 310-4872 Fax: (310)536-2675 Phone: (310)536-2400 El Segundo,CA90245 601 HawaiiStreet DaVita Inc. www.cvty.com Fax: (301)493-0731 Phone: (301)581-0600 Bethesda, MD20817 6705 RockledgeDrive,Suite900 Coventry HealthCare,Inc. www.chs.net Phone: (615)465-7000 Franklin, TN37067 4000 MeridianBoulevard Community HealthSystems,Inc. www.cigna.com Fax: (215)761-5515 Phone: (215)761-1000 Philadelphia, PA 19192 1601 ChestnutStreet 2 LibertyPlace CIGNA Corporation www.healthsouth.com Toll free:(888) 476-8849 Fax: (205)969-3543 Phone: (205)967-7116 Birmingham, AL35243 1 HealthSouthParkway HealthSouth Corporation www.healthnet.com Toll free:(800)291-6911 Fax: (818)676-8591 Phone: (818)676-6000 Woodland Hills,CA91367 21650 OxnardStreet Health Net,Inc. www.hma-corp.com Fax: (239)598-2705 Phone: (239)598-3131 Naples, FL34108-2710 5811 PelicanBayBoulevard,Suite500 Health ManagementAssociates,Inc. ir.hill-rom.com Fax: (812)934-8329 Phone: (812)934-7777 Batesville, IN47006-9167 1069 StateRoute46East Hill-Rom Holdings www.hillenbrandinc.com Fax: (812)934-7613 Phone: (812)934-7500 Batesvill, IN47006-7798 1 BatesvilleBoulevard Hillenbrand, Inc. www.henryschein.com Fax: (631)843-5658 Phone: (631)843-5500 Melville, NY11747 135 DuryeaRoad Henry Schein,Inc. The Vault MBA CareerBible Health Care 107 Customized for: Erin ([email protected]) www.magellanhealth.com Toll free:(800)410-8312 Fax: (860)507-1990 Phone: (860)507-1900 Avon, CT06001 55 NodRoad Magellan HealthServices,Inc. www.labcorp.com Fax: (336)436-1205 Phone: (336)229-1127 Burlington, NC27215 358 SouthMainStreet Holdings Laboratory CorporationofAmerica www.kindredhealthcare.com Toll free:(800) 545-0749 Fax: (502)596-4170 Phone: (502)596-7300 Louisville, KY40202-2412 680 South4thStreet Kindred Healthcare,Inc. www.kaiserpermanente.org Fax: (510)267-7524 Phone: (510)271-5800 Oakland, CA94612 1 KaiserPlaza Kaiser Permanente www.hopkinshospital.org Fax: (410)955-0890 Phone: (410)955-5000 Baltimore, MD21287 600 NorthWolfe Street Johns HopkinsHealthSystem www.humana.com Toll free:(800)448-6262 Fax: (502)580-3677 Phone: (502)580-1000 Louisville, KY40202 500 West MainStreet The HumanaBuilding Humana Inc. EMPLOYER DIRECTORY (CONT.) Health Care The Vault MBA CareerBible 108 www.questdiagnostics.com Toll free:(800)222-0446 Fax: (201)729-8920 Phone: (201)393-5000 Madison, NJ07940 3 GiraldaFarms Quest DiagnosticsIncorporated www.medtronic.com Toll free:(800)328-2518 Fax: (763)514-4879 Phone: (763)514-4000 Minneapolis, MN55432-5604 710 MedtronicParkway Medtronic, Inc. www.mmoh.com Toll free:(800) 700-2583 Fax: (216)687-6044 Phone: (216)687-7000 Cleveland, OH44115-1355 2060 East9thStreet Medical MutualofOhio www.medco.com Fax: (201)269-1109 Phone: (201)269-3400 Franklin Lakes,NJ07417-2603 100 ParsonsPondDrive Medco HealthSolutions,Inc. www.mayo.edu Fax: (507)284-0161 Phone: (507)284-2511 Rochester, MN55905 200 1stStreetSW Education andResearch Mayo FoundationforMedical www.marinerhealth.com Fax: (770)393-8054 Phone: (678)443-7000 Atlanta, GA30346 1 RaviniaDrive,Suite1250 Mariner HealthCare,Inc. www.stryker.com Fax: (269)385-1062 Phone: (269)385-2600 Kalamazoo, MI49002-1802 2825 AirviewBoulevard Stryker Corporation www.sjm.com Toll free:(800)328-9634 Phone: (651)483-2000 St. Paul,MN55117-9983 1 LilleheiPlaza St. JudeMedical,Inc. www.sierrahealth.com Fax: (702)242-9711 Phone: (702)242-7000 Las Vegas, NV89128 2724 NorthTenaya Way Sierra HealthServices,Inc. www.unitedhealthgroup.com Toll free:(800)328-5979 Fax: (952)936-1819 Phone: (952)936-1300 Minnetonka, MN55343 9900 BrenRoadEast UnitedHealth GroupCenter UnitedHealth GroupIncorporated www.tenethealth.com Fax: (469)893-8600 Phone: (469)893-2200 Dallas, TX75240 13737 NoelRoad Tenet HealthcareCorporation www.sunh.com Toll free:(800) 729-6600 Fax: (949)255-7054 Phone: (949)255-7100 Irvine, CA92612 18831 Von Karman,Suite400 Sun HealthcareGroup,Inc. © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.uhsinc.com Fax: (610)768-3336 Phone: (610)768-3300 King ofPrussia,PA 19406-0958 367 SouthGulphRoad Universal CorporateCenter Universal HealthServices EMPLOYER DIRECTORY (CONT.) career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.wellpoint.com Fax: (317)488-6028 Phone: (317)488-6000 Indianapolis, IN46204 120 MonumentCircle WellPoint, Inc. The Vault MBA CareerBible Health Care 109 Customized for: Erin ([email protected]) 110 © 2009Vault.com Inc. Customized for: Erin ([email protected]) understand thestrategiesthatmanagersaysheemploys. undervalued equitiesandsellingovervaluedequities.Althoughthisdescriptionisthelong/shortequitystrategyatitsmostbasic,itimportantto used bythehedgefundmanagertohavepositivereturnsoninvestments.Ifasayshetradeslong/shortequitythenyouknowisbuying trading/investment strategiesthatthehedgefundmanagerstateshetrades.The“investmentstrategy”isinvestmentapproach orthetechniques figure outwhatthehedgefundmanagerdoes?You byunderstanding the areabletofigureoutalittlemoreabouttheunderlyinginvestmentactivities Today, theterm“hedgefund”tellsaninvestornothingaboutunderlyinginvestmentactivities,similarto“mutualfund.”So howdoyou conditions. and asecondaryshortpositioninsimilarsecurity. Thisisusedtooffsetpricefluctuationsandaneffectivewayofneutralizing theeffectsofmarket the existingpositionsinportfolio.Hedgingcanbeaccomplishedmanydifferentwaysbutmostbasictechniqueisto purchasealongposition managers atthetime.“Hedging”referstohedgefundmanagermakingadditionaltradesinanattemptcounterbalanceany riskinvolvedwith During theearlyyearsofhedgefundindustry(1950sto1970s),term“hedgefund”wasuseddescribe“hedging” strategy usedby how theywork.Sowhatexactlyisahedgefund? Although, despitetheirgrowthandpopularity, hedgefundsstillremainamysterytomanypeoplewhodonotunderstandexactly what theyareand Over thepastdecade,hedgefundshavegrowntremendouslyintermsofassetsundermanagementandalsogarneredalotmediaattention. investment fundsthateverydayinvestorscanpurchase,mutualaretheprimeexampleofamainstreamfund. within thescopeofthissectionbutitisusefultoknowthatoftenpeoplereferhedgefundsasalternativeinvestments.Mainstream fundsare estate)isnot covered operate; thisincludesprivateequityandrealestatefunds.Thetotal“alternative”category(including Hedge fundsareconsideredan“alternativeinvestment”vehicle.Thetermisthegeneralunderwhichunregulated WHAT ISAHEDGEFUND? Hedge Funds hedge fundmanageroperates,it isveryimportanttounderstandtheseconcepts.Thefourconcepts arenowdefinedindetail. These characteristicsmakehedge fundsdifferentfrommostotherinvestmentfunds,especiallymutual funds.To getagoodunderstandingofhow a characteristics ofhedgefundsarethefollowing: So nowthatyouhavereviewedsomeofthebasicterminology intheindustry, wewillexplainthekeypointsindepth.Themain distinguishing DISTINGUISHING CHARACTERISTICS investors hearingMadoff’s talemaybecomesuspiciousoftheirownfundmanagers. in March2009,itlookslikethedamagewithinindustrymay lingerforawhile.Andintheend,itmayboildowntotrustissue—hedgefund investors continuedtowithdrawfunds—and,consequently, portfolioshavecontinuedtolosetheirvalue.AlthoughMadoffpleaded guiltytoall charges groups,shocked of thedeclineinbusiness.AsitcametolightthatMadoffhad defraudedhedgefunds,investors,pensionfundsandcharitable Of course,BernardMadoff’s $50billionPonzischemecertainlydidn’thelphedge funds’ outlook—andsomeindustrywatchershaveseenitasasign the fundscanstartcollectingperformancefeesagain. 900 hedgefundsshutteredin2008,and70percentofthe6,800stillbusinesssufferedlosses—lossesthatneedtobe earnedbackbefore in March2009.Thefigure,whichisabout14percentoftheindustry’s totalworkers,isn’toutoflinewithwhatthesectorhas endured.Morethan Ultimately, hedgefundsmayhemorrhageapproximately20,000jobsgloballyoverthecourseof2009,executivesearchfirmOptions Groupreported Hedge funds,asectorthatoncestoodtall,hasbeensteadilychoppeddowninthemidstofoneworstfinancialcrises therecenthistory. Hedge fundstoday variety ofinvestmenttechniquessuchasborrowingmoneythroughleverage,sellingshort,derivativesfordirectionalinvestingandoptions. A “privateunregisteredinvestmentpool”encompassingalltypesoffunds,companiesandprivatepartnershipsthatcanusea A ConciseDefinitionof“HedgeFund” • Hedgefundshavetheabilityto useleverage. • Hedgefundscanshortsell. • Hedgefundsusederivatives. • Hedgefundscan“hedge”theirportfolio. 111 Customized for: Erin ([email protected]) options onstocks. contract fordifferences,totalreturnswaps,etc.)arenotcoveredinthisbook.Discussednowthemostbasicformsofderivatives:“put”and“call” Derivatives thatareusedbyhedgefundscantakeonmanyforms,andthemorecomplexderivatives(interestrateswaps,foreign currencyswaps, Derivatives in asimilarsecurity(seeGapexample).Thisisusedtooffsetpricefluctuationsandaneffectivewayofneutralizingthe Hedging canbeaccomplishedinmanydifferentways,althoughthemostbasictechniqueistopurchasealongpositionandsecondaryshort Hedging Hedge Funds The Vault MBA CareerBible 112 A&F, sohisprofitis$1,000) $4,000. Therefore,Courtneyhasmade$1,000profit.(Hereceives$5,000fromtheoriginalshortsaleandthenpays$4,000 tobuy A. SinceCourtneyowes100A&Fsharestohisbroker, of hecannowgooutandbuythe100sharesfor$40each,costinghimatotal Q. IfthestockpriceofA&Ffallsto$40,whatdoesthismeanforCourtney’s profits? be paidbackatsometimethefuture.Asgoesby, theretailindustrydoespoorlyandsharepriceofA&Ffallsto$40. receives $5,000cashfordoingso.Thistransactionisconductedthroughhisbrokerandhenowowes100A&Fsharesto broker, to A. WhenCourtneygoesshortA&F, itmeanshehassoldbeforeownsit.Sosaysells 100A&Fsharesshortfor$50each.He Q. WhenyousayCourtneygainsfromtheAbercrombie&Fitchtrade,whatdoesthismean? Abercrombie &Fitch.HereduceshisriskofGapbyhedgingwith Abercrombie &Fitch,hewouldmakemoneyonthattrade.ThereforecanoffsetsomeofhislossesfromGapwithgains A. SinceCourtneyislongonGap(heownsit)hewouldlosemoneythistrade.alsoshorthasalreadysold Q. HowwouldthisaffectanymoneyCourtneymakes? A. ThesharepricesofbothGapandAbercrombie&Fitchmightdecline. Q. Whatwouldhappeniftheretailindustrydidpoorly? risk anddoesthisbygoing“short”(selling)Abercrombie&Fitch,whichisinthesameretailindustry. 100 sharesofGapstoresbuthenowbelievestheretailindustrymaybevulnerabletoadownturninmarket.Hewantshedge this Courtney isahedgefundmanagerwhoinvestedintheGapstores.Herewewillseehowhehedgeshisrisk.“long”(he’s bought) This woulddeterminetheknowledge oftheinvestorandwhethertheyunderstandrisksassociated withwritingoptions. option. Anyinvestorcanselloptions (writeoptions)providedtheyhaveansweredanoptionsquestionnaire providedtothemby theirbroker. ofthe This isthepersonwhooriginates anoptioncontractbypromisingtoperformacertainobligation inreturnforthepriceorpremium The selleroftheseoptionsisreferred toasthe“writer”—manyhedgefundswilloftenwrite options inaccordancewiththeirstrategies. Option writer date). A “call”optiongivestheholderrighttobuyunderlying stockatspecifiedprice(strikeprice)onorbeforeagivendate (exercise Call option date). A “put”optiongivestheholderrighttosellunderlying stockataspecifiedprice(strikeprice)onorbeforegivendate(exercise Put option Option Definitions Hedging Example effectsofmarketconditions. © 2009Vault.com Inc. Customized for: Erin ([email protected]) price. (Theoppositeofgoing“short”is“long,”wheninvestorsbuystockstheybelievewillrise.) to repurchasethestockatalowerpriceinfuture.Thus,theywillprofitfromsellinghigherprice,thenbuyitfuture Short sellinginvolvestheofasecuritythatsellerdoesnotown.sellersbelievestockpricewillfallandtheybeable Short selling(going“short”) financial instrumentsintheaccount)topaybackloan. are financialinstitutionsandbanks.Ifthehedgefundmanagercannotpayloanback,institutioncanthensell thecollateral(the financial instrumentsinhisaccountascollateralforthefundstheyhaveborrowedfromtheirbank(primebroker).Theprimarysourcesofleverage the loanfrombank.Thebankmanagercanthensellhouseorcarifyoudefaultonyourloan.Similarly, fundmanagerusesthe thehedge The simplestexamplesineverydaylifeofleveragearehousemortgagesandcarloans.bankmanagerusestheor carascollateralfor impact iftheirprofitablepositionswereequallybalancedbylosingpositions. half totwotimesthevalueoffund.However, hedgefundsareusuallycomprisedoflongandshortpositions,soalargemarket riseorfallhaslittle uncommon tohavefourorfivetimesthevalueoffundborrowed.Equitiesahigherriskprofileandthereforetypical leverage isoneanda Typical hedgefundleveragedependsonthetype offinancialinstrumentsthatthehedgefundtrades.Fixedincomehaslowerrisklevelssoitisnot borrowed funds. component tohedgefundmanagementsinceitgivesthemanagersabilityhavehigherreturns(andpotentially lose more)with Itcanbeakey managers whentheybelievethatthecostofborrowedfundswillbeminimalcomparedtoreturnsaparticularposition. Leverage measurestheamountofassetsbeingborrowedforeachinvestmentdollar. Leverage(borrowingadditionalfunds)isutilized byhedgefund Leverage career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com not availableforborrow, Jimmycannotsellshortthesecurity. the stockloandepartmenthastolend,thenJimmycanshortsell(borrowingitfromprimebroker).If the stockis broker. Jimmywillcallthestockloandepartmentofprimebrokertoseeifhasavailablelend tohim.If Before Jimmyentersintotheshortsale,hemustensurethatisabletoborrowstock(getaloan),usuallythroughitsprime called “covering”hisstockloan),Jimmypays$75pershare,whichresultsinhimlosing$2,500(100*$25) entered intowhenshortingthestock.But,McDonald’s (thisis pricecontinuestorise$75,thismeansthatinorderbuythestock loan he means hehassoldstockthatdoesnotyetown,thisisaloan.Inthefuturetobuyrepay Jimmy believesthatMcDonald’s which isovervaluedandthathecanprofitbysellingshort“MCD.”Jimmysells100sharesat$50 then theleverageusedis200percent.Theamountof typicallyusedbythefundisshownasapercentageoffund. $3 million, If thehedgefundhas$1millionofinvestedmoneyandisborrowing another$2million,tobringthetotaldollarsinvested Leverage CalculationExample Short SellingExample for insidercompany profiles,expert advice, The Vault MBA CareerBible Hedge Funds 113 Customized for: Erin ([email protected]) several differentdepartments.Thisuniquenatureofthehedgefund jobrequiressuperiorteamworkskillsandtheabilitytodealwithavarietyofpeople. In addition,duetothevaryingsizesofhedgefunds,employees tendtohaveamorediverserangeofresponsibilities,whichmay overlapbetween the sizeandenvironmentoffund. depending onthehedgefund.Forexample,anoperationsanalystcanalsobecalledportfolioanalyst,tradingassistantoraccountant It isveryimportanttonotethatspecificjobtitlesarenotathedgefunds.Thisbecauseonerole(job)canhavemanydifferent range fromonetoover20.Asahedgefundgrowsinsize(managesmoremoney),personnelareaddedsupporttheincreased tradingvolume. trading decisionsandoperationsofthehedgefund.Sincesizefundsvarydramatically, departmentcan thenumberofpeopleineach A typicalhedgefundwillhavevariousdepartments:operations,accounting,trading,andriskinvestorrelations.Thesedepartments supportthe larger hedgefundmayemployover300people. hedge fundwouldhaveaseparateoperationspersontohandlethiselement.Asmallermaythreeorfouremployees, whereasa trade,whereasalarger determined bythesizeoffund.Atasmallerfundtraderismuchmorelikelytobeinvolvedwithoperations to someoneelseenteringanotherinvestmentbankasatrader. Traders athedgefundsarelikelytohavedifferentresponsibilities,which areusually the employeesathedgefundsarenotsameforeachfund.Someoneenteringaninvestmentbankasatraderwilllikely haveasimilarrole Hedge fundsvaryinsizefromassetsundermanagementaslittle$1milliontoover$10billion.Unlikeatypicalinvestmentbank,therolesof manager isoftenreferredtoastheprincipalorpresidentandcanalsobecalledportfoliomanager. hiring personnel,monitoringtheriskofportfolioandensuringthataccountingoperationsdepartmentsareinorder. Thehedgefund overseeing thewholeoperationofhedgefund.Thismeansthathe/sheisresponsibleforportfolio,oftenmaking tradingdecisions, So whoexactlyarehedgefundmanagersandwhatdotheydo?Amanagerisnormallythefounderkey person inchargeof ORGANIZATIONAL STRUCTUREOFATYPICALHEDGEFUND Hedge Funds The Vault MBA CareerBible 114 (a/k/a HedgeFundManager) President/Portfolio Manager/Principal Research Analyst Manager Portfolio Traders Manager Risk Chief FinancialOfficer Accountant Chief OperationsOfficer Operations Staff © 2009Vault.com Inc. Customized for: Erin ([email protected]) broker clients.Thispositiongenerally requiresaminimumofbachelor’s degreeandafewyearsofrelevantexperience. Athoroughunderstanding In aprimebrokerdepartment,the riskassociatewillperformthesameduties,excepthebemonitoring riskforseveralhedgefundsthatareprime would beavailableataninvestment bank’s primebrokerdepartment. This associatelevelpositionwillplay asupportingroleintheriskdepartment.Manyhedgefundsdon’t haveaseparateriskdepartmentbutthisposition Risk associate a largevarietyofsecuritiesproductbase;andsecondly, theriskgroupplaysalargeroleinalleviatingconcernsofexistingandpotentialinvestors. Fund offundsareknowntohaveaverylargeriskteamsbecause oftworeasons.Firstly,they aredealingwith duetothewayfundoffundsoperate hedge funds,mutualetc.Manyinvestmentbanksalsoprovide suchaddedvalueservicethroughtheirprimebrokerdepartments. Many hedgefundsarealsoknowntooutsourcetheirriskcontrols throughthirdpartyvendorsspecializedinprovidingthisservicetocorporations, may monitortheriskandtherearenospecificpersonnel;while atalargerfund,thereisgroupwhosolelyresponsible formonitoringrisk. At ahedgefund,riskmanagementrolecanvarydependingon thesizeoffund.Atasmallfund,generallyprincipalsortradinggroup prevent anyriskcompletelyortodealwiththemiftheyoccur. strategiesto various typesofrisks.Thisdepartmentusesproprietyor vendortoolsandmethodologiesforriskmanagementimplements The riskdepartmentproactivelymonitorseachhedgefund,identifyingpotentialrisksandthendeterminingunderstanding the importanceof RISK MANAGEMENT career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com 10:00 p.m.:Headhomeandtrytogetthemotivationgogymbeforecrashing. 7:00 p.m.:Discussrateswiththeprimebrokeroverdinnerandgettoknowthembetter. 6:00 p.m.:Leaveworkandmeettheprimebrokerfordinnerwhoistakingoperationsteamout. 5:00 p.m.:Createalistofagendaitemsforthenextdayandlookatcalendaranymeetings. “open items.” 4:00 p.m.:Re-reviewallreportsfromthemorningandmakesurehighlighteddiscrepanciesareresolvedotherwisejotthemdownas 2:00 p.m.:Fieldcallsandhelpthestaffresolveanypendingproblems. 1:00 p.m.:HavelunchatthedeskwhilebrowsingthroughsomestoriesonBloomberg. internally andasktheprimebrokertofindasolutionthisproblemasitmayinvolvelargelossesfordesk. security. Goovereachtransactionandseeifanythingwasincorrectlybooked.Haveoneofthestaffmembersprintalltransa 11:00 a.m.:Haveameetingwiththeheadtraderonconvertibletradingdeskwhodoesnotagreefinalpositionparticular products, technologyandclearingservicestoahedgefund. needs tobeextraattentiongiveitmakesuregoesthroughproperly. Theprimebrokerdepartmentataninvestmentbank offers 10:00 a.m.:Getonacallwithmanagerintheprimebrokerbecauselargewireneedstobesentoutformanagementfeesandthere 9:00 a.m.:Haveweeklyteammeetingandgooverworkloadcoveragefortheweek. and speaktothememberofstaffwhoworksonitgetstatusitem. 8:15 a.m.:Gooverexceptionreports(availableonlytoamanager)thatshowtradeshavenotsettledandanymargincallsforaccount 7:30 a.m.:Arriveattheofficeandlogontocomputer, alongwillvariousbackofficeandportfoliosystemssuchasDTC. position willgenerallypaybetween$100,000and$250,000dependingonexperience,backgroundsizeofhedgefund. for theemployeesworkingunderyouaswellmaintainingrelationshipsbetweenprimebroker, banksandoffshoreadministrators. This of twoto10peoplewhoaredirectreports.Thejobfunctionssimilartheoperationsspecialistalthoughthereismuch more responsibility Most directorsofoperationseitherhaveseveralyearsexperienceinthesamecapacity, aMBAorboth.Atthisstageonegenerally hasastaff A DayintheLife:DirectorofOperations for insidercompany profiles,expert advice, The Vault MBA CareerBible ction reports Hedge Funds 115 s Customized for: Erin ([email protected]) a goodsourceofcontact/network. Risk jobsarefoundthroughjobagenciesorconnections.Generally, tradersarealsowellawareofjobopeningsintheriskgroupsandcanbe and willalsohelpalleviatestheinvestor’s worries. losses in thefund concerns. Itisimportantthatahedgefundhasstrongriskmonitoringsystembecausethisreducesthelikelihoodoferrorand sole responsibilityistofieldcallsfrominvestors.Although,insmallerfundsinvestorsmaycalltheriskgroupdirectlystateandaddressany employee whose have interactionwithclients(investors)dependingonthesizeoffund.Somehedgefundsadesignatedinvestorrelations Base salarydependsongeographicallocation,previousexperience,educationskillsandsizeofthecorporation.Theriskpositioncouldpotentially spreadsheets andgraphsasbackupofheranalysis. understand whattheoutputofresultsmeanandbeabletoverballycommunicatethoseclearlytradersportfoliomangersalongwithhaving everything manuallybecausetherisksystemhasbuiltinmathematicalmodelstoattributefordifferentscenarios,althoughHeatherneeds such astheDowJonesIndustrialAverage decreasingsubstantiallyinoneday, couldaffectthevalueofportfolio.Heather doesnothavetocompute designed byalargeinvestmentbank.Everymorningshewillperformanalysistotheshortportfoliomeasuringhowminorchanges inthestockmarket, For example,Heatherworkswiththetradinggrouptomonitorrisk.Thehedgefundwhereshesubscribes/utilizesariskmonitoringsystem back-testing andstress-testingsecuritieswithinaportfolioreportingtheanalyzeddatatoseniorriskmanagement. theta) andstronganalyticalskillsarestronglyrecommended.Thedailyjobdutiesincludebutnotlimitedtomaintainingvalueatrisk(VAR) data, of avarietytradingproducts(i.e.,options,fixedincome,mortgagebackedsecurities,swaptions),optionsrisksdelta,gamma,vega,rhoand Hedge Funds The Vault MBA CareerBible 116 7:30 to8:00p.m.:Headhomeandgetbedearly foragoodnight’s sleep. 7:15 p.m.:Reviewschedulefornextday. 7:00 p.m.:Lookovernotesfromtodayandjotdownanyitemsthatneeds tobeaddressedtomorrow. 5:00 p.m.:Fieldcallsandansweremailsonallriskportfolioinquiries tointernalandexternalpeople. 4:00 p.m.:Work withtheCFOtohavehimclarifyaproblemyounoticedonlastmonth’s audit. that theriskmanagergetsridofanypotentialinvestorsconcerns ofsuddenlosses. 2:30 p.m.:Recapthemeetingwithprincipals,seehowitwentandmakea listofitemstofollowupwiththeinvestor. Itisveryimporta monitoring. 1:30 or2:30p.m.:Meetingwithinvestorsinaconferenceroom.Emphasizethesafetyofassetstoinvestorbecauseproperrisk business andcorporatestructureofthehedgefunditslinkstoinvestmentmanger. 1:00 p.m.:Eatlunchatthedeskwhilepreparingfor1:30meetingwithpotentialinvestorsofhedgefundwhowanttodiscuss 12:00 p.m.:Makingsurethattheportfolioismaintainedwithinestablishedriskparameters leaving theorganization,etc. 11:00 a.m.:Compilestatisticsfortheongoingexceptionreportnon-investmentriskissuessuchastradesettlement,particulartrader fund. Write upareportbasedonthecalltopresentprincipals. 10:00 a.m.:Calltheprimebrokerriskdepartmentanddiscussrisksinvolvedinutilizingmoreleverageforaparticularoptionarbitrage are inagreement. illiquid positionsandvaluationsriskcomparemarginrequirementsofallwiththecustodian/primebrokermaking sureyou 9:30 a.m.:Monitoringtheportfoliosononescreenwhilelookingatmarketsaffectingvarioussecuritiesanotherscreen.Quant ify 8:00 a.m.:Dailyriskconferencecallwithtraders,portfoliomanagerandprincipals 7:30 a.m.:Getintotheofficeandcheckemail.ChatwithcolleaguesaboutinterestingstoriesinWSJ. A DayintheLife:RiskAnalystataLargeHedgeFund © 2009Vault.com Inc. nt Customized for: Erin ([email protected]) www.ardenasset.com Fax: (212)751-8546 Phone: (212)751-5252 New York, NY10152 375 ParkAvenue, 32ndFloor Arden AssetManagement www.angelogordon.com Toll free:(800)805-0024 Fax: (212)867-9328 Phone: (212)692-2000 New York, NY10167 245 ParkAvenue Angelo, Gordon&Co. EMPLOYER DIRECTORY www.blackstone.com Phone: (212)583-5000 New York, NY10154 345 ParkAvenue, 30thFloor Management Blackstone AlternativeAsset www.bankofamerica.com Fax: (704)386-6699 Phone: (704)386-5681 Charlotte, NC28255 Bank ofAmericaCorporateCenter 100 NorthTryon Street Bank ofAmerica www.avenuecapital.com Phone: (212)878-3535 New York, NY10022 535 MadisonAvenue Avenue Capital www.aurorallc.com Phone: (312)762-6700 Chicago, IL60606-5055 227 West MonroeStreet,60thFloor Aurora InvestmentManagement Phone: (212)373-0800 New York, NY10019 152 West 57thStreet Atticus Capital career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.deshaw.com Fax: (212)478-0100 Phone: (212)478-0000 New York, NY10036 Tower 45 120 West 45thStreet,39thFloor D. E.Shaw&Co. www.citadelgroup.com Fax: (312)977-0270 Phone: (312)395-2100 Chicago, IL60603 131 SouthDearbornStreet Citadel InvestmentGroup www.cerberuscapital.com Fax: (212)891-1540 Phone: (212)891-2100 New York, NY10171 299 ParkAvenue Cerberus CapitalManagement www.caxton.com Phone: (212)418-8300 New York, NY10022-1606 500 ParkAvenue Caxton Associates www.campbell.com Fax: (410)296-3311 Phone: (800)698-7235 Towson, MD 21204 210 West PennsylvaniaAvenue, Suite770 Campbell &Co. www.bwater.com Fax: (203)291-7300 Phone: (203)226-3030 Westport, CT06880 1 GlendinningPlace Bridgewater Associates www.brevanhoward.com Phone: (212)418-8200 New York, NY10022-2524 590 MadisonAvenue, 9thFloor Brevan HowardAssetManagement Phone: (203)861-4600 Greenwich, CT06830 200 GreenwichAvenue ESL Investments www.eimgroup.com Fax: (212)371-9111 Phone: (212)371-9000 New York, NY10022 750 LexingtonAvenue EIM Phone: (212)371-3000 New York, NY10022-3355 65 East55thStreet,19thFloor Management Davidson KempnerCapital www.ivyasset.com Fax: (516)228-6515 Phone: (516)2286500 Jericho, NY11753 1 JerichoPlaza,Suite304 Ivy AssetManagement www.hbk.com Phone: (214)758-6100 Dallas, TX75201-1836 300 CrescentCourt HBK CapitalManagement www.grosvenorcapitalmanagement.com Chicago, IL60611 900 NorthMichiganAvenue, Suite1100 Grosvenor CapitalManagement goldmansachs.com Phone: (800)292-4726 New York, NY10004 1 NewYork Plaza Goldman SachsAssetManagement www.fortressinv.com Phone: (212)798-6100 New York, NY10105 1345 Avenue oftheAmericas Fortress InvestmentGroup The Vault MBA CareerBible Hedge Funds 117 Customized for: Erin ([email protected]) www.paamco.com Fax: (949)261-4901 Phone: (949)261-4900 Irvine, CA92612 19540 JamboreeRoad,Suite400 Management Co. 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Hedge Funds The Vault MBA CareerBible 118 www.rentec.com Fax: (212)758-7136 Phone: (212)486-6780 New York, NY10022 800 3rdAvenue, 33rdFloor Renaissance Technologies Corp. www.rbsam.com Phone: (312)777-3500 Chicago, IL60606-4637 71 SouthWacker Drive,28thFloor RBS AssetManagement www.quellos.com Phone: (206)613-6700 Seattle, WA 98101-4059 601 UnionStreet,Suite5600 Quellos CapitalManagement www.piratecapitalllc.com Phone: (203)854-1100 Norwalk, CT06854 200 ConnecticutAvenue, 4th Floor Pirate CapitalLLC www.perrycap.com Phone: (630)719-7800 Downers Grove,IL60515-5412 3113 Woodcreek Drive Perry Capital www.permal.com Phone: (212)4186500 New York, NY10022 900 3rdAvenue, 28thFloor Permal Group www.pequotcap.com Fax: (203)429-2400 Phone: (203)429-2200 Westport, CT06880 500 NyalaFarmRoad Pequot CapitalManagement www.superfund.com Fax: (212)750-2206 Phone (212)750-6300 New York, NY10017 489 5thAvenue Superfund Group Fax: (212)245-5154 Phone: (212)262-6300 New York, NY10106 888 7thAvenue, 33rdFloor Soros FundManagement www.careers.sac.com Phone: (203)614-2000 Stamford, CT06902-7912 72 CummingsPointRoad SAC CapitalAdvisors Phone: (212)713-2000 New York, NY10019-6119 51 West 52ndStreet,22ndFloor UBS GlobalAssetManagement www.tudorfunds.com Fax: (203)863-8600 Phone: (203)863-6700 Greenwich, CT06831 1275 KingStreet Tudor InvestmentCorporation www.tremont.com Fax: (914)921-3499 Phone: (914)925-1140 Rye, NY10580 555 TheodoreFremdAvenue Tremont CapitalManagement © 2009Vault.com Inc. Customized for: Erin ([email protected]) inexplicable images,likeapictureofthelunarlander, aLandshark(bornof1970s taunts tocompetitors,andallusionsthepurposeofchip(asemiconductoronaprobesentMarshadcartoonMartians onit)—toother, eventually windup,inmicroscopicform,thechip.Theseimagesvaryfromprosaic—thenamesofpeoplewhodesigned the lithographs, The designersofthelithographicplatesusedtoprintcircuitboardshavebeenknownembedwordsandimagesinblankspaces inthedesign,which Workers intheseenvironmentsalsowearbunnysuits,whichprotectthewafersfromhairorskincellsthatworkersmightshed. can shortoutacircuit.Therefore,chipsmustbemanufacturedincleanrooms,wheretheambientlevelofdustissignificantlyreducedbyfiltration. Since theelectricalpathwaysofmodernprocessorchipsaremeasuredinmerenanometers—billionthsaninch—nearlyanyerrant pieceofschmutz repeating theseprocesses. into thecrystalstructureofsiliconwithaparticleaccelerator. Successivelayersofinsulatingandconductingpathwaysaregraduallybuiltupby chip byimplantingthesiliconwithasmatteringofindividualatoms,oftenboronorarsenic,knownasdopants.Theorarsenicatomsareshot photoresist isremoved,onlythemetalremainstoconnectvariouspartsofchip.Otherelectricalfeaturescanbeadded tothesurfaceof and whenthe underneath it.Anatom-thicklayerofmetal,suchascopperoraluminum,canbedepositedontheseexposedpartsthe chip; filtered throughalithographicplate,whichallowsanacidetchbathtoremovethephotoresistthatwasexposedlight,aswell assomeofthesilicon layer ofsilicondioxideafewatomsthick,which,inturn,iscoatedwithlight-sensitivematerialcalledphotoresist.Thewaferthenexposedtolight Anywhere fromafewhundredtothousandchipscanfiton30-centimeterwafer. withaninsulating Afterpolishing,thewafer'ssurfaceiscoated increased insizefromaboutfourinchesthe1960sto12(30centimeters)today;thoughsomememorychipsarestillmade onsmallerwafers. any imperfectionsinthesurfaceofwaferwillresultchipsthatdonotfunctionproperly. Aschipmanufacturingtechnologyimproved,wafers arepolishedthoroughly; thickness ofaboutamillimeterfromcylindricalcrystalsgrowninbathsmoltensilicon.Aftercutting,thesurfaceswafers The manufactureofchipsinvolveshundredsrepeatedsteps.Chipsarebuiltonasubstratepuresilicon,calledwafer. Wafers arecuttoa can havebillionsofcircuitsinanareathatfitonyourfingertip. during thelate1970sandearly1980s.Unlikethosefirstmicrochips,whichcombinedtensofcircuitsonasinglechip,microchipsproducedtoday consumer goods and inMinutemanmissiles.Astheproductionofchipsbecamelessexpensive,theybegantheirinexorablemoveintorealm the ApolloMoon mission The firstsemiconductors,whichonlyhadahandfulofcircuits,wereinitiallyusedinhighlyfundedgovernmentprojects,like which consistsofmultiplecircuitsembeddedinasemiconductivesubstrate—wasinventedbyJackKilby, anemployeeatTexas Instruments, in1958. 2004, humansproducedmoretransistorsthangrainsofrice,accordingtotheSemiconductorIndustryAssociation.Themicrochipasweknowit— Microchips areuptherewiththewheelandknappedflintintermsofhumaninventionsthathavehadadramaticeffectonhistory. Remarkably, in Chips offtheoldblock combination ofhardwareandsoftware—likeHewlett-PackardDell,whoshipcomputerswithoperatingsystemsprogramsalreadyinstalled. hard drives,chips,circuitboardsandwiring—andsoftware,theprogramsthatrunonsaidchips.Othercompaniesoffertheircustomerssome computer,commonplace partofmodernlife.Thesectorisfairlybroad,andencompassescompaniesthatmanufacturehardware—thegutsthe like has beensorapidlyintegratedintothefabricofmodernlifethatsemiconductorchip,adevicehardlyexisted50yearsago,become As industriesgo,thetechsectorisafairlynewone,butrevolutionizingwaypeopleconductthemselvessociallyandinbusiness.Technology It's atech,techworld TECHNOLOGY ISEVERYWHERE High Tech buys, andcompaniesthatincorporate semiconductorsintheirproductssimilarlyreinedpurchases. Thiscreatedabitofglutproductand through manyindustries,finally reaching techmanufacturers.Becauseofconsumeruncertainty, peoplepulledbackon impulseand non-necessary However, thatgrowthphasehascooled,andinearly2009, theindustryappearstobeinadecline.Theeconomicturmoil inthe financialsectorrippled contracts forinexpensivesilicon, highpricesforthematerialwereexpectedtoexertupwardpressure onchipprices. the samepuresiliconwafersthatmicrochipsaremadeof,increased demandforthematerial.Whilemanymajorchipmanufacturerslockedin in spring2007;asubstantialsupplyofthechipsdepressedprices. Thepriceofsiliconalsorose,asdemandforsolarcells,whicharemade semiconductor productswereontherise.Onenotableexception wasthepriceforFlashmemorychips,whichsufferedastrongdownward correction As ofsummer2007,theindustrywasinagrowthphase. Many semiconductormanufacturerswerebuildingnewfactories,andpricesfor reached ahighin1999—intimetofuelthetechboom—andagain in2004,ordertopowertherecoveryfromtechbust. course oftheindustry'shistory, notablyinthe1980s,whenJapanesemanufacturersfloodedmarketplacewithinexpensivechips.Themarket rises, morefabsarebuilt;astheyaddtheircapacitytothemarketplace, thepriceofchipsfalls.Thishasalreadyhappenedseveraltimesover a faborfoundry, aplant wheremicrochipsaremade,cantakeseveralyears—nottomentionupwardsof$2billion—tobuild.Asthepricechips The semiconductorindustryishighlycyclical,pronetovertiginous highsandastonishinglows.Thisispartlyduetotheindustry'shighcostofentry; Bumpy road Saturday Night Live Night Saturday skit), oradrawingofbaby. 119 Customized for: Erin ([email protected]) wireless connection,justlikeconventional machines.ThelaptopsrunonaversionofRedHat’s FedoraLinuxtoencouragechildrendevelop their can beusedasane-book(with ablack-and-whitescreenthatcanbereadinsunlight),laptop or gamedevice—andcanalsobene Former MITprofessorNicholasNegroponte hasaplantobring$199laptoppoorpeopleindeveloping countries.Thelaptops,nowcalledXO-1, have diversemotivesfordoingso, fromincreasingcomputerliteracyamongtheworld’s marketshare. poorestpeopletoseekingprofitsandgaining with productsandjadedconsumers,thesolutionsareobvious. Thecompaniesbringingthegospelofbytetocitizensgrowingeconomies these countriesisincreasingdramatically, pushingpeopleintoagrowingmiddleclass.CombinethatfactorwithcompetitiveWestern marketssaturated thecitizensin Developing economiesareahotmarketfortechcompanies—and notjustthosewhowanttomanufacturegoodsthere.Thewealthof One laptopperlap replicated exceededavailablestorageforthefirsttimein2007.” according toanIDCwhitepapersponsoredbyEDC(aleader in networkedstoragesolutions),theamountof“informationcreated,capturedor translates intostronggrowthforthedata-storageproductsindustry—it’s expectedtoexpandby15percent in2007.Buteventhat’s notenough— card transactionstofunnycatpicturessenttheofficeviaemail—must besavedforseveralyearsaccordingtoregulationsl credit will be10timeslargerthanthatwhichwasnecessaryin2006. Agreatdealofthisdata,especiallytheportioncreatedbycompanies—from dramatically. For2007, the“digitaluniverse,”at281billiongigabytes,was10percentbiggerthanpreviousestimates;storagerequirementsfor2011 this aslessthanonecentper500gigabytesofstorage).Atthesametime,amountdatathatpeopleandbusinesseswanttostorehasincreased precipitously—from $10,000permegabytein1956and$0.731986,totwohundred-millionthsofacent2008(it’s moreconvenienttotranslate People arealsoproducingmoredatathanever. Luckily, thecostofdatastorageisfallingexponentially. Thecostofdatastorage hasdropped Data, dataeverywhere extremely difficulttodesignanelegant,easy-to-useinterfaceforthedevice—justaddingmorebuttonsdoesn’tquitecutit. addmorefeatures,it’sreturn it.In2008,morethanhalfofallreturnedelectronicshadnothingwrongwiththem.Whileitmaybeeasyandcheapto minutes onaveragefussingaroundwithanewproduct—andiftheycan’tfigureoutallthebellsandwhistlesinthatperiodoftime,they’relikelyto doesn’t addmuchtoitsmanufacturingcost.Thisprocess,knownasfeaturecreep,hasadownside,however. Consumersonlyspendabout20 surefire crowd-pleaser:feature-ladengadgetsattractcustomersandsellatapremium,addingchipthatturnscellphoneintomusicplayer Speaking ofthosepower-hungry seemslike a gizmos,theoverwhelmingtrendintechindustryistoaddmorefeaturesproducts.Thescheme Giving thecustomerswhattheywant can beputbeneathbuttonsinordertoeasethebattery’s painduringthoseepicgamesof can generateasmallcharge,whichbestoredincapacitorforlateruse.Piezoelectricmaterials,electricitywhencompressed, a premiseforhorrormovie,it’s reallyquite clever. Carryingacellphonewhilewalking—havingthedevicejigglingupand down inapurseorpocket— One explosion-freeplanforpoweringthenextgenerationofcellphoneswouldharvestpowerfromgadgets’humanhosts.Whilethissoundslike batteries arepushedtotheirlimits,theycansuddenlyfail—orworse,explode. to provideproductsthatcanstanduptherigorsofpoweringzippyprocessors,bigdisplaysandinternetconnectionsfordays betweencharges.As ion batteries,theusualrechargeablebatteriesfoundinconsumerelectronics,havebeenstandardfornearlyadecade.Engineers arenearlyataloss While chipshavecontinuedtodoublethenumberoftransistorseverytwoyearsaspredictedbyMoore’s law, batterieshavefailedtokeepup.Lithium and weightoftheproduct,theyareoftentaxedbydemandsfuelingfeatureslikebigger, brighterdisplays—sometimesfor daysbetweencharges. Tech isn’tjustchips,however;batteriespresenttheirownhostofproblemsforthedesignerscomputergadgets.Inaddition toaddingthesize In SovietRussia,youpoweryourdevices layoffs ofupto6,000peopleinJanuary2009. and othermakersofhardware(Dell,Lenovo,Seagate,HutchinsonTechnology, et.al.)areidlingfactoriesandlayingoffworkers. EvenIntelannounced overcapacity, andjobcutsensuedaroundthetechworld;manysemiconductormanufacturers(Fairchild,NECElectronics,MicronTechnology, et.al.) and thenecessityofmanufacturingtinypumpsotherpartsforcells. have themalready. Thedesignhassomekinksthatneedtobeworkedout,amongthemthetoxicityofmethanol,itstendency corrode aluminum, and waterinacontrolledreaction;theymustberefilled,insteadofbeingchargedlikebatteries.Naturally, it’s simpleasallthat, orwe’d notas intocarbondioxide beyond batteriestopowerdevices.Methanolfuelcellsareoneoptionreplacebatteries.Theusecatalyststurnmethanol Ambient powercan’tentirelyreplacetheneedforsources,however. Asconsumersdemandmoreandbetterfeatures,companies arelooking on bridges,whererunningpowercordsandreplacingbatteriesisnotalwayspossible. vibrations intoelectricalpower.to powerstructuralsensors Whilethegeneratordoesnotabsorbenoughvibestofuelelectricalgizmos,itwillbeused for aniPodorphone.Thatsamemonth,researchersattheUniversityofSouthamptoninEnglandintroducedasmallgeneratorthtransformsambient the literalnameofInflightPowerintroducedadevicethattransformsmusicdistributedthroughheadphonejacksonairplaneseatsintopower their waytolongerbatterylife,however. In2007,twodevicescameoutthatpromisedtosippowerfromambientsources.That year, acompanywith High Tech The Vault MBA CareerBible 120 Brick Breaker Brick . Consumersneednotonlypokeandboogie ike Sarbanes-Oxley. This © 2009Vault.com Inc. tworked overa Customized for: Erin ([email protected]) netbook.com, ostensiblytobeusedassomesortofsalesportal(therewastalkanIntelnotebooklaunchcomethefollowingMarch). thedomain name it hopestograbonebillioncustomersby2015.Intelsurelyhassomedesignsinthissphereaswell;October2008,bought the companygainmarketshareingrowingIndianeconomy, whereithasthepotentialtolosegroundlessexpensivemachinesrunningLinux— programs tailoredtohelpchildrencramforschoolexams.Thedeviceisn’tdesignedgetpoorupspeedwiththe internet, butwillhelp as runningwater, electricity, teachersandbooks.Microsoft’s computercomesequippedwithaWindowsoperatingsystem,Word, Encartaand not adoptedthelaptopsforchildreninitiative.Theplanisintendedtosupplementeducationinareaswherepublicschoolsmaylacksuchnecessities inIndia, whichhas the marketshareofWindowsanditsOfficesuite.In2007,MicrosoftannouncedthatitwouldbeginsellingPCsaimedatchildren Microsoft ispursuingcustomersinthedevelopingworld,partlysearchofprofits,andtocurbgrowthfreeoperating systems, whichcanerode lightweight laptopswillbetradedannually. 139 million ofthe of whichinEurope)andsomemonths,netbookscreptintotop-10salesrankings.Someanalystsestimatethatby2013,upto “mini” modelsin2008).Thoughtheysoldonly400,000orso2007,thenextyear, salesjumpedbyafactorof30(to11.4million,about7.8million who needonlybasicinternetandemailcapabilities,nobellswhistleslikehyper-graphics orsupermemory. (DellandHewlett-Packarddebuted The ideahascreatedanewsegmentofsortsintheU.S.andespeciallyEurope.Theseso-called“Netbooks”arelatestthing, perfectforpeople and devicesbeganshippingin2008. own software,andalsotokeeppricesdown.Argentina,Brazil,Libya,Nigeria,ThailandUruguaywereamongthefirstcountriesshowinterest technology’s businessstrategicsituation,andhaveagoodchanceatmoving upintouppermanagement. so thaninotherfields,youwillbe expectedtoknowquiteabitaboutthetechnologyinquestion. BygettingthatMBAyoucan alsounderstandthe marketing. Thefieldinvolvesdealing withadvertising,partners,thepressandanythingrelatedto corporateoutreach.Intechnologymarketing,more a positionintechnology If theintensityofITlifestylemakesyoufeelburnedout,and you havesomecreativeDNA,thenmaybeagoodfitfor Marketing break intoproject/productmanagement. a verywiderangeofskillsandknowledge,sohavingyourMBA can onlyhelp.Ifyou’reahardcoreengineerorprogrammer, theMBAwillhelpyou manager canleadtodoingthesamejobbutwithabiggercompany, managersneed ortoapositionwithVPtitle.Asinmarketing,project/product internal users,orinchargeofacertainoperatingsystemversion ofacertainpiecehardware.Eitherway, acquiringanMBAasaproject/product deadlines tomakeand,ofcourse,abudgetstickwith.Maybe you’dbeputinchargeofanITdepartment’ssoftware productfor rolloutofanew As aproject(orproduct)manager, youhaveaveryspecificsetofgoalstomeet.Theytypicallyincludedetailedtechnologys Project management director-level positions,finance,law, marketing,projectmanagement,sales,trainingandtheultimate,whichisC-levelleadership. Today, workinginIToratatechnologymanufactureroffersmanyopportunitiesforMBAstoadvance.Someofthepopula has statedthathethoughtofmanycoreideasfortheelectronicspreadsheetwhileinbusinessschool. Bricklin (VisiCalc),ScottCook(Intuit),DonnaDubinsky(Palm),MegWhitman(eBay),andmanyothers.wasanMIT-educated engineer, but were studyingforMBAdegreesandinterestedintechnology. Inthefive-yearperiodfrom1976to1981,HarvardBusinessSchoolproducedDan Despite theloreof1970s-eracomputer“hackers”whorevolutionizedpersonalcomputingbyworkingoutgarages,manyothe r peopleeventhen Where willyourdegreegetyou? So you’reinITandyoudecidedtogetanMBA.Perhapsyourdegreeevencamewithatechnologyspecialty, whichisanincreasinglycommonoption. THE MBAINTECH modern Applehascontinuallybeenshutoutofthetopfive. looking cases,livelygraphicsandrelativeimperviousnesstoviruses.Nonetheless,amongstvendorsdealinginworldwideshipm ents, thethoroughly same monthin2008,boostingitsshareoftheU.S.markettoabout9.5percent.It’s acertaintypeofconsumerthatenjoysApple computers’modern- the piehasbeengrowing.ConsultingfirmGartnersaidApple’s 2007andthe marketsharecreptupby1.8percentagepointsbetweenSeptember electronics—it’s itsshareof beengaininginthecomputerrace,aswell.AlthoughitstillhangsbehindindustrybehemothsDellandHewlett-Packard, them fourmonthsafterthelaunch,andexpectstomakeitaneven10millionbyearly2009.However, thecompanyisnotjustaboutspiffyconsumer doesn’t haveitpermanentlyweldedtohisears).TheiPhonehasbeenaroaringsuccess,aswell—thecompanyreportedthat soldonemillionof purview ofasmall,rabidfringecomputerusers—isnowthemainstream.Indeed,it’s kindofiPod(and hardtofindanyonewhodoesn’townsome oncethe Microsoft isseekingnewmarketsbecauseitsdominanceathomeincreasinglycomingunderthreat.Apple—whosecomputers were An Appleaday career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible pecifications tofollow, r fieldsareconsulting, High Tech 121 Customized for: Erin ([email protected]) and profitsareprofits,regardless ofyourindustry, while aspecializedtechnologyMBAprogram(suchasine-commerce orsystemsmanagement)will MBA educations.Thereareawide rangeofchoicesforwheretogetit—atraditionalMBAprogram givesyoutherecognitionthatbusinessis Many futureexecutivecandidates startoutastechnicalemployeesorlower-level managers.Forthem, manycompanieswillpayfor aportionoftheir its technologyotherthanwhat’s onthewebsite,hesaid. looking forajobisresearchskills.Itbecomespainfullyevidentin theinterview”thattheyknowaboutCA’s stockperformancebutknownothingabout Candidates thatwellroundedcomealong“almostnever,” hesays.WhenapureMBAinterviewsintechnology, “What’s sorelylacked inthosefolks To reallystandoutinthehiringprocess,idealjobcandidateshouldalsohavesomekindofhands-ontechnology experience,Buonaiutosaid. of retraining,as“alotthe[MBA]casestudiesaredot-com[or] anEnronoralatest-greatestmerger,” Buonaiutoexplains. in abook.Real-worldexperienceIholdmorehighregard.”And evenwhenarookieMBAgetshired,thereisusuallytheneed forsomeamount problem withclassroomexperiencealone,hesays,isthat“Unless you’rereallyoutinthetrenches,it’s sometimeswhatyouread difficult toimplement director ofrecruitingforComputerAssociatesInternationalInc., theIslandia,N.Y. companyspecializinginbusiness managementsoftware.The Of course,gettinganMBAisnotenoughforasuccessfulcareer intech.“Mygutreactionis,getthereal-worldexperience,”saysPaulBuonaiuto, TECH EXPERIENCEANDTHEMBA and prepareyoufortheexecutivesuite. become anITbusinessleader, youcan’tgowrongwithanMBA:itwillhelpclosebigsales,manageyourcompany’s logistics,strategizeforgrowth with alotofnaturaltalent)—theworld’s richestperson,BillGates,neverevenfinishedhisundergraduatedegree.Butformeremortals,ifyouwantto almost arequirement,especiallyatlargecompanies.Thereareluckyfewwhobecomebusinessleadersstraightoutofcorete chnology jobs(and Last, andthehardestjobtoget,istechnologyuppermanagement.To becomeaCIO,CTOorevenCEOinthetechnologyfield,anMBAdegreeis Upper management a titlesuchascallcenterdirectororVPofuserexperience. technical writing,educatethesalesstafforworkwithyourcompany’s technologypartners.WithanMBAdegreeyoucanbecomeamanagerandget As anITtraineryouhavemanycareeroptions.You canworkinaclassroomsetting,manageadvancedcustomersupport,becomeinvolved with Training espionage. a nicewayofsayingcorporate biggest clients,getintoworkingwithpartnersandresellers,orevenenterthefieldof“competitiveintelligence,”whichis In salesthejobdescriptionisveryclear:generaterevenueforcompany. ByhavinganMBAyoucanmanageentry-levelstaff,getthebestand Sales to becomeacompany’s operationsdirector, oreventogetaC-levelpositionifyouhaveextensivesalestechnologyexperienceaswell. areingoodposition backing updata,andworkingwithmultiplelayersofdistributors,partnersresellers.BygettinganMBAdegreeaswell,you compliancerulesfor may havetodealwithpatentissues,foreignemployeevisas,internationallicensinglaws,makingsuretheITstafffollowslegal Finance andlawpositionsinanITdepartmentoratatechnologyvendorhavesomeaspectsthatareuniquecomparedtoworking i Finance andlaw sales, marketing,manufacturing,etc. atechnology group’sand anotchabovethevariousproductmanagers.Productmanagersworkonjustonething,butasdirectoryou’realsoworking makes businesstechnology, orthedirectorofR&Dforamilitarysoftwarecontractor. Asadirector, yourroleisanotchbelowthedivisionvicepresident possessing anMBAdegreewilloftenleadyouintoa“director”leveljob.Forexample,mightbecomethedirectorofprinters foracompanythat If youworkforacompanythatmakestechnologyproducts,insteadofworkingintheITdepartmentsimplyutilizestechnology, then Director jobs play, butleavesyounothavingtoworryaboutfindingnewcustomers. as goodconsultantsdo.)You canalsobecomeanin-houseconsultantforaverylargecompany, whichmayinvolvemoredeadlines andpoliticsto consulting andintotheexcitingworldofventurecapital.(To hand-in-hand,just beaVC,youneedtoexcelatunderstandingbusinessandtechnology move from outof addition ofanMBAdegree,youcanopenyourownconsultingfirm,beinvitedtoparticipateinpanelsattradeshows,orperhaps an entry-levelconsultingjob,whichmeansinterfacingwithyourclient’s ownITstaffabouttheirspecialneeds.Withafewyearsofexperienceandthe you canget Many techconsultantsareformersuccessfultechnologistswhodesiretosharewhatthey’velearnedwithothers.WithjustITexperience, Tech consulting High Tech The Vault MBA CareerBible 122 © 2009Vault.com Inc. n otherfields.You Customized for: Erin ([email protected]) & World Report World & busy schedule to talk to Vault about her experience as an MBA at a tech company. company. tech a at MBA an as experience her about Vault to talk to schedule busy an internship at Silicon Valley stalwart Intuit and took a position as a marketing manager upon graduating in 2005. Wang took some time out from her from out time some took Wang 2005. in graduating upon manager marketing a as position a took and Intuit stalwart Valley Silicon at internship an Prior to attending the Stanford Graduate School of Business, Catherine Wang had little experience in high tech. While at Stanford, however, she landed she however, Stanford, at While tech. high in experience little had Wang Catherine Business, of School Graduate Stanford the attending to Prior VAULT Q&A:CATHERINE WANG, INTUIT make youstandoutbutcanberiskyifyourchosenspecialtymarkethasadownturn.Magazineslike was cool.”Here,thefocusison thecustomerandsoIdon’tthinkyouhavethattensionbetween engineeringandmarketing. where thefolksIwasinterviewing withwouldsay, “Honestly, wehavesomeproducts thathavecertainfunctionalitybecausetheengineersthought it I thinkabigdifferencebetweenIntuit andalotofothertechcompanies,however, isthatmarketingveryimportant.Idid interviewattechcompanies here, becausetechnologyplaysanimportantrole.It’s moreofabalance. Wang: packaged goodscompanies? Vault: responsibilities thanitisforme.We alsohavesomeonewhofocusesonthewebchannelwho’s responsibleforthecontentdisplayedonWeb. We haveagroupof12marketing folkswithinpayroll.Forexample,there’s someonefocusedonretail,sopackagingisamoreimportantpartofher them aboutonceamonth.Rightnow, I’minTucson. lot throughourcallcenters,tomakesurethattheyhavethematerials theyneed.OurmaincallcentersareinTucson andReno,soIgotoeachof Wang: Vault: off theshelfandinstallit. HBO versusifyoudidn’tpayforit.It’s kindoflikethat—weturnitonforyou.Quickbooksitselfcanbedownloadedfromthe Web oryoucanbuyit Wang: Vault: It’s aservicewithintheQuickbooksproduct. Wang: Vault: know you.It’s partofthecompanyculturetomakesureyouhavementorsneedthatnetworkneed. much abouthelpingpeopleout,gettingtoknowpeople.You reachoutto getto don’treallyhavetobeveryproactiveinnetworking,alotofpeople There aremanypeoplewhohaveverysimilarbackgroundstoyou.We areabigcompany, butthecultureatIntuitisverycollaborative, it’s very Stanford MBAsatIntuit. Wang: Vault: lots ofmeetingswithseniorexecutivesthecompany, internevents,thingslikethat. I didmysummerinternshipatIntuit.You candoeithermarketingorproductdevelopmentontheMBAside.Theinternshipwasverystructured— strong marketingorganization. happens thattheyusetechnologytosolvetheircustomer’s needs.Frankly, interestedinIntuit’s Ididn’tinterviewwithmanytechcompanies,butwas more becauseofIntuit’s approachtocustomers. Intuitisdefinitelynotatechnologycompanyforthesakeofbeingcompany. Itjust Wang: Vault: Wang: Vault: common pointofdebate:it’s beennotedmany timesbeforethattheleadingrankingsoftenwildlydisagree. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com What isyourimpressionofhowmarketingmanagementatIntuit and otherhigh-techcompaniescomparestobrandmanagementattraditional So whatdoesitmeantobeamarketingmanageratIntuit? How isitdelivered?IsaCDorthroughtheWeb? Tell meaboutyourcurrentpositionatIntuit. Were therealotofMBAsthatjoinedIntuitatthesametimeyoudid? Did youknowgoingintobusinessschoolthatwantedtomovehigh-techmarketing? Tell mealittleaboutyourexperiencepriortobusinessschool I’m amarketingmanager, workingonourpayrollservice,whichisasmallbusinesssolutionthatenablesbusinessestodoinhouse. My perceptionisthatwithmanyconsumerpackagedgoodscompanies, there’s moreofafocusonmarketing. Iwouldsayit’s sothatway less I wasinconsultingatMcKinseyfortwoyearsandthenworkedwithCharlesSchwabbeforegoingtobusinessschool. So marketing manager is comparable to a brand management position. What I manage is one of our channels, the phone channel. I worka So marketingmanageriscomparabletoabrandmanagementposition. WhatImanageisoneofourchannels,thephonechannel. I actuallywantedtodomarketingingeneral,sotechnologywaslessimportant.choseIntuitbecauseisasoftware company, but It’s functionalitythatweturnoninQuickbooks.ThinkaboutyourcableTV, more,youget andhowthere aredifferentpackages.Ifyoupay There reallyisn’tanMBAclassmyyear;IntuitkindofhiresMBAsasneeded.Thatsaid,there’s tonsofMBAsatIntuitandthere’s tonsof sometimes publishfeaturesdedicatedtorankingthegraduateprograms.Therelativenewnessofspecializeddegreesisanother for insidercompany profiles,expert advice, Computerworld , BusinessWeek The Vault MBA CareerBible and U.S. News U.S. High Tech 123 Customized for: Erin ([email protected]) The productmanagersandengineersworkonfuturefunctionality, themarketinggroupfocusesonsellingcurrentfunctionality. customer requirements,findoutwhatfunctionalityismissing,andtheyworkwithengineerstheproductthemselves. pricing, promotionsandplacement.Theproductpieceisreallytheownershipofmanagers.managersar e theoneswhotake High Tech The Vault MBA CareerBible Wang: Vault: we knownoteveryoneisgoingtoorderthroughtheWeb, somewillcall.Ifwearetryingtogrowsalesofoneparticularproduct, thataffectsallchannels. Wang: Vault: Wang: Vault: I workonpricingpromotionacrosschannels.Thesepromotionsmustbecoordinatedwithother Wang: Vault: coordinate withthatteam. or Payroll.com,aswellworkingwithourdirectmarketingorganization.DirectisacentralizedfunctionatIntuit,soallmanagers Wang: Vault: going tofocusonthat. that customersreallyvalue,hasimplicationstheysell—soifaresayingabenefitisnotimportant,thesalespeoplearen’t For example,wedidsixfocusgroupsaroundwhattypesofmarketingmessagesshouldemphasize.Thisstartswithidentifyingarethebenefits a lotoftimelisteningoncallstoagents,seewhowhatourcustomersaresaying,ordoingagentfocusgroups. Wang: Who areyouworkingwithmainly? Vault: 124 In brandmanagementattraditionalpackagedgoodscompanies,managersinterfacewithawidevarietyofdepartmentsinan Are youoftenincontactwiththeengineersbuildingproducts? So areyoufrequentlyinteractingwiththemarketingmanagersoverseeingotherchannels? Was thereaparticularreasonthatpricingpromotionfellunderyouroversight?Doesithaverelevancetothetelesaleschannel? What otherresponsibilitiesdoyouhave? What aboutgettingcustomersinthedoorfirstplace? Although we’relargelystructuredbychannels,wealsospendsometimeondifferentissuesthataffectallchannels.Forme,beyondtelesales, People fromalllevels,startingsalesmanagerstocoacheswholeadateamofabout15agents.We’re soIspend verycustomerfocused, No, itwasjusthowthingsweredividedup. So Ialsodealwithleadgeneration—gettingcallsintothecallcenter. ThatinvolvesworkingwithourmanagerswhomanageQui Yes, definitely—every day, ifnotmorefrequently. Thingsthatwedoinonechannelaffectotherchannels.IfapromotionontheWeb, Not somuch.We interfacemorewiththeproductmarketingfolks.OffourPsinmarketing,sideisreallyfocused onthe © 2009Vault.com Inc. ckbooks.com organization. Customized for: Erin ([email protected]) www.adobe.com Fax: (408)537-6000 Phone: (408)536-6000 San Jose,CA95110 345 ParkAveue Adobe SystemsIncorporated www.acer.com Fax: +88626963535 Phone: +88626961234 Taiwan Hsichih, Taipei 221 8F, 88, Sec.1,HsinTai Wu Road Acer Inc. EMPLOYER DIRECTORY www.cisco.com Fax: (408)526-4100 Phone: (408)526-4000 San Jose,CA95134 170 West Tasman Drive,Building10 Cisco Systems,Inc. www.canon.com Fax: +81354829680 Phone: +81337582111 Japan Ohta-ku, Tokyo 146-8501 30-2, Shimomaruko3-chome Canon Inc. www.ca.com Fax: (631)342-6800 Phone: (800)225-5224 Islandia, NY11749 1 CAPlaza CA, Inc. www.apple.com Fax: (408)974-2113 Phone: (408)996-1010 Cupertino, CA95014 1 InfiniteLoop Apple Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.hp.com Fax: (650)857-5518 Phone: (650)857-1501 Palo Alto,CA94304 3000 HanoverStreet Hewlett-Packard Company www.fujitsu.com Fax: +81362522783 Phone: +81362522220 Japan Minato-ku, Tokyo 105-7123 1-5-2, Higashi-Shimbashi Shiodome CityCenter Fujitsu Limited www.emc.com Fax: (508)555-1212 Phone: (508)435-1000 Hopkinton, MA01748 176 SouthStreet EMC Corporation www.eds.com Fax: (972)605-6033 Phone: (972)604-6000 Plano, TX75024 5400 LegacyDrive Electronic DataSystems,LLC www.dell.com Fax: (512)283-6161 Phone: (512)338-4400 Round Rock,TX78682 1 DellWay Dell Inc. www.csc.com Phone: (703)876-1000 Falls Church,VA 22042 3170 FairviewParkDrive Computer SciencesCorporation www.juniper.net Fax: (408)745-2100 Phone: (408)745-2000 Sunnyvale, CA94089 1194 NorthMathildaAvenue Juniper Networks,Inc. www.ibm.com Phone: (914)499-1900 Armonk, NY10504 New OrchardRoad Corporation (IBM) International BusinessMachines www.ingrammicro.com Fax: (714)566-7900 Phone: (714)566-1000 Santa Ana,CA92799 1600 EastSt.AndrewPlace Ingram MicroInc. www.nec.com Fax: +81337981510 Phone: +81334541111 Japan Minato-ku, Tokyo 108-8001 5-7-1 Shiba NEC Corporation www.microsoft.com Fax: (425)936-7329 Phone: (425)882-8080 Redmond, WA 98052 1 MicrosoftWay Microsoft Corporation www.lenovo.com Fax: (877)411-1329 Phone: (866)458-4465 Morrisville, NC27560 1009 ThinkPlace Lenovo GroupLimited The Vault MBA CareerBible High Tech 125 Customized for: Erin ([email protected]) www.sap.com Fax: +49622775 Phone: +49622774 Germany 69190 Walldorf Dietmar-Hopp-Allee 16 Aktiengesellschaft SAP www.rim.com Fax: (519)888-7884 Phone: (519)888-7465 Canada Waterloo, ONN2L3W8 295 PhillipStreet Research InMotionLimited www.oracle.com Fax: (650)506-7200 Phone: (650)506-7000 Redwood City, CA94065 500 OracleParkway Oracle Corporation EMPLOYER DIRECTORY (CONT.) High Tech The Vault MBA CareerBible 126 www.toshiba.co.jp Fax: +81334561631 Phone: +81334574511 Japan Minato-ku, Tokyo 105-8001 1-1, Shibaura1-chome Toshiba Corporation www.symantec.com Fax: (408)517-8186 Phone: (408)517-8000 Cupertino, CA95014 20330 StevensCreekBoulevard Symantec Corporation www.sun.com Fax: (408)276-3804 Phone: (650)960-1300 Santa Clara,CA95054 4150 NetworkCircle Sun Microsystems,Inc. www.xerox.com Fax: (203)968-3944 Phone: (203)968-3000 Norwalk, CT06856 45 GloverAvenue Xerox Corporation www.westerndigital.com Fax: (949)672-5408 Phone: (949)672-7000 Lake Forest,CA92630 20511 LakeForestDrive Western DigitalCorporation www.unisys.com Fax: (215)986-2312 Phone: (215)986-4011 Blue Bell,PA 19424 Unisys Way Unisys Corporation © 2009Vault.com Inc. Customized for: Erin ([email protected]) today. resources profession perhaps anothertotrainemployeesonthefactoryfloors.These specialtyareasevolvedintotheofhuman Many companiesbeganhiringmultiplewelfaresecretaries—one responsibleforhiringemployees,anotheremployee benefitsand around unionactivityalsorequiredcompaniesandwelfaresecretaries tounderstandandcomplywiththelaws. In manyindustries,workersalsobeganorganizingintounions—groups ofworkersbandingtogethertolobbyforrightsintheworkplace.Newlaws worked. Standards Act(FLSA)createdaminimumwage,setrulesforchildlaborandrequiredemployerstotreatemployeesfairlyinregards towageandhours required thewelfaresecretariestokeeppaperrecordsofemployeesandtheiractivities.Onefirsthumanresourceslaw s, theFairLabor governments introducedlaborlawstokeepupwiththechangingworkplace.Theselaws,restrictingrightsofbothemployers andemployees, The studyofbehavioralsciencereinforcedtheimportancewelfaresecretaries.secretaries’jobsbecamemoreand morecomplex as as afieldstudiedhowjobsandtheworkplaceaffectworkersperformanceofcompany. The HawthorneStudiesfueledthestudyofworkerbehaviorinorganizations,andwhatwascalledbehavioralscience.growth ofbehavioralscience happens. remains truetoday. Ifacompanywantstoperformwell,ithascreateandmanagecontentworkforce.HRplayscritical tookholdandstill to theworkers,rewardthemforagoodjobandmakesuretheyweresatisfied.Theideaofhappyworkersbeingproductive the lightinginplantcouldhelpemployeesworkfaster. Whattheyfoundinsteadwashowimportantitforplantmanagers topayattention productivity atoneoftheirplantsinChicago.TheHawthorneStudies,takingnameafterthetargetedplant,setouttodeterminewhetherchanging But HRreallytookshapeinthe1930swhenacompanycalledWestern workers’ Electricaskedateamofresearcherstofigureouthowincrease secretaries createdlibrariesandrecreationareasintheworkplace,aswellprimitivemedicalhealthprograms. was thatofawelfaresecretarywhoseroletolookoutfortheworkers.Anancestorwhat’s nowcalledabenefitsmanager, welfare the worker, itpropelledmanycompaniestobeginpersonalizetheworkplace,anticipatingfirstappearanceofHR.One theearliestHRroles showed theimportanceofmanagingworkerstoincreaseacompany’s success.WhileTaylor’s workfocusedmoreoncompanysuccess thanthatof Taylor’s researchwasthefirsttoincreaseworkerproductivity, buthisroboticapproachdidn’t provetobeaneffectivemanagement tool.Still,hiswork and werepaidwell.Thosewhodidn’tamongthefirsttohear“you’refired.” jobs andthenresearchingtheworkerswhoperformedeachsmalltask.Workers whoperformedwell,followingtaskstotheletter, remainedemployed procedures onestepfurther, declaringthattherewasonlyonebestwaytodoajob.Hespentyearscollectingdataonthetasksmakingupspecific Frederick Taylor, abusinessmanandresearcher, firstintroducedtheconceptofscientificmanagement. Taylor’s theorytookworkplace rulesand factory managerstointroducerulesandproceduresonthefloor. The additionofmachinesmadefactoriesrunmorequicklyandsmoothly,them, andforced butalsomeantthattheworkershadtolearnhowuse When the1900sbroughtinventionsandchangesinworkplace,likemachinesthatautomatedproduction,humanresourcesbegantotakeshape. master craftsmenwouldjustgooutandfindthem(talkaboutthebirthofrecruiting!). workers were needed, resources functionsweretypicallyhandledbytheworkersthemselvesortheirbosses(oftencalledmastercraftsmen).Asmore Now athriving,growingprofession,humanresourceswasn’talwayskeypartofmostorganizations—ifatall.Untiltheearly1900s,all THE HISTORY OFHUMAN RESOURCES resources takescareofpeoplefromthetimethey’reinterestedinorganizationtolongaftertheyleave. finding andhiringemployees,helpingthemgrowlearnintheorganization,managingprocesswhenanemployeeleaves.Human in anorganization.Sometimescalled“personnel”or“talentmanagement,”HRisthefunctionchargeoforganization’s whichincludes employees, Every organizationhaspeople,whichmeanseveryneedshumanresources(HR)professionals.HRhelpsmanageanddevelop thepeople Human Resources role inmakingsurethat 127 Customized for: Erin ([email protected]) employees canchangemedical plans andotherbenefitoptions. marketing andpromotingnewbenefits offeringstoacompanyormanagingcompany’s openenrollmentperiod—abriefperiodofti Compensation andbenefitsprofessionals arealsooftentaskedwithcommunicatingsalaryandbenefits informationtoemployees.Thismayinclude and managingthecostofbenefitsforcompany. benefits. Thismayincludeteachingnewemployeesabouttheirmedical planchoices,implementingandmanagingtheplansoffered bythecompany, Benefits professionalsalsohavetomakesureemployeesaretaken careof—theyspecializeinhelpingemployeeswithmedicalandothercompany each department’s budget,aswellconductingandresearchingsalarysurveystomakesurethey’repaying thegoingrate. including raisesandtaxchanges.Compensationexpertsalsowork closelywithanorganization’s finance department toensuresalariesstaywithin Compensation expertsfocusonthemoney. Thisincludesprocessingregularpayroll(makingsurethatthecheckisinmail)andchanges, sure newemployeesaregivenanappropriatesalaryandbenefits, andcurrentemployeescontinuallyreceivetheirsalarybenefits. Finding talentisimportant,butemployeesalsohavetobepaid. HR,specificallycompensationandbenefitsprofessionals,are Compensation andbenefits roles arefocusedonfindingtalentundergraduateandgraduateschoolcampusescanincludeagreatdealoftravelca mpus presentations. employees aboutopenopportunities.Manyorganizationsalsohaverecruitingandstaffingprofessionalsdedicatedtoworkingwithuniversities.These managing recruitingevents,designingmarketingpieces,suchascompanybrochuresandcommercials,staffingcareerfairstoeducateprospective Recruiting andstaffingprofessionalsarealsocalledupontohelpanorganizationmarketprospectiveemployees.Thiscani nclude creatingand positions. growth companiestomakesurethecompanyispreparedhireenoughnewemployeesgrowcompany, andthatemployeesareintheright anticipate hiringneedsandhelpdeterminewhereanewemployeemightbestfitinanorganization.Staffingprofessionalsare heavily reliedoninhigh- departmentsto While recruitersworktofindandhirethetalent,staffingexpertsdeterminewhoshouldgowhere.Theystrategizewithdifferent departments havealltheinformationtheyneedtomakebesthiringdecisionspossible. decisions, it’s therecruiterswhoareusuallyinchargeoffindingtalent,managinginterviewscheduling,negotiatingoffers andmakingsure a goodfit,conductinginterviewsandmakingjoboffers.Whilerecruitersinvolvedepartmentemployeesintheprocesstointerviewmakehiring what skillsandabilitiesthenewemployeeshouldhave.Thenthey’reoffrunning—responsibleforfindingcandidates,determining whomightbe andunderstand and staffingisoneofthelargestareasHR.Recruitersstartprocess—workingwithspecificdepartmentstowritejobdescriptions You’re eitherinoryou’reout.Whenanemployeeleavesandajobopensupnewjobsarecreated,HRisusuallychargeof theprocess.Recruiting Recruiting andstaffing deal withhelpingemployeesinanorganizationperformmoreeffectivelyandsatisfactorilyonthejob. employee relations,andorganizationdevelopment.MostHRprofessionalshaveexperienceinoneormoreofthesespecialtyareas. Theseareasall Typical HRresponsibilitiesarefocusedinmajorareas suchasrecruitingandstaffing,compensationbenefits,traininglearning,labor WHAT DOHRPROFESSIONALS DO? Know thatassatisfyinganHRcareercanbe,theprofessionstillstrugglestogainrespectinmanyplaces. salesor marketing. While HRcontinuestogrowasafunction,inmanycompaniesitdoesnotcarrytheimportanceorvalueofitscolleaguesfinance, Resource InformationSystem(HRIS),technicaldatabaseswhereallemployeedataisstoredandmanaged. can alsoservebehindthescenes,administeringpayroll,trackingHRmetrics(statisticsaboutcompanyworkers)orrunninganorganization’s Human trainer. ButHRprofessionals Intheseroles,you’reinteractingwithpeoplealldaylong,whetherconductinginterviewsorrunningatrainingcourse. and therearemanydifferentcareerpathsopportunitiesintheprofession.Forexample,HRprofessionalscantakecenterstageasarecruiteror to beasuccessfulHRprofessional.isaboutcreatingsystems,processesandenvironmentswhereemployeesperformbetter aresatisfied, While it’s importanttolikeworkingwithpeople andwantingtohelpthembesuccessfulinHR,that’s definitelynottheonly skillorattributeyouneed professionals whofocusspecificallyonhiring,training,benefits,laborrelations,healthandsafetymore. professionals focusonspecificareasofmanaginganddevelopingacompany’s workershasremained.Now, inmostorganizations, thereareHR human resources an organizationis,thereisalwaysaneedforHRstaff.Thewelfaresecretarytitlemaybelonggone,buttheideaofhaving businesses consistentlyrelyonHRprofessionalstohelpthemthroughhigh-growthtimesandperiodsofturmoil.Regardlesshowsuccessful(ornot) Today, humanresourcesisessentialtothesuccessofbusiness.ThelevelimportanceHRholdsdoesdifferfromorganizationorganization,but HUMAN RESOURCESTODAY Human Resources The Vault MBA CareerBible 128 inchargeofmaking © 2009Vault.com Inc. me where Customized for: Erin ([email protected]) development isalsoaboosttoitsworkers’morale. hire newones,trainingandlearningisbecomingincreasinglyimportantinthebusinessworld.Acompany’s strongcommitmenttotrainingand send trainersontheroadtoteachnewcourseemployeesaroundcountry. Sinceit’s oftencheapertotraincurrentemployees ratherthan In someorganizations,trainingandlearningprofessionalsactuallydeliverthecourses.Theymightcreateapresentationskillscoursethen outside thecompany. classesand programs perform betterthantheydidbeforethetraining.Theyalsomayberesponsibleforprovidinginformationtoemployeesontraining evaluating theeffectivenessoftrainingprogramsaftertheyhappen.Thismayincludedesigningsurveysordeterminingifnewly trainedemployees Training managers,forexample,arecalledupontodoeverythingfromregisteringandtrackingtrainingcourses,developingnewcourses groups ofworkerswithinacompany, likeonlinetrainingcourses,in-classinstructionoron-the-jobtraining. programs foranentireemployeepopulation,suchasnewhireorientationorethicstraining,butalsoincludesmorespecializeddifferent Training andlearningprofessionalsaretypicallyresponsibleforrunningprogramsdesignedtoeducatedevelopemployees.Thiscaninclude employees developandgrowasprofessionalsbothonoffthejob. many responsibilitiesoftrainingandlearningprofessionals.Sometimescalledtraining,ordevelopment,it’s helpingbothnewandtenured Part teacher, partmanager, partleader—that’s atrainingprofessional.Helpingemployeesbecomeorientedtonewjoborcompanyisjustoneofthe Training andlearning to employmenttaxformsormanagingadifficultmedicalinsuranceclaim. to healthinsuranceavailableafterdeparture.Employeesalsooftenseekguidanceonunderstandingtheircompensationpackages,makingchanges One-on-one counselingmayalsobepartofthejob.Ifanemployeeleavesorganization,benefitsmanagercounselonaccess address aleadershiporperformance challenge. comrades. ODprofessionalsmay alsobecalledupontohelpanemployeeaddressindividual issues throughexecutivecoaching,oradepartment leadership position,suchasCEO orCFO)andmentoringprograms,makingsurelessexperienced employeescanlearnfromtheirmo nextpersonina how wellthey’reworking.ODspecialistsmayalsohelpcompanies developsuccessionplans(determiningwhoisinlinetobethe OD specialistsoftenmanagetheperformancereviewprocess,making surethatemployeesareevaluatedandmovedwithintheorganizationbasedon building activitiesorintroducenewprogramsforleadershipdevelopment. They oftenworkcloselywithtrainingprofessionalstoaddressdevelopment needsforthecompany. ODprofessionalsmaydevelop companywide team- understand howanewcompanyprogrammightaffecttheemployees’ behavior. OD professionalsareexpertsinunderstandingbehaviorandpsychology. Theyoftenactasinternalconsultants,helpingtheirfellowemployees change, suchastheintroductionofanewcompany-widetechnical system. organization effectiveness,thismightincludehelpingtorestructure thechainofcommandinadepartmenttohelpingemployees copewithamajor focuses onevaluatinghowacompanyisstructuredandemployees worktogethertoseewhereimprovementscanbemade.Alsoreferredas development While developingemployeesisimportant,perhapsjustasimportantanorganization.Arelativelynewfield,organization Organization development(OD) employees mayrelyonoutsideattorneysorconsultantstodealwithanylegalissuesemployeeconflictsthatarise. Labor andemployeerelationsisnotfoundineveryhumanresourcesdepartment.Organizationsthatdon’thavegovernmentcontracts orunionized issues preventingthemfromdoingtheirjobs. may includecounselingorconflictresolutionwithinanorganization,helpingemployeeswhoaredealingwithdisagreementsintheworkplacehave a companyiscomplyingwiththelawandmakinganefforttohireretainemployeesfromunderrepresentedethnicities.Other keyresponsibilities affirmative actionprograms.Forgovernmentagenciesorcompaniesthatdoworkforthegovernment,thismayincludecreatingreportstodemonstrate Employee relationsprofessionalsneedtobefamiliarandcomfortablewiththelaw;theyarealsoresponsibleforequalemployment opportunityand activity andworkwithunionsduringorganizingcampaigns—thetimewhenrecruitnewmembers. deal directlywithunions,doingeverythingfrominterpretingcurrentunioncontractstonegotiatingnewones.Theyalsoanalyze andmonitorunion Labor relationsisafunctiontypicallyfoundincompanieswhoseemployeesaremembersofunions.professionals arecalleduponto employee contracts,rights,responsibilitiesandcomplaintsistakencareofrightquick. anything dealingwith Just likewelfaresecretariesrespondedtonewlawsintheearly1900s,laborandemployeerelationsprofessionalsensurethat Labor andemployeerelations career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Human Resources re experienced 129 Customized for: Erin ([email protected]) to understandthatHRasafunction isn’tthesameineveryorganization. Ready tohelpyourcolleaguesand organizationperformbetter?Beforeyoudeterminewhattype ofHRroleyoumightbestbecastin,it’s important for moreresponsibilities.HRalsosuffersfromsomecommonmisconceptions, likebeingatouchy-feelyprofessionorfemale-dominated. a collegedegree,butdon’twalkawaytooquickly. Theseroles,whiletedious,provideagreatlearningopportunityandchancetoproveyou’reready for newemployees,orenteringandmaintainingresumesinanonline database.Thismightseemlikemenialwork,especiallyifyou’vejustreceived Like manyprofessions,startingoutinHR,youmayalsohaveyour fairshareofadministrativework.ManyHRcareersbeginwithprocessingpaperwork employees aren’ttrainedproperly, youmayendupwithamailboxfullofangrycallerstocontendwith. one says,“thanksHR,”everytimetheygetapaycheck.But if somethinggoeswrong,employeesdon’tgetpaid,benefitsdisappear ornew for granted.No may bechasedbyunhappyemployees.Oneofthetoughestthings aboutworkinginHRisprovidingaservicemanyemployeestake Even rockstarshavetodealwithannoyingpaparazziandscreaming fans.Whileit’s highlyunlikelyyou’llbe chasedbyreportersworkinginHR,you drawbacks (intheoppositecategory, Butnojobisperfect. downsizingorlayingoffemployees).Otherwise,theywouldn’tbethereinthefirstplace. tooutweighthe For mostHRprofessionals,thepositivesofworkingin(such asextendingajoboffertoveryexcitedcandidate)areenough Why not? Talk aboutmakinganimpact. They alsolikecontributingtothebusinessandbottomline.Forexample,oneofmostcommonissuesCFOsarefacingin2005 (accordingto concepts Ilearnedinmyeducationalexperience,adaptingthemandapplyingtoaspecificissuethebank.” myselfidentifyinggeneral In hisroleatBankofAmerica,PhilSkeathlikesthediversityprojects.“EachtimeIamonanewproject,”hesays,“Ifind tasks. This meanstheymightbeworkingwithasalesteamoneweekandproductdesignthenext.Sothereistonofvariety i company. Organizationdevelopmentspecialistsmayactlikeinternalconsultantshelpingdifferentdepartmentsinacompanyworkbettertogether. differentpartsofthe They alsoenjoytheabilitytointeractwithdifferentgroupsofpeople;HRprofessionalsmaybeworkingemployeesinmany inherent satisfactioninthesetypesoftasks. normal onthejob.Whetherit’s thereisan helpinganemployeeovercomeaperformanceproblemorfixexpensiveandstressfulmedicalclaim, the worktheydohasadirectimpactonpeopleeveryday. andgetbackto HRprofessionalslikehelpingemployeesnavigatethroughtoughproblems While HRprofessionalshavevaryingdegreesofinteractionwithanorganization’s employees,allHRpeoplecanenjoythesatisfactionofknowingthat WHY HR? compliance withthelaw. following federalandstaterulesgoverningworkplacesafety, including,insomeindustries,submittingreportsthatdemonstrateacompany’s Working withanorganization’s areresponsiblefor legalteamandemployeelawspecialistsisalsopartoftherole.Healthsafetyprofessionals professionals tohandleanyinjuriesanddeterminehowpreventfuturefromoccurring. handle acomplaintfromworkeraboutdangerousfactorymachineoranon-siteinjury. Theyworkcloselywithcompensationandbenefits Health andsafetyprofessionalsarealsoresponsibleforreactingtoissues,concernsorproblemsrelatedtheworkplaceenvi safety options. dangers mightbeandcorrectingthembeforeaninjuryoccurs.Thisincludeperiodictoursofaworksite,orresearchinto thelatestworkplace One ofthemajorcomponentsroleahealthandsafetyprofessionalistobeproactive—assessingworkenvironment anticipate wherethe must protectthesafetyoftheiremployeeswhileatwork,itismorecomplicatedinindustriesthathaveworksitesbeyondatypicalofficeenvironment. all workers—thisismoreofanissueinindustrieswithriskyworksettings,suchasmanufacturing,healthcareandconstruction. Whileallorganizations professionals comein.OneoftheoldestHRspecialties,healthandsafetyareresponsibleforensuringasafeworkingenvironment Factory machines,hazardouschemicalsandconstructionsitesareallpotentiallydangeroussituationsforworkers.Thisiswhere healthandsafety Health andsafety with singularissuesthatmaypreventthemfrombeingpromoted. teamwork ormanagementskills.Manylargefirmsarehiringexternalcoaches,creatingcoachingfunctionsinordertohelpvaluable employeesdeal Less commonODworkmayincludecoachingorcareerdevelopment.Coaches,attheexecutivelevel,helpemployeesovercomepoor Magazine Human Resources The Vault MBA CareerBible 130 ) istherisingcostofhealthcare.HRandbenefitsprofessionalswhoanalyzehowtolowerthesecostscansaveacompanymillions ofdollars. ronment. Theymight © 2009Vault.com Inc. n theirday-to-day CFO Customized for: Erin ([email protected]) organization hastohaveatleastonepersonresponsibleforHRM.ThemajorareasofHRMinclude: Human resourcemanagement(HRM)isthesetoftraditionalHRactivitiesthatmanageorsupportpeopleinorganization,andeveryworking HUMAN RESOURCEMANAGEMENT HR managementprofessionalsmustcontinuallybethinkingabout waystobetterserveandsaveacompanymoneyatthesametime. HRM professionalstoshowtheircommitmentanorganization’s bottomline. might trackstatisticsonhowmanyminoritiesareemployedinan organizationforanaffirmativeactionreport.Measuringsuchactivityisimportant professional track howmuchemployeesarespendingonhealthcarecostsand seekwaystoreducethem.Ontheotherhand,anemployeerelations how acompany’s employeesareperforming)anddemonstratingthevalueHRbringstocompany. Compensationandbenefitsprofessionalsmight HRM professionalsarealsooftenchargedwithreportingHR’s (statisticson returnoninvestment(ROI)tothecompanythroughtrackingHRmetrics elections processonline,aswellallofouremployeepoliciesandprocedures.Nomorepaper!” years, over75percentofourHRtransactionshavebeenautomatedtobetterservecustomers.We createdacompanyIntranetandputourbenefits “Inthelastfive As ahumanresourcesVPforconsultingfirmprofesses,improvingthewayemployeesareservedisanimportantpartofjob. prospective employeesisanimportantwaytosavevaluablerecruitingdollars. veterans whohaverecentlyfinishedtheirmilitarycareers.Sinceadvertisingononlinejobboardscanbeexpensive,findingnew channelstorecruit in ordertoservecustomers,andultimatelytheorganization,better. TheHomeDepothasbecomemorerecentlyrenownedforcreativelyrecruiting Companies suchastheHomeDepotarewellknownfortheirHRpractices,andconsistentlylookingwaystoeaseautomate thefunction professionals arecontinuallyevaluatingprocessesandimplementingnewprogramssystemstoservetheorganizationbetter. Examplesinclude: professionals tomakedecisionsthathelpsavethecompanymoneyandsureemployeesarewellserved.Ineachofmajor areasofHRM, HRM professionalsarealsoresponsibletotheorganizationasawhole.Runningalloftheseprocessescancostlotmoney, anditisuptoHRM preventing anyinterruptioninservicesthatemployeesexpect. company stoppedrecruitingaltogether. HRMfunctionsarekeytokeepingorganizationsrunningsmoothly, andHRMprofessionals are responsiblefor In HRMroles,professionalsneedtokeeptheHRmotorhummingandwheelsturning.Imagineifyoustoppedreceivingyourpaycheckor career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com Common HRMrolesinclude: Common HumanResourceManagement(HRM)Roles • Compensation and benefits: • Health andsafety: • Laborandemployee relations: • • Recruiting andstaffing:managementsystems(RMS)orapplicanttracking(ATS) arethelatesttrendinelectronically scratch. vendors alreadyhavetheexpertiseandsystemsinplacetomanagetheseprograms,itsavescompanyexpenseofcreating themfrom and benefitsprofessionalsworkwithoutsidevendorstomanageprogramssuchasanemployeestockpurchaseplan.Since these o computer screensmaybeexpensive,suchinvestmentscanpreventfutureinjuriesandtheirassociatedcosts. many healthandsafetyprofessionalsareintroducingergonomicallycorrectofficefurniture.Whilethesefancychairsglar more common,inordertoproactivelyreducelawsuitsrelatedworkplacebehavior. and requiringfewerstaffmemberstomanageemployeerecords. managing theinfluxofresumesduringbusyrecruitingtimes.Thesesystemssaveorganizationsmoneybystreamliningrecrui ting process eirrcutr•Benefitsspecialist •HRgeneralist • Employmentlawyer •Laborrelationsspecialist • Healthandsafetymanager • Seniorrecruiter • Compensationmanager • Healthandsafety • Laborandemployeerelations • Compensationandbenefits • Recruitingandstaffing for insidercompany profiles,expert advice, While injuriesatplantsandhazardoussitesarecommon,HRprofessionalsalsorecognizingtheincreaseinofficeinjuries; Benefits outsourcingisapopularwaytoreducecostsandresponsibilityforanorganization.Somecompensation Legal trainingformanagersontopics,suchassexualharassmentandworkplacelaw, isbecomingmoreand The Vault MBA CareerBible Human Resources e-reducing 131 utside Customized for: Erin ([email protected]) HRD includes: develop andgrowemployees.ManyorganizationssimplyrefertoHRDastrainingorlearningdevelopmentbutinreality, it’s muchmorethanthat. smoothly, HRDprofessionalsarehelpingthemturnfasterandbetter. Humanresourcedevelopmentreferstotheactivitiesinanorganizationthathelp wheels turning Human resourcedevelopment(HRD)isthesecondpart(albeitmuchsmaller)ofHRworld.IfHRMprofessionalsarekeeping HUMAN RESOURCEDEVELOPMENT HRD asacompanythathasspecificorganizationdevelopmentfunction. important toresearchwhereitfitsinspecificcompanies.Organizationsthatonlyhaveatrainingandlearningfunctionmaynotseeasmuchvalue Because HRDisnotonlygrowing,butstructuredverydifferentlyfromorganizationtoorganization,ifyouseeasaviab le careerpath,it’s popular careerpath. more andtrainingdevelopmentprogramsforworkers.WhatdoesthismeanHRprofessionals?HRDmightwell beanincreasingly beyond. Thisisduenotonlytohowcomplexjobsarebecoming,butalsotheagingofworkforce,andmanychangesin technology requiring HRD careersaregrowingeveryyear. Training anddevelopmentisoneareainwhichtheBureauofLaborStatistics(BLS)predictsgrowth in2005and program, technology, mergeroracquisition. responsibilities includeemployeeperformanceevaluations,trainingnewemployeesandhelpingcompaniesdealwithchangeas theresultofanew division. OtherHRD working onprojectsastheyarise,suchhelpingtorestructureadepartmentorthesuccessionplanforanentire HRD professionalsmayberesponsibleforacertainsubsetoftheworkforce(suchastrainingsalesforce),orserve internal consultants business partnerswhosupportourlinemanagers’needs,butwearealsoanintegralpartindrivingthecompany’s strategy.” “Organization developmentisakeypartofhumanresources,”saysPhilSkeath,performanceimprovementconsultantatBank Bank ofAmericaandTexas Instruments,haveentirefunctionsdevotedtosubsetsofHRDsuchasorganizationdevelopment. smaller organizationsoftenhaveHRgeneralistsassumetheresponsibilityfortrainingalongsideothertasks,largecompanies,suchasMedtronic, HRD istheareaofHRthatgrowingmostquicklyasorganizationsrecognizeneedtogowaybeyondsimplymanagingtheirworkforce.While Human Resources The Vault MBA CareerBible 132 • Organizationdevelopment,whichincludes: • Training andlearning – Performance management(thosepeskyperformancereviews) – Coaching (helpingemployeesovercomeon-the-jobproblems) – Successionplanning(determiningwhoisnextinlineforaCEOorotherseniorjob) © 2009Vault.com Inc. America. “We are Customized for: Erin ([email protected]) www.administaff.com Toll free:(800) 237-3170 Fax: (281)348-3718 Phone: (281)358-8986 Kingwood, TX77339 19001 CrescentSpringsDrive Administaff www.accordhr.com Toll free:(800)725-4004 Fax: (405)232-9899 Phone: (405)232-9888 Oklahoma City, OK73102 210 ParkAvenue, Suite1200 Oklahoma Tower Accord HumanResources EMPLOYER DIRECTORY www.barrettbusiness.com Toll free:(800)494-5669 Fax: (360)828-0701 Phone: (360)828-0700 Vancouver, WA 98662 8100 NEParkwayDrive,Suite200 Barrett BusinessServices www.adp.com Toll free:(800)225-5237 Fax: (973)974-3334 Phone: (973)974-5000 Roseland, NJ07068 1 ADPBoulevard Automatic DataProcessing,Inc. www.allegisgroup.com Toll free:(877) 388-3823 Fax: (410)540-7556 Phone: (410)579-4800 Hanover, MD21076 7301 ParkwayDrive Allegis Group,Inc. www.adecco.com Fax: +41448298888 Phone: +414487888 Switzerland 8152 Glattbrugg Sägereistrasse 10 Adecco SA career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.entegee.com Toll free:(800)368-3433 Fax: (781)221-4544 Phone: (781)221-5800 Burlington, MA01803 70 BlanchardRoad,Suite102 Entegee, Inc. www.employco.com Fax: (630)920-0157 Phone: (630)920-0126 Westmont, Il60599 350 EastOgdenAvenue Employco Group,Ltd. www.convergys.com Fax: (513)421-8624 Phone: (513)723-7000 Cincinnati, OH45202 201 East4thStreet Convergys www.comforce.com Toll free:(877) 266-3672 Fax: (516)396-9528 Phone: (516)437-3300 Woodbury, NY11797 415 CrosswaysParkDrive COMFORCE Corporation www.ceridian.com Fax: (952)853-4430 Phone: (952)853-8100 Minneapolis, MN55425 3311 EastOldShakopeeRoad Ceridian Corporation www.buckconsultants.com Fax: (212)695-4184 Phone: (212)330-1000 New York, NY10119 1 PennsylvaniaPlaza Buck Consultants Hewitt Associates www.haygroup.com Fax: (215)861-2111 Phone: (215)861-2000 Philadelphia, PA 19107 100 PennSquareEast The Wanamaker Building Hay Group www.expresspros.com Toll free:(800)222-4057 Fax: (405)717-5669 Phone: (405)840-5000 Oklahoma City, OK73162 8516 NorthwestExpressway Express EmploymentProfessionals www.manpower.com Fax: (414)906-7985 Phone: (414)961-1000 Milwaukee, WI53212 100 ManpowerPlace Manpower Inc. www.kellyservices.com Fax: (248)244-4360 Phone: (248)362-4444 Troy, MI48084 999 West BigBeaverRoad Kelly Services,Inc. www.kforce.com Toll free:(800) 395-5575 Fax: (813)254-9640 Phone: (813)552-5000 Tampa, FL33605 1001 EastPalmAvenue Kforce Inc. www.hewitt.com Fax: (847)295-7634 Phone: (847)295-5000 Lincolnshire, IL60069 100 HalfDayRoad The Vault MBA CareerBible Human Resources 133 Customized for: Erin ([email protected]) www.mpsgroup.com Fax: (904)360-2350 Phone: (904)360-2000 Jacksonville, FL32202 1 IndependentDrive,Suite2500 MPS Group,Inc. Toll free:(888)622-6460 Fax: (727)563-1501 Phone: (727)563-1500 St. Petersburg,FL33702 9455 KogerBoulevard,Suite200 Modern BusinessAssociates www.msnhealth.com Toll free:(877) 676-8326 Fax: (561)322-1200 Phone: (561)322-1300 Boca Raton,FL33431 901 Yamato Road,Suite110 Inc. Medical StaffingNetworkHoldings, www.mercerHR.com Fax: (212)345-7414 Phone: (212)345-7000 New York, NY10036 1166 Avenue oftheAmericas Mercer LLC www.meador.com Toll free:(800)332-3310 Fax: (713)941-3582 Phone: (713)941-0616 Pasadena, CA77504 722 AFairmontParkway Meador StaffingServices,Inc. www.maximhealthcare.com Fax: (410)910-1515 Phone: (410)910-1500 Columbia, MD21046 7227 LeeDeforestDrive Maxim HealthcareServices,Inc. EMPLOYER DIRECTORY (CONT.) Human Resources The Vault MBA CareerBible 134 www.rhi.com Fax: (650)234-6999 Phone: (650)234-6000 Menlo Park,CA94025 2884 SandHillRoad Robert HalfInternationalInc. www.pdstech.com Toll free:(800) 270-4737 Fax: (214)647-9636 Phone: (214)647-9600 Irving, TX75063 Suite 550 1925 West JohnCarpenterFreeway PDS Technical Services,Inc. www.paystaff.com Toll free:(800) 776-0076 Fax: (301)340-3801 Phone: (301)340-3800 Rockville, MD20855 7361 CalhounPlace,Suite510 Paystaff Corporation www.paychex.com Fax: (585)383-3428 Phone: (585)385-6666 Rochester, NY14625-2396 911 PanoramaTrail South Paychex, Inc. www.onassignment.com Fax: (818)878-7930 Phone: (818)878-7900 Calabasas, CA91302 26651 West AgouraRoad On Assignment,Inc. www.towersperrin.com Phone: (203)326-5400 Stamford, CT06901 263 Tresser Boulevard Towers Perrin www.spherion.com Fax: (954)308-7666 Phone: (954)308-7600 Fort Lauderdale,FL33309 2050 SpectrumBoulevard Spherion www.selectstaffing.com Fax: (813)830-7029 Phone: (813)830-7700 Tampa, FL33607 Suite 900 1511 NorthWestshore Boulevard Select Staffing www.westaff.com Fax: (925)934-5489 Phone: (925)930-5300 Walnut Creek,CA94598 298 NorthWiget Lane Westaff, Inc. www.watsonwyatt.com Fax: (703)258-8585 Phone: (703)258-8000 Arlington, VA 22203 901 NorthGlebeRoad Watson WyattWorldwide www.volt.com Fax: (212)704-2417 Phone: (212)704-2400 New York, NY10022 560 LexingtonAvenue Volt InformationSciences,Inc. © 2009Vault.com Inc. Customized for: Erin ([email protected]) Sales In theinvestmentbankingworld,capitalcanberaisedbysellingeitherstocksorbondstoinvestors. structure thedealandgenerallyensureasmoothtransaction.Theunderwritingfunctionwithincorporatefinanceinvolvesraising capitalforaclient. thepurchase price, a mergerbetweentwocompanies.If,forexample,companywantstobuyanotherfirm,thenaninvestmentbankwillhelpfinalize advisory, and(2)underwriting.Onthemergersacquisitions(M&A)advisingsideofcorporatefinance,bankersassistinnegotiatingstructuring The breadandbutterofatraditionalinvestmentbank,corporatefinancegenerallyperformstwodifferentfunctions:(1)mergersacquisitions Corporate finance Generally, aninvestmentbankcomprisesthefollowingareas: this cash.Thesesecuritiescancomeintheformofstocks,bondsorloans.Onceissued,thesetradeglobalfinancialmarkets. Companies needcashinordertogrowandexpandtheirbusinesses;investmentbankssellsecurities(debtequity)investorsraise to describethebusinessofraisingcapitalforcompaniesandadvisingthemonfinancingmergeralternatives.Capitalessentially meansmoney. What isinvestmentbanking?Isitinvesting?Really, itisneither. Investmentbanking,ori-banking,asit Investment Banking much alive,ifnotyetquitewell. experienced bankersletgobythe bigfirms).So,thoughit’s truethatinvestment bankingisadifferentanimalthanitwaspriorto2008,it’s stillvery & Company, Greenhill&Co.andEvercorePartners havebeenaddingtotheirstaffs(andthoseadditionsinclude recentgraduates aswell obvious ofplaces.Forexample, althoughbighitterslikeCiti,GoldmanandMorganStanleyhave cutnumerousemployees,smallerfirmslikeMoelis However,might notbeinthemost contrarytopopularopinion,thatdoesn’tmean investmentbankingpositionsaren’tavailable;theyare,but just employees, meaningjobsintheindustryarehardertocomebythan inyearspast. other sector. Investment bankshavebookedbillionsofdollarsinlosses,acceptedmoregovernmentfundingandshedthousands predicament thatbeganinsummer2007hasturnedintoafull-blown financialcrisis—andhasaffectedinvestmentbankingperhaps morethanany seriously ailing(UBS,CreditSuisse,etc.).Unlessyou’vebeen hidingoutinacavesomewhereforthepasttwoyears,youknowthatcredit Brothers), beenacquired(BearStearns,MerrillLynch), changedtheirstatustoholdingcompany(Goldman Sachs,MorganStanley)or, atbest,are To saytheleast,landscapeforinvestmentbankingjobseekershasdrasticallychanged.Someoflargestfirms havegonebankrupt(Lehman The stateoftheindustry the process.Inacorporateormunicipaldebtdeal,syndicatealso determinestheallocationofbonds. placing ofsecuritiesinapublicoffering,knock-down-drag-out affairbetweenandamongbuyersofofferingstheinvestmentbanksmanaging The huboftheinvestmentbankingwheel,syndicateprovidesavitallinkbetweensalespeopleandcorporatefinance.Syndicateexiststofacilitate Syndicate substantial tradingactivity, andthusareanintegralpartofanyinvestmentbank. to beexpertsintheindustrywhichtheyareworking.Reputableresearchanalystscangeneratesubstantialcorporatefinanc research publishedbyanalyststoconvincetheirclientsbuyorsellsecuritiesthroughfirm.Corporatefinancebankers relyonresearchanalysts income sideandwillcoveraparticularsegment,suchashigh-yieldbondsorU.S.Treasury bonds.Salespeoplewithintheinvestmentbankutilize equity analysts)typicallyfocusononeindustryandwillcoverupto20companies’stocksatanygiventime.Someresearchanalysts workonthefixed- Research analystsfollowstocksandbondsmakerecommendationsonwhethertobuy, sellorholdthosesecurities.Stockanalysts (knownas Research slightly higherprice.Thispricedifferentialiscalledthe“bid-askspread.” ability tobuyandsellsecurities)forthemarket—oftencalledmakingamarket.Traders sellingthemata makemoneybypurchasingsecuritiesand an inventoryofsecuritiesforsaleorbyexecutingagiventradeclient.Traders dealwithtransactions,largeandsmall,provideliquidity(the Traders alsoprovideavitalrolefortheinvestment bank.Traders facilitatethebuyingandsellingofstock,bondsorothersecurities,eitherbycarrying Trading commissions ontradesmadethroughtheirfirms. institutional salespeople,providingbrokerageandmoneymanagementservicesforextremelywealthyindividuals.Salespeoplema ke moneythrough or mutualfunds.Privateclientservice(PCS)representatives,oftenreferredtoasprivatewealthmanagers,liesomewherebetween retailbrokersand Institutional salespeopledevelopbusinessrelationshipswithlargeinstitutionalinvestors—thosewhomanagegroupsofassets,likepensionfunds (3) theprivateclientservicerepresentative.Brokersdeveloprelationshipswithindividualinvestorsandsellstocksstock advicetotheaverageJoe. Sales isanothercorecomponentofaninvestmentbank.Salespeopletaketheformof:(1)classicretailbroker, (2)theinstitutionalsalespersonor is oftencalled,thetermused e businessand 135 Customized for: Erin ([email protected]) opposed tothevolumeofbusinessgeneratedbybankerswith whomheorsheworks. second-years whodemonstratehighperformance.Atthislevel, bonusesdependmostlyonananalyst’s contribution, attitudeandworkethic,as Regardless oflocation,whilethesalarygenerallydoesnotimprove muchforsecond-yearanalysts,thebonuswilldramaticallyincreasethose still shacklesanalyststotheircubicles. cost oflivingismuchlower. Bewary, however, ofthesmallregional firmorbranchofficeofaWall Streetfirmthatpaysatthelowendofscaleand 20 percentlessthanthatoftheirNewYork counterparts.Worth oftenless,and(2)the noting,though,isthefactthatatregionalfirms(1)hoursare meaning fatcheckingandsavingsaccountsamplefodderto fundbusinessschoolorlawdowntheroad.Atregionalfirms, paytypicallyis to spendtheirincome,often compensating toptalent.Atmostfirms,analystsalsogetdinner every nightforfreeiftheyworklate,andhavelittletime undergrad degree,it’s notagreatdealifyouconsiderper-hour compensation.Bonusesatthislevelarealso force-ranked,thusidentifyingand to $70,000peryear, with anannualbonusofapproximately$60,000to$85,000.Whilethisseemsbequitealotfor22-year-old withjustan When itcomestoanalystpay, muchdependsonwhethertheanalystisinNewYork ornot.InNYC,salaryoftenbeginsforfirst-yearanalystsat$55,000 time. TheverybestanalystsoftengetidentifiedearlybytopperformingMDsandVPs,thusfindingthemselvesstaffedonmanylivetransactions. pitchbooksallofthe busy analyst.Thesearetheanalystswhodonotgetcalledtoworkonlivetransatctionsandmenialorjustputtogether up ortalksbacktoomuchmaynevergetqualitywork,spendinghisdaysboreduntil11p.m.waitingforworktocome,stressing evenmorethanthe many bankersrecognizethetransientnatureofanalystsandworkthemhardtogetmostouttheycan.Theunfortunate analystwhoscrews office, analystscanbefoundfeverishlytypingontheirBlackBerries.Notsurprisingly, aftertwoyears,manyanalystsleavetheindustry. Unfortunately, whennotatthe Modeling everynightuntil2a.m.andnothavingmuchofasociallifeprovestobeunbearableformanyananalyst.Furthermore, kids doesthefinancialmodelingandbasicentry-leveldutiesassociatedwithanycorporatefinancedeal. barely enoughfreetimetosleepfourhoursanight.Typically ofbright,highlymotivated hireddirectlyoutoftopundergraduateuniversities,thiscrop Analysts arethegruntsofcorporatefinanceworld.Theyoftentoilendlesslywithlittlethanks,pay(whenfiguredonanhourlybasis),and THE PLAYERS business theycanscoutoutwithintheirindustrysector. both inthisexplanation.Infact,atmostsmallerfirms,underwritingandtransactionadvisoryarenotseparated,bankerstypicallypitchwhatever finance isgenerallycalledanI-banker.) BecausethetitlesandrolesreallydonotdiffersignificantlybetweenunderwritingtoM&A,wehaveincluded provide anoverviewoftherolesandlifestylespositionsincorporatefinance,fromanalysttomanagingdirector. (Often,apersonincorporate below,Investment bankersgenerallyworkindealteamswhich,dependingonthesizeofadeal,varysomewhatmakeup.Inparagraphs we will The dealteam but don’tbeafraidtoaskpenetratingquestionsaboutdealsandwhatisrequiredofyou. to beambitious,intelligentandpedigreed.Ifyouhappengoingintoananalystorassociateposition,makesurecheckyouregoatthedoor and manyanticipateworkingforjustafewyearstoearnasmuchpossible,beforefindinglessdemandingwork.Analysts associatestendalso Personality-wise, bankerstendtobehighlyintelligent,motivated,andnotlackinginconfidence.Moneyisverymuchadrivingmotivationforbankers, end bonuses. exhibiting thewearandtearofall-nighters.Fortunately, theselonghourspayremarkabledividendsintheformofsix-figure salariesandhugeyear- life suffers,freetimedisappearsandstressmultiplies.Itisnotuncommontofindanalystsassociateswearingrumpledpants andwrinkledshirts, for corporatefinanceprofessionalscanbeakiller. theirlivestothejob.Social Infact,manycorporatefinanceworkersfindthattheyliterallydedicate decreasing, storiesofanalystabuserunrampantandsomebankerscomedownhardonnewanalystssimplytoscareintimidatethem.Thelifestyle Depending onthefirm,corporatefinancecanalsobeatoughplacetowork,withunforgivingbankersandexpectationsthroughtheroof.Although crunching numbers. atmosphere incorporatefinanceis,unlikethatsalesandtrading,oftenquietreserved.Juniorbankerssitseparatedbycubicles,quietly bank. The nonstop. Whilethisisincreasinglylesstrue,corporatefinanceremainsthemostwhite-shoedepartmentintypicalinvestment The stereotypeofthecorporatefinancedepartmentisstuffy, arrogant(whiteandmale)MBAswhofrequentgolfcoursestalkoncell-phones Stuffy bankers? CORPORATE FINANCE Investment Banking The Vault MBA CareerBible 136 © 2009Vault.com Inc. Customized for: Erin ([email protected]) banker at Goldman Sachs. Sachs. Goldman at banker to $500,000andupperyear, dependingonthefirm’s profitabilityandotherfactors. the firm,providingtotalfirst-yearcompensationover$200,000fortopfirms.Associatesbeyondtheirfirstyearbegintorak cash inonsigningbonusesandforgivableloansaswell,especiallyWall Street.Thesecanamounttoanother$35,000$55,000,dependingon $55,000 ormoreinthefirstsixmonths.(Atmostfirms,associatesstartAugustandgettheirproratedbonusJanuary.) NewlymintedMBAs Associates areatleastmuchbetterpaidthananalysts.A$95,000to$100,000salarygenerallystartsthemoff,andusuallybonuses hit$35,000to associates quicklyearntheluxuryofmorecomplicatedwork,clientcontactandbiggerbonuses. experience undertheirbelts.TheoveralllevelofbusinessawarenessandknowledgeabrightMBAhas,however, makesatremendousdifference,and havea littlemore experience incorporatefinance,sotheymuststartalmostfromthebeginning.Associateswhoworkedasanalystsbeforegradschool Usually hailingdirectlyfromtopbusinessschools(sometimeslaworothergradschools),associatesoftenpossessonlyasummer’s worthof done, andnotabouttheguyorgalworkingawayallnighttocompleteit. presidents andmanagingdirectorsdoesn’tnecessarilyimproveforassociatesversusanalysts,asbankerssometimescaremoreabouttheworkgetting Associates quicklylearntoplayquarterbackandhand-offmenialmodelingworkresearchprojectsanalysts.However, treatmentfromvice is. Unlikeanalysts,however, associatesmorequicklybecomeinvolvedwithclientsand,mostimportantly, arenotatthebottomoftotempole. what thepoint over pitchbooksandmodelsallnight,becomeexpertswithfinancialmodelingonExcel,sometimesshaketheirheadswondering Much likeanalysts,associateshitthegrindstonehard.Working 80-to100-hourweeks,usuallyfreshoutoftop-tierMBAprograms,associatesstress Associates We’ve asked insiders at leading investment banks to offer us insight into a day in the life of their position. Here’s a look at a day of an associate I- associate an of day a at look a Here’s position. their of life the in day a into insight us offer to banks investment leading at insiders asked We’ve A DAY INTHELIFE:ASSOCIATE, CORPORATE FINANCE visits areaptlycalledsalescalls. develop relationshipsamongmanagementteamsofcompaniesintheindustry, andvisitthesecompaniespitchingideasonaregularbasis.These point inabanker’s career, thejobcompletestransitionfrommanagingaprocesstorelationship.MDstypicallyfocusononeindustry, later.) MDsmostlydevelopandcultivaterelationshipswithvariouscompaniesinordertogeneratecorporatefinancebusinessforthefirm.Atthis level, anddisappearwheneveradraftingsessiontakesplace,leavingthisgruelingworktoothers.(We willexaminethesedrafting sessionsindepth Directors andmanagingdirectors(MDs)arethemajorplayersincorporatefinance.Typically, MDssettheirownhours,dealwithclients atthehighest Directors/managing directors roadshows. on and buildasolidnetworkwithintheirindustry),and,ofcourse,roadshows.VPsareperfectcandidatestobaby-sitcompany management current andpotentialclients.Don’tforgetaboutclosingdinners(tocelebratecompleteddeals),industryconferencesdrumupbusiness time ontheroadthananalystsorassociates.AsaVP, youcanlookforwardtobeingonthe road atleasttwotofourdaysperweek,usuallyvisiting that accompaniesVP-levelbankerresponsibilitiescanbedifficult.AsaVP, onebeginstohandle clientrelationships,andthusspendsmuchmore VPs managethefinancialmodeling/pitchbookproductionprocessinCorporateFinanceoffice.Onnegativeside,wear and tearoftraveling drop off,andthegenerallevelofresponsibilityincreases—VPsareonestellingassociatesanalyststostaylateonFridaynights.Inoffice, bankers. ThelifestylebecomesmoremanageableoncetheassociatemovesuptoVP. On theplusside,weekendssometimesfreeup,all-nighters Upon attainingthepositionofvicepresident(atmostfirms,afterfourorfiveyearsasassociates),thoseincorporatefinanceenterrealmreal Vice presidents 9:30 a.m.:Eatbreakfast;read 9:00 a.m.:Checkvoicemail,returnphonecalls. 8:45 a.m.:Pickupworkfromwordprocessingdepartment,reviewit,make changes. be abletogetaroundthebuildingallday.”) 8:25 a.m.:Arriveon17thFloor. Use “bluecard”togetpastfloorlobby. (“Don’teverforgetyourbluecard.Goldmanhas tightsecurityandyouwon’t 8:15 a.m.:Arriveat85BroadStreet.(ShowGoldmanIDcardtogetpastthe surlyelevatorguards.) 12:00 p.m.:Conferencecallwithmembersof IPOteam,includinglawyersandclient. 10:00 a.m.:Preparepitchbooks,discussanalysis withmembersofdealteam. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Wall Street Journal Street Wall The . (“Butdon’tletasupervisorseeyouwithyourpapersprawledacross yourdesk.”) The Vault MBA CareerBible e itin,earning$250,000 Investment Banking 137 Customized for: Erin ([email protected]) hold an“auction”inwhichitwill acceptbidsforthecompany, inordertogetthesellerbestpricepossibleforitsprop erty. firms thatfocusonpurchasingtechnology orhigh-techmanufacturingoperations.Inthecaseof manyLBOtransactions,asell-sidefirmmighteven buyers oftheclient.Ifclienthopestosellasemiconductorplant, forinstance,theI-bankerswillcontactfirmsinthatindustry, aswellbuyout orfinancial Generally speaking,theworkinvolvedinfindingabuyerincludes writingaSellingMemorandumandthencontactingpotentialstrategic to helpitselladivision,plantorsubsidiaryoperation. the banktofindabuyerofeitherentirecompanyordivision. Often,sell-siderepresentationcomeswhenacompanyasksaninvestmentbank investment bank(alsoanmayalsomaketheinitial approachand“pitch”theideaofcompanybeingsoldormerged)asks represents apotentialacquirer. Alsoknownassell-sidework,thistypeofadvisoryassignmentisgeneratedbyacompanythatapproachesan An I-bankthatrepresentsapotentialsellerhasmuchgreaterlikelihood ofcompletingatransaction(andthereforebeingpaid)thananI-bankthat Representing thetarget called targetrepresentationandacquirerrepresentation). particular, M&Aadvisoryfallsontothelapsofspecialistsandfitsintooneeithertwobuckets:sellerrepresentationorbuyer(also involve salespeople,tradersorresearchanalysts,althoughanalystsinparticularcanplayanimportantrole“blessing” themerger. In donotdirectly M&A advisorscomedirectlyfromthecorporatefinancedepartmentsofinvestmentbanks.Unlikepublicofferings,mergertransactions owner/manager wishestoselloutforcashandretire.Orperhapsabigpublicfirmaimsbuycompetitorthroughstockswap. Whateverthecase, private company’sFor anI-bank,M&Aadvisingishighlyprofitable,andtherearemanypossibilitiesfortypesoftransactions.Perhapsasmall M&A advisoryservices Merger: corporation swallowsthebusiness.Thestockofacquiringcompanycontinuestobetraded. acquisition onWall Street.Typically, thetargetcompanyceasestoexistpost-transaction(fromalegalcorporationpointofview)andacquiring Acquisition: the two. differencebetween the press,andactuallegaldifferencebetweentwoinvolvesarcanaofaccountingprocedures,butwecanstilldrawarough Mergers &Acquisitions(M&A)transactionscanberoughlydividedintoeithermergersoracquisitions.Thesetermsareoftenused interchangeablyin MERGERS &ACQUISITIONS and Daimler-Benz ceasedtoexistwhentheirfirmsmerged,andanewcombinedcompany, DaimlerChrysler wascreated. “merger ofequals.”Bothcompanies’stocksaretendered(orgivenup),andnewcompanystockisissuedinitsplace.Forexam ple, bothChrysler 11:00 p.m.:Leaveforhome.(“Callacarservice.Enjoyyournightly‘mealonwheels’thewayhome.”) names tobypassthelimit.”) 10:00 p.m.:Orderinfoodagain.(“It’s unlikelythatthere willbeanyroomleftinyourmealallowance—butweusuallyorderagroupand addextra them ifyouhavealast-minutejoboryou’rescrewed.”) 9:45 p.m.:Try tomakeFedExcutoff.Dropoffpitchbookdocumentprocessingdepartmentonthe20thFloor. (“You warn havetocallaheadand 8:00 p.m.:MeetwithVPagain.(“You’ll probablygetmoreworkthrownatyoubeforeheleaves.”) place acrossthestreetthat’s open24hours.”) 6:45 p.m.:Dinner. (“DinnerisfreeintheIBDcafeteria,butavoidit.Wall Streethasprettylimitedfoodoptions,soforaquickmealit’s theIndian 6:00 p.m.:Gotogymforanabbreviatedworkout. 5:00 p.m.:Checkinwithvicepresidentsandheadsofdealteamsonstatuswork. 3:00 p.m.: 2:00 p.m.:Work onrestructuringcasestudies;makeseveraldocumentrequestsfromGoldmanlibrary. cheaper, butyouhavetoenduretheshoptalk.”) 1:00 p.m.:Eatlunchatdesk.(“TheWall StreetMcDonald’s delivers,butit’s themostexpensiveMcDonald’s inNewYork City;Goldman’s cafeteria is Investment Banking The Vault MBA CareerBible 138 A mergeroccurswhentwocompanies,oftenroughlyofthesamesize,combinetocreateanewcompany. Suchasituationisoften Start toprepareanalysis;orderadditionaldatafromDRG(dataresourcesgroup). When alargercompanytakesoveranother(smallerfirm)andclearlybecomesthenewowner, thepurchaseistypicallycalledan © 2009Vault.com Inc. calleda Customized for: Erin ([email protected]) range. Fora$100milliondeal,aninvestmentbanktakeshome$1to$2million.Notbadforfewmonths’work. representing thebuyerbecauseoftheirenormousprofitability. Typical feesdependonthesizeofdeal,butgenerallyfallinone-twopercent aboonfor theI-bank associate andanalystfatigueastheyrepeatedlybuildmergermodelspullall-nighters.Dealsthatdogetdone,though,are retainer feetohireabankandsay, “Findusatargetcompanytobuy.” Theseacquisitionsearchescanlastformonthsandproduce nothingexcept Consequently, whenadvisingclientslookingtobuyabusiness,anI-bank’s workoftendragsonformonths.Oftenafirmwillpay nonrefundable proposals. collect feesbasedoncompletedtransactions,theirworkoftengoesunpaid.However, thisdoesn’tstopinvestmentbanksfromdreamingupnew However, mostoftheseproposalsdonotworkout;fewfirmsorownersarereadilywillingtoselltheirbusiness.AndbecausetheI-banksprimarily may befromtheacquiringcompany. Ortheinvestmentbankmay“pitch”ideaofanacquisitionCompanyXtoacquiring the firmtheirclientwishestopurchase,attemptsstructureapalatableofferforallparties,andmakesdealreality. (Again,theinitialcontact investmentbank contacts company ordivisionassets.Buy-sideworkisanentirelydifferentanimal.Theadvisoryitselfstraightforward:the In advisingsellers,theI-bank’s workiscomplete onceanotherpartypurchasesthebusinessupforsale,i.e.,buysyourclient’s Representing theacquirer career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Investment Banking company.) 139 Customized for: Erin ([email protected]) www.blackstone.com Fax: (212)583-5712 Phone: (212)583-5000 New York, NY10154 345 ParkAvenue The BlackstoneGroup www.barcap.com Fax: (212)412-7300 Phone: (212)412-4000 New York, NY10166 200 ParkAvenue Phone: +442076232323 United Kingdom London E144BB Canary Wharf 5 TheNorthColonnade Barclays Capital www.bnymellon.com Fax: (212)809-9528 Phone: (212)495-1784 New York, NY10286 1 Wall Street Bank ofNewYork Mellon www.bankofamerica.com Fax: (704)386-6699 Phone: (704)388-2547 Charlotte, NC28255 100 NorthTryon Street Bank ofAmerica Fax: (212)832-8023 Phone: (212)832-8000 New York, NY10022 711 5thAvenue, 9thFloor Allen &Company EMPLOYER DIRECTORY (CONT.) Investment Banking The Vault MBA CareerBible 142 www.citigroupcib.com Phone: (212)816-6000 New York, NY10013 388 GreenwichStreet Citi Markets&Banking www.citigroup.com New York, NY10013 388 GreenwichStreet Citi InstitutionalClientsGroup www.citi.com Fax: (212)793-3946 Phone: (800)285-3000 New York, NY10043 399 ParkAvenue Citi ConsumerBanking www.cibcwm.com Phone: (212)856-4000 New York, NY10017 300 MadisonAvenue MG CorporateFinance CIBC World Markets www.bbh.com Fax: (212)493-8545 Phone: (212)483-1818 New York, NY10005-1101 140 Broadway Brown BrothersHarriman www.bnpparibas.com Fax: (212)841-2146 Phone: (212)841-2000 New York, NY10019 787 7thAvenue Fax: +33140146973 Phone: +33140144546 France 75009 Paris 16, boulevarddesItaliens BNP Paribas www.investmentbanking.deloitte.com Fax: (313)396-3618 Phone: (313)396-3000 Detroit, MI48243-1704 600 RenaissanceCenter, Suite900 LLC Deloitte &Touche CorporateFinance www.cowen.com Fax: (646)562-1741 Phone: (646)562-1000 New York, NY10020 1221 Avenue oftheAmericas Cowen andCompanyLLC www.citi.com Fax: (212)793-3946 Phone: (800)285-3000 New York, NY10043 399 ParkAvenue Citigroup Inc.(Citi) www.evercore.com Fax: (212)857-3101 Phone: (212)857-3100 New York, NY10055 55 East52ndStreet,43rdFloor Evercore Partners www.dresdnerkleinwort.com Phone: (212)969-2700 New York, NY10019 1301 Avenue oftheAmericas Phone: +442076238000 United Kingdom London EC2V2XY P.O. Box52715 30 GreshamStreet Dresdner Kleinwort www.db.com Phone: (212)250-2500 New York, NY10003 60 Wall Street Deutsche Bank © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.gleacher.com Fax: (212)752-2711 Phone: (212)418-4200 New York, NY10021 660 MadisonAvenue, 19thFloor Gleacher Partners www.fbrcapitalmarkets Fax: (703)312-9501 Phone: (703)312-9500 Arlington, VA 22209 1001 19thStreetNorth FBR CapitalMarkets EMPLOYER DIRECTORY (CONT.) www.jmpsecurities.com Fax: (415)835-8910 Phone: (415)835-8900 San Francisco,CA94111 600 MontgomeryStreet,Suite1100 JMP Securities www.jefferies.com Phone: (212)284-2300 New York, NY10022 520 MadisonAvenue, 12thFloor Jefferies &Company www.hsbcnorthamerica.com Fax: (224)552-4400 Phone: (224)554-2000 Mettawa, IL60045 26525 NorthRiverwoodsBoulevard HSBC NorthAmericaHoldingsInc. www.hl.com Fax: (310)553-2173 Phone: (310)553-8871 Los Angeles,CA90067 1930 CenturyParkWest Houlihan Lokey www.greenhill.com Phone: (212)389-1500 New York, NY10022 300 ParkAvenue Greenhill &Co. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.moelis.com Fax: (212)880-4260 Phone: (212)880-7300 New York, NY10167 245 ParkAvenue, 32ndFloor Moelis &Company www.macquarie.com/us Phone: (212)231-1000 New York, NY10019 125 West 55thStreet Macquarie Group www.lazard.com Phone: (212)632-6000 New York, NY10020 30 RockefellerPlaza Lazard www.kpmgcorporatefinance.com Phone: (888)957-5764 New York, NY10271 120 Broadway, 23rdFloor KPMG CorporateFinance www.kbw.com Fax: (212)541-6668 Phone: (212)887-7777 New York, NY10019 787 7thAvenue, 4thFloor The EquitableBuilding Keefe Bruyette&Woods, Inc. www.jpmorgan.com Fax: (212)270-2613 Phone: (212)270-6000 New York, NY10017 270 ParkAvenue J.P. MorganInvestmentBank www.jpmorganchase.com Fax: (212)270-2613 Phone: (212)270-6000 New York, NY10017 270 ParkAvenue J.P. MorganChaseCommercialBank www.nomura.com Fax: (212)667-1058 Phone: (212)667-9300 New York, NY10281-1198 2 World FinancialCenter, BuildingB Fax: +81332780420 Phone: +81352551000 Japan Tokyo 103-8645 1-9-1, Nihonbashi,Chuo-ku Nomura Holdings,Inc. www.morganstanley.com Fax: (212)762-0575 Phone: (212)761-4000 New York, NY10036 1585 Broadway Morgan Stanley www.morgankeegan.com Fax: (901)579-4406 Phone: (901)524-4100 Memphis, TN38103 50 FrontStreet,17thFloor Morgan KeeganTower Morgan Keegan www.piperjaffray.com Fax: (612)303-8199 Phone: (612)303-6000 Minneapolis, MN55402 800 NicolletMall,Suite Piper Jaffray&Co. www.pwpartners.com Fax: (212)287-3201 Phone: (212)287-3200 New York, NY10153 767 5thAvenue Perella Weinberg Partners www.opco.com Phone: (212)668-8000 New York, NY10004 125 BroadStreet Oppenheimer &Co. The Vault MBA CareerBible Investment Banking 143 Customized for: Erin ([email protected]) www.rwbaird.com Fax: (414)765-3633 Phone: (414)765-3500 Milwaukee, WI53202 777 EastWisconsin Avenue Robert W. Baird&Company www.rbccm.com Phone: (212)428-700 New York, NY10006-1404 165 Broadway 1 LibertyPlaza Phone: (416)842-2000 Canada Toronto, ONM5J2W7 200 BayStreet Royal BankPlaza RBC CapitalMarkets www.rjf.com Fax: (727)567-5529 Phone: (727)567-1000 St. Petersburg,FL33716 880 CarillonParkway Raymond JamesFinancial EMPLOYER DIRECTORY (CONT.) Investment Banking The Vault MBA CareerBible 144 www.usbank.com Phone: (800)872-2657 Minneapolis, MN55402 800 NicolletMall U.S. Bancorp www.tweisel.com Fax: (415)364-2695 Phone: (415)364-2500 San Francisco,CA94104 1 MontgomeryStreet Thomas Weisel Partners www.rbs.com Phone: +441315568555 Scotland Edinburgh EH22YB 36 StAndrewSquare Royal BankofScotland www.us.rothschild.com Fax: (212)403-3501 Phone: (212)403-3500 New York, NY10020 1251 Avenue ofAmericas,51stFloor Rothschild NorthAmerica Rothschild www.wellsfargo.com Phone: (866)249-3302 San Francisco,CA94163 420 MontgomeryStreet Wells Fargo www.wachovia.com Fax: (704)383-0996 Phone: (704)374-6161 Charlotte, NC28288-0013 1 Wachovia Center 301 SouthCollegeStreet,Suite4000 Wachovia Corporation www.ibb.ubs.com Phone: (212)821-3000 New York, NY10171 299 ParkAvenue UBS InvestmentBank www.williamblair.com Fax: (312)368-9418 Phone: (312)236-1600 Chicago, IL60606 222 West AdamsStreet William Blair&CompanyLLC © 2009Vault.com Inc. Customized for: Erin ([email protected]) planning fortheirfuturefinancialneeds.Asaresult,theindustryisgrowingandmorevisiblethanever. ever beforeare management industry—withhouseholdincreasingandthedemiseofSocialSecurityasatoolforlong-termsavings,morepeoplethan industries canyouthinkofthatbroadlyimpacthouseholdsallovertheworld?Very few. Thatisoneofthemanyexcitingaspectsasset Imagine anindustrythatrewardsindividualsforworkingindependently, thinkingontheirfeetandtakingcalculatedrisks.Additionally, howmany an appealingoption. Do youconsideryourselftobecreativeandanalytical,opinionatedobjective?Ifthatisthecase,mayfindacareerininvestmentmanagement Do youenjoyfollowingthefinancialmarkets—whetheritbereading Investment Management investors andtheformationofwhat canbedescribedasaprivatepensionfundmarket. plans allowemployeestosavepre-tax earningsfortheirretirement.)Theseelementspromptedan increasedfocusonlong-term savings byindividual Employment RetirementIncome Security Act)in1974,whichgaveemployeesincentivestosavefor retirementprivatelythrough401(k)plans.(401(k) system (SocialSecurity)tobeunder-funded, ofERISA(the whichmadeindividualsmoreconcernedwiththeirretirement savings;and(2)thecreation The twocatalystsforchangein the industrywere:(1)broadrealizationthatdemographictrends wouldcausetheU.S.government’s retirement ERISA, 401(k)plansandspecialistfirms managed atthetimewereprimarilypensionfunds.Mutualfunds hadyettobecomebroadlypopular. a specificcategoryorstyle.(Examplesofdifferentinvestmentcategories includesmallcapstocksandlargestocks.)Finally, theassetsthatwere afundaround might simplypick50stockstheythoughtweregoodinvestments—there wasnotnearlyasmuchanalysisonmanagingriskororganizing formal requestforproposalandbiddingprocess.Theactualpractice ofinvestmentmanagementwasalsounstructured.Atthetime,assetmanagers These assetmanagerswerechoseninanunstructuredway—assignments greworganicallyoutofpre-existingrelationships,ratherthanthrougha investors.) are calledinstitutional employees eachyearandmustmanagetheirfundstomeetthese obligations.Organizationswithlargepoolsofassetstoinvest pension funds—thathadfundstoinvest.(Afundissetup asanemployeebenefit.Employerscommittoacertainlevel employee relationships thatbanksandinsurancecompaniesalreadyhadwithinstitutions—primarilyormunicipalorganizations with outof the early1970s.Priortothattime,investmentmanagementwascompletelyrelationship-based.Assignmentsmanage assets grew While theinformalprocessofmanagingmoneyhasbeenaroundsincebeginning20thcentury, theindustrydidnotbegintomatureuntil The beginningsofaseparateindustry acquainted withitsformationandhistory. To betterunderstandwhyassetmanagementhas becomesuchacriticalcomponentofthebroaderfinancialservicesindustry, wemust first become HISTORY and 2008,withthesubprimemortgagedebacle.Incontrast,assetsarequitesimplyalwaysbeinginvested. investment banks,whichtranslatesintolayoffsofbankers.Thisoccurredin2000-2001,withthetechbubbleburst,andmostrecently inlate2007 investment banking.Bankingfeesdependontransactions.Whenbankingactivities,suchasIPOsandM&Atransactions,dry up, so dofeesfor investors.) Still,evenwheninvestmentmanagementfeesinvolveaperformanceincentive,thebusinessismuchlesscyclical thancousinslike assets undermanagement.(Thefeestructurevaries,andsometimesisbothanasset-basedplusaperformancefee,especiall y forinstitutional other financialservicespositions(mostnotably, investmentbanking).Investmentmanagementfirmsaregenerallypaidasetfeeaspercentageof Because ofthestabilitycashflowsgeneratedbyindustry, comparedtosome investmentmanagementprovidesarelativelystablecareerwhen More stability whereas “assetmanagement”isusedmorewithreferencetotheindustryitself(i.e.,“Theassetmanagementindustry”). management”), referring totheactivityorcareer(i.e.,“I’maninvestmentmanager”“Thatfirmisgainingalotofbusinessin the samepractice—theprofessionalmanagementofassetsthroughinvestment.Investmentisusedabitmoreoftenwhen A quicknoteaboutthetermsinvestmentmanagement Investment Managementvs.Asset and asset management:thesetermsareoftenusedinterchangeably. Theyreferto The Wall Street Journal Street Wall The , watchingCNBC,orcheckingstockpricesontheInternet? ofpaymenttoretired 145 Customized for: Erin ([email protected]) account, investorscancreate“efficientportfolios,”oneswiththehighestexpectedreturnsforagivenlevelofrisk. circumstances. Thisiscalled“correlation,”whichmeasureshowmuchtwosecuritiesfluctuateinpricerelativetoeachother. Taking allthisinto contributes totheoverallriskofportfolio.To dothis,Markowitzconsideredhowsecuritiesmoveinrelationtooneanotherundersimilar ratheronhowthatsecurity a securitytoaddtheirportfolio,shouldnotbasedecisionontheamountofriskthatanindividualhas,but whenchoosing in ordertooptimizemarketriskagainstexpectedreturns.Markowitz,assumingallinvestorsareaverse,proposedthatinvestors, provided theframeworkforwhatisnowknownasMPT. Thetheoryquantifiesthebenefitsofdiversification,lookingathowinvestorscreateportfolios worth) inordertoinvestthese products. a varietyofeconomicsituations.Sincealternativeinvestmentsare veryrisky, investorsneedtobedeemed“accredited”(whichisdeterminedbynet positivereturnsin tolerances. Theseassetclassesareoftendesignedtobeuncorrelated withthebroadstockandbondmarketsseektoprovide differ fromtraditionalassetmanagersastheyarelightlyregulated investmentvehiclesthatdonotalwayshavedefinedinvestmentstrategiesorrisk Alternative assetmanagersincludeassetsclassessuchashedge funds,privateequityandventurecapital.Theirinvestmentstrategiesregulation and strategiestheycanpursueinagivenportfolio. limit theamountofunnecessaryrisk-taking.Traditional assetmanagershavedefinedinvestmentmandates,which determinewhattypesofsecurities funds undertheInvestmentCompanyActof1940.Therulesgoverning traditionalassetmanagersareprimarilyinstilledtoprotecttheinvestorsand andregulatesthese that aregovernedbystrictlawsandregulations.TheSecurities ExchangeCommission(SEC)istheprincipalgoverningbody between traditionalassetmanagersandalternativemanagers. Traditional assetmanagers(suchasmutual funds)arehighlyregulatedentities makethedistinction The dominantthemeoverthepastfiveto10yearshasbeen proliferationofalternativeassetmanagers.Itisnecessaryto Traditional vs.alternativeassetmanagers percent oftotalassets,whilethetop-20mutualfundscontrolroughly65assets. established andformidableplayerssuchasBlackRockJ.P. roughly50 MorganAssetManagement. Thetop-10mutualfundfirmsnowcontrol industry,These factorsledtoashakeoutperiodofconsolidation.Overthelast20years,therehavebeenwellover150mergersin creatingwell- star ratingsystem. awareness ofportfolioperformance.Theseratingagenciespublishreportsonfundperformanceandratefundsscalessuchas Morningstar’s five- fund ratingagenciessuchasLipper(foundedin1973,nowapartofReuters)andMorningstarChicago1984) increased investor companies. Massiveglobalcommercialandinvestmentbanksenteredtheindustry, takingbusinessawayfrommanyspecialistfirms.Also,mutual recognition andadvanceddistributionchannels(throughbrokersorothersalesvehicles)becamekeysuccessfactorsfor asset management The dominantthemesoftheindustryin1990swereconsolidationandglobalization.Asmanyformer“specialists”rapidly expanded,brand Consolidation andglobalization “Portfolio Selection,”inthe thesis, Modern PortfolioTheory(MPT)wasbornin1952whenUniversityofChicagoeconomicsstudentHarryMarkowitzpublished hisdoctoral Modern PortfolioTheory marketing oftheirnewservicesandcapabilities. funds arethepreferredchoiceinmost401(k)portfolios).Manyspecialistsrespondedbyexpandingtheirproductofferingsandfocusingmoreon funds totheemployeesthemselves,401(k)marketgrewrapidly. Consequently, consumerdemandfornewmutualfundproductsexploded(mutual diversification andotherbenefitsofinvestinginmutualfunds.Withmoreemployersshiftingretirementsavingsresponsibilitiesfrompension the virtuesof Asset managementfirmsbeganheavilymarketingmutualfundsasasafeandsmartinvestmenttool,pitchingtoindividualinvestors sophistication increasedwiththeadventofmodernportfoliotheory(thesettoolsdevelopedtoquantitativelyanalyzemanagementaportfolio. only generallyusedbyalmostexclusivelyfinanciallysophisticatedinvestorswhopaidalotofattentiontotheirinvestments. However, investor theywere In theearlytomid1980s,drivenbyERISAlaws,mutualfundcameintovogue.Whilefundshadbeenaroundfordecades, The riseofthemutualfund also begantobecomesignificant. industry. Investmentskills,ofcourse,remainedcritical.However, relationshipbuildingandtheprofessionalpresentationof moneymanagementteams During thisperiod,theinvestmentindustrybecamefragmentedandcompetitive.Thiscompetitionaddedextradimensionstoassetmanagement or fixedincomeinvesting). example,core equities institutional assets.Throughoutthe1970sandearly1980s,thesesmallfirmsspecializedinoneortwoinvestmentstyles(for These fundamentalchangescreatedtheopportunityforprofessionalgroupsofmoneymangerstoform“specialist”firmsmanageindividualand Investment Management The Vault MBA CareerBible 146 Journal of Finance of Journal . Markowitz,whowontheNobelPrizeineconomics1990forhisresearchanditsfar-reaching effects, © 2009Vault.com Inc. Customized for: Erin ([email protected]) Working intheindustry, unlikeotherareasoffinancial serviceslikeinvestmentbanking,doesnotrequirethatyouliveinaparticularregionofthecountry. multinational commercialbankstoindependentbehemoths,suchasFidelityandCapitalGroup. have createdadiverselistofleadingindustryplayersthatrangefromwell-capitalizeddivisionsinvestmentbanks,globalinsurancecompaniesand As theindustryhasmatured,totalassetsundermanagement(AUM)inUnitedStateshavegrownto$60trillion.Consolidatio n andglobalization In fact,nearly50millionhouseholdsinvestinmutualfunds,withatotalworthof$24trillionasJune2007($1srecently1990). in 2004.Mutualfunddemandhascontinuedtoincrease;asof2006,therewere9,000differentfundsthemarket(upfrom just 3,000in1990). decade. AccordingtoMerrillLynch, upfrom8.2million thereare 9.5millionpeopleacrosstheworldwithgreaterthan$1infinancialassets, annuallyover thepast analysts estimatethetotalglobalinvestableassetuniversetobewortharound$60trillion,havinggrownbyroughly10percent A robusteconomyhasledtoever-increasing wealthcreation,whichinturnledtoevengreaterdemandformoneymanagementservices today. Some $11.73 trillioninJanuary2008. possible problemsonthehorizonforindustryaswell—overallassetsofU.S.mutualfundscameinat$9.4trillionJanuary2009,downfrom Asset ManagementtoPromarkGlobalAdvisors,amovedesignedwooadditionaloutsideclients.Andothergeneralmonetaryshifts haveindicated management divisions.InMarch2009,GeneralMotorsdecidedtotakeitsnameoffofassetunit,changingitfrom But, overall,it’s fromtheirasset gottenbadenoughforthe sectorthatevenafewbignameswithintheindustryaretryingtodistancethemselves Bank ofAmericaholdings. Management Co.(PIMCO)attainedasimilarcontractin2009,receivinganappointmentbythegovernmenttoadviseonvalueof$118billion contract supervisingassetsfortheU.S.government.Suchahasbecomehighlysought-afteronewithinindustry. PacificInvestment managed toscorea 84 percentanditconsequentlyhadtocut500jobs—thefirstroundoflayoffsBlackRockhasevermake.Still,thefirm the biggestpureinvestmentmanagementfirm,hadaroughtimeofitlatelyaswell.Thefirm’s one,asearningsfell 2008fourthquarterwasagloomy Barclays andBankofAmerica—justtonamejustafew—allmadesubstantialjobcutswithintheirassetmanagementteams.AndBlackRock,perhaps Morgan Stanley,Due totherecessionthathitUnitedStates,investmentmanagementsectorsawanumberoflayoffsin2008andinto2009. THE INDUSTRY TODAY (marketing/sales). Onthefollowingpage,youwillfindadiagram explainingthisstructure. Asset managementfirmsareorganizedintothreesegments: portfoliomanagement,investmentresearchandaccount/productmanagement three-segment professionalstaffconsistingof: This presentstheopportunityforveryintelligentandsuccessfulindividualstobepromotedatayoungage.Ingeneral,buy-sidefirmshave (for example,anewundergradhireisconsideredanassociate,notanalyst). and thereisusuallynoformaltrainingprogram.Jobdescriptionsforsimilarjobtitlesintheinvestmentmanagementindustrydifferfromfirmto promoted analysts),andthenpromotionstovicepresidentmanagingdirector. Investmentmanagementcareershaveamuchlessrigidhierarchy For example,investmentbankingtypicallyhasathree-yearanalystprogramforcollegegrads,associate MBAgrads(ordirectly finance firms. especially thoseonthesell-side.Asaresult,investmentmanagementpositionshavelessdefinedjobdescriptionsthan atothertypesof bankers, tradersandresearchanalysts.)Ingeneral,investmentmanagementcompaniesarelessstructuredthanmostothertypes offinancefirms, who representindividualandinstitutionalinvestors.Thesell-sidereferstothefunctionsofaninvestmentbank.Specifically, thisincludesinvestment As youknow, theinvestmentmanagementisusuallyconsidered“buy-side”offinanceindustry. (Thebuy-sidereferstotheassetmanagers THE THREESEGMENTS career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com • Account andproductmanagerswhomanageclientrelationships anddistributetheinvestmentproductstoindividualinstitutional • • Portfolio managerswhoinvestmoneyonbehalfofclients investors respective sectors Research analystswhoprovideportfoliomanagerswithpotential investmentrecommendationsandinsomecasesinvestmoneytheir for insidercompany profiles,expert advice, The Vault MBA CareerBible Investment Management 147 Customized for: Erin ([email protected]) This decisionisbasedonthemandate oftheportfolio—activeorpassive—andriskexpectation oftheoverallportfolio.Forexample,riskier Once investmentopportunitiesare recognized,portfoliomanagersmustdecidewhatpercentage of theirportfoliotoallocate the respectivesecurity. the portfoliomanagerwouldnot even considera$500millionutilitystock,with6percentdividend yield. companies thathaveamarket-capitalization inexcessof$10billionandearningsgrowthcharacteristics thatexceeditsindustry average.Therefore, The selectionofinvestmentsmust adheretothestyleofportfolio.Forinstance,alarge-capitalization growthmanagermightbescreeningforonly company managers,andmonitorindustryeconomictrends looking fortherightcompanyandtimetoinvestportfolio’s capital. is theirjobtosiftthroughtherelevantinformationanduse judgment tobuyandsellsecurities.Throughouteachday, they readreports, talkto All daylong,portfoliomanagersarepresentedwithinvestmentideas frominternalbuy-sideanalystsandsell-sidefrominvestmentbanks.It Portfolio managersareresponsibleforestablishinganinvestment strategy, selectingappropriateinvestmentsandallocatingeachinvestmentproperly. Senior portfoliomanager manager positionorbroadentheirexperiencebycoveringadditional sectors. into anassociateportfolio several yearsinresearch,MBAswillthenhaveachoice:eitherstay inresearchorleveragetheirexperiencetomove Typically, MBAswhowishtopursueacareerinportfoliomanagementjoin investmentmanagementfirmsintheirresearchdivisions.After and seniorportfoliomanagerassignments.MBAsarenothiredas portfoliomanagersrightoutofbusinessschool,unlesstheyhaveatonexperience. assistants. Recentcollegegraduatesoftenfillportfolioassistantpositions,whileindividualswithmanyyearsofinvestmentexperienceholdassociate jobs thattypicallyfallunderthiscomponentofthefirm:portfoliomanagers,analysts(orassociatemanag The portfoliomanagementsegmentofthefirmmakesultimateinvestmentdecision;it’s thedepartmentthat“pullstrigger.” Therearethree PORTFOLIO MANAGEMENT analysts managemoneydirectlyintheirindustriesofexpertise. directly totheclientifhe/shehasmoneymanagementresponsibilities.AnexampleofthiswouldbeFidelity’s “Select”fundsinwhichtheindustry process. Whilethisrepresentsatraditionalhierarchy, assetmanagerscanhavevaryingstructures.Inmanycases,theresearch analystcanalsoreport institutions orhigh-net-worthinvestors).Alternatively, investmentresearchfallsunderportfoliomanagement,indicatingits supportoftheinvestment As youcanseefromthediagram,bothportfoliomanagementandaccount/productserveclient(whether they beind Investment Management The Vault MBA CareerBible 148 The threesegmentstructure Analyst/Associate Portfolio Research Analyst Portfolio Manager Research Associate Research Assistant Client Account/Product Manager Associate Account Management Associate Product Management ers) andportfoliomanager © 2009Vault.com Inc. ividuals, Customized for: Erin ([email protected]) the IPO. and seekstoselltheequityinstitutional investors.WhileIfindthecompanyandpresentation tobeinteresting,Iamgoingpassoninvestingin 10:30 a.m.:IattendameetingwithCEOon hiscompany’s roadshow. (IPO) A“roadshow”occurs whenacompanyfilesaninitialpublicoffering other ofourideasandtrades.We discusstheweek’s upcomingeconomic releasesandhowourportfolioisstructuredtoreactcertaindatapoints. 9:30 a.m.:Myco-portfoliomanagerwalksintomyoffice.Whileweeachmanage 50percentoftheportfolioindependently, each weconstantlyinform 9:00 a.m.:Dial-intoearningsconferencecall.I’lltrylistenasmuchof itaspossiblebutrealizeIwillprobablybeinterrupted. in theday. the industry. Heputs hold ratingsontwostocksinmyportfolio.Iaskseveralquestionsduringhispresentation.Heagreestofollowupwithmelater 8:30 a.m.:Attendthemorninginvestmentmeeting.Anewsenioranalystcovering pharmaceuticalshasjoinedthefirmandisinitiatingcoverageon up fortwoofthemeetings. 8:00 a.m.:Reviewmycalendarwithanalyst.ShenotifiesmethatCEOs fromfourcompanieswillbevisitingtheofficestoday. Iasktobesigned process, soIasktheportfolioanalysttocontinueresearchingandbuildoutadetailedfinancialmodel. increasing returnsoninvestedcapital,whichhetellsmeexpectsitto.Thecompanyseemsveryinterestingandmeetsourportfolio’s initialscreening and afinancialmodel.Hetellsmethecompanyisgrowingtoplineat20percentgeneratingpositivefreecashflow.I askhimifitwillgenerate 7:30 a.m.:Theportfolioanalystcomesintomyofficewithpreliminaryresearchontheaerospacecompany. Hehasprintedoutseveralsell-sidereports released quarterlyearnings.ThreecompanieswhosestocksIownintheportfoliohavereported 7:00 a.m.:Arriveatwork.Ihave100emailssittinginmyinbox.quicklysiftthroughtheemails,payingparticularattentiontocompanies thathave additional information. aerospace firmthatdesignsgenericaftermarketparts.Itsoundslikeaninterestingcompany. Isendtheportfolioanalysta quick emailtogather depending ontheassociate’s trackrecord. While thereisnodefinedcareertrack,successfulassociateportfoliomanagerscouldbepromotedtoseniorwithinthreefiveyears to manageontheirown. managers onthelargestandmostcomplicatedportfolios.Aftertheyhavesucceededinthatrole,firmwillassignthemsmallerinstitutionalaccounts diversified fundatthesametime.Alternatively, withseasonedportfolio ontheinstitutionalside,associateportfoliomanagerstypicallyapprentice command onalargediversifiedfund.Dependingthefirm,anassociatecouldalsoactasleadsectorfundandsecond-in-command ona worth. Forinstance,associateportfoliomanagersatmanymutualfundfirmswilleitheractastheleadinvestoronasector orassecond-in- The roleoftheassociateportfoliomanagerdiffersdependingonwhichsegmentmarketisbeingserved—mutualfund,institutional orhigh-net- complicated portfolios. senior managersdo.Associateportfoliousuallyareassignedsmaller, aslieutenantsonlarge, lesssophisticatedportfoliostomanageorserve business school.Thejobitselfisverysimilartothatoftheseniorportfoliomanagerwithonemainexception:associatesinteract lesswithclientsthan research analystswhohaveatleastthreetofiveyearsofpost-MBAexperience.LargerfirmsmayalsorecruitMBAsfitthisrolestraightout The associateportfoliomanagerpositionrequiresanMBA,CFA orconsiderableinvestmentexperience.Typically, thejobisfilled bysuccessful Associate portfoliomanager experience occupythesepositions,andmosthaveeitheranMBAand/oraCFA designation. Portfolio managersarethemostseasonedinvestmentprofessionalsinfirm.Typically, ofinvestment peoplewithatleastsevento10years However, institutionalandhigh-net-worthportfoliomanagershavefewerclients,theyonlymeetwiththemonetotwotimesayear. managers donotspendtimetalkingtoindividualcustomers,buttheyareoftencalledonpresentatsalesconferencesandproductroadshows. management professionalsleadthisprocess,portfoliomanagersareoftenanintegralpartofclientdiscussions.Inthemutualfundworld, Portfolio managersalsospendtimemeetingwiththeirclientstoreviewinvestmentstrategyandperformanceresults.Whileaccountproduct risk ofanyoneholding. companies. Theseareoftenreferredtoas“concentrated”funds.Alternatively, diversifiedportfoliosmayinvestinover100securitiestospreadthe portfolios investinasmallnumberofsecuritiesandtakelarge“bets.”ThepopularJanusTwenty large-capitalization fundinvestsinonly20liquid A DAY INTHELIFE:PORTFOLIO MANAGER,MAJOR MUTUALFUNDFIRM 6:30 a.m.:Take trainintooffice.Read career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Wall Street Journal Street Wall The and severaltrademagazines.Anarticleinanaviationmagazinementionsasmall The Vault MBA CareerBible Investment Management 149 Customized for: Erin ([email protected]) position. Ifsuccessfulintheirrole, manysenioranalystsmoveintoportfoliomanagementroleslater intheircareers. Senior researchanalyststypically haveservedasinvestmentresearchassociatesforthreetofive years,postMBAorCFA, beforeassumingtheir and persuasiveintheirconvictions inordertoearnrespectwithinthefirm. spend considerabletimepresenting toportfoliomanagersandissuinginvestmentreports.Because ofthis,seniorresearchanalysts mustbearticulate An importantpartofaseniorresearchanalyst’s jobistoconveytheirrecommendationstheportfoliomanagement teams.Therefore,senioranalysts analysts typicallyfollowevenmorecompanies. while buy-side demand trendstoderivebusinessforecasts.Sell-sideanalysts follow around15to25companiesandmustbeanexpertoneach Analysts spendaconsiderableamountoftimeattendingindustry conferences, meetingwithcompanymanagementandanalyzingindustrysupply to payoffthebond. cash flowsandlookatotherdebtobligationsthatmightbemore senior tothenewbond.ThiswilltellanalystlikelihoodthatQwestbeable analyst willbelookingforisQwest’s abilitytopayoffthatloan—theamountofthebond.Theanalystwilllook athistorical cashflows,projectfuture A fixedincomeanalystfocusingonTelecom, forexample,mightbelookingatanewhigh-yieldcorporatebondissued byQwest.Themainthingthe to deriveApple’s earningsandappropriatevalue(e.g.,salesgrowth,businesscosts,aswellresearch development). value ofAppletotheexpectationsstockmarket.To dothis,theanalystwouldbuildafinancialmodelthat included all ofthepotentialvariables companies, includingAppleComputer. TheanalystwouldberesponsibleforpredictingApple’s futureearningsandcashflow, and comparingthefair Their roleistopredicttheinvestmentpotentialofcompaniesintheirsector. Forinstance,takeanequityanalystcovering computerhardware Senior researchanalystsareinvestmentexpertsintheirgivenindustryfocus.Anequityanalystcoversstocks;afixedincomebonds. Senior researchanalyst program thatcanleadtoamoreseniorpositionorresultintheassociatereturningbusinessschool. covering hisownsector. Bothbuy-sideandsell-sidefirmsemployrecentcollegegraduatesasresearchassociates.Itistypicallyatwo-orthree-year a sell-sidepositionforrecentMBAgraduates.Thesepositionsareusuallyoccupiedseveralyearsoruntilthecandidateisdeemedcapableof MBA wasnotpursued).Onthebuy-side,newgraduatestypicallyoccupysenioranalystposition.Theresearchassociate -analyst istypically On thesell-side,senioranalyststypicallyhavethreetofiveyearsofpost-MBAresearchexperienceorsix10post-college(ifan (or junioranalyst),andresearchassociate. Similar totheportfoliomanagementsegment,thereareseveralpositionsinresearchhierarchy:senioranalyst,re The investmentresearchsegmentisresponsibleforgeneratingrecommendationstoportfoliomanagersoncompaniesandindustries thattheyfollow. INVESTMENT RESEARCH 5:30 p.m.:Leaveforhome. set upaconferencecallwithsell-sideanalystthenextdaytodiscusscompany. 5:00 p.m.:Touch basewiththeportfolioanalystandseeifhe hasgottenanyfurtherworkdoneontheaerospacecompanyfromthismorning.He managers whoseclientshavelargepositionsinthefund. of itsclosestcompetitors.Theproductmanagerwantsadetailedunderstandingthe“movingparts.”Heconveysthisinformationtoseveralaccount 4:00 p.m.:Meetwiththeproductmanagerformyfund.Whileourperformancehasbeendecentinlastquarter, itfaredmuchbetterthan some portfolio. 3:00 p.m.:MeetwiththepharmaceuticalsindustryanalysttogainfurtherunderstandingbehindhisinvestmentthesesontwostocksIhold inmy 2:30 p.m.:Contacttrader. Makeseveraltradesinordertomeetnewfundflows. quite casualandwediscusstheoutlookforhisbusinessamidstapotentialpendingrecession. institutional investors.IhaveownedthisparticularstockatseveralpointsthroughoutthelastfiveyearsandknowCEOquitewell.Themeetingis 1:30 p.m.:AttendanothermeetingwiththeCEOofarestaurantcompany. CEOsandCFOsoftengoontheroadseveraltimesayeartomeetwith 1:00 p.m.:Monitorportfolio.Checktoseeifanystockshaveparticularlylargegainsorlosses.Therearecurrentlynoabnormalreturns. managers. Ourfirmprovideslunchwhiletheanalystformallypresentshisresearchandprojections. 12:00 p.m.:Eatlunchwhileattendinganindustryupdate.Thetechnologyanalystisprovidingannualupdateandoutlooktoourfirm’s p is gettingseveralinquiriesfromaccountmanagersoverthequarterlyperformanceofmyportfolio.We setupatimetomeetlaterintheday. 11:30 a.m.:Returntomyoffice.Ihavefivenewvoicemailsand20emails.Onemessageisfromtheproductmanageroffundmana Investment Management The Vault MBA CareerBible 150 search associate-analyst © 2009Vault.com Inc. ge. He ortfolio Customized for: Erin ([email protected]) to beenergetic,diligentandintellectuallycurious. from portfoliomanagersthatchallengetheirideas—whichrequiresastrongtactandgreatdealofpatience.Furthermore,ass ociate-analysts need need tobeableclearlyandpersuasivelycommunicatetheirinvestmentrecommendations.Theymustalsorespond todetailedinquiries Obviously, financialacumenandquantitativeskillsareamustforanassociate-analyst,butcommunicationalsocritical.Associate-analysts with theirsuperiors. the patienceorluxurytoallowananalystbeuninformedconsistentlyincorrect.Newassociate-analystsworkextremelyhardbuildingtrust One ofthegreatestchallengesforanewassociate-analystissteepnesslearningcurve.Senioranalystsandportfoliomanagersdonothave managers (onthebuy-side). models andfundamentalcompanyanalysis,theydevelopinvestmentrecommendationsthatdistributetothesenioranalystorfirm’s portfolio constantly speakingwithmanagement,customersandsupplierstogaugethecurrentstatusofcompanytheyareanalyzing.Armedfinancial research analyst’s timeisspentmonitoringindustry andcompanytrendstopredictfinancialresultsforthecompany. Therefore, associate-analystsare themselves withtheirindustrybyreadingpapers,journalsandtextbooks,attendingconferences.Alarge percentageofa The associate-analystcreatesinvestmentrecommendationsinthesamemannerasasenioranalyst.Ingeneral,theyspendseveral weeksfamiliarizing associate-analyst willtypicallyworkunderthesenioranalystforseveralyearsbeforebranchingoffonhisowntocoverasub-sector. insurance companies.Asstatedabove,themorelikelyscenarioisforMBAtoenterbuy-sideassenioranalyst.On thesell-side, being analyzedbyasenioranalyst.Forinstance,anassociate-analystmightbeassignedHMOsandworkcloselywiththeanalystinchargeof smaller industriestofollow. Typically forthebuy-side,industryassignedtoanassociate-analystisacomponentofbroadersectorthatalready as well.Essentially, associate-analystshavethesameresponsibilitiesasseniorresearchanalystswithoneexception:associate-analystsaregiven firmsemploythe position This istheroleformostMBAsorthosewithequivalentexperience.Ittypicallyasell-sidepositionbutsomelargerbuy-side Investment researchassociate-analyst A DAY INTHELIFE:SENIOR ANALYST, HEDGEFUND portfolio manageraquickemail. 11:30 a.m.:Callupseveraldistributorsofthe companytodiscussinventorylevels.Determinethat remains atall-timelowlevels.Writethe questions onthecompany’s inventorylevels.Ianswermostofthequestionsbutneedtogetbackhimon others. 11:00 a.m.:MeetwiththeportfoliomanagertofurtherdiscussCompanyXYZ andwhythestockisunderperforming.Heasksextremelydetaile volatility intheindustry. catalyststhatwillincrease trying todeviseanoptionsstrategycapitalizeonthevolatilityof one ofmyindustries.Iassistbynotifyinghimupcoming 9:45 a.m.:Meetwithacolleagueontheoptionsdeskforcoffee.Asananalyst coveringthreeindustries,Ibriefhimonmyindustryoutlooks. Heis 9:35 a.m.:Thetradercallsmeandconfirmshewasabletofind100,000shares andmadethepurchase. shares. 9:30 a.m.:Themarketopensandthestockisdown15percent.Icontact ourtraderandlethimknowIwanttopurchaseanadditional100, 9:00 a.m.:NotifytheportfoliomanagerthatIwanttopurchasemoreof stock. Heapprovesthedecision. check thepre-markettradingactivity. Itappearsthestockisdown12percent. 8:30 a.m.:Readthesell-sideanalyst’s downgradereport.Revisitmyfinancialmodelandassumptions.Idisagreewithcertainkeyconclusions and I expectthestocktodropsignificantlyandmayuseopportunitypurchasemorestock. 8:00 a.m.:Receivephonecallfromasell-sideanalystthatdowngradedstockIhavelargepositionin.Heexplainshisreasoningfor the downgrade. significantly. OurinvestmentthesisremainsintactandwedecidetoscheduleacallwithCompanyXYZ’s CFOforlaterintheday. months andnowrepresentsasignificantconcentrationoftheportfolio.We decidetotrimourposition.Theotherstockhasunderperformed 7:00 a.m.:Attendmorningmeetingwiththeotherfivemembersofourportfolioteam.We three discusstwopositions.CompanyXYZhasdoubledin 6:30 a.m.:Arriveatwork.Monitorforeignpositionsandcombthroughemail,checkingforanyupgradesordowngradesfromsell-sideanalys ts. how theU.S.marketswillopen.) 6:00 a.m.:CheckforeignmarketsonCNBCfromhomebeforeIleaveforwork.(Foreignstockandthefuturesmarketareagood proxyof 5:45 a.m.:Wake upandcheckBlackBerryforanynews. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Investment Management 151 000 d Customized for: Erin ([email protected]) Investment Management The Vault MBA CareerBible 7:00 p.m.:Gohome. 6:00 p.m.:Prepareforearningsreleasesofthreecompaniesthenextday. 4:00 p.m.:Gothroughemailandreturnphonecalls. 3:30 p.m.:Discussthecallwithportfoliomanager. We agreetoholdontotheposition. 2:30 p.m.:ConferencecallwithCFOofcompanyXYZ. 2:00 p.m.:PreparefortheconferencecallwithCompanyXYZ’s CFO.WritedownfivetopicsIplanondiscussingwithhim. hired andtohearhisinvestmentideas. 1:00 p.m.:EatlunchwithasalesrepresentativefromJ.P. thefirmhas Morgan.Thepurposeofthelunchistointroducemeanewsell-sideanalyst 152 © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.allianz.com Fax: +498938003425 Phone: +498938000 Germany D-80802 Munich Königinstrasse 28 Allianz Group www.alliancebernstein.com Fax: (212)969-2229 Phone: (212)969-1000 New York, NY10105 1345 Avenue oftheAmericas AllianceBernstein EMPLOYER DIRECTORY www.barclaysglobal.com Fax: (415)597-2171 Phone: (415)597-2000 San Francisco,CA94105 45 FremontStreet Barclays GlobalInvestors,N.A. www.bankofamerica.com Fax: (704)386-6699 Phone: (704)386-5681 Charlotte, NC28255 100 NorthTryon Street Bank ofAmericaCorporateCenter Bank ofAmericaCorporation www.ameriprise.com Toll free:(800) 386-2042 Fax: (612)671-5112 Phone: (612)671-3131 Minneapolis, MN55402 707 2ndAvenue South Ameriprise Financial,Inc. www.americancentury.com Toll free:(800) 345-2021 Fax: (816)340-7962 Phone: (816)531-5575 Kansas City, MO64111 4500 MainStreet American CenturyCompanies,Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.credit-suisse.com/am/en Fax: (212)538-3395 Phone: (212)325-2000 New York, NY10010 11 MadisonAvenue Credit SuisseAssetManagement www.schwab.com Toll free:(800)648-5300 Fax: (415)636-9820 Phone: (415)636-7000 San Francisco,CA94104 120 KearnyStreet Charles Schwab www.capgroup.com Fax: (213)486-9217 Phone: (213)486-9200 Los Angeles,CA90071 333 SouthHopeStreet,53rdFloor Capital GroupCompanies www.calpers.ca.gov Toll free:(888) 225-7377 Fax: (916)795-4001 Phone: (916)795-3829 Sacramento, CA95814 400 QStreet Lincoln Plaza CalPERS www.blackstone.com Fax: (212)583-5712 Phone: (212)583-5000 New York, NY10154 345 ParkAvenue The BlackstoneGroupL.P. www.blackrock.com Fax: (212)935-1370 Phone: (212)810-5300 New York, NY10022 40 East52ndStreet BlackRock, Inc. www.db.com Fax: +496991034225 Phone: +496991000 Germany 60486 Frankfurt Theodor-Heuss-Allee 70 Phone: (212)454-3600 New York, NY10017 345 ParkAvenue Deutsche Bank www.deshaw.com Fax: (212)478-0100 Phone: (212)478-0000 New York, NY10036 39th Floor, Tower 45 120 West 45thStreet D.E. Shaw&Co.,L.P. www.federatedinvestors.com Toll free:(800)341-7400 Fax: (412)288-6446 Phone: (412)288-1900 Pittsburgh, PA 15222-3779 1001 LibertyAvenue Federated InvestorsTower Federated Investors,Inc. www.edwardjones.com Fax: (314)515-2820 Phone: (314)515-2000 Des Peres,MO63131 12555 ManchesterRoad Edward Jones www.etrade.com Fax: (212)826-2803 Phone: (646)521-4300 New York, NY10022 135 East57thStreet E*TRADE FINANCIAL www.dreyfus.com Fax: (212)922-7533 Phone: (212)922-6000 New York, NY10166 200 ParkAvenue Dreyfus Corporation The Vault MBA CareerBible Investment Management 153 Customized for: Erin ([email protected]) www.ingim.com Fax: +31703781854 Phone: +31703781781 The Netherlands 2595 AKTheHague Prinses Beatrixlaan15 ING InvestmentManagement www.hbscusa.com Fax: (224)552-4400 Phone: (224)554-2000 Mettawa, IL60045 26525 RiverwoodsBoulevard HSBC NorthAmericaHoldings www.gs.com Fax: (212)902-3000 Phone: (212)902-1000 New York, NY10004 85 BroadStreet Goldman, Sachs&Co. www.gabelli.com Toll free:(800) 422-3554 Fax: (914)921-5392 Phone: (914)921-5100 Rye, NY10580-1422 1 CorporateCenter GAMCO Investors,Inc. www.franklintempleton.com Fax: (650)3125606 Phone: (650)312-2000 San Mateo,CA94403 Building 970,1stFloor 1 FranklinParkway Templeton Investments) Franklin Resources,Inc.(Franklin www.fidelity.com Fax: (617)476-6150 Phone: (617)563-7000 Boston, MA02109 1 FederalStreet,27thFloor Fidelity Investments EMPLOYER DIRECTORY (CONT.) Investment Management The Vault MBA CareerBible 154 www.mfs.com Toll free:(800)637-2929 Fax: (617)954-6620 Phone: (617)954-5000 Boston, MA02116 500 BoylstonStreet MFS InvestmentManagement www.leggmason.com Toll free:(877)534-4627 Fax: (410)454-4923 Phone: (877)534-4627 Baltimore, MD21202-1099 100 LightStreet Legg Mason www.lazardnet.com Phone: (800)821-6474 New York, NY10112-6300 30 RockefellerPlaza,58thFloor Lazard AssetManagement www.jpmorgan.com Fax: (212)270-2613 Phone: (212)270-6000 New York, NY10017 245 ParkAvenue Management J.P. MorganChaseInvestment www.janus.com Fax: (303)336-7497 Phone: (303)333-3863 Denver, CO80206 151 DetroitStreet Janus CapitalGroup www.amvescap.com Fax: +442070653962 Phone: +442076380731 United Kingdom London EC2A1AG 30 FinsburySquare INVESCO www.morganstanley.com Fax: (212)762-0575 Phone: (212)761-4000 New York, NY10036 1585 Broadway Management Morgan StanleyInvestment www.morgankeegan.com Fax: (901)579-4406 Phone: (901)524-4100 Memphis, TN38103 50 FrontStreet,17thFloor Morgan KeeganTower Division Morgan Keegan-Wealth Management www.putnam.com Toll free:(800)225-1581 Fax: (617)482-3610 Phone: (617)292-1000 Boston, MA02109 1 PostOfficeSquare Putnam Investments www.pimco.com Fax: (949)720-1376 Phone: (949)720-6000 Newport Beach,CA92660 840 NewportCenterDrive,Suite100 (PIMCO) Pacific InvestmentManagementCo. www.nuveen.com Fax: (312)917-8049 Phone: (312)917-7700 Chicago, IL60606 333 West Wacker Drive Nuveen Investments www.ntrs.com Fax: (312)630-1512 Phone: (312)630-6000 Chicago, IL60603 50 SouthLaSalleStreet Northern Trust Corporation © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.schroders.com Fax: +442076586965 Phone: +442076586000 United Kingdom London EC2V7QA 31 GreshamStreet Schroders plc www.rjf.com Toll free:(800)248-8863 Fax: (727)567-8915 Phone: (727)567-1000 St. Petersburg,FL33716 880 CarillonParkway Raymond JamesFinancial EMPLOYER DIRECTORY (CONT.) www.statestreet.com Fax: (617)664-4299 Phone: (617)786-3000 Boston, MA02111 1 LincolnStreet State StreetCorporation career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.tiaa-cref.org Toll free:(800) 842-2252 Fax: (212)916-4840 Phone: (212)490-9000 New York, NY10017 730 3rdAvenue TIAA-CREF www.amtd.com Toll free:(800)237-8692 Fax: (402)597-7789 Phone: (402)331-7856 Omaha, NE68127 4211 South102ndStreet TD Ameritrade www.troweprice.com Fax: (410)345-2394 Phone: (410)345-2000 Baltimore, MD21202 100 EastPrattStreet T. RowePrice www.wellington.com Fax: (617)951-5250 Phone: (617)951-5000 Boston, MA02109 75 StateStreet Wellington ManagementCo., LLP www.vanguard.com Fax: (610)669-6605 Phone: (610)648-6000 Malvern, PA 19355 100 Vanguard Boulevard The Vanguard Group www.ubs.com Fax: (212)713-9818 Phone: (212)713-2000 New York, NY10019 1285 Avenue oftheAmericas UBS FinancialServices The Vault MBA CareerBible Investment Management 155 Customized for: Erin ([email protected]) buyouts tomajorcorporaterestructurings,thereareplentyofheadlinetransactionsacrossthefield. Burger King,UnitedAirlines,Domino’s PizzaandSonyMGMhaveallaccessedtheleveragedfinancemarkets.Frommultibillion-dollar leveraged transactions ayear. Leveragedfinanceaffordsanalystsandassociatesacontinuallybusypacegooddealclientexposurealongtheway. industry), oneanalystmightcloseortwodealsayearinaninvestmentbank.Bycontrast,leveragedfinance,it’s feasible toclosefive10 corporate financerolewithinacoverageteaminaninvestmentbank(athatcoversspecificindustryandpitchesdealst o companiesinthat Another advantageofworkinginleveragedfinanceisthatgeneral,itanareainvestmentbankingfocusedonclosingtransactions.Ina working inleveragedfinanceallowsonetoseewhatelseisouttherecareer-wise inthefinancialmarkets,withouteverhavingtoleave the field. and associates, because itprovidesavantagepointintomostoftheotherareasinvestmentbanking,aswellsalesandtrading.Foranalysts Along withitsroleasapotentialspringboardtocareersinprivateequityandhedgefunds,leveragedfinanceisalsouniquefromcareerperspective Why leveragedfinance? after fields. ground forthemosteliteprivateequityshopsandhedgefunds.Subsequently, forcareersonWall Street,leveragedfinanceisoneofthemostsought- and hasbeenoneoftheboomingprofitcentersWall Streetforthepasttwodecades.Foranalystsandassociates,ithasbecome aprimetraining markets (thehigh-yieldbondmarketandtheleveragedloanmarket),isaccessedbynearlyallprivateequityshopshedgefunds onaregularbasis, Generally speaking,leveragedfinanceisaplatforminallmajorinvestmentandcommercialbanks.Itfunctionthattapsintotwofinancial markets. as theintersectionofinvestmentbanking,commercialhedgefunds,privateequity, andsalestradingonthedebtside ofthefinancial The financialmarketscanbedividedintotwomajorsections:debtandequity.think ofleveragedfinance Underthisoverarchingorganizationstructure, WHAT ISLEVERAGEDFINANCE? Leveraged Finance also coversthecompanyandworks withpeoplefromitsdebtcapitalmarketsteamtostructurea syndicatedloanand/orhigh-yieldbond. an IPO,sodoesitprovidethesame serviceforleveragedfinancetransactions.Inthecaseofa leveragedfinancetransaction,theinvestmentbank is identical—justasaninvestment bankcoversacompanyinanindustrycoveragegroupandworks withitsequitycapitalmarkets teamtostructure this sense,leveragedfinance both offeringadvicetocompanies, aswellexecutingafinancialtransaction,suchaninitialpublic offering(IPO).In for afinancialproblem,butalsoproductassolution.However, mostpeoplethesedaysbroadentheirdefinitionofinvestmentbankingtoinclude notonlyofferingadvice acquisitions advice).Inthisregard,leveragedfinanceisdifferent frominvestmentbanking,sincealeveragedfinancebankis A commonmisperceptionisthattraditionalinvestmentbanking onlyinvolvesprovidingsolutionsandadvicetocompanies(suchasmergers a debtcapitalmarketsgroup—itjustdependsonthevolumeofdeals todeterminehowspecificand/orlargethegroupswillbe. the markets,inmoreofadebtcapitalmarketsgeneralistrole.However,platform istypicallypartof inbothtypesofinstitutions,theleveragedfinance dedicatedtofollowing such asGoldmanSachsthatdonotoriginatemanyofthesetypes ofdebttransactions,therewilltypicallybesmallergroups positions, sellingtheseproductstoinvestors,andmonitoringthe firm’s exposuretoloansandbondsofissuers. Naturally, at pureinvestmentbanks groups dedicatedto“originatingdeals”(proposingdealsexisting ornewclients),followingthecapitalmarkets,tradinginandoutofloan/bond beentirefloorsand of AmericaandCitigroup.Becausethesheeramountleveraged financedealvolumeattheseinstitutions,therewilltypically of thepremierleveragedfinanceshopscanbefoundwithin investment banksofthelargestfinanceinstitutions,suchasJPMorganChase,Bank Are theleveragedfinanceandinvestmentbankingsameanimal? Sortof.Asleveragedfinancewasoriginallyacommercialbanking function,most LEVERAGED FINANCEVS.CORPORATE FINANCE/INVESTMENTBANKING While thesector’s immediatefutureremainsindeterminate,itseemslikeasafebet tosaythat2009probablyisn’tgoingbeleveragedfinance’s year. example, UBS,whichlost$6.85billioninthefourthquarterof2008,partiallyblameditsexposuretoleveragedfinanceascausedeephit. companies cut40percenteachoftheirleveragedfinancestaff).Andevensimplecontactwiththesectorseemstospellbadnewsforfirmslately. For these toughtimes.In2008,Citigroup,DeutscheBankandJ.P. (thelattertwo Morganallmadedeepcuts withintheirleveragedfinancebusiness whenitcametosurviving The leveragedfinancesectordidn’tescapetheruthlessU.S.recession.Infact,dideverythingbutgetafreepass The industrytoday leveraged financefirm,youmayevenseeatleastoneofyourdealsmakethecover One ofthegreatadvantagestoworkinginleveragedfinanceisthatyouwilltypicallyworkonnotabletransactions.Asananalystorassociateamajor Major deals The Wall Street Journal Street Wall The . NotablebrandslikeRJRNabisco, 157 Customized for: Erin ([email protected]) trading floors. Some people feed off the energy from a football field-sized area crammed with people chatting all day long, while otherswouldprefer trading floors.Somepeoplefeed offtheenergyfromafootballfield-sizedareacrammedwithpeople chattingalldaylong,while is importanttorealizethatsome firmsareorganizedinatypicalinvestmentbanking“cubicle/office” atmosphere,whereassomeareorganizedlike firms, andwhothrivesinthepace ofaseeminglynever-ending day. Furthermore,whenconsideringifleveragedfinanceis/is not thefieldforyou,it individual whoenjoysmanaging numerous dealsthroughoutthisprocess,whoisajack-of-all-trades fromfinancialmodelingtotalkinginvestment structures theloan/bond,markets ittoinvestors,sellsit,andthenclosesfundsthetransaction. Thisroleasananalystorassociatecaterstothe However, verygenerally speaking,leveragedfinancereferstothedealoriginationfunction—whenateamgoesoutpitchclient,winsmandate, for bothsyndicatedloansandhigh-yieldbonds. syndicated loan/high-yieldbondmarkets,therearepositionsininternal credit/portfoliomanagementwork.Finally, thereisasalesandtradingfunction and conductingresearchaboutthemarket’s trends.Forthepersonwhoenjoysassetmanagementaspect ofmanagingafirm’s exposuretothe There isalsocapitalmarketswork(forbothsyndicatedloansand high-yieldbonds)forthepersonwhoenjoysunderstandingflowofmarkets andpitching. is dealorigination,forthepersonwhoenjoysmanagingnumerous processessuchasputtingtogetherpresentations,financialmodeling Forexample,there There aresomanydifferentareaswithinleveragedfinanceand manyrelatedtothefieldthatthereisplaceforalmosteveryone. OPPORTUNITIES INLEVERAGEDFINANCE business unit,andevengeneraldebtrefinancings,whereanexistingloan/bondistakenoutwithanewloan/bond. company’s financialstructureischanged,IPO/spin-offfinancings,wheretheproceedsofaloan/bondareintandemwithanIPOorspin-off Leveraged financealsocoversdividendtransactions,whereloans/bondsareusedtopayouttheownersofabusiness,recapitalizations, wherea both thefinancialinstitutions’leveragedfinancegroupsandfederalbankruptcycourttogetfinancingpackagesinorder to stayinbusiness. where companiesareentering/exitingbankruptcyandtryingtoavoidChapter7(liquidation).Inthiscase,the companies willworkwith and financialsponsorsuseborrowedmoneytopurchasecompanies.TherearealsocorporaterestructuringsDIP(Debtor-in-Possession) facilities, general corporatepurposes(day-to-dayfinancingneeds).However, privateequityshops inleveragedfinanceyou’llalsofindbuyouts,when workingcapitalor There areawidevarietyofdealsexecutedwithinleveragedfinance.Mostcommonsyndicatedloansandhigh-yieldbondsfor Types ofleveraged financedeals matter. exposure willdefinitely when comparedtoyourexposureworkinginanindustrycoveragegroup.Inwhererelationshipsareeverything,this the casethatyourexposure(mostlikelyinlate-nightfinancialmodelingrevisions)toprivateequityshopswillbehigherleveragedfinancegroups happen—it certainlydoes,andeventhetop-tierPEshopshedgefundsseekpeoplewithveryspecificindustryknowledge.However, it’s definitely emphasized inthecoveragesideofbank.Thisisnottosaythatmovingfromagroupprivateequityshop or hedgefundcan’t you willbetrainedincertaindebtmetrics(what’s typicallycalled“credit”training),whichareusefulinunderstandingtheindustryandnot working inleveragedfinancewillgiveyoutheopportunitytointeractwithmanyofthesefirms,asclosenumerousdealstheirs.Furthermore, better servedinahealthcarecoveragegroupataninvestmentbank.However, ifyouareinterestedinworkingatahedgefund coverage versusleveragedfinance.Ifyourgoalistoworkinaspecificindustry—let’swould probablybe sayrunningahealthcarecompany—you If youarebeginningyourcareerinfinance,itisimportanttothinkaboutlong-termgoalswhenconsideringaroleinvestmentbanking on themarkets,comparabletransactionsandprovideotherrelevantadvice. loan orhigh-yieldbondtofinanceanM&Adeal,theywillsurelybringalongtheappropriatepeoplefromleveraged platform tocomment leveraged financewillnotdoanypitching—quitethecontrary. Whiletheindustrycoveragegroupmightcomeupwithandpitchideaofasyndicated to saythatsomeone in generation andpitchingofideastoclientsthanonewouldfindinaninvestmentbankingindustrycoveragegroup.Thatisnot same day—somethingthatwouldbequiteunlikelyinacoveragerole.However, thistransaction-orientedenvironmentinvolvessubstantiallylessidea grind mightbealittlemorehecticinleveragedfinancerole,asdealteamcouldpotentiallyclosingtwomultibillion-dollartransactionsonthe example,the day-to-day This breadthvs.depthtrade-offisdirectlyrelatedtotheamountoftransactionexperienceofferedinleveragedfinance.For like theircounterpartinacoveragegroup,theywillgenerallyhavemorebreadthoffinancialmarketknowledge. (ECM). ThereismoreexecutionofdealsinaDCMorECMrole.Whereassomeonethisrolemaynotbeasfamiliarwitheveryfacetanindustry Working inacoveragegrouporM&Aataninvestmentbankdiffersgreatlyfromworkingdebtcapitalmarkets(DCM)equity capitalmarkets Different experiences:workinginthecove Leveraged Finance The Vault MBA CareerBible 158 orprivateequityshop, © 2009Vault.com Inc. Customized for: Erin ([email protected]) at anygiventime.Thislifestylelends itselftothenever-ending workday. including nearlyeveryweekend. Asisthecasewithdealcycleinleveragedfinance,therearetypically quiteafewprojectsneedingtobecompleted late, reviewingworkwiththeiranalysts togetprojectscompleted.Itisnotuncommonforeventhe mostseniorassociatesto work 80+hourworkweeks, Associates generallyhaveaverysimilarlifestyletothatofananalyst. EagertobepromotedVP, theyarriveintheoffice early. Theytypicallyleave of anassociate. and subsequently, might runtheriskofbecomingamicromanager. Thedeallifecycleissoprocess-oriented thatthiscaneasilybecomethedownfall class. ThedownsideisthatanA-to-Amighthavetroubleseparating herselffromtheday-to-dayfinancialmodelingthatcamewithanalystlifestyle running morequicklythantheirjust-out-of-B-schoolcounterparts, theseassociatesstandamuchhigherchancetoberankednear thetopoftheir performing analystsfortunateenoughtolandtheanalyst-to-associate (“A-to-A”)promotion,thispositionhasalotofupsides. Abletohittheground Either freshoutofatop-tierMBAprogramorrecentlypromoted fromthird-yearanalyst,theassociateroleishighlysoughtafter. Forthose top- Associate lower salary. VPtitles are alsoquiteoftenawardedtothosewhospendagoodamountoftimeinteractingwithclients. At somefirmsavicepresidentwillbereferredtoas“principal” or“director”—themaindistinctionofthisrolefromthat amanagingdirectoris The highperformingVPsaregenerallyonthefasttracktopromotion,spendingthreefouryearsinrolebeforebecomingamanagingdirector. times, orworkingingroupsthatdonotoriginatemanytransactions,theseVPstendtomakecloser$250,000. banking counterparts.Ingreatyears,itisnotuncommonforatopperformingVPinveryactiveteamtoclear$1million.However, inbadeconomic VPs arepaidextremelywell,commandingsalariesinthemultiplehundredsofthousandsdollars,liketheirothercorporate financeinvestment are.Theverybest Although, likeMDs,VPsinteractfrequentlywithclients,tendtobesalariedandnotcommission-basedtheywayMDstypically client updatecallandsubsequentlylayingthefuturefoundationforhispromotiontoMD. ensure thateverythinginthedealgoessmoothly. Throughoutthedeallifecycle,aVPwilloftenactasrelationshipmanager, deliveringtheperiodic process goingforward.Fromthenegotiatingandsigningoflegaldocumentstofinalsignoffinformationmemorandum, theVP’s roleisto managesthe The vicepresidentonadealteamistherighthandmanofMD.Oncemandatehasbeenwon,VPgenerallytakesover and Vice president have accesstocorporateexpenseaccounts,inorderentertainclientsoverlunch,dinner, aballgameoronthegolfcourse. uncommon foranMDtoreviewmaterialsandmakecallsfromtheirhomesontheweekendortrainridehomework. MDsalsotendto will oftenworklater, reviewingfinancialpresentationsandeditingofferingmemorandums.Rarelyisaweekendworkedfromtheoffice,butitnot As forlifestyle,managingdirectorstypicallywork“market”hours—from8a.m.to7p.m.However, whenworkingonmorecomplextransactions,they incentive enoughforseniorMDstostayattheircurrentfirmslongperiodsoftime,whichgenerallyensuresconsistencythemostranks. areusually of paycomesintheformabonuspaidwithstockoptionsthatmustvestovercertainperiodyears.These“goldenhandcuffs” LBOs, DIPfacilities,andrecapitalizations.However, moreoftenthannot,thesalaryofanMDisenoughtosupporthis/herbasiclifestyleandbulk $3 millionormoreinbonuses).Naturally, itpaystobeanMDinaleveragedfinancegroupthatexecuteshighvolumeofexceptionallyprofitable deal flow. Inthissense,itisnotuncommonforthebest-of-the-bestMDstocommandmultiple-millionsofdollarsincompensationgoodyears(think feestheyearnfromtheir Managing directorswillspendquiteabitoftimepitchingideastoclients,astheirsalaryistypicallydeterminedbasedonthe whom theyhaveworkedthroughouttheyears.ThetopMDsaregroupheads,whomaycontractsoutliningtheircompensationstructure. dialogue withtheclient.Asseniormembersofdealteam,MDshavesomethingasalesrole,andinteractlimitednumberclients in ordertoassesstheirfinancialstatusandneedfordebtfacilities.TheMDisusuallythekeyrelationshipmanagerbankbecauseofcontinuous Sitting atthetopofleveragedfinancefoodchain,MDgenerallyspendsmosthis/hertimespeakingwithtreasurersandCFOscompanies, Managing director one totwoVPs,threeassociates,andfouranalysts. are generallymoreanalyststhanassociates,associatesVPs,andVPsMDs.Atmostfirms,theratiotendsto Within structuring/origination,therearefourmajorroles:managingdirector, vicepresident,associateandanalyst.Asthehierarchyisstructured,there Structuring/organization can chatitupwithanymanagingdirectorattime. where ananalyst Electric CommercialFinance.Whereasonemightbeveryrigidandhierarchical,theothergolfshirtkhakisonFridays, such as General you mightfindtheculturetobealmostentirelyoppositefromthatofcommerciallendingarmalargerfinancialinstitution, The cultureofleveragedfinancedependsalmostentirelyonthefirmingeneral.AtapureinvestmentbanksuchasGoldmanSachs, can makeasubstantialdifferenceintheday-to-dayenjoymentofsomeone’s roleinleveragedfinance. the qui career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible beoneMDforevery Leveraged Finance 159 Customized for: Erin ([email protected]) Capital markets/loansalesanddistribution with differentissuers,dealteamsandfinancialproducts.Atfirst,mostjuniorresourcesarestaffedalongsideotherseasonedones. or closingatthesametime.Inevitably, thisisneveractuallythecase.Thisdealvarietyhelpstoensurethatthesejuniorresourceswillbeablework Generally staffedbyaVPintheirteam,analystsandassociatesareusuallyplacedonvarietyofdeals,whichmeansthattheyshouldnotallbe“live” to doubletheirsalaryamount. easily becutinhalf.Whereasanalystsaregenerallyveryexcitedtomaketheirbasesalarybonusagoodyear, associatesarehoping senior years. Thiscantranslateintobonusesnear$300,000,withsalariesclearing$150,000to200,000.However, bonusamountcan insloweryears,this the first-yearassociategetspaidwellforhisefforts.Themoreexperiencedassociatescanexpecttobecompensatedverywellingoodeconomic work ethic.Withbasesalariesashigh$95,000,signingbonusesinthe$25,000to45,000range,andfull-yearwell in excessof$150,000, However, associatesarepaidaccordinglywithothercorporatefinanceinvestmentbankingassociates,whichtendstorewardthemhandsomelyfortheir end until4a.m.,butthenextday willnotusuallystartuntil10a.m.,asthereislessmarketsensitivity inorigination/structuring. morning meetingsandlate-night, last-minuterequestsfromdealteams.Thisisquitedifferent origination,wherethedayofananalystmightnot a.m. Althoughthecapitalmarkets haveclosedandtheMDVPsmightgonehome,there arealwaysmaterialsneedingpreparationforearly the upside(ifyoucancallitthat),daywillmostlikelyendbefore midnight(andusuallycloserto9or10p.m.)andresume againpromptlyat8 listofrequests.On Therefore, itisnotuncommonforanassociate/analystinthesegroups tospendtheentiredayathisdesk,workingthroughalarge first halfofadayforcapitalmarketsassociateoranalyst. want adeckofslidesoutliningmarketconditions,andclientmight wantasetofrecentsecondlienLBOdeals.Theseareall likelyrequestsinthe MDofthebankmight slides, investorsmightwanttoknowthespreaddifferentialbetween aparticularsyndicatedloanandhigh-yieldbond,senior of thejobislikeasprint,notmarathon,ofteninvolvingnumerous firedrills.Forexample,dealteamsmightaskforleague tablesandcredential to acreditdeck,orcompletingslidesinpitch),thecapitalmarkets associate/analystusuallycompletestasksonadailyorhourlybasis.Thenature While anoriginationanalystorassociatecompletesanumberof different tasksoverthespanofaweek(suchaswritinganinfomemo,addingpages necessarily true. that thecapitalmarketsanalystorassociaterolewouldofferabetter lifestylethaninorigination.However, becauseofthe paceofthejob,that’s not onfirstglance grade dealsandcoverageofsmallerclients.Becausetheyarepaidonthesamescaleasanoriginationassociate/analyst,itappears in capitalmarketsthesetendtobepositionsthataremoregearedtowardsresearch,whileloansalesrolesfocusedoninvestment- As partofthecorporatefinanceprogram,associateandanalystrolewithintheseteamsismuchliketheirpeersinothergroups.Onajuniorlevel, Associate/analyst be done. day attachedtoaBlackBerry. Weekends forthese teamsaretypicallyfreerthanoriginationteams’,butthereisalwaysoccasionalworkthatneedsto professionals inbothcapacitiestendstobequitehectic:followingthemarkets,talkingclients,answeringquestionsfrominvestorsandspending capacity andoutsideoftheoffice.Often,theyareattendingdinners/sportingeventswithinvestorsand/orclients.Regardless,lifestylessenior working withoriginationteamsandissuerstostructurelargedealswellintotheevenings.Loansalesprofessionalsoftenworklatetoo,butinadifferent out by7p.m.issomewhattypicalfortheseseniorprofessionals.However, eventheseniorcapitalmarketsprofessionalswillcommonlyfindthemselves As thefirm’s Inat7a.m.and eyesandearsofthefinancialmarkets,capitalmarketsloansalespositionstendtoworkmore“market”hours. players bringinextraordinaryfinancialcontracts,theverybestcoachesaregenerallynottoofarbehind. research onothercompetition(marketcomparables),talkingtofans(investors),andinteractingwiththeteam’s owners(theclient).Whilemarquee out winningthegames,coachisdirectingteamduringdrawingupnewplays(adjustingtermsofdealin market), conducting In thissense,thecapitalmarketsandloansalesteamsarelikeheadcoachesofprofessionalsportsteams:whereasplayers (thedealteam)are earnings forthecapitalmarketsMD/VPyearafteryear. because thepayforacapitalmarketsMDdoesnotdependasmuchonfeegenerationitanoriginationMD,thiscanleadtomoreconsistent very close.However,and thismeansthattheirpayscalemightnotbequitethesameasthosesuccessfulatoriginatingmanydeals,itisgenerally and corporatefinance.Althoughtheirfunctionisnotspecifically“ontheline”(theyaredirectlyresponsibleforgeneratingrevenuesafirm), corporate financepractice,andaretypicallycompensatedonascalecomparabletotheirmanagingdirectorvicepresident peersinorigination With yearsofrelevantexperience,theseprofessionalsgenerallyhailfromoriginationandstructuringteamsoranothersectiontheinvestmentbank’s deal teamsandclientsonmarketconditions,aswelldeliveringthesedealstoinvestors. one andthesameatmostfirms),thesepositionsarecompensatedsimilarly. Managingdirectorsandvicepresidentsspendmostoftheirtimeadvising markets professionals (ifnot responsibilities butyearsofexperienceinthefield.Asloansalesanddistributionistypicallygroupedwiththesecapital In acapitalmarketsfunction,themanagingdirectorandvicepresidentoftenhaveverysimilarjobresponsibilities;one’s titlereflectsnotjob Managing director/vicepresident Leveraged Finance The Vault MBA CareerBible 160 © 2009Vault.com Inc. Customized for: Erin ([email protected]) weekend lifestyleisslightlymorepredictable. resources inallofthesegroupscandefinitelyexpectit.Usuallyworkingintenselyononeortwodeals,asopposedtothreefiveorigination,their forweekendwork,junior creation ofaratingsagencypresentation.Also,thepaywillgenerallycoincidewithentirecorporatefinanceprogram.As fluctuate basedontheirgroupandordeal-flow, butwillgenerallybelonghours,markedwithlong-termprojectsandfirmdeadlines,suchasthe banks. However, theebb-and-flowofworkloadinthesepositionstendstobemoresimilaroriginationthancapitalmarkets.Theirday-to-daywill Much liketheorigination/structuringandcapitalmarketsjuniorresources,theseindividualsarepartofcorporatefinance programattheinvestment Associate/analyst finance function,ifalargeorcomplexdealiscomingtothemarket,everyoneonteamusuallyworkswellpasttheir“normal”hours. Like theircounterparts,weekendsareusuallyfreeandyouwillnotfindthemintheofficeat9p.m.However, anyothermajorleveraged aswith In termsofhours,theseniorresourcesinthesefunctionscanexpecttoworkevenmorepredictablehoursthanthoseprofessionals inorigination. much asthetop-tieroriginationmanagingdirector. However, whenitcomestocompensationforgroup/departmentheads,allbetsareoff. revenue generationrolewillhavemorestableearnings.Thismeansthatthetop-tierratingsadvisorymanagingdirectormostlikelynotearnas credit forbringingin$25millionoffeesadealandwillbepaidin-linewiththisfeegeneration(orlackthereofbadyear),someonenon- usually alignedwithrevenuegeneration,theyarecompensatedonadifferentscale.Whereasanall-starmanagingdirectorinoriginationmightgetthe counterparts. Withtheexceptionofcorporatebanking,theserolesarenotusuallyprimaryclientcontactsforfirm. Also, sincetheyarenot Similar tootherseniorresources,thelifestylesofmanagingdirectorandvicepresidentroleswithintheseteamsisless intense thantheircoverage Managing director/vicepresident compensated onalowerpayscale,andthelifestyleinthesegroupsisbetter. These functionsareessentialtotheleveragedfinanceplatformbutnotgenerallyalignedwithrevenuegeneration.Assuch,theytypically Credit/risk/corporate banking/ratingsadvisory update slidesorleaguetables,whichusuallyhappensincapitalmarkets. on aweekendwouldbequiteoutoftheordinary. AquickphonecallorBlackBerrymessagetoaclientmightoccur, butnotthecreationofmarket origination. Inorigination,thereareusuallyprojecteddeadlinesforprojects.capitalmarkets,thoseusuallyASAP. Asforsales,working weekends forcapitalmarketsanalystsandassociatesareusuallynotspententirelyintheoffice,varietyofrequestsislesspredictablethan Weekend counterparts, workforcapitalmarketsassociatesandanalystsisusuallyaregularoccurrence.Whileunliketheweekendsoftheirorigination ASSOCIATE A DAY INTHELIFE:LEVERAGED FINANCESTRUCTURING/ORIGINATION generation. However, atthecommercialbanks,payandlifestyleareoftenverydifferentthanthataninvestmentbank. thatgroupistorevenue the titles/hierarchyaresimilartothatofinvestmentbanks,asiswaypayforeachfunctiondependsonhowcloselytied Atthesefirms, investment banks,althoughtheywillcombinethecomplementaryfunctionssuchassales/capitalmarketsandunderwriting/credit/risk. might combinealloftheirorigination,capitalmarketsandsalesroles.Typically though,thelargeplayersaresetupinamannersimilarto Whereas someofthelargerplayerslikeGEhavededicatedoriginationteamstocoverlargecapandsmallissuers,smallerm iddle-market players Organizationally, commercialbanksandfinancecompaniestendtosetuptheirleveragedplatformsinrelation totheirdealflow. Commercial banksandcommercialfinancecompanies The MD,alwaysontheBlackBerry, forwardsyoualla notefromseniormanagement,whichsayshowproudtheyarethat thedealteampulledoff deadline fortheinfomemotobe distributedtolenders,foralenders’meetingbeheldand sit-downswiththesalesandcapitalmarketsteams. Youtransaction. TheMDisexceptionally pleasedtoknowthattheinfomemowasalreadystartedand youalltalkaboutthenextsteps. setafirm 9:00 a.m.:You finishyourbagelatdeskwhile readingtheinfomemo,andheadovertomeetingwhere MDoutlinesthenexttasksfor 8:40 a.m.:Realizingthatyou’vegot20minutesuntilyourmeeting,yourun downstairs tograbacupofcoffeeandbagel. emails andstarttoreviewtheinfomemoshellthatyourtopnotch analystworkedonlatelastnight.Thatkidisdefinitelygoingplaces. second isinmarketwithalenders’meetingonTuesday morning.There’s alwaysplentygoingoninthisjob,whichisexactlywhy youloveit.You check just mandated,andthe until 11p.m.,youradrenalinestillrunshigh,asyouarenowon twolivedeals.One,amultibillion-dollarrefinancing,was atwork 8:15 a.m.:Evenasathird-yearassociate,youstillarenotusedtotheearly morninghours,whichfollowlongevenings.Althoughyouwere and youwanttobeprepared.So,grabtheBlackBerry head totheoffice. on aninfomemoforanewdeal,youdefinitelywanttogetintothe officeandreviewitASAP. Also,yourMDhascalleda9a.m. meetingforthisdeal 7:00 a.m.:It’s alittlebitearlyforyoutobeup,butwantgetheadstartontheday. Sinceit’s aFridayandyouranalyst hasbeencrankinglate career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Leveraged Finance 161 Customized for: Erin ([email protected]) a 7p.m.departureonFriday, youhaveseenalotworse! 7:00 p.m.:You shutdownthelaptop,remindanalystsnottostaylatesincea lot ofthatworkcanbedonetomorrow, andyouheadhome. Asfor tonight, sinceitisaniceeveningoutside.Withonlyfewhours ofworkonSaturday, youfeelgreataboutthisweekend. 6:00 p.m.:You stopbybothanalysts’deskstoseehowtheyaredoing.You office divide up someminortasks,sothateveryonecangetoutofthe a.m.: Sinceyouwillbeintheofficeanyhow, thisisfinebyyou. shortly too.Asoneofthemisdraftingpartacreditagreement thisweekend,sheinvitesyoutohoponaconferencecallt no news.Fromthelooksofit,youmightactuallyhavesomething ofaweekend.You theyareleaving alsomakesuretocheckinwiththeVPs,since slides forthefirsttransactionlookgreat,shellofinfomemo fortherefinancingtransactionisunderwayandyourauctionsstillremainquietwith 5:00 p.m.:BeforeyourMDsleavefortheweekend,youcheckinwitheachofthemtomakesuretheyknowwhereeverythingstands.The lend weekend work. front. Yet, updatesneedtobemadethatinfomemosoitcansentinvestorsimmediatelyafterthemeeting.Thiswilldefinitelyyour before Tuesday’s meeting.However, sincethefinalapprovalfordeckofslideshasnotyetbeengiven,youarereallyinaholdingpatternonthat completely exhausted.You bothsitdowntoupdateonwhathashappenedwiththelenders’presentation,whileyoustrategizeneedshappen catch upontherestofyourday. Aboutthistime,theanalystfromyourdealhasarrivedbackinofficehigh-yieldbondroadshow, 4:00 p.m.:Oncebackatyourdesk,youcheckemailsandvoicemails.You makesomecallstofriends,checkCNNand and careerstuff. transaction overviewsectionoftheinfomemoandmakinggoodprogress.You theweekend bothgrabsomecoffeetotakeabreak,whileyoudiscuss 3:30 p.m.:Your onthe email totheclienthasbeensent,sonowitistimecheckinwithyourotherdealteam.Meanwhile,analystcranking of thelenders’meetingslides. will callyoudirectlyandviceversa,butstillliketotouchbasewithyourdealteam.Oncehavefinalapprovalfromthem,sendoveracopy 3:00 p.m.:Withthechangesmade,youcirculatepresentationtoVPandMDshowthemwhataresending.Often,CFO t you wantittobeasperfectpossible.Also,sincethisisgoingbacktheclient,worktopnotch. most oftheafternooncrankingonchangesanddouble-checkingeverything.Sincehundredsinvestorswillbescrutinizing thisdeckofslides, 12:50 p.m.:Whileeatinglunchatyourdesk,youstartcrankingonchanges.TheVPstopsbyperiodicallytoaskquestions,butotherwisey ou spend grab abitetoeatfromthecafeteriadownstairs,sinceyouknowthatcangetbackyourdeskquickly. decideto 12:30 p.m.:Immediatelyafteryougetoffthephone,beginreviewingchanges.Recognizingthatthiswilltakeafewhours, can printthemoutbeforetheyleaveforhome. changes willbemadetotheinfomemo,youmakenotechangethoseaswell.You promisetosendthemasoftcopyoftheslidesby 4p.m.sothey points, whereyouallshouldmeetandanyotherchanges.Theclientsuggestsupdatestoafewslidesmakenoteofthem.Knowingthese 11:00 a.m.:Onthecallwithclient,youaregoingslide-by-slidethroughyournewestupdatetopresentationclient.You discuss talking the presentationonTuesday, they’dliketowrapupanymajorchangesbeforetheweekend. on cue,theclientcalls,askingtoreviewlenders’presentationslidesyousentlastnight.Sincetheywillbetraveling 10:45 a.m.:Assoonasyousetdownthephone,VPforthisdealcomesovertoyourdesk,checkinginwithaboutpresentation.Almost deal. gone out.You callthemback,givingsomeinformationandpassingthewordalongtoyoursalesteam.Peoplearedefinitelyexcited aboutthis 10:15 a.m.:You returntoyourdeskfindsomeinvestorshavealreadycalledaboutthenewtransaction,evenbeforelenders’presentationhas firms. things arebusyrightnow. shopsandfinancing Thankfullyyourauctionshavegoneradiosilent,whiletheownersreviewbidsfromprivateequity Withtwolivedeals inmarket, recruiting, youaredoingalloftheheavyliftingforlenders’meetingandwillneedhelppossibleonthisdeal. a.m. tomorrow, isoutoftheofficefor tomakesurethateverythingisontrackandreviewprogress.Sincetheotheranalystyourlivetransaction 10:00 a.m.:Withsomecleardeadlinesinhand,youquicklydebriefwiththeanalyst,dividingupresponsibilities.You agreetomeetattheoffice 10 before thedeallaunches. another successfulpitch.Asyouhavebeenonquiteanumberofdeals,recognizethatthisisthecalmbeforestormandcrunchtime Leveraged Finance The Vault MBA CareerBible 162 The Wall Street Journal Street Wall The to NewYork onMondayfor omorrow morningat11 © 2009Vault.com Inc. reasurer , and ers’ Customized for: Erin ([email protected]) www.bankofamerica.com Fax: (704)386-6699 Phone: (704)386-5681 Charlotte, NC28255 Bank ofAmericaCorporateCenter 100 NorthTryon Street Bank ofAmericaLeveragedFinance www.abnamro.com Fax: +31206299111 Phone: +31206289393 The Netherlands 1082 PPAmsterdam Gustav Mahlerlaan10 ABN AMRO EMPLOYER DIRECTORY www.deutsche-bank.de Fax: +496991034225 Phone: +496991000 Germany 60262 Frankfurt Taunusanlage 12 Deutsche Bank www.csfb.com Fax: (212)325-8057 Phone: (212)325-2000 New York, NY10010 11 MadisonAvenue Credit Suisse www.citigroup.com Toll free:(800) 285-3000 Fax: (212)793-3946 Phone: (212)559-1000 New York, NY10043 399 ParkAvenue Citigroup www.thecarlylegroup.com Fax: (202)347-1818 Phone: (202)729-5626 Washington, DC20004-2505 1001 PennsylvaniaAvenue NW The CarlyleGroup career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.pnc.com Toll free:(888)762-2265 Fax: (412)762-7829 Phone: (412)762-2000 Pittsburgh, PA 15222-2707 1 PNCPlaza,2495thAvenue PNC www.nationalcity.com Fax: (216)222-9957 Phone: (216)222-2000 Cleveland, OH44114-3484 1900 East9thStreet National City www.key.com Phone: (574)237-5200 South Bend,IN46601-2021 202 SouthMichiganStreet KeyBank www.jpmorganchase.com Fax: (212)270-1648 Phone: (212)270-6000 New York, NY10017 270 ParkAvenue JPMorgan Chase www.jefferies.com Phone: (212)284-2300 New York, NewYork 10022 520 MadisonAvenue, 10th Floor Jefferies &Co www.goodwinprocter.com Fax: (617)523-1231 Phone: (617)570-1000 Boston, MA02109 Exchange Place,53StateStreet Goodwin ProcterLLP www.goldmansachs.com Fax: (212)902-3000 Phone: (212)902-1000 New York, NY10004 85 BroadStreet Goldman Sachs www.suntrust.com Toll free:(800) 786-8787 Fax: (404)332-3875 Phone: (404)588-7711 Atlanta, GA30308 303 PeachtreeStreetNE SunTrust www.rbs.com Fax: +441315576140 Phone: +441315568555 Scotland Edinburgh EH22YB 36 StAndrewSquare Leveraged Finance The RoyalBankofScotlandGroup www.wellsfargo.com Toll free:(800) 869-3557 Fax: (626)312-3015 Phone: (866)878-5865 San Francisco,CA94163 420 MontgomeryStreet Wells Fargo&Company www.ubs.com New York, NY10178 101 ParkAvenue UBS The Vault MBA CareerBible Leveraged Finance 163 Customized for: Erin ([email protected]) Brothers andtheBernardMadoffcase,respectively). unwindingofLehman AlixPartners takingontheresponsibilityforguidingmanagementofsomebiggestcasualtieseconomysofar(the As thecrisishasdeepenedintoarecession,demandforcorporateturnaroundservicesalsospiked,withfirmssuchasAlvar ez &Marsaland the typeofservicesitoffers—especiallyitsforensicaccountingdivision,whichhasshownmarkedgrowthsince2007. crisis managementandrecoverystrategies.ThathasseencompaniessuchasFTIConsultingbenefitingfromanunprecedented surge indemandfor calamities areactuallyprovidingworkinsomesectorsoftheindustry. Financialservicesfirms,forexample,arelookingto consultants forhelpwith are managementandstrategydecisionstobemade,thenconsultantswilllikelyofuse.Intheshortterm,various only worsenedin2008.Thathasn’tmeantdoomandgloomfortheconsultingindustry, however;thegeneralruleofthumbis thatwhereverthere Fallout fromyearsofdubiouslendingpoliciesmotivatedcorporationsacrosstheindustryspectrumtoreinintheirstrategyspending—a situationthat Though businesswasstrongthroughoutmostof2007,byitsend,thesubprimemortgagecrisishadchangedeconomicclimated for almost50percentoftheworldwideconsultingmarket,revenuehit$160billion2007,upfrom$156in2006. high inM&Aactivitytoafocusoncorporateturnaroundandrestructuringastheeconomytookitstoll.Evenso,United States,whichaccounts private equity, gavewaytoaclimateoffear, drivenbyanall-time sothemajorrevenuesourcesinconsultingindustryshifted—fromadvisingwork understandable urgeforthosesameclientstocutbackonnonessentialexpenditures.And,aspositiveeconomicconditions,such astheboomin had seenclientsinterestedinimplementingimprovements—andwillingtospendtopdollargettherightadvice—theeventsof2008sawan therobusteconomy in2007 by revenuefallingoffacliffinthelatterhalf,whenfulleffectsofvariousfinancialcriseswererecognized.Where rest oftheeconomy, consulting’s yearwasdominatedbymovementsintheglobaleconomy. Theseledtoareasonablefirsthalfoftheyear, followed While 2007markedtheconsultingindustry’s thirdconsecutiveyearofgrowth,thestateplayin2008wasmuchlessclearcut.Like Strategy holdingsteady WHAT ISCONSULTING? Managment Consulting success inthisarea,withitsadvisoryandconsultingdivisionsgenerating approximately18percentmorerevenuein2008than2007. practice,alsoenjoyed advisory servicelinebroughtin14percentmorethan2007.Deloitte, theonlyofBigFourfirmsnottocastoffitsconsulting percent increaseinrevenuefromitsassuranceandadvisoryservices division,whileKPMG’s advisorydivision enjoyeda13percentincreaseandPwC’s of remarkablegrowthforallthreefirms,leadingtosomeimpressive financialresultsdespitetheeconomy. Thatyear, Ernst&Young posteda7.8 The hiatushasnotdiminishedtheirbrandvalueinclients’eyes,however; inthe2008fiscalyear, consultingandadvisoryservices continueda pattern and financialriskconsultingdivisionsaccordingly. signed withtheirspin-offs.Thecompanieswereeffectivelyreleased backintotheconsultingfold,andcrankeduptheirbusiness advisoryservices audit andaccountingwings.Then2007sawtheendoffive-year noncompeteagreementsthatErnst&Young, andKPMG PricewaterhouseCoopers and ExchangeCommissiontightenedindependencerequirements, promptingseveraloftheBigFourtoseparatetheirconsultingdivisions fromtheir Further heatingupcompetitionaretheBigFouraccountingfirms thathavere-enteredtheconsultingarena.AfterEnronscandal,Securities work. may alsogetafootinthedoorbyacceptingprojectsthataren’tas“sexy,” suchasimplementationordatamigration,beforetakingonactualstrategy become tougher, sincesmallfirmsareoftenabletoundercutthefeesofblue-chiphousesbykeepingoverheadandstaffexpenseslow. Smallerfirms have enteredthelandscape,joustingwithlarger, well-establishedconsultingshopsforprojects.Competitionintheworldhasnodoubt its ensuinglayoffs) With clientsdemandingtargetedservices,morenichefirms(manyspunofffromlargerconsultanciesafterthedot-combustand Anybody’s game than honinginsolelyonstrategy, firmshavealsostartedofferingawiderrangeofservices,includingIT, restructuringandcompliance. themselves inthemarketplace,manyfirmsarenowfocusedonnicheareassuchaseconomicconsulting,securityorglobalizationstrategy. Andrather last decade,consultingfirmshaveshiftedstrategies,offeringspecificindustryknowledgeandemphasizingquantifiableresult s. To differentiate consultants—industry expertswhoreallyknowtheirsector—ratherthanfresh-out-of-schoolgeneralists.Inresponsetosuchclientselectivity, overthe sophisticated buyers,demandingmorevalue,deeperexpertiseandtargetedsolutions.Manynowinsistthattheirprojectsbest affed bysenior-level One thingisforcertain:consultanciesarebetterpreparedthistimearound.Afterthedot-comtraumaofearly21stcentury, clientsbecamemore Weathering thestorm ramatically. 165 Customized for: Erin ([email protected]) year. outsourcing firmsin2009—afactunderlinedbyaGoldmanSachs reportthatestimatedadeclineinITspendingofaround9percentthroughoutthe the highestdemandforBPOservicescomesfromfinancial servicesandmulti-processmarkets.Thatspellsatleastshort-termtroublefor toGartnerResearch, contracting eachforjustonepieceofthewholeBPOproject,instead ofusingasingleoutsourcingproviderforall.According declined—by 12percent.Partofthedropisduetomaturation ofthemarket;businessesareincreasinglyusingseveralspecialistproviders,and Berger StrategyAssociates,expressed itsconfidenceinthefutureofIndianmarket,formingan alliancewithIndianfirmTata Strategic Management there to50,000bytheendof2009, upfromaround37,000in2008.Inearly2009,meanwhile, theworld’s fourth-largestconsulting firm,Roland has alsotakenasubstantialinterest intheIndianmarket—itmaintains12globaldeliverycenters inthecountry, andplans toincreaseitsheadcount numbers inIndiatoover53,000, andin2008,KPMGannouncedplanstoraiseitsheadcountthe countryfrom3,000to5,000by2010.Accenture India continuestobeahotspotfor growth,bothforoutsourcingandadvisoryservicelines.Between 2005and2007,IBMdoubled itsemployee India andbeyond America, totalcontractvaluein2007dropped,asdidduration. As Although theBPOmarketisstillgoingstrong,businesstrending awayfromthemegadeals($1+billionengagements)of past.InNorth and helpingtotransformtheirbusinessoperationsaBPOmodel. than halfofthe$217billionglobalmarket.Consultingfirmsaregettingapiecethislucrativepiebyassistingclientswith globalsourcingstrategies payroll andhumanresources.In2007,theNationalOutsourcingAssociationestimatedNorthAmericanBPOmarketatover $127billion—more providing loadsofwork.Inanongoingefforttoboostefficiencyandsavemoney, companiesarenowoutsourcingmorecomplexoperationslikefinance, Well BPOmarketisstill afterthefirstwaveofbusinessprocessoutsourcingprojectstookcustomerserviceandsoftwaredevelopmentoverseas, Outsourcing’s secondwave for newMBAgrads(andthestreamoflayoffsinfinancialsectorhasnodoubtenhancedindustry’s allureforstudents). time careertracks.Thestrategyseemstobeworking;despitetheunimpressivesalaryincreases,consultingindustryremainsoneoftoppicks equity groups,manyaresweeteningemploymentpackageswithlifestyleperkslikeflexibleschedules,work-from-homeoptions, sabbaticalsorpart- that ofthefirmasawhole.Asconsultanciestraditionallyhaven’tbeenabletocompetewithlucrativebonusesofferedby hedgefundsorprivate remained relativelyflat.Somefirmsdoofferanincentive-basedcompensationstructure,tyingbonusestoindividualandgroup performance,andto Due totheincredibleamountofcompetitionforjobswithinindustry, andbonuses—have paylevelsinconsulting—bothtermsofbasesalary Cashing in fact washighlightedinMarch2009,withfigures Recruiters arealsoscouringcampusesforMBAcandidateswhohaveparticularindustryexpertise,ratherthanabroad,generalis t background.That career. or privatefirmscanlurecandidateswiththepromiseofmoreclientexposure,fastercareerprogressionprofitsharingfrom anearlystageintheir salaries, smaller appeal tocandidateswhowishaccruespecializedexperience.Althoughlargepubliccompaniesaretypicallyableofferhigher attracted tothenameandprestigeofablue-chipfirmorpublicentitythatcanofferstockoptions.Smaller, nichefirms,ontheotherhand,may Despite thedownturn,topgraduatesenteringconsultingfieldin2009willstillhaveaspectrumofoptionsfrontm.Somenodoubtbe America’s gottalent and securityconsulting.Anotherhotareaisregulatoryconsulting,asbanksnavigateBaselIIrequirementsSarbanes-Oxleycomplianceissues. the marketbecomingmoredynamic(read:risky)andglobal,businessesareplacinghigherpriorityonriskmanagement,raisingdemandfor In 2008,however, asM&Aandprivateequityactivitydroppedoff,arangeofotherfinancialservicespumpeddemandforconsultingservices.With the secondandthirdquarters. diligence, integrationadvisoryandotherM&Aservicesaimedatgrowthfacilitation.Bainreportedthat2007activity was strongestduring diligence andsmoothpost-mergerwrinkles.Bain&Company’s mergersandacquisitionspractice,forexample,providesacquisitionscreening,due As thesetransactionsincreasedinvalueandgrewmorecomplex,consultantswerecalledtoevaluatepotentialdeals,analyze trillion (ofwhich$1.4camefromtheUnitedStates),up20percentover2006,andfrenzycreatedanewclientbas M&Amarket was$4.3 demand fordeals,whileprivateequityfirmsrifewithcashwereeagertogetinontheaction.In2007,valueofglobal A largepartoftherecentgrowthinstrategyconsultingwaspropelledbyrecord-levelM&Aactivity. debtdroveupcorporate Strongprofitsandcheaper Servicing financialservices Management Consulting The Vault MBA CareerBible firms. Consultantswithafewyears’experiencearealsoindemand,ascompaniesseekouthireswhocanhitthegroundrunning . Candidates withatrackrecordinthepublicsector, compliance,riskorcrisismanagementandcorporateturnaroundwilllikelyhavetheirchoiceof demand. climate whereengagementsaremorecomplexandclientspickieraboutwhomtheyworkwith,specialistconsultants inhigh the consultingindustry—significantlymorethancomefromindustrytoMBAprograms.Additionally, asfirmsseektoaddvalueinabusiness 166 The New York Times York New The indicating thatmorethan15percentofMBAgraduatesgoontocareerswithin Consulting Times Consulting posits, 2007wasthefirsttimetotalcontractnumbers markets,conductdue e forconsultingfirms. © 2009Vault.com Inc. Customized for: Erin ([email protected]) include Vietnam,SingaporeandthePhilippines.Infact,IDCpredictsthatAsiaPacificBPOmarketasawholewillexpand to $14billionby2010. over thenextdecade,addingtwoorthreenewbranchesinAsiaannuallywithinfewyears.Additionalareaspoppingup asprimeBPOcenters aims tohave20,000employeesinChinaby2015,upfrom8,5002007,andErnst&Young planstoexpandfrom8,00030,000 in thecountry In fact,accordingtoa2007reportfromresearchfirmIDC,ChinaisexpectedovertakeIndiaasthetopoutsourcingdestination by2011.Deloitte Though mostconsultingfirmsarestillinvestingresourcesinthesubcontinent,India’s risinglaborcostsandshortageoftalent havefirmseyeingChina. restructured.” will have tobe change willbeinthekindofworkwedo.Therealotmorerestructuring—notonlycertainprocesses,butentirecompanies the Western Europeanmarketthrough2009. willoutpacethatof them navigatethesenewmarkets.KennedyInformationpredictsthatgrowthinthe$4billionEasternEuropeanconsultingmarket Turkey, Romania,theCzechRepublicandRussia.Assuch,consultantsarebeingtappedbybanks,financialservicestelecomclientstohelp standards, andasformerlystate-ownedindustries—suchtelecommunications—deregulate,multinationalbusinessesareestablishingapresencein outsourcing destination;itisbecomingastrongmarketforstrategyconsulting.AsmorecountriesintheregionmeetEuropean Unioneconomic region’s outsourcingindustry, estimatedat$2billionin2007,isexpectedtogrow30percentby2010.ButEasternEuropenow more thanjustan up, thankstotheavailabilityofhighlyeducated,multilingualworkerswhodemandlessinsalarythantheirWestern Europeancounterparts.The Consulting firmsarealsoseeingbusinesstakeoffinotherdevelopingeconomies,suchasEasternEurope.Outsourcingtheregion hasbeenramping The nextbigthing Times Economic The to createafootholdinthecountry. CEORolandBergertold StrikinganebullientnoteaboutthepotentialforgrowthinIndianmarket,founderand All thismightsoundgreat,butbeforewegoon,shouldaddresssomecommonmisconceptionsaboutconsulting. CONSULTING MYTHS clients, especiallythoseinindustriessuchasoilandgas,chemicalsenergy, whichfaceincreasinglystringentcompliancestandards. others alsospearheadedenvironmentaladvisorypracticeareas,applyingthelessonsofconservationlearnedintheirownprogra ms createdtoassist use ofrecycledandrecyclableofficematerials,reducedenergywasteindailyoperationsminimizationairtraveltocli Capgemini andA.T. Kearney, aswellothers,havealllaunchedformalgreenprogramsinthelastfewyears.Amongtheirresolutions are increased of firmstoadoptlong-terminitiativeswiththestatedgoalreducingtheircarbonfootprint—manyevenhopingachievecarbonneutrality. L.E.K., Environmental awarenesshasbecomeanemergingfocusfortheconsultingindustrysince2007.Thepitfallsofglobalwarming prompted anumber Earthy efforts career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com • • • “civilians” won’thaveheardofyour firm—unlessithasbeeninvolvedinascandal,thatis. explain it,nomatterhowhardor manytimesonetries.Ifyouwantajobcanexplaintoyour grandmother, consulting isn’tforyou.Most isthatnoonecan As aresult,fewpeopleoutsideof theindustryreallyunderstandwhatconsultingis.Infact,arunning jokeaboutconsulting firms arepubliclyrecognizedforthehelptheygive. also understandwheretheproblemslie.) (Most peoplewithafairamountofcommonsenseandanoutsider’s perspective can identifyaclient’s problems.Andinmany cases,clients making greatmoneyfordoingsomethingreallyeasy.” Unfortunately, that’s nottrue.Spotting aclient’s problemsisamerefraction ofthebattle. Implementation—You mightbethinking,“Allconsultantsdoisfigureoutproblemsatcompaniesandexplainthem.Awesome. I’mgoingtobe contrast toworkininvestmentbanking,yourconsultingwill probablynevergetmentionedin Prestige—Consulting iswidelythoughtofasaprestigiouscareeramong businesscircles,particularlyMBAs.Butyoushouldrealizethatin and youmightbeworkingwiththeseniorvicepresidentofone thecompany’s manybusinessunits. are possible).Dependingontheindustryandlocationofyourclient’s business,yourenvironmentmightbe amid-rangehotelin asmallcity, from theCEOatyournextprojectkickoff,andyouprobablywon’t bestayinginfour-star hotelsinthecoolestcitiesworld(thoughboth Glamour—Consulting canindeedbeexcitingandhighprofile,butthisis the exception,notrule.Chancesare,youwon’tbesittingacross convince individualclientemployeestohelpthemmakesolutions work.It’s toughtosolveproblems—andthat’s whyclientshireconsultants. Consultants mustalsogetbuy-infromtheclients.Notonlydoes bureaucracyoftenmakeimplementationtough,butconsultants must also ofthetime. solution thatcan’tbeputintoplace.)Acorollarytothisisthe80/20 rule:80percentofaproblemcanbesolvedin20 have what’s calledan80percentrule:it’s bettertoputinplaceasolutionthattakescareof80percenttheproblemthanstriveforperfect isn’t theendofstory. Consultantsmustmakesurethesolutionisn’ttooexpensiveorimpracticaltoimplement.(Manyconsultingfirms The joboftheconsultant,therefore,isn’tjustaboutknowingwhat’s wrong.It’s aboutfiguringouthowtomakeitright.Even findingthesolution that “volumeswillcertainlygodownabitincertaincountrieslikeGermany, JapanandtheUnitedStates,butmoresignificant for insidercompany profiles,expert advice, The Wall Street Journal. Street Wall The ent sites.Thesefirmsand The Vault MBA CareerBible Management Consulting Very fewconsulting 167 Customized for: Erin ([email protected]) projects typicallydoalotofresearch, financialanalysis,Excelmodelbuildingandpresentation. You will attendlotsofmeetingsinyourquesttofind Keep inmindthattheanalysis phase—usually themostinterestingpart—isprobablyshortest partofanyassignment.Consultantsstaffedon Administration Implementation Reporting Analysis Research Pitching Depending whereyouareintheprojectlifecycle,heresomeofthingscouldbedoing: midlevel (MBAortheequivalent)consultantsdo.Generally, projectsfollowthepitching/research/analysis/reportwritingcycle. degree, youareprobablyoverseeingacoupleofentry-levelconsultantsdoingresearch.Forthemostpart,we’lldescribe job thatentry-leveland experience, phaseoftheprojectandyourcompany. Ifyouareapartner, youaresellingworkmostofthetime,whereasifhavearecentMBA The shortansweristhatyouwillbeworkingonprojectsofvaryinglengthsatsitesfordifferentclients.Whatdo willdependonyourseniority, which onlyraisethelevelofjargon. mean whentheytalkabouthelicoptering.Inaddition,manyconsultingfirmshavetheirownspecificphilosophiesandproblem-attacking frameworks, consultants tendtouseaverydistinctivevocabulary. Youor whattheheckconsultants maynotknowwhatyourskillsetis,orhowtoboiltheocean, to givingadviceandsolvingproblems,youmaynotunderstandhowthistranslatesintoacareerpath.Theproblemiscompoundedbecause Most “non-consultants”aremystifiedbytheactualjobanditsday-to-dayresponsibilities.Theregoodreasonswhythisisso.Whileyou’reused So whatdoesaconsultantactuallydo,anyway? Management Consulting The Vault MBA CareerBible 168 • • Filling outweeklytimetrackingandexpensereports • Working oninternalcompanyresearchwhenyourfirmhasnoprojectsforyou.(Beingunstaffedisreferredtoasbeing“on thebeach,”a • Documenting theteam’s workaftertheprojectisover • Executing thecoding,systemsintegrationandtestingofrecommendedsystem, ifyouworkforanITconsultingpractice • Actingasaprojectmanagerfortheimplementationofyourstrategy, phaseofaproject ifyourfirmistypicallyactiveduringtheimplementation • Helping topresentthefindingsandrecommendationsclient • Preparing thefinal presentation(typicallya“deck”ofPowerPointslides,thoughsomefirmswriteuplongerreportsinMicrosoftWord format) • Helping togenerate recommendations • Analyzing thegathered dataandthemodelforinsights • Building Exceldiscounted cashflow(DCF)and/orotherquantitativefinancialmodels • Facilitating aweekly clientteamdiscussionaboutthecompany’s businessissues • Checking yourfirm’s databanksforpreviousstudiesthatithasdoneintheindustryorwithclient,andspeakingto projectleadsabout • Interviewing the client’s customerstogatherviewpointsonthe company • Performing secondaryresearchontheclientanditsindustryusinginvestmentbankingreportsothersources(theseinclude • Presenting asales pitchtoaprospectiveclient(usuallywithPowerPoint,Microsoft’s presentationsoftware) • Helping towrite theproposal • Helping toselland marketthefirm(preparingdocumentsandresearchingprospectiveclientsinpreparationforsalescalls) pay perhourisn’tmuchbetterthanotherbusinesscareers. Income—The salarylooksattractiveonpaper, butremember, it’s noteasymoney. andthe Divideyoursalaryoverthe(large)numberofhours, pleasant nameforwhatisoftenatedioustime.) their insightsonthefirm Bloomberg, OneSource,Hoover’s Online,Yahoo! NewsandSECfilings) © 2009Vault.com Inc. Customized for: Erin ([email protected]) Typical engagementsmayinclude: $45 billionoperationalconsultingmarketwillgrowatacompoundannualgrowthrateof7.1percentthrough2010. and distribution—alltohelpclientsalterprocessesinresponsecompetitionorreactshiftsthemarket.KennedyInformation estimatesthatthe these goals,whichmightincludeallocatingresources,shiftingvaluechainpriorities,evaluatingbenefitsofoutsourcingorexaminingcustomerservice shift backtoearlierconventions.Whilestrategyinvolvesmarkingoutcleargoals,operationsconsultingfocusesonthepracticalmeansofreaching to marketchanges,globalizationandcustomerinteraction.Today, withclientstakingacautionarystancetowardspending,therehasbeenslight recent boomingeconomy, however, clientsweremorefocusedonexpansionandprofitgrowth,sooperationsconsultingrevolvedaroundresponding Operations consultingiswhatputsstrategyintoaction.Inyearspast,operationsfocusedonsavingmoneyandincreasingefficiency. Inthe Operations andimplementation PRACTICE AREAS work longhoursinapressurizedenvironment.It’s noteasy. new typeofsalesconference,oranentirelywaythinkingaboutbusiness.To workassignmentand topitalloff,youoftenmusttraveltoyour To configuration,a someextent,though,theboundariesofjobarevirtuallylimitless.Eachprojectcarrieswithitanewtask,spreadsheet you, thisusuallymeanslotsofresearch,whichisthenelucidatedontheomnipresentPowerPointslides. and dependingonhowthefirmisstructuredoreconomydoing,youcouldspendsignificantamountsoftimeworkingproposals.For when you’renotstaffedonapaidengagementisusuallylessfrenetic—thoughalwaysso!)Consultingfirmsspendlotoftime acquiringthework, will spendtime“onthebeach”doingresearchonprospectiveclientsandhelpingwithmarketingefforts.(It’sbeach” becausethetime called“onthe the data,createprocessandmeetpeoplewhowillhelpyouresolveissuesyou’vebeenhiredtoaddress.And,when you’re notstaffed,you legislation, tacklecompetition,manage costsonvendorsandequipment,implementnewtechnology. consulting firmscomeintoplay—helping clients,suchaslifesciencesfirms,hospitals,HMOsand drugcompanies,navigateacomplicated mazeof industrialized country. Withsomuchcashatstake,the industryispredictablyoverrunwithplayers.That’s wherehealthcareandpharmaceutical by 2016.Furthermore,healthspendingintheUnitedStates—at 16percentofGDP—accountsforalargershareGDPthaninanyothermajor The NationalCoalitiononHealthCarereportsthattotalU.S.health careexpenditureswere$2.3trillionin2007,andareexpected tohit$4.2trillion careindustrythrives. countries ages,asscientistsmakefurtheradvancesingeneticengineering andaspatentsforblockbusterdrugsexpire,thehealth With amarketworthover$20billion,healthcareconsultingcontinues tobeacoregrowtharea.AstheU.S.populationandthatofotherindustrialized Health care/pharmaceuticalsconsulting Examples oftypicalhumanresourcesconsultingengagementsinclude: systems. KennedyInformationreportsthatthecombinedglobalmarketforHRoutsourcingandBPOwasworth$31billionat theendof2007. An importantsubsectionofHRconsultingisoutsourcing.Increasingly, theirinternalHR clientsareturningtoHRconsultingfirmsmanage of reducingcoststocopewiththedownturn. Standards Boardchangestopensionplans,ishelpingkeepthemarketafloat,asanupsurgeinfirmsseekingalternativeslayoffsameans somewhat optimistic.Increaseddemandforbenefitsconsulting,duetorevisionsintheU.S.PensionProtectionActandFinanci al Accounting expected toweathertherecession,evenifa2007predictionbyKennedyInformationofcompoundannualincrease83 percent nowseems restructuring, talentmanagement,HRsystemsimplementation,benefitsplanningandcompensation.Despitetherecentdownturn, thissegmentis issue ofmaximizingthevaluestaffandplacingrightemployeesinrolesthatsuitthem.HRconsultingfirmsarealsohiredfororganizational addressesthe Even withfine-tunedstrategiesandstreamlinedoperations,businesseswon’tsucceedwithouttherightpeopleinplace.HRconsulting Human resourcesconsulting career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com • Developingaretentionstrategyforfirmthathasexperienced high turnover • Evaluatingthefinancialconsequencesofchangingbenefitsplans • Helpingabusinessdeviseleadershipdevelopmentplanforits junioremployees • Implementingacustomerloyaltyprogramtohelpcreditcardcompanyattractandretaincustomers • Developingaglobalfinancialreportingsystemformultinationalbusiness • Evaluatingprocurement,sourcingandsupplierrelationshipsforamanufacturer for insidercompany profiles,expert advice, The Vault MBA CareerBible Management Consulting 169 Customized for: Erin ([email protected]) Do youhavethefollowingcharacteristicsin your skillset? time sellingexpensiveservicestocompanieswhodon’tthinkthey needhelp.Your tomakethosesales. payandjobsecuritywilldependonyourability qualities tobeagoodconsultantandmanager. To beapartner, youhavetobeapersuasivesalesperson.You willspendnearly 100percentofyour career foryou.Isyourgoaltoseeitthroughpartner?Ifyouwould ratherhaveaninterestingjobforsixyears,youjust havetoknowyouthe you areapartner. We aregoingtotalkaboutwhetheryouwouldlikethejobnow, butyoushouldthinkaboutwhetherthis might beagoodlong-term Before wetalkabouttheskillsets,keepinmindthatthereisabig differencebetweenthejobnowandsixtoeightyearsfromnow, ifandwhen we mean“yourdesirableattributesandskillsthatcontributevalue asaconsultant.”Skillsetishandy, abbreviatedwaytorefersame.) Despite thebigpicturedifferences,however, consultants’day-to-dayskillsetsare,bynecessity, verysimilar. (Beforewegoanyfurther:byskillset, protocol foranewsoftwarepackage.Whatcouldbemoredifferent? could imagine.Whileasupplychainconsultantadvisesclientaboutleadtimesintheirproductionfacility, anotherconsultantiscreatingatraining areasdifferentone Consultants focustheirenergiesinawidevarietyofpracticeareasandindustries.Theirindividualjobs,frommacrolevel, CONSULTING SKILLSETS Examples oftypicalfinancialconsultingengagementsinclude: shareholdervalue. performance, ortheyuseaspecificfinancialmodeltoenhanceclientperformance.Inbothcases,thefocusistypicallyonboosting theirstrategiesand Financial consultingfirmstendtowardtwotypesofserviceofferings;eithertheyworkwithfinancialservicestoenhance risk. and findnewmarketscustomers.Otherfinancialserviceareasdrivingexpansionareregulatorycompliance,M&A,divestitures, privateequityand gained momentumasconsultantsstepintoassistcompaniesmanagecrises,dealwithglobalmarketcompetition,developoffshore establishments, Information. Growthinthesectorispredictedtoremainstrongoverlongterm,despite(andlargelydueto)currentcreditwoes.Themarkethas In 2007,consultingspendingbythefinancialservicesindustrytopped$60billion,andisprojectedtohit$74billion2011, accordingtoKennedy Financial consulting Examples oftypicaleconomicconsultingengagementsinclude: both domesticandglobal.Quantitativeanalysis,statisticalstudiesmodelingservicesoftenformthecoreofeconomicconsultingengagements. MBAs, aswellindustryexperts,investigatetheeconomicfactorsthathelpclientsresolvecompetition,antitrust,publicpolicyandregulationissues, world. Thus,clientsoftenturntothinktank-likeeconomicconsultingfirmsforguidance.Thesefirms,typicallyloadedwitheconomicsPhDsand With globaleconomiesbecomingprogressivelyintertwined,businessesintheU.S.arenolongerisolatedfromeconomicshiftsotherpartsof Economic consulting Examples oftypicalhealthcare/pharmaceuticalengagementsinclude: Management Consulting The Vault MBA CareerBible 170 • will notenjoybeingaconsultant. attend meetingsandinterviewpotential informationsources.Ifyou’rethesortofpersonwhoprefers toworkaloneinquietenvironments, you work withemployeesattheclient company, orevenwith consultantsfromothercompanieshiredbytheclient.Consultants also frequently Do youworkwellinteams? • Evaluatingliquidityforaprivateequityfirm • Helpinganinvestmentfirmidentifyastrategytoreachnewtargetmarket • Applyingaproprietaryfinancialmodeltoimproveperformance • Assessingtheimplicationsofaproposedmerger • Projectingthefinancialimpactofanewenvironmentalregulation • Helpingaclientcomplywithmultitudeoftaxregulationsinthevariouscountrieswhichitoperates • Helpinganinsurancecompanymanagereimbursements • Analyzingmarketcompetitionforanewpharmaceuticalproduct • Developinganelectronicmedicalrecordssystemforahospital Consultants don’tworkalone.Notonlydotheyfrequentlybrainstorm withotherconsultants,buttheyalsooften © 2009Vault.com Inc. Customized for: Erin ([email protected]) $500 perhourrange. consultants areverycostlyonaverage. Giventravelexpenses,hotelbillsandactualprojectfees,hourly pricesforconsultantscaneasilyclimbintothe Whatever thereasonsforhiringconsultants, they’reboundtobecompelling—because,evendespite thecost-effectivenessargumentinsomecases, but atadifferentlyprescribedpace.Acontingencyperformance basismakesthisanevenbetterdealfortheclient. employees toadhereacompressedtimeframebystayinglate hours. Bydefinition,consultantsarehiredtoworknotatthepaceofcorporation Consultants mayalsogetthejobdonefaster, notbecausetheyarenecessarilybetter, butbecausethecompany mightnotgetaway withforcingregular package. some outsiderstohelpthemwithaproject,ratherthanhire folksfulltimeattheexpenseofacompetitivesalaryandbenefits For sometypesofconsulting(particularlyoutsourcingorIT),consultants areactuallyaformofcost-effectivelabor. Itcoststhefirmlessmoneytohire consultants. Whentheconsultantsrecommendaworkforcereduction, thecompanycanfireatwill,blamingtheirhiredgunsfordownsizing. In theeraofdownsizing,consultantshaveanotherpoliticaluse. Companieswithanitchtofireapercentageoftheirworkforceoftenlikebringin evident tomany, buthaving itconfirmedbyanoutsidepartymakesimplementingaplaneasierpolitically. solutionmaybequite in consultantstooverseelargeprojects,companiesensurethatsomeone isalwayswatchingtheball.Inmanycases,correct reports thatstepsfromamajorconsultingreport1996were approvedbut,asofSeptember2002,hadnotyetbeenimplemented.) Bybringing executives loseinterest.Directreportsmoveontootherissues.Inshort,companiestheirfocus.(Aninsideratalargeprivateglobalcorporation Second, evenifagiantprojectgetsthegreenlight,there’s inertia.Senior noguaranteeingitwillbeimplemented.Thereason?Simplebureaucratic adhere tothisasaruleofthumb. that theprojectfails.Thereisanoldadage:“NooneevergotfiredforhiringMcKinsey”(orasimilarlyprestigiousconsultingfirm).Someclientsstill deniabilityintheevent to theproject,approvalcanbehardget.Butonceaconsultingfirmstepsintopicture,everyoneinvolvedhasplausible a singledollartobespentonsuchproject,mostcompaniesrequireseniorexecutiveapproval.Andwithoutmajorconsultancybrandnameattached Consultants gethiredforpoliticalreasonstoo.Launchingbigprojectscanbeverycumbersome,particularlyatFortune500companies.Inorder a plantshutdown.Perhapsclientwantstobringinextraindustryknowledge. lack anyexperiencewithpost-mergerstaffingproceduresandneedaneutralpartytomediate.Someclientsmayanoutside r’s perspectiveon yet they’reoutoftouchwiththelatestback-endsystemsordon’thavestaffresourcesforsuchalargeproject.Otherclients maybemerging,but for help,oratleastthekindofhelpthatshort-term,internalhiringcan’tsolve.Someclients,example,needtooverhaultheirentireITinfrastructure, Corporations, governmentsandnonprofitinstitutionshireconsultantsforanumberofreasons.Everyconsultingprojectsprings fromaclient’s need WHO HIRESCONSULTANTS, ANDWHY? but alsotoknowwhatyou’regettinginto—andtrulywantbeaconsultant. Be truthful.Ifyoucan’tanswermostofthesepointswitharesounding“yes,”consultingislikelynotforyou.Thepoint isnotjusttogetthejob, career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com • • • • • • Last, butcertainlynotleast,areyouwillingtotravelfrequently? Now imaginedoingsofivedaysaweekformonthsonend. you havenomajorcommitmentsoutsidework,understandwhatsuchaschedulemeanstoyou.Try workingfrom8a.m.to10p.m.oneday. expectations, thenthatwillbeyourfate.Ifyouhavecommitmentsoutsidework,forexample,mayfindconsultinghoursdifficult. Evenif Are youwillingtowork70,even80hoursaweek? This meanstheabilitytofindsolutionsthatare“outsidebox”—notconstrainedbycommonlyacceptedfacts. relish andbegoodatanalysisthinkingcreatively. Consultantshaveaterm,nowinfiltratingpopularculture,called“out oftheboxthinking.” as commonlyusedprogramslikeExcel,AccessandPowerPoint.Ifyouhatemath,willconsulting.Onarelatednote,youshouldalso Are youcomfortablewithmath? enjoyment ofconsulting. Did youloveschool? impromptu presentations,you’vegotsomevaluabletalentsinyourconsultingskillset. the otherhand,ifyoutrulyrelishmeetings,talkingtoexperts,explainingyourviewpoints,cajolingotherscooperatewithandmaking consider yourselfatrueintrovertandfindthatspeakingtopeoplealldaysapsyourenergy, youwilllikelyfindconsultingquiteenervating.On Speaking offriends,doyouliketalkingtopeople? involved inatonofactivities,andstillabletokeepyourpersonallifeontrack? Superior organizationalskillsandagoodsenseofprioritizationareyourfriends.Would yourfriendsdescribeyouasareally busypersonwho’s Do youmultitaskwell? for insidercompany profiles,expert advice, Did youreallylikegoingtoclassanddoingyourhomework?There’s ahighcorrelationbetweenacademiccuriosityand Not onlycanconsultingassignmentsbefrenetic,butconsultantsareoftenstaffedonmorethanoneassignment. Consulting firmsdon’texpectyoutobeamathprofessor, butyoushouldbecomfortablewithfigures,aswell Consultants mustfulfillclientexpectations.Ifyouwork80hoursaweektomeet Do youfindyourselfgettingintointerestingconversationsoverlunchanddinner?If (See thesidebaronnextpageforadiscussionoftravelinconsulting.) The Vault MBA CareerBible Management Consulting 171 Customized for: Erin ([email protected]) professions. you findthatrequirehigherlevelsofrecognitionandcompletionthananytypeconsultingcanoffer, thenyoumaywanttolookintoother that suitsyourlevel.If So, thinkaboutthelevelofrecognitionandcompletionyouneedforyourwork,lookafirmthatdoestypework work inthefuture,ifthatisyourwish.) mentioned, butatleastyouwillbeabletoseetheresultsofyourhardworkbecomeareality. (It’llalsobeeasierforyoutotransitionotherfinancial professionals. Onthebrightside,youwilleventuallyreadin and transactionsupport.Thebadnewsisthatonsuchprojects,youaresubjecttotheevenlongermoreerratichourssufferedbyotherM&A Another exampleisM&Aconsulting.Somefirms,likeL.E.K.Consulting,havepracticeareasspecificallyfocusedonduediligence,companyanalysis certainly knowhowthefruitsofyourlaborwillturnout.Dependingonsizedispute,somighteveryoneelsewhofollows thebusinessnews. dispute, youwill economic analysisandtestimonies.Thiscanbeveryinterestingwork,sinceyou’resupportingonesideortheotherofapublic Economic consultingfirms,likeCharlesRiverAssociatesandtheBrattleGroup,oftenhelplawfirmswithlitigationsupport,includingresearch, stays inthesameindustry, youwon’tneedtosellthatservicethemagain. firms mightofferamethodologythatisn’tasrepeatable.Ifyourfirmfocusessolelyoncompetitiveanalysisstudies,chancesaregoodthat,ifclient clients.) Other different engagements.(MarakonAssociates,forexample,boaststhat90percentofitsworkcomesfromengagementswithprevious If so,youwillhaveabetterchanceofseeingtheclientthroughdifferentprojectsandbusinesscycles;mayevenworkwit If youenjoyrecognitionandcompletion,willwanttoconsiderthetypeofconsultingfirmjoin.Doesyourhaveahistoryrepeatbusiness? may neverknowwhetheritsucceededorfailed. itscompletion and chances areyourclientwillthankyou,butyoumayneverhearaboutitagain.Insomecases,leaveprojectbefore All consultantsmustdeliverbottom-linevalue,andoftenspendcountlesshourshuddledincrampedspacestodojustthat.If you doagreatjob, noneoftherecognition. Consultants areabackroombreedofprofessional.Injointprojectswiththeirclients,theydomuchtheworkandcanexpect The workerbehindthecurtain Management Consulting The Vault MBA CareerBible 172 Here aresomevariationsofthesetravelmodesthatpop upfrequently: basic ones: Here’s whatwemean byconsultingtravel.Differentfirmshavedifferenttravelmodels,buttherearetwo because oftravelrequirements. to Italywasablast!”However, manysoonfindthetravelingconsultant’s lifetobeanightmare.Manyconsultantsleavethe field solely A lotofpeoplegointotheconsultingfieldwithnotionthattravelisfun.“Traveling lastvacation fourdaysaweek?Noproblem!My for longperiodsoftime?Areyou comfortablewiththeideaoftravelingtoremotecitiesand stayingthereforthreeorfournightsevery rooms stress aboutit?Doyoualways underpack oroverpack?Doyouhateflying?todrive? Doyoumindsleepinginhotel You needtoaskyourselfanumber of questionstoseeifyouaretravel-phobic.Forexample,when youpacktogoonvacation,do The Traveling SalesmanProblem • Then, thereisthe“local”projectthatreally alongcommuteintosuburb,sometimesinvolvinguptotwohoursincar.• Examples • International projects involve alonger-term stayontheclientsite. (Flyingconsultantstoandfromthehomecountryeveryweekcan • The otherpopulartravel modelistogotheclientsite“asneeded.”Thisgenerallymeanstravelingatbeginningofproject Monday A numberofconsultingfirms(thelargerones)spendfourdaysontheclientsite.Thismeanstravelingtodestinationcity • the longdrivehome.Thisisnotverydifferentfromnonlocaltravel, anditcanbemoregrueling,duetothecarcommute. Valley oftaking clientwhilelivinginSanFrancisco.Inthesecases,youmightopttostayatalocalhotelafter workinglate,instead of thisincludeconsultingtoMotorola(basedinnot-so-convenient Schaumburg,Ill.)whilelivinginChicago,orconsultingtoaSilicon corporate apartmentinsteadofahoteltosavecosts)andthen gohomeforaweek,repeatingtheprocessuntilendofproject. get expensive.)Forexample,theconsultantmightstaytwoor threeweeksonorneartheclientsite(themightputyouupina predictability withthistravelmodel,butthereisalsolessoverall timeontheroad. for afewdays,attheendofprojectpresentation,andcoupletimesduringproject.Thereislessregula rity and on clientpreferenceandflighttimes.)Thesamefirmsoftentrytostaff“regionally”reduceflyingtimeforconsultants. depending morning, spendingthreenightsinahotelneartheclientsite,andflyinghomelateThursdaynight.(Thiswill,ofcourse,vary The Wall Street Journal Street Wall The about anytriumphenjoyedbyyourclient.Your firmmaynotbe h thesameclienton © 2009Vault.com Inc. Customized for: Erin ([email protected]) noting that no day at any consulting firm can be called typical. typical. called be can firm consulting any at day no that noting Greg Schneider is an associate at the Boston office of a top strategy consulting firm office. He kindly agreed to share a “typical” workday with Vault, with workday “typical” a share to agreed kindly He office. firm consulting strategy top a of office Boston the at associate an is Schneider Greg A DAY INTHELIFE:ASSOCIATE STRATEGY CONSULTANT 6:35 p.m.:Callhomeandcheckinwiththe family. Confirmplans forweekendtriptoVermont. Apologizeforforgettingtomailtheinsuranceforms. heading todinnerwiththepartner. Aquickpolldetermines thatItalianfoodwins—weleaveavoicemailwiththedetails. 6:00 p.m.:Team meeting. The engagementmanagerpullstheteamtogethertocheckprogress onvariousfrontsanddebatesomeissuespriorto 3 :00p.m.:Shortcallwithsomeonefromlegaltogetanupdateonthepatent search. but thedataisgreat.Igetacouple“a-ha”s—alwaysgoodfeeling. 2:04 p.m.:Begintoworkthroughnewdata.Afterdiscussingtheplanofattack withtheengagementmanager, Idivein.It’s averybusy avoid takingonanyadditionalresponsibility. 1:30 p.m.:Ijumponaquickconferencecallaboutaninternalknowledgebuilding projectI’mworkingonforthemarketingpractice.Isuccessfully production andhowmuchitcouldcost. he’d givenmesomeinformationfor, technologyintofull andintheprocessIgetsomeinterestingperspectivesaboutdifficultiesmoving analysis 12:28 p.m.:AsIwalkbackintotheclient,adivisionheadI’vebeenworking with grabsmeandweheadtolunch.Hewanteddiscussan many ofourhypotheses.Thewomanisamazing—weluckoutand getsomedataweneed.Thebadnewsis,nowhavetofigureoutwhatitmeans. do,weareabletocheck and inparticularwhattheprospectsarefortypeoftechnologywe’relookingat.Asthisislastinterviewweplanto 11:00 a.m.:Idepartwithmyteammateforaninterview. We meetwithanindustryexpert(aprofessorfroma localuniversity)todiscussi insurance forms. time fordinnerandwantstomeetdiscusstheprogressreview. AheadhunterlookingforadivisionalVP. Mywifereminding metomailoffthe 10:53 a.m.:Checkvoicemail.TheofficeislookingforaninterviewertheHarvardBusinessSchoolhellweekend.partnerwillbearriving in key dataisnotyetavailable.We electtogowithacomputer-based slideshowandbeginthedebate onthecontent. by thefactthatsome we havetroublestayingofftangentsaboutthevariousanalysesthatwe’veallbeenworkingon.Thediscussioniscomplicated client toassessthemarketpotentialofanemergingtechnology. Today’s effective,although meetingconcernswhatkindofpresentationwouldbemost 9:00 a.m.:Meetwiththeclientteam.We’ve gotanimportantprogressreviewwiththeCEOnextweek,sothere’s alotgoingon.We’re the helping We thenheadouttotheclient. 7:30 a.m.:Breakfastwiththeteam.We discusssports,Lettermanandamorningmeetingwehavewiththeclientteam(notnecessarilyinthat order). for informationaboutwhatthepartnerfrommylastteamisliketoworkwith. 7:15 a.m.:Checkvoicemail.SomeoneinLondonwantsacopyofmyknowledgebuildingdocumentonmanaginghypergrowth.Aco-worker is looking and wehobbleoutforajog.Atleastit’s warmout—anotheradvantageofhavingaprojectinMiami. 6:15 a.m.:Alarmgoesoff.Iwakeupaskingmyselfwhyput“runthreetimesperweek”intotheteamcharter. team, Imeetanothermemberofthe career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com It absolutelydependsonthefirm’s travelmodel,industry, yourlocationand,mostimportantly, yourproject. allthetime. Note thattraveliscommonintheconsultingfield,butnotallconsultantstravel.Andclientsexpectyoutobeonsite the largestconsultingfirms,suchasAccenture,havecertainbusinessunitsthatcanguaranteeanon-travelingschedule—ask.) campus wheretheycanfindcost-effectivespace,ofteninthesuburbsorlargecorporateparks.(Ifyouabsolutelycannottravel,someof have theluxuryofchoosingtheirclients,theycan’tguaranteethatyouwon’ttravel.Moreover, manylargecompaniesbuildtheircorporate if youworkinfinancialconsultingandliveNewYork City, don’talways mostofyourclientsmaybelocal.Butbecauseconsultingfirms If thesequestionsmakeyourstomachchurn,lookforconsultingcompaniesthatpromiseamorestableworkenvironment.Forexa idea ofmanagingyourweeklyfinancesandto-dolistsfromtheroadbotheryou? Does the because theclientwantsyoutostayadaylater?Ifandyourspousebothtravelforwork,whowilltakecareofpets? week? Doesyourfamilymind?Will yourspouseunderstandandnotholditagainstyouifhavetocancelanniversaryd week for10weeks?Ifyou’remarried,doyoumindbeingawayfromyourspouse(andchildrenifhavethem)uptothreenightsa for insidercompany profiles,expert advice, The Vault MBA CareerBible Management Consulting ndustry trends afternoon, mple, inner 173 Customized for: Erin ([email protected]) in light of her previous experience as an external consultant. consultant. external an as experience previous her of light in international shipping giant Deutsche Post World Net (DPWN). She spoke with Vault about her experience with internal consulting at DPWN, especially DPWN, at consulting internal with experience her about Vault with spoke She (DPWN). Net World Post Deutsche giant shipping international school, she focused her job search on lesser known internal consulting opportunities. After graduating, she joined the in-house consulting division of division consulting in-house the joined she graduating, After opportunities. consulting internal known lesser on search job her focused she school, Once at business at Once consultant. external an as worked Eberle Heather Management, International of School Garvin the Thunderbird, attending Before INHOUSE CONSULTING VAULT Q&A:HEATHER EBERLE,DEUTSCHEPOSTWORLDNET client needs. Eberle: Vault: Eberle: Vault: Consulting conferenceinGermanywhereoneofthemaingoals was tobuildupthetiesbetweengroupsandnetworking. The consultingpracticestartedin1999GermanyandtheU.S. groupwasincorporatedayearago.We justreturnedfromtheannual InHouse opportunities inmanydifferentcountriesandregions. but offerstheopportunityforthosewhowouldliketoworkinanother office.Inaddition,becauseofthegroup’s thereareproject worldwidefootprint, There isquiteabitofmovementbetweenofficesasprojectschange. Theorganizationislargeenoughtoaccommodatethosewho choosenottotravel, Eberle: Vault: organizations. consulting other keyphrases.PMOs—projectmanagementorganizations—whichplanandmanageprojectsarealsoanoptioncanbe similar to of thisjobmarket.Inmyexperience,thesein-housejobswereoftenreferredtoas“in-houseconsulting”or“strategicprojectsgroup”alongwithsome Eberle: Alumnirecruitingatschool.We alsohadalumnipostingsforotherin-houseconsultingpositions,whichopenedmyeyes Vault: you get48hoursatyourhouseeveryweek. With externalconsulting,thetravelisdifficult.MaybeyouarehomeonaThursdaynight,butthenleaveSundaynight—everyweek. You areluckyif external consultingopportunities. Eberle: Vault: Eberle: Vault: have substitutedaconferencecallforthedinnermeeting,sowecouldgohomeinstead.Also,Iprobablywouldn’twatchedSportsCenter. Note: Hadthisbeenanin-townstudy, thefollowingthingswouldhavebeendifferent:Iwouldn’trunwithanothermemberofmyteam,andwe’d 10:30 p.m.:Watch SportsCenterinsteadofgoingrighttosleep,asIknowprobablyshould. down foranhourtomorrownight. 10:10 p.m.:Presleepvoicemailcheck.Aclientfromapreviousstudyislookingforoneoftheappendices,sincehelosthiscopy. willbe Theserver I needfromthecompanydatabase,checkRedSoxscore,andseehowclient’s stockdid. 9:15 p.m.:Returntohotel.Plugincomputerandcheckemail,sinceIhadn’thadachanceallday. WhileI’mloggedin,Idownloadtwod of ourdraftpresentationtoreadafterdinner. uses forthenewdata,addshertakeonourdebatesandagreestoraiseacoupleissueswithCFO,whomshe’s knownforyear through ourplansfortheprogressreview, thenewdata,what’s goingonwiththeclientteam,andotherareasofinterest.She suggestssomeadditional 7:15 p.m.:Theteampacksupandheadsouttodinner. We meetthepartneratrestaurantandhaveaproductive(andcalorific)mealwo Management Consulting The Vault MBA CareerBible 174 How doestheworkatDPWNcompare toyourpreviousexperienceinconsulting? Is itmostlyMBAsoralsoundergradanalysts? How largeistheDPWNInHouseConsultinggroup? How didyoufindthepositionatDPWN? So whenyouwenttogetyourMBA,werespecificallylookingforinternalconsultingpositions? Tell meaboutyourbackgroundpriortogetting MBA. Yes, consulting oroperations.Internalconsultinghadalwaysappealedtomebecauseitseemedlikethework/lifebalancewasbetterthan Mostly MBAs. In totalaround150peoplewithabout20eachinourFortLauderdale andSingaporeofficestheremainderinBonn,Germany. I wasinconsultingforfiveyearsatasmallerHRIS/strategyimplementationfirm. I wouldsaythatitisprettysimilar towhatyouwouldexpectwithrespectthetypicalconsulting engagement—allprojectsdifferbasedon tothesizeandscope s. Shetakesacopy © 2009Vault.com Inc. ocuments rking Customized for: Erin ([email protected]) and usuallyyougettocomehome tosleepinyourownbed—whichmeansyouareprettymuch guaranteedtogetagoodnight’s sleep. Eberle: Vault: project hasahighdegreeofinternationalizationtoit. Eberle: Vault: and Iamcurrentlyonaprojectlookingatfinanceaccounting. Theprojectsarequitedifferentbuteachhasbeenveryinteresting. Eberle: Vault: increasing theorganizationaleffectivenessofDPWN.Ididn’talways getthatfeelingasanexternalconsultant. At InHouseConsultingeveryoneisextremelysupportiveandfriendly. Thebestpartisthatweallworktogether, workingtowardsthesamegoalof it couldtakeyoudaystocomeupwithanswerssomeofthespecializedlogisticsquestions. alargelogisticspractice, to relyonifyouhaveaquestionaboutanythinglogisticsrelated.Ifworkedatanoutsideconsultingfirmunlesshad tohaveanetwork The othergreatthingaboutInHouseConsultingisallthespecializedknowledgewehavewithingroup.Itenormouslyhelpful recommendations. groups duetosecurityconcerns.Byhavingaccesstheroadmapwemayfindoutaboutanacquisitiontargetthat would changeour it foracompetitor’s project.Forexample,thefive-yearstrategicoperationsroadmap forabusinessisnotgoingtobesharedwithotherconsulting Eberle: Vault: recommendations youcanbeginimplementingtomorrow. gritty becauseitismuchmorechallengingtosayhere’s 10generalbest-practicerecommendationsversushere’s 10extremelydetailed funtogetintothenitty- This isreflectedintheamountofinformationyoucangetregardingproblemandsolutions.Ihavefoundthatitreally paid afatbonusforsolutionthatwon’twork,andIthinkothersinthebusinessrecognizethis. projects thatareunlikelytosecurebuy-inandthereforesuccess.Two, asDPWNemployeesourgoalistoincreasethesuccess of thegroup—notget Eberle: Vault: expertise ofInHouseConsultingcouldhelpthebusiness,wewouldprepareaproposal—however, thisislesscommon. the methodologyand In othercases,weidentifyabusinessissuethatappearstobesimilaranotherprojecthaveworkedon.Iffelt department whoisbetterabletoidentifykeyissuesormanagepressurefromdisparatestakeholders. Eberle: go inandworkwithagroup? Vault: agreement, wedeclinetotaketheproject. P&L ownership.Inthesecasesweaddthemintothediscussionregardingconsultingapproachin-housewillemploy. Ifthereisno Eberle: Vault: expertise thatisneededandunavailableelsewherewithinthegroup. move consultantsaroundfrequently. AtDPWNyouwouldnotbepulledoffyourprojectandmovedtoanewunlesshave someveryspecific Eberle: Staffingisbasedonavailabilityandskillset.DPWNprobablydoesabetterjobthansomeeternalconsultancies,whichhavetendencyto Vault: improvement projectsthatlastamonthortwosuchassalesforceoptimization.Italldependsonthescopeofproject. Within DPWNthereareorganizationalstrategyprojectsthatlastsixtoninemonths,operationsthreemonthsandincremental career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com And how are the projects requested? Or is it that they’re not requested but that the CEO or some other high-level manager wants yourgroup to And howaretheprojectsrequested?Orisitthatthey’renotrequestedbutCEOorsomeotherhigh-levelmanagerwants What areyourhourslike? Were alltheseprojectsin Florida? What sortofprojectshaveyouworkedon? Why areyouabletogetintomoredetail? And soit’s notoftenthatit’s becauseofpoorperformancethatyou’rethereandtheydon’tactuallywantyoutobethere? So whoareyour“clients”whenyou’reworkingonanengagement? How isstaffingdone? They wereallbasedinFortLauderdalebuthaveincludedcomponents fromallregionsoftheworld.ThegreatthingaboutDPWNisthatevery Because wearepartofthecompany, thereiszerolikelihoodwe,asaconsultinggroup,woulddatamineinformationfromoneproject anduse Usually, weekly grind 9to7.Thegroupgenerallydoesnotworkweekends, whichhasbeennice.Theremaybesometravel,butitis notthe We onlyacceptprojectsthataresponsoredbyamemberofthemanagementboard.However, theclientmaybeadirector, SVPorEVPwith I workedonaprojectinvestigatingmarketopportunities,whichwas greatfun.Ihaveworkedonprojectworkingsalesforce optimization I thinkthatitislessthecasebusinessdoesnotwantustobetherefortworeasons.One,InHouseConsultingengagein In manycases,thebusinessisrequestingassistanceeitherbecausetheylackprojectexpertiseorneedsomeonefromoutsidetheir for insidercompany profiles,expert advice, The Vault MBA CareerBible Management Consulting 175 Customized for: Erin ([email protected]) Management Consulting The Vault MBA CareerBible organization. are opportunitiestojointhecompaniesyou’reconsultingwith,youprobablydon’thaveexperienceworkingwithanumberoffunctionswithinclient In-house consultingalsoallowsyoutobuildareallystrongnetworkduethenumberofclientsworkwith.Withexternalconsulting,whilethere accelerated careerpath. higher degreeofprojectdiversity. Becauseyouhaveworkedonprojectsforavarietyoffunctionswithintheorganization,canoftenfollowan In thisrespectin-houseconsultingissimilartoprojectbasedmanagementdevelopmentprograms,butgroupstypicallyhavea often allowsformovementdirectlyfromtheconsultinggroupintomanagementtrack. Eberle: Vault: 176 What aresomeotheradvantagesofin-houseconsultingversusexternalconsulting? One ofthekeyadvantagesisthatmanyin-houseconsultinggroupshavestrongtieswithinmanagementlevelorganization, which © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.accenture.com Fax: (917)527-9915 Phone: (917)452-4400 New York, NY10105 1345 Avenue oftheAmericas Accenture www.atkearney.com Phone: (312)648-0111 Chicago, IL60606 222 West AdamsStreet A.T. Kearney EMPLOYER DIRECTORY www.aon.com/hcc Fax: (312)381-0240 Phone: (312)381-4844 Chicago, IL60601 200 EastRandolphStreet,10thFloor Aon Center Aon ConsultingWorldwide www.analysisgroup.com Fax: (617)425-8001 Phone: (617)425-8000 Boston, MA02199 111 HuntingtonAvenue, 10thFloor Analysis Group,Inc. www.alvarezandmarsal.com Fax: (212)759-5532 Phone: (212)759-4433 New York, NY10022 600 LexingtonAvenue, 6th Floor Alvarez &Marsal www.alixpartners.com Fax: (248)358-1969 Phone: (248)358-4420 Southfield, MI48075 2000 Town Center, Suite2400 AlixPartners www.advisoryboardcompany.com Fax: (202)266-5700 Phone: (202)266-5600 Washington, DC20037 2445 MStreetNW The AdvisoryBoardCompany career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.cambridgeassociates.com Fax: (617)457-7501 Phone: (617)457-7500 Boston, MA02110 100 SummerStreet Cambridge AssociatesLLC www.bcg.com Fax: (617)973-1339 Phone: (617)973-1200 Boston, MA02108 1 BeaconStreet The BostonConsultingGroup www.booz.com Fax: (212)551-6732 Phone: (212)697-1900 New York, NY10178 101 ParkAvenue, 18thFloor Booz &Company www.bain.com Fax: (617)572-2427 Phone: (617)572-2000 Boston, MA02116 131 DartmouthStreet Bain &Company www.adlittle-us.com Fax: (617)261-6630 Phone: (617)532-9550 Boston, MA02110 High StreetTower, 28thFloor 125 HighStreet Arthur D.Little www.archstoneconsulting.com Fax: (203)940-8201 Phone: (203)940-8200 Stamford, CT06902 107 ElmStreet,6thFloor 4 StamfordPlaza Archstone Consulting www.cornerstone.com Fax: (212)759-3045 Phone: (212)605-5000 New York, NY10022 599 LexingtonAvenue, 43rd Floor Fax: (415)229-8199 Phone: (415)229-8100 San Francisco,CA94111 353 SacramentoStreet,23rdFloor Cornerstone Research www.crai.com Fax: (617)425-3132 Phone: (617)425-3000 Boston, MA02116 200 ClarendonStreet,T-33 John HancockTower CRA International,Inc. www.ey.com Fax: (212)773-6350 Phone: (212)773-3000 New York, NY10036 5 Times Square Ernst &Young LLP www.diamondconsultants.com Fax: (312)255-6000 Phone: (312)255-5000 Chicago, IL60611 875 NorthMichiganAvenue John HancockCenter, Suite3000 Consultants, Inc. Diamond Management&Technology www.deloitte.com Fax: (212)492-4743 Phone: (212)492-4500 New York, NY10019 1633 Broadway, 35thFloor Deloitte www.executiveboard.com Fax: (571)303-3100 Phone: (571)303-3000 Arlington, VA 22209 1919 NorthLynn Street Corporate ExecutiveBoard The Vault MBA CareerBible Management Consulting 177 Customized for: Erin ([email protected]) www.hewitt.com Fax: (847)295-7634 Phone: (847)295-5000 Lincolnshire, IL60069 100 HalfDayRoad Hewitt Associates www.haygroup.com Fax: (215)861-2111 Phone: (215)861-2000 Philadelphia, PA 19107 100 PennSquareEast The Wanamaker Building Hay Group www.giulianipartners.com Fax: (212)931-7310 Phone: (212)931-7300 New York, NY10036 5 Times Square Giuliani PartnersLLC www.gartner.com Phone: (203)964-0096 Stamford, CT06902 56 Top Gallant Road Gartner, Inc. www.gallupconsulting.com Fax: (202)715-3041 Phone: (202)715-3030 Wasington, DC20004 901 FStreetNW The GallupBuilding Gallup Consulting www.fticonsulting.com Fax: (410)224-8378 Phone: (410)951-4800 Baltimore, MD21202 500 EastPrattStreet,Suite1400 FTI Consulting,Inc. www.fmcg.com Phone: (212)557-0500 New York, NY10016 90 ParkAvenue First ManhattanConsultingGroup EMPLOYER DIRECTORY (CONT.) Management Consulting The Vault MBA CareerBible 178 www.lek.com Fax: (617)951-9392 Phone: (617)951-9500 Boston, MA02109 28 StateStreet,16thFloor L.E.K. Consulting www.kurtsalmon.com Fax: (404)898-9590 Phone: (404)892-0321 Atlanta, GA30309 1355 PeachtreeStreetNE,Suite900 Kurt SalmonAssociates www.kpmg.com Fax: (212)758-9819 Phone: (212)758-9700 New York, NY10154 345 ParkAvenue KPMG LLP www.katzenbach.com Fax: (212)213-5024 Phone: (212)213-5505 New York, NY10016 381 ParkAvenue South Katzenbach PartnersLLC www.imshealth.com Phone: (203)845-5200 Norwalk, CT06851 901 MainAvenue, Suite612 IMS HealthIncorporated www.ibm.com/consulting Fax: (914)765-7382 Phone: (914)499-1900 Armonk, NY10017 New OrchardRoad IBM GlobalBusinessServices www.huronconsultinggroup.com Fax: (312)583-8701 Phone: (312)583-8700 Chicago, IL60607 550 West Van Buren Huron ConsultingGroup www.marakon.com Fax: (212)377-6000 Phone: (212)377-5000 New York, NY10167 245 ParkAvenue, 44thFloor Marakon Associates www.marsandco.com Fax: (203)629-9432 Phone: (203)629-9292 Greenwich, CT06830 124 MasonStreet Mars &Co www.lecg.com Phone: (510)985-6700 Emeryville, CA94608 2000 PowellStreet,Suite600 LECG www.monitor.com Fax: (617)252-2100 Phone: (617)252-2000 Cambridge, MA02141 2 CanalPark Monitor Group www.mitchellmadison.com Fax: (212)742-9719 Phone: (646)873-4100 New York, NY10004 17 StateStreet,22ndFloor Mitchell MadisonGroupLLC www.mercer.com Fax: (212)345-7414 Phone: (212)345-7000 New York, NY10036 1166 Avenue oftheAmericas Mercer LLC www.mckinsey.com Fax: (212)446-8575 Phone: (212)446-7000 New York, NY10022 55 East52ndStreet McKinsey &Company © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.nera.com Fax: (914)448-4040 Phone: (914)448-4000 White Plains,NY10606 50 MainStreet,14thFloor NERA EconomicConsulting www.navigantconsulting.com Fax: (312)583-5701 Phone: (312)583-5700 Chicago, IL60606 30 SouthWacker Drive,Suite3100 Navigant Consulting,Inc. EMPLOYER DIRECTORY (CONT.) www.parthenon.com Fax: (617)478-2555 Phone: (617)478-2550 Boston, MA02109 200 StateStreet,14thFloor The ParthenonGroup www.oliverwyman.com Phone: (212)345-8000 New York, NY10036 1166 Avenue oftheAmericas Oliver Wyman career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.rolandberger.com Fax: (212)756-8750 Phone: (212)651-9660 New York, NY10022 230 ParkAvenue, Suite112 Roland BergerStrategyConsultants www.putassoc.com Fax: (781)273-5484 Phone: (781)273-5480 Burlington, MA01803 25 BurlingtonMallRoad Putnam Associates www.prtm.com Fax: (650)967-6367 Phone: (650)967-2900 Mountain View, CA94041 444 CastroStreet,Suite600 PRTM www.pwc.tv www.pwc.com Fax: (813)286-6000 Phone: (646)471-4000 New York, NY10017 300 MadisonAvenue, 24thFloor .PricewaterhouseCoopers LLP www.zsassociates.com Fax: (888)972-7329 Phone: (888)972-4173 Evanston, IL60201 1800 ShermanAvenue, 7th Floor ZS Associates www.watsonwyatt.com Fax: (703)258-8585 Phone: (703)258-8000 Arlington, VA 22203 901 NorthGlebeRoad Watson WyattWorldwide www.towersperrin.com Fax: (203)326-5499 Phone: (203)326-5400 Stamford, CT06901 263 Tresser Boulevard One StamfordPlaza Towers Perrin The Vault MBA CareerBible Management Consulting 179 Customized for: Erin ([email protected]) well asintheconsumerproductschapter, whichcontainsinformationaboutthemanufacturingandmarketingoffood. electronics tomotorvehicles,furniture,paper, textilesandclothing.Severalofthemoreimportantsectorsarediscussedin theparagraphsbelow, as The manufacturingprocessisapartofwidearraybusinesses,frommineralproducts,metals,chemicals,plastics,machinery, computersand economists paycloseattentiontomanufacturingstatsandfigures. of theworld’s countries.Themanufacturing andexportingofgoodsiscriticaltomaintainingastrongcurrencyeconomy, so it’s nowonder theGDPofall buteight manufactured productsworldwide,anditstotalmanufacturingoutputindollars($1.7trillionthe2008fiscalyear)surpasses including automobiles,aerospace,steel,telecommunicationsandconsumergoods.Inaddition,theUnitedStatesisNo.1exporterof intermediate economicoutput,morethanfromanyothergroup.TheUnitedStatescontinuestoleadtheworldinmanymanufacturingareas, to theNationalAssociationofManufacturers(NAM),every$1amanufacturingproductsoldfinaluserhascreatedanadditional$1.37in manufacturing generatesbusinessinotherindustriesbecauseitrequiresintermediategoodsandservicesitsproductionprocess—sothat,according country’s economicgrowth—28percent with theadditionofsoftwareproduction.Throughaphenomenonknownasmultipliereffect, of theU.S.grossdomesticproduct(GDP)$14.3trillionin2008fiscalyear. Inthepastdecade,industrycontributed22percentof America’s manufacturingindustryisapowerful enginethatdrivesthenation’s economy, constitutingcloseto10percentofemployment and12percent Got themotorrunning… INDUSTRY OVERVIEW Manufacturing Automobile Manufacturersestimates thatby2009,theseforeignautomakerswillhaveinvested$3.3 billion. times—in fact,2005wasthefirst yearthatJapanesecarmakersmademorecarsintheUnitedStates thaninJapan.TheAssociationofInternational Southeast U.S.Inthepast20years, theyhavequietlycutdownonthenumberofimportsto U.S.andincreaseddomesticproduction byseven Enhanced competitionhasalso arrived viaBMW, Honda, HyundaiandToyota, astheseforeigncompanies movedtheirmanufacturingplantstothe Toyota andHondapickupthepace. for trucksandsportutilityvehicles,analystswarnthatU.S.companies needtolooktheEast,asAsianmarketsimproveandmanufacturerslike created anexecutivepositiondevotedtoenvironmentallyfriendly strategies.Astheautoindustryattemptstoreboundin face ofcrashingdemand Volt)more seriouslyconsidertheircontributionstotheglobalwarming problem.GMistoyingwithabattery-poweredcar(theChevrolet andFordhas gas-guzzling carsinthesetimesofloftygasolineprices—nottomention theirprecariousfinancialpositions—areforcingthelargerU.S.automakersto and thepossibilityofvehiclerecalls.Furthermore,expectedchanges inregulationofemissionsandfuelefficiency, andconsumerleaningsawayfrom warrantycosts ons likesatelliteradio,crashavoidancesystemsandiPods.At the sametime,though,suchdevelopmentsalsoincreaseautomotive To piquepublicinterest,automotivecompanieshaveincreasinglycombinedwithmajorelectronicsmanufacturers toprovideavariety ofin-vehicleadd- steel industryandotherautomotive-relatedsectorsexperienceda negativerippleeffectfrommanufacturingslowdowns. price ofsteelperton,whichmorethandoubledfrom$580inmidyear 2006to$1,100inJuly2008(accordingpurchasingdata.com). Inturn,the the rapidlyincreasing in theautoindustryslumpincludehikegasprices,culminating inrecord-highlevelspergallonduringsummer2008and passenger carmarket—untilAmerican-madestaplesliketheFordExcursionandChevyTahoe witnessedasteadyerosioninsales.Themainculprits to GM’s 8.35million.Recently, theso-called“BigThree”automakers(GeneralMotors,ChryslerandFord)claimedabout55percentofU.S. improving productquality—itcededthecrowntoGM,missingbyjust3,100vehicles.In2008,however, Toyota cameoutontop,selling 8.97million a bigthreatinToyota, whichovertookFordMotors astheNo.2manufacturerandsellerforseveralmonthsin2007bycontinuously, and thoughtfully, General Motorsremainedtheworld’s largestautomanufacturer, butitsshareoftheU.S.markethitfirst80-yearlow(24.6 percent)in2006.Itfaced anymore. Upthrough2008,theUnitedStateshasbeenabletoweathercompetitionfromJapanesecompanies,butjustbarely. Fordecades, for alongtime,Michiganassemblylinewasexactlywhatmanypeoplethinkofwhentheyheartheword“manufacturing” … butperhaps not confidence.Indeed, Manufacturing haslongbeencloselytiedtoautomobileproduction,andbig-ticketpurchaseslikecarsareconsumer Auto manufacturingforthepeople automaker. suchstaffpositionforan believed intherealityofglobalwarming,andcreatedanexecutiveslotdevotedtoenvironmentallyfriendlystrategies,first the costofcuttinggreenhouse-gasemissions,givingcompaniesanincentivetodoso.AndinApril2007,FordCEOAlanMullaly saidthatheclearly DuPont, Alcoa,CaterpillarandotherfirmsarepartoftheU.S.ClimateActionPartnership(USCAP),whichproposesamarketsystemthatwouldlower biofuels andamiraclefibercalledbio-PDO(madefromgeneticallyadjustedcornsugar). efficient ornon-harmfultotheplanet.Moreover, thecompanyplanstoincreasethatamountby$2billion2015.DuPont’s projects include pet with eco-positiveprojects,andestimatesthat$5billionofDuPont’s annual$30.5billionrevenue(for2008)comesfromitemsthatareeitherenergy- look forwardtodevisingenvironmentallyfriendlypoliciesandproducts.DuPontchiefChadHollidayhasmadenosecretofhis decade-long involvement The currentmediafocusonglobalwarmingandgreenhousegaseshasbeguntotrickledownmanufacturers’corporateofficers, who (insomecases) Greener pastures 181 Customized for: Erin ([email protected]) put the United States at a significant disadvantage. In a report, the NAM and AMR Research calculate that these “add 31.7 percent tothecostof put theUnitedStatesatasignificant disadvantage.Inareport,theNAMandAMRResearchcalculate thatthese“add31.7percent programs)has jumped, andacombinationofhigher costs(corporatetaxes,insuranceandlegalcosts,pollution abatement feesandemployeebenefit Nonetheless, theindustryhasexperienced agreatdealofpricingpressureinthemid-2000s.The priceofnaturalgas,usedinmanyprocesses,has technological advancements.Steel workersandmanufacturersofautomotiveaerospaceproducts havethehighestsalariesingroup. to importsand ($351 and$659,respectively)—andworse,thetextilesectorprojects alossof46percentitsstaffinthecomingyearsdue vary wildly. Nonsupervisory workersatapparelmanufacturershaveaverageweeklyearningsconsiderablylowerthanthe for allmanufacturing Though alltogetherthemanufacturingindustryenjoyshigherwages thanprivateindustryasawhole(bynearly25percent),itscomponentsectors Work hard forthemoney demand forlumberdeclined,andnewhomeconstructionin2007 and2008felloffaproverbialcliff. construction activityinthehurricane-damagedSoutheast.But goodnewsdidn’tlastlong.Aseveredepressioninthehousingmarketsettledin, wood forfurnitureandcabinetry. Forawhile,theindustryexpectedsolidprofitsasdemandforlumberincreased—drivenbyriseinhousingand unfavorable economicconditions,changesindemandduetothe “paperless”businessenvironment,andnewmanufacturingtechniquesthatuseless a convergenceof roughly 22percentofallU.S.manufacturingoutput.Hereagain, employmentfigureshaveplummetedinrecentyearsbecauseof Other manufacturingsectorsincludetextiles,apparel,forestryproducts (furnitureandpaper),rubberminerals.Together, theseholdclaimto Production grab-bag expects thatemploymentinthissectorwillincreasebyjust5percentthrough2016duetoincreasedefficiencyandjobsbeingmovedoverseas. innovative newconsumerproductsandadvancingdigitaltechnologyhaveopenedupmarketsavenuesofrevenue.Despite this, theBLS telecommunications, medicineandautomotives.Electronicsdemandisthusinextricablytiedtotherisefallofdependentindustries, eventhough industrial electronicsandhouseholdappliances,amongotherthings.Inparticular, thesectorplaysavitalroleinnumberofotherindustries,including Electronics manufacturingincludescompaniesengagedinpowerdistributionequipment,communicationsdevices, semiconductors, All roadsleadtotech synthetics—were projectedtobethehardesthitinupcomingyears,losingatotalof80,000workers. more stringentregulation,amongotherfactors.Evenbefore2008and“layoffdisease,”threesectors—basicchemicals,chemicalproducts manufacturing segmentoftheindustrytodeclineby7percentthrough2016,dueincreasedefficiency, productionoutsourcingand chemical Despite estimatesofhigherproduction,theBureauLaborStatisticsexpectsemploymentforproductionoccupationswithin the prices to60percent(andsometimesless)oftheirpreviousrecordlevels. retain acompetitiveedgebyproducingagentsusedforhighlyspecificpurposes.Thefailureofbanksandcreditmarketslateronintheyearbrought chemical catalysts,for$5billion.)Manufacturersseespecialtychemicalssuchastheseperhapsthebestavenuegrowth;andcompaniescan ofpigmentsand increased drivetowardmergersandacquisitions.(Forreference,seetheJune2006BASFpurchaseofEngelhardCorp.,amaker as partofmanymanufacturingprocesses)addedcostswell.Inthepast,thishasresultedindecreasedrevenueindustry-wid e, alongwithan naturalgas(used During thesummermonthsof2008,highoilpricesdroveupcostmanypetrochemical-derivedproducts,andrisingfor at home. foruse dependent onchemicals.)Inaddition,chemicalmanufacturingcompaniesmakethesoaps,bleachesandcleanerspurchasedby consumers paper processing,pharmaceuticals,electronicsandagricultural.(Over55percentofallmanufacturerssaythattheirproductionissignificantly, directly the industry, sinceitproducesthesolvents,dyesandothercompoundsusedinallmannerofmanufacturingindustries:automobileproduction, segment of Besides representingthelargestsingleslice—4percent—ofmanufacturingpie,chemicalproductionisperhapsmostimportant Chemically altered possibility. the waveofindustryconsolidationtocontinueaslateAugust2008,butcollapseinglobaleconomiessincethenhaslikelyquashedthat ThyssenKrupp (theworld’s 10th-largeststeel concernaccordingtotheInternationalIronandSteelInstitute)inJune2007.Analysts wereforecasting with Germany’sbillion inearly2007tocommandthetopspotasproducerofpipesforgasandoilinterests,intriguedspeculatorsbytalking Poor’s SupercompositeSteelIndexsoared63percent.Thelargestdomesticmanufacturer, U.S.Steel,purchasedLoneStarTechnologies for$2.1 buyouts ormergerswereannounced,tothetuneof$82.3billion(withanother129agreementssignedinfirsthalf2007) and theStandard& half ofAmericansteelproduction.Alongwithrisingpricesandincreasedefficiency, aspateofacquisitionsrevivedtheindustry. In2006alone,241 manufactured eachyear. Thesteelmarkethasn’talwaysbeensohealthy, however. Price Manufacturing The Vault MBA CareerBible 182 © 2009Vault.com Inc. Customized for: Erin ([email protected]) 2009, meansthesectorissufferingGreatDepression-levelills. manufacturing jobswerelostin2008.Thatfigure,coupledwiththefactthatunemploymentindustrystandsat11.5percentasofFebruary than 870,000 never return,signalingafundamentalshiftintheindustryaswhole.AccordingtoU.S.BureauofLaborStatistics,more efficiency andproductivitywhilereducingtheneedformanpower. It’s likelythatmanyofthefactoryjobslostsincebeginning of thecenturywill In addition,inthepastfewyears,manufacturing(likemanyotherindustries)hadseenasteadypushtowardtechnologiesthat promise greater consumer productshousesandchipmakers.Cutsof5to10percentwerecommon—automakersdroppedtensthousandsworkers. These factorsledtomasslayoffsnotonlyatautomanufacturers,ashasbeenwidelycoveredinnationalmedia,butalsochemical companies, purchases. during summer2008),bankingfailures(alsotiedtosubprimeloans),anderodingconsumerconfidencesubsequentpullbackon prices (especially earthquake. Acombinationofcircumstancesbroughtthesectortothispoint;subprimemess,adramaticspikeinoilandenergy Despite theeconomy’s generalresurgence from2003to2006,industryemploymenthasdroppeddrasticallyinthefaceof2008’s e Following aboomthatspannedmostofthe20thcentury, downturn. manufacturingemploymentdeclinedsharplyduringthe2001-2003economic A shiftingoutlook industry byforeignfirms. these costsalongtotheconsumerhasbecomeextremelydifficult.Thesefactspointpossibleescalatingencroachmenton doing businessintheUnitedStatescomparedtoournine(largest)tradingcompetitors.”Andasproportionofexportedgoodshasrisen,passing manufacturer thenissuesapurchase order, whichserves asacommitmenttopurchasedefinednumberofunits.A ordermusthaveterms materials needed(e.g.,material, lubricant,machinecapacity, laborresources)forthecomponentsupplierprovides willbeavailable.A A manufacturingcompanyhasto furnishaforecast(usuallyannually)sothesuppliercanthengo throughhissupplychainandmakesurethatallthe engineering departmentmaydetermine thatthepartneedstoberedesigned.Thiswouldstart processover. to maketheparts,orverifydesignoffinishedproduct. Inotherwords,thesuppliermayfabricateapartcorrectly, butamanufacturer’s Depending onwhetherprototypesorthecomponenthavealready beenmadeornot,thesamplesorderedmaybejusttoverifyabilityofsupplier cost $5each.However, injectionmoldingrequiresa$10,000mold.Ifyouonlyneed20piecesannually, you arebetteroffusingthermoforming. solely onunitcost).Forexample,makingasimplepartbythermoforming wouldcostabout$50each,whereasmakingitbyinjec should alwayspresentthesetupcostsalongwithpieceprice quotewhenworkingwithengineers(somanufacturingmethodsare notspecified for thesetupcostsandsamples.Setupcanbeafewhundred tohundredsofthousandsdollars(mostlytoolingcosts).Asupplychainmanager ordershouldbedone to thesuppliergetaquotationofunitpriceandleadtime.After thequotesarereceivedandasupplierischosen,purchase In thecaseofnewmaterial,customermustfirstsupplyanticipated numberofunitsrequired,alongwithallthedrawingsandspecifications, is appropriateforthework. supplier audit(averificationthatahasthepotentialtomeet themanufacturer’s needs)shouldbeconductedfirsttodetermineifthesupplier in chronologicalorderfromtoptobottom.(Notethatthisfigure is foranalreadyestablishedsupplierandmaterial.)Inthe caseofanewsupplier, a them. Therearecontinuousflowsbetweenthesupplierandcustomer. TheSupplyChainFlowProcessChartonthenextpageshowstheseflows The relationshipbetweenasupplierandmanufacturingcompanyisnotassimplesupplychainmanagerorderingpartst he suppliershipping centers, distributorsandwholesalersareallpartofthesupplychain.Itisnotrareforachaintoinvolvedozenparties. processing toallowmaterialscrossborders.Thesupplychaindoesnotenduntiltheproductreachesconsumer. Forthisreason,distribution The transportationofmaterialsthroughoutthesupplychainisoftencalledlogistics.Thisincludesair, landandseashipping,aswellcustoms plant intheU.S.andtheirassemblyMexico.Thewouldbeconsideredaninternalsupplier, sinceit’s partofthesamecompany. Oftentimes, amanufacturingfacilityactsassuppliertodownstreamfacility. Forexample,acompanycouldhavetheirmanufacturing chain butheshouldhavesomeinvolvement. the upstreamsupplier’s rolesare.Fromasupplychainmanager’s perspective,hissuppliersareprimarilyresponsibleformanagingtheirownsupply but isinvolvedingettingmaterialsorpartsfromanupstreamsuppliertoadownstreamsupplier).Themorecomplexproduct,thesignificant The networkofvendorsinasupplychainoftenincludestieredsuppliers(meaningcompanydoesnotreceivematerialsdirectly fromthesupplier, “upstream” asupplierisconsideredtobe. customer assemblestheplasticpartsintotheirmachine,andthensellsmachinetocustomer. customer, Thefartherawayfromthe thefarther to arefinery, plasticismade,aninjectionmoldingshopbuyspellets,makesplasticscomponents,shipsthecomponentstoacustomer, the complicated. Thereisastreamofflowsfromsuppliertountilproductreachesanenduser. Forexample,oilisriggedfromtheground,sent A simpledefinitionofsupplychainisthenetworkvendorsthatprovidesmaterialsforacompany’s products,butinreality, thesupplychain ismore Suppliers andvendors WHAT ISTHESUPPLY CHAIN? career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible tion moldingwould manufacturing Manufacturing conomic 183 Customized for: Erin ([email protected]) been acceptedbythecustomer, apaymentissenttothesupplierequalamountofinvoice. described therein.Thesuppliersendsthematerialperpurchaseorderandthenaninvoicefornumbershipped.O nce thegoodshave A suppliershouldsendaconfirmationtothecustomeracknowledgingtheyhavereceivedpurchaseorderandagreedter ms andconditions certain numberofrodsleft,theywouldissueareleaseforthenextshipmentrods. Customers candoreleasestothesupplieratspecifictimeintervalsorinventoryintervals.With,whenacustomergets lease, shrinkagecosts,security, costofcapital,etc.). and in-househandlingtogetthecomponentsproductionfloor. warehouse Theunitcarryingcostistheofholdinginventory(insurance, The OrderCompletionCostisthetotalcostofplacingpurchaseorder, payingforasetupatthevendor(ifapplicable),andtransportation transportation, inspectionandtransactioncostsforreceivingfrequentsmallershipments. is theoptimalbalancebetweentakingdeliveryforentire1,000rodsatonceandpayingmaterialthatwillnotbeusedmonths, but nottakedeliveryofall1,000rodsatonce.Instead,thesupplychainmanagerwouldrequesteconomicorderquantity(EOQ) releases.AnEOQ For example,acompanyuses1,000rodsofaluminuminyear. Theymaylockintoapricefortheentireyear(theofaluminum changesdaily), make releasesagainstthatpurchaseorderforsmallnumberswhentheyactuallywantit. manufacturer couldissuemultiplepurchaseordersthroughouttheyear, ordowhatiscalledablanketpurchaseorderforlargenumberandthen and conditionsaccompanyingittoprotectyourcompany. Usually, atonce.Instead,a acustomerwillnotwanttoreceivetheentireforecastamount Manufacturing The Vault MBA CareerBible 184 The formulaforEOQis: The SupplyChainFlowProcess Supplier 2*Demand*Order CompletionCost Unit CarryingCost Purchase Order Confirmation Payment Forecast Release Material Invoice Customer © 2009Vault.com Inc. Customized for: Erin ([email protected]) Freight forwardersandtransportationproviders is anoptioninalmosteveryindustryfromfoodprocessingtosemiconductors. level ofvisibilityorcontroloverthemanufacturingproductastheydowhenaremakingthemselves.C contract hasbeensigned.Acompanytoputahugeamountoftrustintothemanufacturer, sincethecustomerdoes not havethesame products turntocontractmanufacturers.Thesupplychainmanagerfindssuitablemanufacturersandmanagestherelationshipaftera ships thefinishedproducteitherdirectlytocustomerorawarehouse.Companiesthatwantgetoutofmanufacturingaspecttheir manufacturing companyarereliedupon.Thecontractmanufacturerpurchasesormakesallofthecomponents,assemblesproduct,testsit,and Contract manufacturersarethethirdtypeofsuppliers,inwhichformalcontractsbetweensupplier(thecontractmanufacturer)andyour Contract manufacturers are calledoff-the-shelf(ascrewisanexampleofacomponentthatusuallypurchasedasproductratherthanbeingcustomdesigned). These products the companydoesnotspecifydesignforacustomproduct,butinfactbuysproductthatsuppliersellstomanycustomers. to furnishandthesuppliermakesitcompany’s specifications.Thesecondistheoriginalequipmentmanufacturer(OEM)supplier. Inthiscase, theywantthe supplier There arebasicallythreetypesofsuppliers.Inthefirst,ormostconventionalscenario,acompanyprovidesdesignforwhat OEM suppliers the plasticpartsonallofproduct families.Whenthisisthecase,supplychainmanagers canbecalledcommoditymanagers. be responsiblefor One supplychainmanagerwould beresponsiblefortheopticsonallofproductfamiliesand onesupplychainmanagerwould supply chainmanagers,theymight assignonesupplychainmanagerforeachproductfamily. Anotherapproachistodistribute the workbycommodity. the supplychainmanagersbyproductline.Forexample,ifacompany makesbinoculars,telescopes,camerasandmicroscopes,andtheyhavefour Commodity manager: quality, helpingthemto analyzefailures,anddevelopingnewproducts. Supply chainengineer:Asupplyengineerworksontechnicalissueswiththesupplier. Thisinvolvesworkingwithsupplierstoimprovetheir ocean traffic,bothdomesticandinternational. Logistics manager: will alsocoordinatetravelarrangements. Purchasing administrativeassistant: should bebuilttomeetinventorygoals.Plannersalsoworkwith supplychainmanagerstocontrolinventoryofpartsandmaterials. Planner: tools. products, whereasbuyerspurchaseeverythingelse.Someexamplesofitemsthatprocurearedesktopcomputers,office supplies andhand Buyer: duties ofthepositionswillnotbelimitedtothosedescribedhere. Below arebriefsummariesofthedutiesforsupplychainmanagementoccupations.Noteveryorganizationwillhaveallthese positionsandthe Supply chainmanagementoccupations SUPPLY CHAINCAREERS better tohavefreightforwardersinvolvedifacompanyisdealingwithmorethanfewcountriesorcommodities. the goodsfrompickuptodelivery. Becauseofthecomplexitycustomsrequirements,tariffcodesandlanguagebarriersfordifferentcountries,itis Freight forwardersspecializeintransportationacrossborders.Theycoordinatethepaperwork,bookspacewithatransportationprovider, andtrack transportation, orlogisticsdepartmentsthattakecareofmostthisworksoasupplychainmanagercanconcentrateonsuppliersonly. transportation providersalsoexist(i.e.,fortransportingexplosivematerials,refrigeratedcargo,etc.).Somemanufacturingcompanieshavetraffic, off ashipmenttoanothercompanycarryoutsomeorallofthetransportation.Thisiscalledsubcontractingthirdparty carriers.Specialty providertohand or anairport),sendthemtoarrivinghub,andthendelivertheirfinaldestination.Itisquitecommonforatransportation York for delivery. Forthisreason,thesecompaniesconsolidateshipmentsfromdifferentplaces inadepartinghub(whetheritbeport,warehouse product fromonelocationanddeliverthemtoanother. Obviously, itallthewaytoNew itisverycostlytopickupsomecargoinLosAngelesanddrive Transportation providersandfreightforwarders arealsocontrolledbyasupplychainmanagementpractitioner. Transportation providerspickup career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com Buyers dopurchasingjustlikesupplychainmanagers.Thedifferenceisthatmanagersbuypartsandmaterialsforthecompany’s A plannertakestheforecastfrommarketing/salesandbreaksthatintoabuildscheduleofwhatproductsshouldbebuilt when they A logisticsmanagerisresponsibleforthetrafficofgoodscoming toandgoingfromthefactory. Thisencompassesair, land,and A commoditymanagerissimilartoasupplychainmanager. Somecompaniesseparatetheownershipofpartsandmaterialsfor for insidercompany profiles,expert advice, A purchasingadministrativeassistanttakescareofthefilingpaperwork forthepurchasingdepartment.He/she The Vault MBA CareerBible ontract manufacturing Manufacturing 185 Customized for: Erin ([email protected]) company (i.e.,industryexperts,competitorsandprospectivevendors). causes, andstayingabreastofissuesfacingthecompany. outsideofthe Adirectorofmaterialsalsospendsalottimenetworkingwithpeople purchasing group,thedirectorofmaterialsspendssignificanttimemeetingwithotherexecutivesincompany, sharingexpertise, championing vendor relationshipmanagementforthesupplierswithwhomcompanyspendsmostmoney. directiontothe Inadditiontoprovidingstrategic of materialsalsosetsthepracticeshisdepartmentsandapproveslargedollaritempurchases.Similarly, thedirectorofmaterialsparticipatesin the supplychainmanagementdepartment,butwillassumereinswhenissuesgetoutofcontrolorneedupper-management Adirector attention. A directorofmaterialsisresponsibleforthestrategypurchasinggroup.Hedoesnotgetinvolvedindetailstheday-to-dayoperations done withoutnotifyingtheexistingsupplieruntilnewisrunningatrequiredcapacity. transitionsare be evenharderthanaplantshutdown,becausetheexistingsuppliermaybecomebitterandrefusetocooperate.Mostoften, these products. Inanefforttoreducecosts,thecompanymaywantpartnerwithacontractmanufacturerinVietnaminstead.Makingthistransitioncan transition). Anotherexampleofatransitionislargescalevendorchange.Acompanymayhavecontractmanufacturerin Mexicomakingits vendors getupandrunning),humanresources(layingofftheproductionworkers),manufacturing(managinginventory to make aseamless management ofaplantshutdownprojectrequirescross-functionalteamworkbetweenaccounting(workingoutthecosts),engineeri ng (helpingthe company maydecidethatitismorecost-effectivetostopmanufacturingtheirproductsthemselves,andinsteadhaveavendor do itforthem.The A projectmanagerisresponsibleforlargetransitionsrelatedtosupplychainmanagement.Oneexampleoftheseaplantshutdown. these vocationsrequirepreviousexperienceinsupplychainmanagement,sothelikelihoodofanewgraduatelandingonethes e positionsislow. position.Bothof MBA graduatesseekingopportunitiesinsupplychainmanagementusuallypursueeitheraprojectmanagerordirectorofmaterials THE MBAINSUPPLY CHAINMANAGEMENT Manufacturing The Vault MBA CareerBible After verifyingtheinvoicesmatchwhatwasactuallyreceived,accountspayablecoordinatorsendsapaymenttosupplier Accounts payablecoordinator: receiving supervisorisinchargeofcreatingandimprovingdepartmentprocesses. Receiving supervisor:Thereceivingsupervisorisresponsibleforthedepartment.Besidessupervisingdepartmentworkers, moving thepartstotheirlocation,andmakingsurepaperworksuppliersendsmatcheswhatwasreceived. Receiving coordinator:Thereceivingcoordinatorprocessesthepartsandmaterialsdelivered.ThisincludesdoingatransactioninERP, the departmentandprovidesalevelofescalationwhensupplychainmanagerishavingtroublemanagingsupplier. Procurement manager: check 100percentoftheincomingitems. a shipmentthatneedtobecheckedmeetthedesiredconfidencelevelentirelotreceivedisacceptable,soreceiving inspectordoesnot moved totheproductionfloorforconsumptionandbeforesuppliergetspaid.Therearestatisticschartsthatdefinenumberofsamplesfrom Receiving inspector:Areceivinginspectorisresponsibleforcheckingthequalityofpartsandmaterialsthatcomefromvendorbeforetheyget 186 A procurementmanagerisinchargeofthebuyersandsupplychainmanagers.Thesetsgoalsfor The accountspayablecoordinatorworksintheaccountingdepartmentandprocessesinvoicesfromsuppliers. . © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.abb.com Fax: +41433174420 Phone: +41433177111 Switzerland 8050 Zürich Affolternstrasse 44 ABB Limited www.aacorp.com Toll free:(800)422-2213 Fax: (630)227-2019 Phone: (630)227-2000 Wood Dale,IL60191 1100 NorthWood DaleRoad AAR Corporation EMPLOYER DIRECTORY www.amphenol.com Toll free:(877)267-4366 Fax: (203)265-8516 Phone: (203)265-8900 Wallingford, CT06492 358 HallAvenue Amphenol Corporation www.amcor.com Fax: +61392269050 Phone: +61392269000 Australia Abbotsford, VIC3067 679 Victoria Street Amcor Limited www.alcoa.com Fax: (412)553-4498 Phone: (412)553-4545 Pittsburgh, PA 15212-5858 201 IsabellaStreet Alcoa Incorporated www.airbus.com Fax: +33561934955 Phone: +335619333 France 31707 BlagnacCedex 1, RondpointMauriceBellonte Airbus S.A.S. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.bellmicro.com Toll free:(800)800-1513 Fax: (408)451-1600 Phone: (408)451-9400 San Jose,CA95131 1941 RingwoodAvenue Bell MicroproductsInc. www.bek.com Fax: (205)972-6651 Phone: (205)972-6000 Birmingham, AL35243 2000 InternationalParkDrive BE&K, Inc. www.basf.com Fax: +4962160425 Phone: +49621600 Germany 67056 Ludwigshafen Carl-Bosch-Straße 38 BASF Group www.baesystems.com Fax: +441252383000 Phone: +441252373232 United Kingdom London SW1Y5AD Carlton Gardens Stirling Square BAE Systemsplc www.armstrong.com Fax: (717)396-6133 Phone: (717)397-0611 Lancaster, PA 17603 2500 ColumbiaAvenue Armstrong World Industries,Inc. www.apog.com Toll free:(877)752-3432 Fax: (952)835-3196 Phone: (952)835-1874 Minneapolis, MN55431 7900 XerxesAvenue South,Suite1800 Apogee EnterprisesInc. BMW Group www.bdk.com Toll free:(800) 544-6986 Fax: (410)716-2933 Phone: (410)716-3900 Towson, MD21286 701 EastJoppaRoad The Black&DeckerCorporation www.bhpbilliton.com Fax: +61396093015 Phone: +61300554757 Australia Melbourne 3000 L 27180LonsdaleStreet BHP BillitonFinanceLimited www.cat.com Fax: (309)675-1182 Phone: (309)675-1000 Peoria, IL61629 100 NEAdamsStreet Caterpillar Inc. www.bc.com Phone: (208)384-6161 Boise, ID83702 1111 West JeffersonStreet Boise CascadeHoldingsLLC www.boeing.com Fax: (312)544-2082 Phone: (312)544-2000 Chicago, IL60606-1596 100 NorthRiversidePlaza Boeing Company www.bmwgroup.com Fax: +4989382258 Phone: +49893820 Germany Munich 80788 Petuelring 130 The Vault MBA CareerBible Manufacturing 187 Customized for: Erin ([email protected]) www.corning.com Fax: (607)974-8091 Phone: (607)974-9000 Corning, NY14831-0001 1 RiverfrontPlaza Corning Incorporated www.coopertire.com Toll free:(800)854-6288 Fax: (419)424-4108 Phone: (419)423-1321 Findlay, OH45840 701 LimaAvenue Cooper Tire &RubberCompany www.commercialmetals.com Fax: (214)689-5886 Phone: (214)689-4300 Irving, TX75039 Suite 800 6565 NorthMacArthurBoulevard Commercial MetalsCompany www.cintas.com Toll free:(800) 246-8271 Fax: (513)573-4130 Phone: (513)459-1200 Cincinnati, OH45262 6800 CintasBoulevard Cintas Corporation www.chryslerllc.com Toll free:(800)992-1997 Phone: (248)576-5741 Auburn Hills,MI48326-2766 1000 ChryslerDrive Chrysler LLC www.cpchem.com Fax: (800)231-3890 Phone: (800)231-1212 The Woodlands, TX77380-1498 10001 SixPinesDrive LLC Chevron PhillipsChemicalCompany EMPLOYER DIRECTORY (CONT.) Manufacturing The Vault MBA CareerBible 188 www.delphi.com Fax: (248)813-2670 Phone: (248)813-2000 Troy, MI48098 5725 DelphiDrive Delphi Corporation www.deere.com Fax: (309)765-5671 Phone: (309)765-8000 Moline, IL61265 1 JohnDeerePlace Deere &Company www.dana.com Toll free:(800) 472-8810 Fax: (419)535-4643 Phone: (419)535-4500 Toledo, OH43615 4500 DorrStreet Dana HoldingCorporation www.daimler.com Fax: +497111794116 Phone: +49711170 Germany 70546 Stuttgart Mercedesstraße 137 Daimler AG www.cummins.com Fax: (812)377-3334 Phone: (812)377-5000 Columbus, IN47202 500 JacksonStreet Cummins, Inc. www.crowncork.com Fax: (215)676-7245 Phone: (215)698-5100 Philadelphia, PA 19154-4599 1 CrownWay Crown Holdings,Inc. www.dril-quip.com Fax: (713)939-8063 Phone: (713)939-7711 Houston, TX77040 13550 HempsteadHighway Dril-Quip, Inc. www.dow.com Toll free:(800)258-2436 Fax: (989)989-1556 Phone: (989)636-1000 Midland, MI48674 2030 DowCenter The DowChemicalCompany www.donaldson.com Fax: (952)887-3155 Phone: (952)887-3131 Minneapolis, MN55431 1400 West 94thStreet Donaldson Company, Inc. www.ecolab.com Fax: (651)293-2092 Phone: (651)293-2233 St. Paul,MN55102 370 Wabasha StreetNorth Ecolab Inc. www.eaton.com Fax: (216)523-3787 Phone: (216)523-5000 Cleveland, OH44114-2584 1111 SuperiorAvenue Eaton Center Eaton Corporation www.dupont.com Toll free:(800) 441-7515 Fax: (302)999-4399 Phone: (302)774-1000 Wilmington, DE19898 1007 MarketStreet DuPont © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.federal-mogul.com Fax: (248)354-8950 Phone: (248)354-7700 Southfield, MI48034 26555 NorthwesternHighway Federal-Mogul Corporation www.gotoemerson.com Fax: (314)553-3527 Phone: (314)553-2000 St. Louis,MO63136 8000 West FlorissantAvenue Emerson ElectricCo. EMPLOYER DIRECTORY (CONT.) www.ggc.com Fax: (770)395-4529 Phone: (770)395-4500 Atlanta, GA30346 115 PerimeterCenterPlace,Suite460 Georgia GulfCorporation www.gm.com Phone: (313)556-5000 Detroit, MI48265-3000 300 RenaissanceCenter General MotorsCorporation www.gd.com Fax: (703)876-3125 Phone: (703)876-3000 Falls Church,VA 22042-4513 2941 FairviewParkDrive,Suite100 General DynamicsCorporation www.ford.com Fax: (313)845-6073 Phone: (313)322-3000 Dearborn, MI48126-2798 1 AmericanRoad Ford MotorCompany www.foamex.com Toll free:(800) 776-3626 Fax: (610)859-3035 Phone: (610)859-3000 Linwood, PA 19061-3997 1000 ColumbiaAvenue Foamex InternationalInc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.harley-davidson.com Fax: (414)343-8230 Phone: (414)342-4680 Milwaukee, WI53208 3700 West JuneauAvenue Harley-Davidson, Inc. www.handyharman.com Fax: (914)925-4496 Phone: (914)921-5200 Rye, NY10580 555 TheodoreFremdAvenue Handy &Harman www.hamiltonsundstrandcorp.com Phone: (860)654-6000 Windsor Locks,CT06096 1 HamiltonRoad Hamilton SundstrandCorporation www.goodyear.com Fax: (330)796-2222 Phone: (330)796-2121 Akron, OH44316-0001 1144 EastMarketStreet Company The GoodyearTire &Rubber www.goodrich.com Fax: (704)423-5540 Phone: (704)423-7000 Charlotte, NC28217-4578 2730 West Tyvola Road Four ColiseumCentre Goodrich Corporation www.gp.com Fax: (404)749-2454 Phone: (404)652-4000 Atlanta, GA30303 133 PeachtreeStreetNE Georgia-Pacific Corporation www.honeywell.com Toll free:(800) 601-3099 Fax: (973)455-4807 Phone: (973)455-2000 Morristown, NJ07962-1219 101 ColumbiaRoad Honeywell InternationalInc. www.hnicorp.com Fax: (563)272-7655 Phone: (563)272-7400 Muscatine, IA52761-0071 408 East2ndStreet HNI Corporation www.hermanmiller.com Fax: (616)654-5234 Phone: (616)654-3000 Zeeland, MI49464-0302 855 EastMainAvenue Herman Miller, Inc. www.ipaper.com Toll free:(800)223-1268 Fax: (901)214-9682 Phone: (901)419-7000 Memphis, TN38197 6400 PoplarAvenue International PaperCompany www.irco.com Phone: (441)295-2838 Bermuda Hamilton HM11 2 ChurchStreet Clarendon House Ingersoll-Rand CompanyLimited www.hyundaiusa.com Fax: (714)965-3149 Phone: (714)965-3000 Fountain Valley, CA92728-0850 10550 Talbert Avenue Hyundai MotorAmerica The Vault MBA CareerBible Manufacturing 189 Customized for: Erin ([email protected]) www.moog.com Fax: (716)687-5969 Phone: (716)687-4567 East Aurora,NY14052 Plant 4,JamisonRoad Moog Inc. www.monsanto.com Fax: (314)694-8394 Phone: (314)694-1000 St. Louis,MO63167 800 NorthLindberghBoulevard Monsanto Company www.meadwestvaco.com Fax: (804)897-6383 Phone: (804)327-5200 Glen Allen,VA 23060 11013 West BroadStreet MeadWestvaco Corporation www.lockheedmartin.com Fax: (301)897-6704 Phone: (301)897-6000 Bethesda, MD20817-1877 6801 RockledgeDrive Lockheed MartinCorporation www.johnsoncontrols.com Fax: (414)524-2077 Phone: (414)524-1200 Milwaukee, WI53209 5757 NorthGreenBayAvenue Johnson Controls,Inc. www.jaguarvehicles.com Fax: +442476202101 Phone: +442476402121 United Kingdom West MidlandsCV59DR Browns Lane,AllesleyCoventry Jaguar CarsLimited EMPLOYER DIRECTORY (CONT.) Manufacturing The Vault MBA CareerBible 190 www.parker.com Fax: (216)896-4000 Phone: (216)896-3000 Cleveland, OH44124 6035 ParklandBoulevard Parker HannifinCorporation www.paccar.com Fax: (425)468-8216 Phone: (425)468-7400 Bellevue, WA 98004 777 106thAvenue NE PACCAR Inc. www.owenscorning.com Phone: (419)248-8000 Toledo, OH43659 1 OwensCorningParkway Owens Corning Fax: (978)750-2152 Phone: (978)777-1900 Danvers, MA01923 100 EndicottStreet OSRAM SYLVANIA Inc. www.nucor.com Fax: (704)362-4208 Phone: (704)366-7000 Charlotte, NC28211 1915 RexfordRoad Nucor Corporation www.northropgrumman.com Fax: (310)553-4561 Phone: (310)553-6262 Los Angeles,CA90067-2199 1840 CenturyParkEast Northrop GrummanCorporation www.natoil.com Toll free:(888)262-8645 Fax: (713)435-2195 Phone: (713)346-7500 Houston, TX77036 7909 ParkwoodCircleDrive National OilwellVarco, Inc. www.plumcreek.com Toll free:(800) 858-5347 Fax: (206)467-3795 Phone: (206)467-3600 Seattle, WA 98104-4096 999 3rdAvenue, Suite4300 Plum CreekTimber Company, Inc. www.pb.com Fax: (203)351-7336 Phone: (203)356-5000 Stamford, CT06926-0700 1 ElmcroftRoad Pitney BowesIncorporated www.pella.com Toll free:(800)374-4758 Fax: (641)628-6070 Phone: (641)628-1000 Pella, IA50219 102 MainStreet Pella Corporation www.quanex.com Toll free:(800)231-8176 Fax: (713)439-1016 Phone: (713)961-4600 Houston, TX77027 1900 SouthLoopWest, Suite1500 Corporation Quanex BuildingProducts www.ppg.com Fax: (412)434-2011 Phone: (412)434-3131 Pittsburgh, PA 15272 One PPGPlace PPG Industries,Inc. www.polyone.com Toll free:(866) 765-9663 Fax: (440)930-3799 Phone: (440)930-1000 Avon Lake,OH44012 33587 Walker Road PolyOne Corporation © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.raytheon.com Fax: (781)522-3001 Phone: (781)522-3000 Waltham, MA02451-1449 870 Winter Street Raytheon Company www.rayonier.com Toll free:(800)243-2590 Fax: (904)357-9101 Phone: (904)357-9100 Jacksonville, FL32202 50 NorthLauraStreet Rayonier Inc. EMPLOYER DIRECTORY (CONT.) www.saicmotor.com Fax: +8621220111188 Phone: +862122011688 China Shanghai 200041 489 WeiHai Road Corporation (Group) Shanghai AutomotiveIndustry www.sanmina-sci.com Fax: (408)964-3636 Phone: (408)964-3555 San Jose,CA95134 2700 North1stStreet Sanmina-SCI Corporation www.rolls-royce.com Fax: +442072279178 Phone: +442072229020 United Kingdom London SW1E6AT 65 BuckinghamGate Rolls-Royce plc www.rockwellautomation.com Fax: (414)382-4444 Phone: (414)382-2000 Milwaukee, WI53204-2496 1201 South2ndStreet Rockwell Automation,Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.toyota.com www.toyota.co.jp Fax: +81565235800 Phone: +81565282121 Japan Toyota, Aichi471-8571 1, Toyota-cho Toyota MotorCorporation www.textron.com Fax: (401)457-2220 Phone: (401)421-2800 Providence, RI02903-2591 40 Westminster Street Textron Inc. www.tenneco.com Fax: (847)482-5940 Phone: (847)482-5000 Lake Forest,IL60045 500 NorthFieldDrive Tenneco Inc. www.stanleyworks.com Fax: (860)827-3895 Phone: (860)225-5111 New Britain,CT06053 1000 StanleyDrive The StanleyWorks www.sherwin-williams.com Fax: (216)566-2947 Phone: (216)566-2000 Cleveland, OH44115-1075 101 ProspectAvenue NW The Sherwin-WilliamsCompany www.shawfloors.com Toll free:(800)441-7429 Phone: (706)278-3812 Dalton, GA30722 616 EastWalnut Avenue Shaw Industries,Inc. www.ussteel.com Fax: (412)433-5733 Phone: (412)433-1121 Pittsburgh, PA 15219-2800 600 GrantStreet United StatesSteelCorporation www.tyco.com Fax: (609)720-4208 Phone: (609)720-4200 Princeton, NJ08540 9 RoszelRoad Tyco InternationalLtd. www.trw.com Fax: (734)855-2999 Phone: (734)855-2600 Livonia, MI48150 12001 Tech CenterDrive TRW AutomotiveHoldingsCorp. www.valspar.com Fax: (612)375-7723 Phone: (612)332-7371 Minneapolis, MN55415-1211 1101 3rdStreetSouth The Valspar Corporation www.ufpi.com Toll free:(800) 598-9663 Fax: (616)361-8302 Phone: (616)364-6161 Grand Rapids,MI49525 2801 EastBeltlineAvenue NE Universal ForestProducts,Inc. www.utc.com Fax: (860)565-5400 Phone: (860)728-7000 Hartford, CT06103 One FinancialPlaza United Technologies Corporation The Vault MBA CareerBible Manufacturing 191 Customized for: Erin ([email protected]) www.vulcanmaterials.com Fax: (205)298-2960 Phone: (205)298-3000 Birmingham, AL35242 1200 UrbanCenterDrive Vulcan MaterialsCompany www.vw.com Fax: +4953619282 Phone: +49536190 Germany Wolfsburg 38436 Brieffach 1849 Volkswagen AG www.vitroamerica.com Toll free:(800)238-6057 Fax: (901)682-3062 Phone: (901)767-7111 Memphis, TN38187 965 RidgeLakeBoulevard Vitro AmericaInc. EMPLOYER DIRECTORY (CONT.) Manufacturing The Vault MBA CareerBible 192 www.walterind.com Fax: (813)871-4399 Phone: (813)871-4811 Tampa, FL33607-2551 4211 West BoyScoutBoulevard Walter Industries,Inc. www.gore.com Toll free:(888)914-4673 Fax: (410)996-8585 Phone: (410)506-7787 Newark, DE19711 555 PapermillRoad W.L. Gore&Associates,Inc. www.worthingtonindustries.com Fax: (614)438-7948 Phone: (614)438-3210 Columbus, OH43085 200 OldWilson BridgeRoad Worthington Industries,Inc. www.weyerhaeuser.com Toll free:(800)525-5440 Fax: (253)924-2685 Phone: (253)924-2345 Federal Way, WA 98003 33663 Weyerhaeuser Way South Weyerhaeuser Company © 2009Vault.com Inc. Customized for: Erin ([email protected]) is generatedintheUnitedStates,15yearsagomosttheycouldlookforwasmaybe25centsoutside,asanexport.Nowitdollardollar.” been unheardofjust10yearsago.Notonlyhasmediaseenenormousdomesticgrowth,butabroadaswell;saysLieberman,“For every dollarthat building ofalliancesaswell,inanindustrythathasbeennotoriouslycompetitive.TherecentnegotiationsbetweenCNNand Wall Streethastakennotice.“Allofthesuddenthiswasanindustrytobereckonedwith.”Liebermanpointsashifttowards cooperationandthe Consumers todayhavearainbowofmediaproductstochoosefrom.Dennissaystheindustryhasbecomeanimportanteconom ic engineand successful andcompeteeffectively.” inordertobe coming outsoquicklythatitrequirespeoplewhoareabletoadaptandthinkontheirfeetpursuenewopportunities Oberlander, afirst-yearstudentatColumbiaBusinessSchool,findsthebusinesssideofmediasoattractive.“Thetechnologythatcomesout,it’s Technology, withoutadoubt,haswroughthavocintheindustry, forcingfirmstorethinktheirbusinessstrategies.That’s onereasonwhyJason of themedialandscape.Deregulationandmergershavegivenrisetobehemoths. fundamental changebecausethecompetitivefactorsthataredrivingthisnotgoingaway. Theyareintensifying.”Heistalkingabouttheshakeup notrend. “It’shide outinbusinessschoolthewakeofcollapsedot-comsandweakadmarket.Liebermanarguesthatthisis a So whyaremoreandmediaprofessionalsinterestedinanMBA?Ofcourse,manycanarguethatawaveofdot-comdropoutshavedecidedto CBS, arrivedasthebusinessschool’s newdean andbroughtinWilliamSmall,anotherCBSexecutive,toheaduptheprogram. applications.” Fordham’s program,believed tobeoneofthefirstincountry, beganinthemid-1980swhenArthurTaylor, aformerpresidentof seen anincreasedinterestoverthelastcoupleofyears,“We havearelativelysmallprogram,butwe’vehadprobably20to25percentincreasein Sports Marketing.OveratFordhamBusinessSchool,Dr. EveretteDennis,chairofthecommunicationsandmediamanagementprogram hasalso EMT programawardsacertificatetothosestudentswhocompleteatleastninecreditsincourseslikeEntertainmentFinanceand TheBusinessof one ormoreclasses,”saysAlLieberman,executivedirectorofNYUStern’s Entertainment,MediaandTechnology in1996,Stern’s Initiative.Started “When westarted,Ihadtwocoursesandabout40peopleineach.Today,students taking inanygivensemesterwehaveabout400to500 A neworder of dot-commeltdown,manymediaprofessionals,bothonthecreativeandbusinesssides,arefindingitnecessarytopursueanMBA. Street paidlittleattentiontothemediabiz,anindustryitdidn’ttakethatseriously. Now, andtheaftermath withtheriseofglobalconglomerates Not longago,thecreativetypesinmediakeptawaryeyeonsuitsorbeancounters,asbusinesssideofisknown.Foryears,Wall MEDIA ANDENTERTAINMENT MBAS Media andEntertainment balances thecreativeskillswith business skillsisthemostsuitablepersontorunafrom ageneralmanagementstandpoint.” make completeidiotsofthemselves.” Attheendofday, thinksomeonewho Oberlandarguesthatyouneedtheoverallpackagetogetahead. “I filmmaking attheTisch SchooloftheArts.“They’renotgoingtomakefilms,but at leasttheyunderstandtheskills,sodon’tcomeonasetand about business.”Sternisalsohelping thebusinesstypesbetterunderstandcreativeprocess byencouragingSternstudentstotakecoursesin this gap,willbelaunchinganewMSprogramsoon,“It’s andunderstandmore reallytailoredtothepeoplefromcreativesidewho doneedtoknow It takestwototango,andthecreativesidehasalsocontributed thedisconnect.Fordham,recognizinginterestbysomecreativefolkstobridge understand howitmademoney, didn’tunderstandhowtoapplythebasicstrategicthinking,thereforetherewasahugedisconnect,”saysLieberman. “One ofthebiggestproblemswasbusinesspeoplewhostepped intothisworldofcreativity, didn’tunderstandthecreativeproduct, Bridging thegap experience ontheirowninsomeway, ortheygotoabusinessschoolandgetitwhereistaughtsystematically.” ofbackgroundand think peopleonthecreativesidearenotgoingtomoveintomajor managementandexecutiverolesunlesstheyeithergetthiskind down intitleandcompensation.”DennisconcursthatanMBA isincreasinglybecomingarequirementformanagementinmediacompanies.“I takeasignificantstep for advancement.“Ifeltthatdoingthetransitionwithincompany wouldhavebeendifficult.Icertainlyhadto Oberland leftShowtimeasacommunicationsmanagerinsports andeventprogramming,butfeltanMBAwastheonlywaytoincreasehischances offer themjobs.” Education. Outofthe40or45adultsthatwouldcomeinfromallkindsindustriestolearnaboutthis,I’dpickonetwo thatwerethebestand NYU SchoolofContinuing courses hewasteachingatNYU.“ItaughtthiscoursethatIcreated,calledtheMarketingofEntertainmentIndustries the time,hecouldn’tfindenoughqualifiedcandidatestokeeppacewithgrowthoffirm.Heendeduprecruitingpeople rightoutofonethe manage changeandthecashpositionofacompany. Inthemid1980s,Liebermanstartedamarketingfirmfocusedonentertainmen business practices,isprobablyessential,”saysDennis.Hecitesagrowingneedforbetterunderstandingofmarketresearch, audiences,howto “A fewyearsago,Iwouldhavesaid,‘AnMBA—thatbenice,butitreallyisn’tnecessary.’ Now, IthinkanMBA,oratleast someexposureto What doesanMBAreallyoffer? ABC News ABC t andmedia.At would have 193 Customized for: Erin ([email protected]) CEO hadproblemswiththepress, thewhiteknightsofcorporatePRcametorescuehelpavert a worsecatastrophe.CorporatePRgroupsstillperform For years,corporatePRwasconsidered tobeexclusivelyfordamagecontrolduringeventsliketheExxon Valdez ortheTylenolcyanide scare.Whenevera Corporate publicrelations Corporate marketersoftenhaveanextensivebackgroundwithadvertising agenciesormarketingconsultancyfirms. Corporate marketingencompassesmanyobjectives: negotiating positionwhenchoosingamongcompetingagencies. placement agencies,marketresearchfirms)whennegotiatingfees:themoremoneyacompanyplansonspendingwithone deal,the betterits agencies,media information iscompiledbyonegroupthatcanthenspreadtheinformation.Italsoprovidesleveragewithoutsidevendors(advertising their servicesonanas-neededbasis.Thebenefitofcentralizedmarketingisthatitenablesthesharingdataacross company sincethe (where eachdivisionhasitsownmarketinggroup),buttherearealsomanycasesinwhichthesegroupscentralizedunderco rporate andprovide Corporate marketingassessesconsumerreactiontonewprojects,initiativesandendeavors.Oftenthesegroupsaredirectreports ofbusinessunits Corporate marketing finance andpubliccompanyperformancetotheentertainmentindustry. Most individualsinthecorporatefinancefunctionareformerinvestmentbankers,accountingwizardsandCFOs-to-bewhobring theirexpertisein determine synergiesandnegotiatedeals.Likewise,theyalsodivestbusinessesthatmaybeundesirableinexchangeforcash. corporate financiers.Corporatefinanceprofessionalsinvestigateacquisitionopportunities,gathercompetitiveintelligenceo n othercompanies, Nearly allthemajorentertainmentcompanieshavegrownthroughacquisitionsinpasttwodecades,increasing importanceoftheir of them)topricedeals,investigateoptionsandplotthecoursecompany’s growththroughacquisitionsofothercompanies. Corporate financeisasistergrouptostrategicplanning.financiersarethepeoplewhoworkinconcertwithinvestment bankers(orinlieu Corporate finance jobs, mostlyfilledbytop-notchMBAs. to behighlysought-after high-level executives,theoverallcloutofgroupanditsimpactinmajordecisionsmediaconglomerates,thesetend This functionisalsosometimescalledcorporatedevelopment,businessdevelopmentorin-houseconsulting.Becauseofthefrequentexposureto maximize thereturnsoncompany’s capital, whichmeansanalyzinganddismissingmanycurrentprojects. planning groupsdelivermustnecessarilybeatoddswithdecisionsthathavealreadybeenmade.Strategicplanners,afterall,areconstantlytryingto spun intoastorypriortothepresentationoffindings.Thisgroup’s jobisallthemorechallenging,giventhatrecommendations thatstrategic the jobsalsotendtobeincrediblychallengingandtaxing,asinordinateamountsofbackgrounddata,researchinformationaresynthesized rooms withthecompany’s seniorexecutives, includingtheCEO,COOandCFO.Whileexposuretotheseindividualsisoneofperksthisposition, Because theseprojectsaffecttheoverallhealthofcompany, meetingsareoftenpowersessionsinthecorporatediningroom ortop-floorboard prognosis forthehealthofalldivisionscompany, andanyotherhigh-levelissuesthatthecompanyasawholemaybefacing. budgeting and overall ventures, theexpansionofcurrentbusinesslines(andsometimescreatingnewones),forward-lookingfinancialplanstoprovide most employeesareex-consultantsandbankers.Strategistsinvolvedinvaluationnegotiationdecisionsforacquisitions,businessplansnew Strategic planninggroupsaresmallofaboutfiveto40professionalsthatserveasin-houseconsultingandinvestmentbankingarms.Notcoincidentally, Strategic planning MEDIA BUSINESSPOSITIONS Media andEntertainment The Vault MBA CareerBible 194 • Overseeing product-specificpublicrelationseffortsthatdrivecoverageinthemedia • Overseeing overallbrandequityandelementsofdifferentiationlikelogoidentity • Supervising advertisinganddirectmail • Authoring marketingplans • Estimating marketpenetrationandrolloutstrategies • Creating pricingmodels • Soliciting consumerfeedbackonnewandexistingproducts • Determining revenueprojectionsfornewproducts • The managementofoutsidevendorswhooverseenewsoftware,focusgroupsorlargeresearchstudies • Market researchandtheexecutionofbothquantitativequalitative © 2009Vault.com Inc. Customized for: Erin ([email protected]) bus shelters.Thepopularityof marketing, mainlybecauseinformationcanbecommunicatedbroadlyandcheaply—muchmoreinexpensivelythanTVcommercials,billboards distributing andprofitingfromit(sortofapreemptivestrikeagainstcompanieslikeNapster),theInternetisalsoanincredibly seductiveresourcefor material thatentertainmentcompaniescreate.WhilestudioswouldlovetousetheInternethoardtheircontentandprevent anyone elsefrom As contentbecomesincreasinglycommoditizedduetothefactthatsomuchonInternetisfree,therearechallengesinprotectinghallowed Internet strategy articles ingeneralinterestmagazineslike The corporatePRgroupisalsoknownforinitiatingmajorpresscoverageinindustryandbusinesstradepublications,aswell corporate-focused spokespersons, serveasexpertsonmediatrainingandpublicappearancescoachCEOstheyprepareforandeventmarketing. this function.However, theworkofcorporatePRgroupsismuchbroaderthanjusthandlingcrisismanagement.Corporatenowmanage In businessunits,thepaycanbe anywherefrom10to30percentlower. percent raiseafterayear. Managersmakeatleast$80,000 anddirectorsusuallycracksixfigures.VPsearninthelow $100Krange. At thecorporatelevel,beginning-level analystsoutofcollegetypicallystartataround$40,000, withseveralthousanddollarsinbonusesanda15 come straightoutofthetopline)andbecauselessgrueling hours. a publishinghouse.Thebusinessunits,however, aretypicallyknownforpayingless,bothbecausetheyresponsibleprofit andloss(high salaries “The payincorporatejobsisusuallyuptherewithinvestmentbanking andmanagementconsulting,”reportsoneformerconsultant-turned-analystat Pay Jobs thataremorepredictable(i.e.,positionswithbusinessunits ratherthancorporate-levelpositions)generallyhavemorepredictablehours. One ruleofthumb:CorporatejobsthatreporttotheCEOtypically face“firedrills”(i.e.,urgentdeadlinesimposedatthelastminute)onaregularbasis. year forafewweeksinthespringduringourfive-yearplanningprocess, it’s notuncommonforustoputin12 hoursaday, sevendaysaweek.” hours andtherequirementsarelessdemanding.Therealways exceptions.Saysonethemeparkexecutive:“Hoursareusually9to6,butevery being homeby6p.m.Whilethecareertrajectoryisslowerand the compensationislowerin“businessunits”(versus“corporateside”), But that’s notalwaysthecase.Therearemanyindividualsthatreport(mostlyoutsideofstrategicplanningandothercorporategroups)consistently lifestyle. It’s araredayIdon’tputin12hours.” aboutabalanced employee inthestrategicplanninggroupofastudio.“Theentertainmentindustrydefinitelydoesn’tcometomindwhenIthink Like somanyindustries,thereisawork/lifetrade-offthatcomesintheentertainmentindustry. “Therearetonsoftrade-offs,”saysonelongtime Hours OUR SURVEY SAYS: LIFESTYLEANDPAY estate developmentisaparticularlyexcitingdivisionforindividualswishingtocombineinterestsinthehospitalityindustry, financeandrealestate. contractors andlandscapearchitects,workingwithcommunitydevelopmentoffices,leveragingtaxbenefitsexecutingvisiona ry blueprints.Real from outsidetheentertainmentindustry. managingvendors, Themostsuccessfulindividualsinthesedivisionsarethosewithsubstantialexperience attractsindividuals As realestatedevelopmentisitsownuniquebusinesswithspecialfinancingrulesandintrinsicrewards,thefieldgenerally now managedundertheaegisofDisneyDevelopmentCorporation),wereresultsacquisitionsoracquiredovertime. often haveproprietarylotsoftheirownlandthatwereeitherpartthecompany’s andSouthernCalifornia, origin(asDisneydoeswithitslandinFlorida tracts oflandthatcanbothprovidesteadyrevenuestreamsandimpressanentertainment-seekingaudience.Themajorentertain ment companies including themedrestaurants(HardRockCafé),sportsstadiums,entertainmentcomplexes(SonyMetreon)andotherdestinations thatinvolvelarge empire’sReal estatedevelopmentwithinanentertainmentcompanyinvolvesnotonlythemeparks,butalsoextensionsof brands, Real estatedevelopment relations agencieslikeEdelmanWorldwide, BozellorHill&Knowlton. lobbying groupsthatmayhaveinfluenceoverlegislationaffectingthecompany’s growthanddevelopment.Often,thisgroupworkswithoutsidepublic Web. MediacompanieswithInternetstrategygroupsincludeWalt Disney/ABCandAOLTime Warner. all majorentertainmentcompanies,trackingevolvingtechnologies,codingpages,maintainingfreshwebsitecontentandotherwisemarketingviathe and entertainmentcompanies.Becauseoftheconstantlyevolvingstilluncertainnaturebusiness,therearehundredsindividualsatnearly This tension(topromoteourpropertiesorprotectthem?)feedstheverycomplexandcriticalrolethatInternetstrategyplays inthegrowthofmedia career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Blair Witch Project Witch Blair The Time , Newsweek , asurprisehit,waspartiallyattributedtoveryeffectivewebsite. or Vanity Fair Vanity . PRprofessionalsalsodeveloprelationshipswithgovernmentofficialsand The Vault MBA CareerBible Media andEntertainment 195 Customized for: Erin ([email protected]) 3:00 p.m.:Answeremails,reviewdailytradepublications, 1:30 p.m.:ReturntoofficedebriefwithCFOonthenumbersneededfor a five-yearplan. 12:00 p.m.:DepartforlunchmeetingwithaseniorVPatanothersmallentertainmentcompanytoproposeanacquisition. 10:55 a.m.:Arriveatoff-sitemeeting.Listentopresentationsfromkeyleadersonwhatdonext. 10:45 a.m.:Callmyassistant.Havehertypeupemailresponsestosomenewemailsandsendthemoffonbehalf. 10:30 a.m.:Leaveforanoff-sitemeetingtodiscusswhatdowithawaningdivisioninwhichthetopchiefjustleft. 10:00 a.m.:Returnsomemorningphonecalls.Glanceatemailforanythingurgent. 9:00 a.m.:Reviewasubordinate’s presentation,assignedlastnight.ThepresentationisdueearlytomorrowfortheCEO—revisionsmustbemadewithhaste. 8:00 a.m.:Breakfastmeetingwithamanagerinanotherbusinessunittoupdateoneonworkand“keepbothearsclosetheground .” 7:00 a.m.:Arriveatwork,makeconferencecallstoEuropediscussprogressonamajornewinitiativeexpandinEurope. do nothavefamiliesorchildren,oftenforsakethemfortheircareers. If thissoundsmurkyorunclear, readonforanillustrationofthespecifics.Overall,hoursarelong.Thereoftenstoriesmanyexecutiveswho While there’s no“typical”dayinstratplanningatamediacompany, belowaresomeofthemostcommonday-to-daytasks: A DAY INTHELIFE:STRATEGIC PLANNINGEXECUTIVE professional work.Eventhoughthereisanoversupplyofpeoplevyingfortheavailablejobs,italargelymeritocraticindustry. comes tocompetition.Promotiondecisionsarenotbasedonwhetherpeoplelikeyou,orhowyourlastfilmdid,butrather thebodyofyour There isindeedjockeyingforcertainrolesandpositions,asthereinanyindustry, butthebusinesssideisnotasugly thecreativesidewhenit Promotions andcompetition the job.“Iitemizedeverythingfrommystereotomovietickets,”boastsonecorporatefinancemanager. Another practice,widelyconsideredaperk,isthatmanywithintheindustryitemizetaxesanddeductalltheirentertainmentexpenses inthenameof occasionally getfreelunches,ticketstomoviepremieresandcelebrityweddinginvitations,butthesearemostlytheresultofaperson’s personalconnections. are notnearlyaslavishtheexpenseaccountsandfreebiesthatcomeoncreativesideofbusiness.Therestoriesbusinessfolkswho insider. Employeesgetdiscountsonproducts,invitationstoadvancescreeningsofmoviesandticketsmoviepremieresgala parties.Thatsaid,theperks Entertainment isattractivepartlybecauseofitsperks.“Let’s faceit,Igotintotheindustryhopingtohangoutwithrockstars,”confessesonerecord Other perks 8:30 p.m.:Leavetheoffice. 7:30 p.m.:Answeralloutstandingemails. 6:30 p.m.:MakeaconferencecalltoAsiaexecutives todiscussprogressontheirlatestinitiative. 5:00 p.m.:Perusetheproposalsfromthreetopmanagementconsultingfirms, allvyingforapieceofmajorproject. 4:10 p.m.:Startreviewingbudgetrequestsandexpensereportsofdepartment employees. 4:00 p.m.:Tell juniormanagertocalloffworkandgohomesinceshe’s beenpullingall-nightersforacoupleofdays. 3:47 p.m.:SpontaneousmeetingwithCEOinthehallway—turnsoutpresentation originallyduetomorrowisnotthaturgent. 3:45 p.m.:Forfunandtobuildteammorale,respondofficepoolonwhat theweekend’s boxofficewillbe. Media andEntertainment The Vault MBA CareerBible 196 • Managing juniorteammembers(15percent) • Responding torequestsfromseniormanagement(25percent) • Presentations fromthebusinessunitsongrowthinitiativeswithinothergroups(10percent) • Presentations totheseniorexecutiveteamonkeydecisions(25percent) • Interfacing withotherbusinessunits,domesticallyandabroad,eitherincallsormeetings(25percent) The Hollywood Reporter Hollywood The and Daily Variety. Daily © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.activision.com Fax: (310)255-2100 Phone: (310)255-2000 Santa Monica,CA90405 3100 OceanParkBoulevard Activision www.abc.com Fax: (212)456-1424 Phone: (212)456-7777 New York, NY10023-6298 77 West 66thStreet ABC, Inc. EMPLOYER DIRECTORY www.bet.com Fax: (202)608-2589 Phone: (202)608-2000 Washington, DC20018 1235 West StreetNE One BETPlaza Black EntertainmentTelevision www.bertelsmann.com Fax: +495241809662 Phone: +495241800 Germany 33311 Gütersloh Carl-Bertelsmann-Strasse 270 Bertelsmann AG www.badboyonline.com Fax: (212)381-1599 Phone: (212)381-1540 New York, NY10019 1710 Broadway Bad BoyEntertainment www.amctheatres.com Fax: (816)480-4617 Phone: (816)221-4000 Kansas City, MO64105 920 MainStreet AMC EntertainmentHoldings,Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.caa.com Fax: (424)288-2900 Phone: (424)288-2000 Los Angeles,CA90067 2000 Avenue oftheStars Creative ArtistsAgency www.cox.com Phone: (404)843-5000 Atlanta, GA30319 1400 LakeHearnDrive Cox Communications,Inc. www.comcast.com Fax: (215)981-7790 Phone: (215)665-1700 Philadelphia, PA 19102-2148 1500 MarketStreet Comcast Corporation www.clearchannel.com Fax: (210)822-2299 Phone: (210)822-2828 San Antonio,TX78209 200 EastBasseRoad Clear ChannelCommunications www.cbs.com Fax: (212)975-4516 Phone: (212)975-4321 New York, NY10019 51 West 52ndStreet CBS, Inc. www.c-span.org Fax: (202)737-6226 Phone: (202)737-3220 Washington, DC20001 400 NorthCapitolStreetNW, Suite650 Network Cable SatellitePublicAffairs www.bloomberg.com Fax: (917)369-5000 Phone: (212)318-2000 New York, NY10022 731 LexingtonAvenue Bloomberg L.P. www.dreamworksanimation.com Fax: (818)695-9944 Phone: (818)695-5000 Glendale, CA91201 1000 FlowerStreet DreamWorks AnimationSKG Inc. www.discovery.com Fax: (240)662-1868 Phone: (240)662-2000 Silver Spring,MD20910 1 DiscoveryPlace Discovery Communications,Inc. www.directv.com Fax: (310)535-5225 Phone: (310)964-5000 El Segundo,CA90245 2230 EastImperialHighway The DIRECTVGroup,Inc. www.fox.com Fax: (310)969-3300 Phone: (310)369-1000 Los Angeles,CA90035 Building 100,Suite3220 10201 West PicoBoulevard Fox EntertainmentGroup www.emigroup.com Fax: +442077957296 Phone: +442077957000 United Kingdom London W85SW 27 Wrights Lane EMI Groupplc www.ea.com Fax: (650)628-1422 Phone: (650)628-1500 Redwood City, CA94065 209 RedwoodShoresParkway Electronic Arts The Vault MBA CareerBible Media andEntertainment 197 Customized for: Erin ([email protected]) www.marthastewart.com Fax: (212)827-8204 Phone: (212)827-8000 New York, NY10036 11 West 42ndStreet Inc. Martha StewartLivingOmnimedia, www.lucasfilm.com Fax: (415)448-2495 Phone: (415)662-1800 San Francisco,CA94129 1110 GorgasAvenue Lucasfilm Limited www.livenation.com Fax: (310)867-7001 Phone: (310)867-7000 Beverly Hills,CA90210 9348 CivicCenterDrive Live Nation,Ltd www.libertymedia.com Fax: (720)875-5401 Phone: (720)875-5400 Englewood, CO80112 12300 LibertyBoulevard Liberty Media www.hbo.com Fax: (212)512-1182 Phone: (212)512-1000 New York, NY10036 1100 Avenue oftheAmericas Home BoxOffice(HBO) www.gannett.com Fax: (703)854-2046 Phone: (703)854-6000 McLean, VA 22107-0910 7950 JonesBranchDrive Gannett Company, Inc. EMPLOYER DIRECTORY (CONT.) Media andEntertainment The Vault MBA CareerBible 198 www.pixar.com Fax: (510)922-3151 Phone: (510)922-3000 Emeryville, CA94608 1200 ParkAvenue Pixar AnimationStudios www.paramount.com Phone: (323)956-5000 Hollywood, CA90038 5555 MelroseAvenue, Suite121 Paramount PicturesCorporation www.nintendo.com Fax: (425)882-3585 Phone: (425)882-2040 Redmond, WA 98052 4820 150thAvenue NE Nintendo ofAmerica,Inc. www.newscorp.com Fax: (212)852-7147 Phone: (212)852-7000 New York, NY10036 1211 Avenue oftheAmericas, 8thFloor News Corp. www.nbcuni.com Fax: (212)664-4085 Phone: (212)664-4444 New York, NY10112 30 RockefellerPlaza NBC Universal www.mtv.com Fax: (212)258-6175 Phone: (212)258-8000 New York, NY10036 1515 Broadway MTV NetworksCompany www.mgm.com Fax: (310)449-8857 Phone: (310)449-3000 Los Angeles,CA90067 10250 ConstellationBoulevard Metro-Goldwyn-Mayer Inc. Regal EntertainmentGroup www.reuters.com Fax: +442075424064 Phone: +442072501122 United Kingdom London E145EP Canary Wharf The ReutersBuilding Reuters GroupLimited www.pbs.org Fax: (703)739-8495 Phone: (703)739-5000 Arlington, VA 22202-3785 2100 CrystalDrive Public BroadcastingService www.take2games.com Fax: (646)536-2926 Phone: (646)536-2842 New York, NY10012 622 Broadway Take-Two InteractiveSoftware,Inc. www.sonybmg.com Fax: (212)833-7416 Phone: (212)833-7100 New York, NY10022-3211 550 MadisonAvenue Sony BMGMusicEntertainment www.sirius.com Fax: (212)584-5200 Phone: (212)584-5100 New York, NY10020 1221 Avenue oftheAmericas, 36thFloor Sirius SatelliteRadioInc. www.regalcinemas.com Fax: (865)922-3188 Phone: (865)922-1123 Knoxville, TN37918 7132 RegalLane © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.umusic.com Fax: (212)331-2580 Phone: (212)841-8000 New York, NY10019 1755 Broadway Universal MusicGroup www.timewarner.com Phone: (212)484-8000 New York, NY10019 1 Time Warner Center Time Warner EMPLOYER DIRECTORY (CONT.) www.usanetwork.com Fax: (212)664-6365 Phone: (212)664-4444 New York, NY10112 30 RockefellerPlaza USA Network,Inc. www.univision.com Fax: (310)556-7615 Phone: (310)556-7665 Los Angeles,CA90067 1999 Avenue oftheStars, Suite3050 Univision CommunicationsInc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.vivendiuniversal.com Fax: +331711001 Phone: +331711000 France 75380 ParisCedex08 42 avenuedeFriedland Vivendi SA www.virgin.com Fax: +442077278200 Phone: +442072291282 United Kingdom London W87AR 120 CampdenHillRoad Virgin Group,Ltd. www.viacom.com Fax: (212)258-6464 Phone: (212)258-6000 New York, NY10036 1515 Broadway Viacom Inc. www.wma.com Fax: (310)859-4462 Phone: (310)859-4000 Beverly Hills,CA90212 1 William MorrisPlace William MorrisAgency www.wmg.com Fax: (212)757-3985 Phone: (212)275-2000 New York, NY10019 75 RockefellerPlaza Warner MusicGroupCorp disney.go.com Fax: (818)560-1930 Phone: (818)560-1000 Burbank, CA91521-9722 500 SouthBuenaVista Street The Walt DisneyCompany The Vault MBA CareerBible Media andEntertainment 199 Customized for: Erin ([email protected]) 200 © 2009Vault.com Inc. Customized for: Erin ([email protected]) their communitiesandareinthedailyeyeoflocal,sometimesnational,publicmedia. interactions withabroadarrayofpeoplefromallclasslevelsandatexecutivelevels,satisfyingsalary. representthelifebloodof Manyorganizations The rewardscanbequitesatisfyingforprofessionalswhosucceed.Suchpositionscomewith,attimes,atremendousamountof prestige andrespect, sure theycan.Afterall,theNewYork StockExchangeisanonprofit! wide-eyed andambitiousyouthwhoarestrivingtosavetheworld,onepuppyatatime.Withyourbusinessmanagementskills,youcanmake business practicesfocusesintotheircurriculum,goingacareerinthenonprofitworldbecomesmoreviable.Mostnonprofitorganizationsemploy This iswhereyourMBAjumpsin.Asmoreandprogramsintegratenonprofitmanagement,socialentrepreneurshipsociallyresponsible to survive. prepared tofinanciallysupportthisrecentinfluxofnewlyregisteredcharities.Itisclearthatonlythestrongestandsavviestorganizationsarecertain registered charitableorganizations.Alloftheseorganizationsareinneedstrongleadersasmanythesectorconcerned thatourcountryisnot It won’tbeeasygoing,though.Inrecentyears,andespeciallysincetheSeptember11terroristattacks,U.S.hasseenajumpinitsnumberof If beingabletodothistypeofworkinthecourseyourcareerappealsyou,youmaywantconsideranonprofit/philanthropyworld. Imagine whatitmightbeliketosay: Nonprofit imagine, suchadefinitioncovers astaggeringlybroadrangeoforganizations—youthclubs, churches, schools,tradeassociations, freeclinics, acause.Asyoucan with someformalstructurethat do notdistributeanyprofitstoitsownersorleadership,butrather devoteallresourcestoward As directdescendentsoftheorganizations firstcreatedbyBenjaminFranklin,modernnonprofit organizationsare,inthesimplestofterms,entities more generaltermofphilanthropy, whichisassociated withthegoodworksofnonprofitorganizationstoaddressasocial problemorcause. the termphilanthropicgivingfromthispointforwardtodescribe the workofprofessionalswhogivemoneyawaytoworthycauses,ratherthan with theseinstitutions,specificallythosehavingtheresponsibility of raisingthemoneytokeeporganizationsgoing.To avoid confusion,wewilluse wide varietyofnonprofitornot-for-profit institutionsistheheartofmodern philanthropy. Thisguidefocusesalmostexclusively oncareersassociated commissions, tofederalwelfareprograms—playanenormously important philanthropicrole.ButfromtheperspectiveofmostAmericans today, the give voicetotheunderserved,feedneedy, amongotherimportantgoals.Governmentagencies—fromcity-runhomelessshelterstostateart In thelargestsense,philanthropyreferstoanyactivityimprove society—tomakecommunitiessafer, tosheltertheunfortun NONPROFIT ORGANIZATIONS organization jumpedintocommunityordirectservicewhilecontinuing itsworkinadvocacyandresearch. just trainingworkerswhoworkwiththemorconductingresearch), essentiallyopeningadoortonewrevenuestream.Inthisinstance,the $300,000 innewsupportfromdonorswhoonlyfund“directservice”programs(nonprofitsthatworkdirectlywiththoseitseeks to serve,ratherthan into neighborhoodstoteachprovidershowencourageliteracywiththeyoungchildrenintheircare.Thisdecisionwasrespo nsible fornearly practices for20years.Recently, however, it developed andimplementedanearlyliteracychildcareprovidertrainingprogram of thisisanearlyeducationadvocacygroup,ChildCareActionCampaign,whichhasservedasafacilitatorandcommunicator researchandbest Other nonprofitsaredevelopingentirelynewcompetenciesinhopesofintroducingtheorganizationtoanpoolsupporters.Oneexample way ofmakingamorecomprehensiveimpactonsingleareaserviceorissue. commonly, however, justifiedasa nonprofitsarebranching outintootherareasofserviceinhopesattractingnewdonors.Thisisprogrammatically staffing itsowncharterbuscompany, essentiallyrunningitsownfor-profit ventureand“donating” theincometochurch’s operationalfunds.More One commonapproachtothischallengeisdiversifyfundingsources.AnextremeexampleofachurchinJamaica,N.Y. thatisrunningand and subsequentlyphilanthropicdonationstononprofits.Thenonprofit/philanthropyfieldislearninghowprotectitselffromfinancialfluctuations. greatly improvedtheirapproachtocultivatingandaccessingstrongerfinancialsupport.Manyunpredictablevariablesimpactournationaleconomy solving throughthedevelopmentofbetter, morecost-effectivestrategiesforprovidingservices.Justasimportant,nonprofitorganizationshavealso more professional.Anincreasedemphasisonefficientmanagementhasenhancedthesector’sor problem approachtoprogramimplementation Today’s culturehasbecome nonprofitorganizationisaverydifferentinstitutionthanitwasonlydecadeago.In anutshell,thenonprofitcorporate NONPROFIT DOESN’TMEANMONEYMATTER homes for disadvantaged families.” disadvantaged for homes “Throughout the course of my career I helped to clean up my city’s most depressed neighborhoods and developed hundreds of new a new of hundreds developed and neighborhoods depressed most city’s my up clean to helped I career my of course the “Throughout “This year at work I raised $1.5 million to fund a program that promotes better early education for young children.” young for education early better promotes that program a fund to million $1.5 raised I work at year “This “Today at work I helped to provide a safe place for 100 teens in my community to go after school to receive tutoring and homework assistance.” homework and tutoring receive to school after go to community my in teens 100 for place safe a provide to helped I work at “Today ate, tohealthesick, , sendingtrainersout ffordable 201 Customized for: Erin ([email protected]) hospice careandcommunityhospitals) areknowntohavewarmer, friendlierenvironments.It’s important torememberthateven if youaresquirreled departments atahospitalcompeting withoneanotherforfunding,especiallyclinicalresearch. Facilitiesfocusedoncommunityhealth(including will haveinterns,residentsand researchersvyingforthebestresidencies,teachingandadministrative positions.You mayalso seedifferent you areadoctorornurse.Insome healthorganizations,politicsmaygohandinwithtreatment ofthesick;hospitalassociatedwithuniversities Medicaid—which providethelion’s shareofrevenue.Soasafundraiser, youarejustaslikelyto workwithahospitaladministrator ofsomesortas and federalregulations,concernsaboutpatientprivacythe needtonavigatecomplicatedhealthinsuranceprograms—includingMedicareand among thehighestinnonprofitworld.Alongwithhealing sick, healthorganizationsnurtureextensivebureaucraciesto hospitals)tendtobe services. Perhapsbecauseoftheirrelativewealth,orthedemands ofphysicians,salariesathealthorganizations(especially by theUrbanInstitute,morethanhalfrevenueearned or contributedtotheentirenonprofitsectorgoesorganizationsprovidinghealth nonprofit pie,intermsofrevenue,expensesandthenumberpeople theyemploy. AccordingtothelatestversionofNonprofit Almanacpublished Health organizations—suchashospitals,clinics,nursinghomes, hospicefacilitiesanddrugrehabilitationcenters—takeupthe largest pieceofthe Health organizations has corneredthemarketonefficiencyanddynamicleadership,nor mismanagementanddysfunction. Again, thedescriptionshereareverygeneralandcannotbeapplied toeveryorganizationinanyparticularcategory. Moreover, noonekindofnonprofit Here’s abitmoreinformationaboutthekindsofgroupsineachcategorythatmighthelpyoumakesomedecisions aboutwhereyouwouldliketowork. in size,infrastructure,andtosomeextent,thekindsofpeoplewhoworkthere. there areorhowmanynonprofittheatergroups.)Butorganizationsthatexemplifyonecategoryanotherdosharewithan other characteristics system tocapturespecificinformationaboutthenumberandkindsofnonprofits;forinstance,theytrydeterminehowmanyc ommunity hospitals not infallible,sincemanynonprofitsfallintomorethanonecategory. (TheIRSandBureauofLaborStatisticsuseamorecomplicatedclassification services, religious,civicandadvocacy, internationalreliefanddevelopment,artsculturefunders.It’s acrudekindoftaxonomyanddefinitely several differentcategorieslargelybasedonapproachandpurpose.Themostcommonusedarehealth,education, social orhuman organizations into The IRS,theU.S.BureauofLaborStatisticsandnumerousuniversitiesthinktanksthatstudysectordolumpnonprofit different causes,it’s morethanalittledifficulttotalkaboutthegeneralcharacterorpersonalityofnonprofitorganizations. The sheersizeanddiversityofthenonprofitsectorcanbedauntingtocontemplate.Withsomanydifferentgroupstakingdiff erent approachesto MANY CHOICES and private,for-profit businesses. or independentsectorhasevolvedintoavibrantpartofAmericanlifeanditseconomy, regardedasseparatefrombutinbalance withpublicagencies (including manyindividualchurchgroupsandcongregations)servingeverypopulation,communitycausethatexis ts. Thenonprofit (such astradeassociations,chambersofcommerceandchurches).Thisnumberdoesnotaccountforthescoressmaller, informalgroups country, including501(c)(3)charities(fromhomelessshelterstogrant-givingfoundations),politicaladvocacygroups,andmembership organizations According totheNationalCenterforCharitableStatistics,nearly1.5millionregistered,tax-exempt,nonprofitorganizationsoperatethroughout 501(c)(4) oftheInternalRevenueCode.Suchgroupscanalsoseekdonations,butthesegiftsarenottaxdeductible. nonprofit groups;forexample,organizationsexclusivelydevotedtolobbyingandpoliticalactivitiescanapplytaxexempt cause andthefoundationsotherinstitutionsthatfundthesegroups.You shouldalsobeawarethatthereareothertaxexempt designationsfor oradvocate fora personal incometaxes.Itisimportanttonotethatthe501(c)(3)categorycoversbothcharitableorganizationsprovideservices candeduct fromtheir exempt fromfederaltaxes(andinmostcasesstateaswell),buttheyarealsoallowedtoreceivedonationsthatindividuals fostering ofnationalorinternationalamateursportspreventioncrueltytoanimalsandchildren.”A501(c)(3)nonprofitorganizationisnotonly charity orprivatefoundation,whichisestablishedforpurposesthatarereligious,educational,charitable,scientific,literary, testingforpublicsafety, organizations, asoutlinedinsection501(c)(3)oftheInternalRevenueCode.Asdefined501(c)(3),suchagroupmustbe“apublic current federallaw, thereareseveraltaxexemptioncategoriesfornonprofitgroups,dependingontheiractivities.Mostgroups arepublic-serving tax codewasinenacted,buttoday’s tax-exempt designationsemergedin1954,whenCongressapprovedthefirstmajoroverhaulofcode.Under Generally, sincethemodern nonprofitorganizationsalsoapplyfortax-exemptstatusunderthefederaltaxcode.Suchexemptionshavebeeninplace Tax exemptions leadership structure(anexecutivedirectororpr Nonprofit The Vault MBA CareerBible 202 dealwithstringentstate status undersection © 2009Vault.com Inc. Customized for: Erin ([email protected]) universities findinteractionswithstudents,parentsandalumnitobethebestpartoftheirjobs. there maybeopportunitiestomeetdistinguishedformerstudentswhohavegoneonHollywoodorpolitics.Mostfundraisersfschoolsand which youmaybeexpectedtoupholdasanemployee.Bothuniversitiesandindependentschoolsfocusmostfundraisingactivitiesonalumni, also smallwithaslittletwostaff.Salariesareconsiderablesmallerthanatuniversities.Manyindependentschoolshavereligiousaffiliations, Catholic, toboarding—areconsiderablysmaller. Fundraisingteamsare Somemimicuniversitiesinstyleandstructure,butmostarefarlessformal. Montessori to demands forresources,universitiesmaintainlargefundraisingprogramswithwell-paidstaff.Independentschools—rangingfrom about theirscholarlypursuitsandpublishingopportunitiesdifferentdepartmentsfiercelycompetefordollars.Given sizeandthemyriad among themselves that professor/scholarstendtohavestrongpersonalities.Soassociateprofessorsjockeyfortenure,tenuredsquabble and anindependentschool.Universitiesarelarge(employinghundredsofpeople),hierarchicalextremelypoliticalplaces,exacerbatedbythefact which staffandalumniareratherproud.Thereis,however, abigdifferenceinthesize,infrastructureandorganizationalculturebetweenuniversity indeed HarvardUniversity, foundedin1638,isconsideredtobethefirstnonprofitU.S.Thu,manyschoolshaveastrongsenseofhistory well asfundingfromindividuals,foundations,andstatefederalagencies.SchoolsarealsoamongtheoldestAmericannonprofitinstitutions; institutions arethesecond-largestcategorybasedonrevenueandemployment.Formostpart,universitiesschoolsrelyheavilytuitions,as Primarily universities,collegesandprivate,independentschools(meaningthosethatarenotpartofthesystempublicschools),educational Educational institutions depressing. away intheadministrativeofficesasafundraiser, sicknessanddeathwillbeapartofyoureverydayexistence.Somefindthat fulfilling;othersfindit (1) educatingandorganizingpeople toengagetheirlocalpolicy-makers(countycommissioners, stateagencies,MembersofCongress,etc.);(2) category, aswellarangeofsmallergroupsfocusedon specificissuesintheircommunities.Generallythesegroupsengage in fourbasicactivities: Union, NationalAssociationforthe AdvancementofColoredPeople,AmericanAssociationRetired PeopleandtheChristianCoalition fallintothis policies aroundaparticularissue orproblem.SuchprominentgroupsastheSierraClub,National OrganizationforWomen, AmericanCivilLiberties onchanging These organizationscomprisea relatively small(intermsofrevenueandnumberpeoplethey employ) categoryofnonprofitsfocused Civic andadvocacyorganizations structure andcultureofthefaith,religiousleadership individualmembers. with othernonprofitorganizationsreligiousties.Asyouwould expect,thecharacterofcongregationsanddenominationsisdeterminedby There arethereforefewopportunitiestoworkforacongregationor denominationasaprofessionalfundraiser. However, therearemanyopportunities fromitsmembers. needy) arealmostentirelyvolunteeroperations.Andasyouwould expect,congregationsarealmostentirelyreliantondonations orhousingtothe ministers, rabbis,etc.providingreligiousinstruction.Likewise, any socialservicesthatacongregationprovides(suchasclothes few largecongregationswithseveralpaidstaff(includingfundraisers), mostareverysmallandrunentirelybyvolunteers,aside fromthepriest,pastors, While therearea is importanttonotethatacongregationinanygivencommunity maybecompletelyindependentfromaparticulardenomination. to it,whiledenominationsareregionalornationalassociationsthat provideadditionalleadershipandsupportservicestoindividualcongregations.It serve ortheassistancetheyprovide.Theprimarypurposeofacongregation istoofferreligiousguidanceandeducationtheindividualsthatbelong religious affiliations(suchastheSalvationArmyorCatholicsforFreeChoice),buttheseorganizationsfallundercategory ofthecausethatthey may organizeconstitutethecategoryofreligiousorganizations.Therearemanyhospitals,schools,socialservicesagenciesand advocacygroupswith whichcongregations Congregations ofvariousreligioussects(Christian,Muslim,Jewish,Buddhist,etc.)andanydenominationsorassociationsunder The categoryofreligiousorganizations who aregenerallyacompassionateandcaringbunch.Theynot,however, necessarilyveryeducatedaboutorinterestedinfundraising. a result,fundraisingteamsareoftensmallandnotpaidtopdollar. Asafundraiser, youaremostlikelytoworkwithsocial workersandclinicians, services groupsaresmallandleanwithoutmuchofinfrastructurebeyondwhatisrequiredthembystateagenciesthefederalgovernment.As establish benchmarksandperformanceoutcomes.AsidefromorganizationsliketheSalvationArmy, CatholicCharitiesortheYMCA,mostsocial of theirheavyrelianceonpublicfunding.Moreover, theUnitedWaythat itsbeneficiaries (amajorfunderforsocialservicesgroups)alsorequires based onperformance.Thisisanissuethattheentirenonprofitsectorcontendswith,butit’s aparticularchallengeforsocial servicegroupsbecause rigorous andsomewhatcumbersomeself-evaluationprocesses,sincemanygovernmentagenciesprivatefoundationsaward contracts andgrants therefore subjecttomyriadregulationsfromthoseforfoodpreparationclientprivacy. Socialserviceagenciesmustalsowrestlewithestablishing for thepoortoasoupkitchen.Mostsocialserviceoperationsheavilyrelyonstateandfederalfunding,eitherthroughgrants orcontractsandare “nonprofit.” Thesizeandscopeofworkfortheseorganizationsisextraordinarilydiverse,rangingfromtheSalvationArmy’s multi-faceted programs nonprofit fielddescribesocialserviceagenciesasthefaceofworld,kindgroupthatmostpeoplethinkofwhentheyhearword third intermsoftotalrevenueforthesector, thesheernumberofsuchgroupsfarexceedsanyothercategory. Asaresult,manyscholarsinthe assistance organizations,rapecrisiscentersandmentalhealthcounselingfacilities,amongmany, manyothers.Whilethisclass ofnonprofitsplaces societies, housingassistanceprogramsandhomelessshelters,soupkitchens,jobtrainingcenters,childwelfaregroups,daycareoperations,immigrant This categoryencompassesabroadarrayofgroupsthatprovideresourcesandservicesforthedisableddisenfranchised, includinglegalaid The socialorhumanservicecategory career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Nonprofit 203 Customized for: Erin ([email protected]) the restofnonprofitsector, therearefarmoresmall familyfoundationsanddonor-advised fundsrunbyoneortwostaff thanlarge,professional and thosewithexpertiseinnonprofit managementmakeday-to-daydecisionsabouthowtowiselyinvest thepooloffundsandhowtodistributegrants.Like of directors(usuallyknownasthe boardoftrustees)overseesthegeneraldirectiongrant-giving.A professionalstaffoffinancialadvisors,policyexperts foundations alsocreatedonor-advised funds tohelpdonorsinanygivenlocationbeeffectivetheirphilanthropy. Likeother nonprofitorganizations,aboard own. Mostcommunity advisor whomayeitherfollowtheinstructionsofdonoronwhich charitiestosupportormaymakethosedecisionsontheir funds thatareregisteredasnonprofitorganizations.These arecomprisedofdonationsfromwealthyindividualsandmanagedbyafinancial raise fundsforresearchandtreatmentofdiseases—anexampleisthe LeukemiaandLymphoma Society. Investmentfirmscanalsoestablishdonor-advised legal group ofnonprofitorganizations.Thosecharitiesthatwishtoreceive fundsusuallygothroughanapplicationprocesstodemonstratethattheyare organizations thatfunctionasgrantgivers.Federatedcharitiesare organizationsthatcollectdonationsfromindividualsanddistributethemtoachosen involved inadvocacywork.WhileprivatefoundationsliketheFord Foundationarethemostcommonlyknown,thereinfacta varietyofnonprofit any otheractivitythangivingawaymoney, althoughthereareexceptions,suchasthePewCharitableTrusts, whichprovidesgrantsandisalso Like privatefoundationsandfederatedcharities,grant-givingorganizations fallintothe“funders”category. Thesegroupsgenerallydonotengagein Grant-giving organizations intoxicating. leadership overtheartisticdirectionofanorganization.Thatsaid,passion,dedicationandtalentartistsinvolvedwiththeseorganizationsis temperament ofartisticdirectorsandboards.Itisnotatallunusualforhighlypublicbitterfightstobreakoutbetween boardsandorganizational experienced administrativestaffbecauseofthelowersalaries,longhours(especiallywhenworkingforaperformancegroup) andthestrong corporate intereststhatseeavarietyofopportunitiestoelevatetheirprofilethroughthearts.Mostartsgroupsstruggle keepqualifiedand Art organizationsalsotendtoworkinclosepartnershipwithschoolssupportartseducationprograms.Theytryfoster relationshipswith groups infactarealwayslookingforwaystoengagenewconstituents,especiallytheGenerationX’erswhohaveaccumulatedsome wealthbynow. director. Mostrevenuecomesfromticketsales,somarketingandaudiencedevelopmentisanimportantconcernaconstantchallenge.Arts thantheartistic are thereforeconsiderablysmalleratartsorganizations,althoughtheremanycaseswhereadevelopmentdirectorispaidmore in healthcare,theartscommunityisfarlesswealthy. Revenuetohealthcaregroupsisinfact25timesgreaterthanwhatgoesthearts.Salaries literary andculturalmagazines,aswellarangeofartsappreciationgroups.Whiletherearealmostmanygroupsinthecountry These organizationsincludecommunityandprofessionaltheaters,dancecompanies,nonprofitartgalleriesmuseums,orchestr as andsymphonies, The categoryof“artsandculture”organizations difference isachallenge,especiallyinnavigatingdifferentcommunicationstyles. staff areatconsiderableriskfromterrorismandcivilstrife,mostusedtolivingwithoutmuchluxury.global workforce,cultural Withatruly staff whoarelargelyfromthecountryinwhichtheyworking.Theworkisrewarding,exciting,dangerousandstressful.Insomecountries,field report writing,sofundraisersareusuallystrongwriters.TherestofthestaffiscomprisedpolicyexpertsfromtheU.S.andabroadwithfield relief agencieswillpaytheirfundraisingstaffwell.Sincethere’s aheavyrelianceongovernmentfunding,there’s focusonproposaland alsoaheavy work. Fundraisingteamsusuallyworkfromheadquarterswithopportunitiestotravelabroad.Likeadvocacygroups,thelargest oftheinternational headquarters inWashington, D.C.orNewYork (toconnectmoredirectlytotheUnitedNations), aswellfieldofficesinthecountrieswherethey of theUnitedNation’s andU.S.government’s humanitarianrelieffundsarefunneledthroughtheseinternationalgroups,whichusuallyhave relief activitiesandadvocacy. AccordingtotheNonprofitAlmanac,morethan5,000suchgroupsareincorporatedinUnitedStates.Themajority environmental organizationsliketheOceanConservancyandConservationInternationalareexamples.Mostgroupsalsohaveadualfocusondirect quality oflife— category ofnonprofitsalsoincludesorganizationswhodonotprovidedirectassistancetocommunitiesbutperipherallyimpact economies. This direct reliefinthewakeofwarandnaturaldisasters,whileothergroupsdevotetimeenergytoeducationbuildinglocal for communitiesoutsideoftheUnitedStates,primarilyindevelopingcountries.GroupslikeAmericanRedCrossandOxfamprovideimmediate, Known abroadasnon-governmentalorganizations(NGOs),internationalreliefanddevelopmentgroupsfocusonactivitiestoimprovethequalityoflife International reliefanddevelopmentgroups intense, especiallywhenCongressandstatelegislaturesareinsession.Somefinditenergizing,whileothersquicklyburnout. c Nonprofit The Vault MBA CareerBible 204 and viablenonprofits.MostpeoplearefamiliarwiththeUnitedWay, andsocietiesthat butthereareothersuchgroups,asJewish federations policy-makers.Mostreceive © 2009Vault.com Inc. Customized for: Erin ([email protected]) the 25bestcareerstoenter. nonprofit communitygrowsintoaninfluentialsectoroftheoveralleconomy. Infact, of fundraisingandphilanthropyinAmericansocietyhasneverbeensoprominent,asfoundationsgrowlarger, thewealthygrowwealthier, andthe in Americaalonegeneratesnearly$300billionayearforsocialcausesandovermilliondifferentcharitableorganizationsi As such,thefieldoffundraisingandphilanthropyistrulyglobalwithopportunitytointeractanyeverystratasociety. Anditisafieldthat of religiousdoctrineandcodifiedintheearliestlaws. profession—that oneshouldgiveone’s wovenintothefabric wealth tohelpthelessfortunateandimproveconditionsinwhichwealllive—isdeeply to thevillagesofSub-SaharanAfrica,BuddhisttemplesJapan,GhengisKhan’s MiddleEasternempire.Thefundamentalprincipleofthe It isaprofessionhonoredthroughouttimeandpracticeundertakenbyeverykindofsocietyinstitution—fromtheLakotatribeNorthAmerica Buffett, leadersofsocialchangelikeBookerT. Washington, andcelebritiesofallsorts,fromRobertRedfordtoAngelinaJolie,Bono. Buddhist monks,theworld’s greatestthinkers (PlatoandBenjaminFranklin,forexample),industrygiantslikeAndrewCarnegie,BillGatesWarren Interested inacareerfundraisingand/orphilanthropy?You areingoodcompany. You are, infact,enteringtheranksofChristiansaintsand PHILANTHROPY ANDFUNDRAISING in theguide,jobsatfoundationsareamongmostcompetitivefundraisingandphilanthropicgivingfield. foundations runbymany. Thelargerfoundationsandfederatedcharitiesgenerallypaywellproviderathergenerousbenefits.Aswewilldiscusslater funding. Shehasevenhelpedget usnewfunders.” believed inusandtheorganization, andinturn,wecouldbecompletelyopenwithher, useherexpertiseand,ofcourse, countonherforcontinued thanbyus.Heraccoladespelledouteverything Iworkfor:notonlywasshedonatingatamajorlevel,but completely ‘never seenitdonebetter’ “One ofthebestmomentsI’veever hadinfundraisingwaswhenamajorfundertoldmethatshe hadworkedwithhundredsofnonprofitsand strong relationshipwithadonorisopen,honestandwarm.Asdescribed byafundraiser: presentations, alertthemtoimportantevents,informofmajor victoriesandsimplythankthemfortheirsupport.Likeanygoodfriendship,a whether theyareprogramofficersatafoundationorpeoplewriting uptheirwills.Theymeetwithdonors,invitethemtoeventsandinformational Establish arelationship—Fundraisersspendthevastmajorityof theirtimefindingwaystogetknowandengagepotentialexistingdonors, finances andtheirgivinghabits.Themoreinformationyouhave, themorelikelyyouaretogetsomeoneinterestedinyourorganization. a part-timeorfull-timeprospectresearchersolelyresponsiblefor identifyinglikelyprospectsandkeepingfundraisersapprised ofchangesinpeople’s in yourissue,and,(3)feelconnectedtoorganization.Mostlarge nonprofitorganizations(thosewithbudgetsof$10millionormore)employeither known as“prospects,”takescarefulresearch.Asuccessfulfundraiser developsalistofpotentialdonorswho(1)havetheabilitytogive,(2)interest doesn’t careabouttheissuethatyourorganizationaddresses,then youactuallydon’tknowtherightpeople.Infact,identifyingpotentialdonors,also group states,“IfyouhappentobebestfriendswithBillGates,sure, chancesarehe’dsupportyourcause.”Butifbestfriendwithatrustfund Identify therightpeople—Ifyousurroundyourselfwithwealthypeople, thismayseemobviousandeasy. Asonefundraiserforanationalenvironmental around fivebasicstrategies: time willmakeafundamentaldifferenceintheworld.Therefore,fundraiser’s daily activities(nomatterwhathisorherparticularspecialty)revolve establishing arapportwiththem,andgivingthemtherightinformationargumentstoconvincethattheirsupportofyour organizationover finding thosepeople, So askingformoneyfromsomeonewhodeeplycaresaboutyourorganizationistheeasiestthinginworld.Thehardpart foundation ormeetingwithapossiblemajordonortoyourorganization,it’s allaboutnurturingandbuildingrelationshipsforthelonghaul.” your cause.Asonefundraisingconsultantputsit,“Nomatterifyou’recreatinganindividualdonorcampaignorwritingaletter ofinquirytoa help thatpersongetinvestedinyouandorganization.Andthat’s aboutestablishingandstrengtheningarelationshipwith peoplewhocareabout The mantraoftheprofessionalfundraiserisverysimple:peoplegivetopeople.Soinordergetsomeoneinvestyour organization, youneedto numbers likeatelemarketer, youareunlikelytohavemuchsuccess. you meettowriteacheck(andyou’veseenthoseeageryoungfolksonstreetcornerswiththeirclipboards),orrunningthrough alistoftelephone Here’s themostworst-keptsecretamongfundraisers:youactuallyspendverylittletime“begging”formoney.are askingevery person Infact,ifyou day,” or“Howhardcanitbetoaskpeopleformoneyallday?” People generallyhaveoneoftworeactionstothewholenotionprofessionalfundraising.It’s either, peoplefor money all “God,howawfultobeg professionals inthebusinesswillquicklyletyouknowthatfocusoftheirworkisfundamentallydifferent. to landthebigfishdonor—theprimaryfocusismoney, eitheraskingforitordistributingit.Well, let’s throwthatnotionbackouttosea,formost or asthefundraiserlooking It wouldseemthatfromeithersideofthefence—asphilanthropicgivingprofessionallookingouttoseanonprofits Professional fundraising career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, U.S. News & World Report Report World & News U.S. recently namedfundraisingasoneof n Americaafloat.Therole The Vault MBA CareerBible Nonprofit 205 Customized for: Erin ([email protected]) inevitable “no”comesyourway. organization, itsprograms,fundraising practices,itsfinancialhealth;SigmundFreud’s listeningskills;andLanceArmstrong’s resiliencewhenthe about acause;PresidentClinton’s charmandconfidencetomakeacaseforsomeonedonate;Stephen Hawking’s deepknowledgeaboutan KingJr.’sfundraisers andgivingprofessionalsaspossessingthesamequalities ofgreatsocialleadersandthinkers.TheyhaveMartinLuther passion themostsuccessful Is thisahighercalling?Manyinthefieldwillsayyes.Thedirector ofdevelopmentatabreastcancerawarenessgroupdescribes people, communitiesandcauses. investment portfolios.Theyaremediatorsandfacilitators,building crucialrelationshipstowardsuccessfulphilanthropyinthatlargersenseofserving cooperation fromnonprofitorganizations.Butthebestinfield considerthemselvesadvocatesforacause,callingbeyond schmoozingandsound investment decisionstogrowfoundationendowmentsanddonor-advised funds.Heisalsoperfectlywillingtousemoneyasanincentive toensure tomakesound socialite withthebiginheritance.Andaneffectivephilanthropic givingprofessionaliskeenlyawareofhisorherresponsibility managers orsalespeople.Agoodfundraisermaybeabletowork acocktailparty, chattinguptheentrepreneurwhojustsoldhiscompanyor to anendandnotbeforgotten.Butmostfundraisers philanthropic givingprofessionalswoulddescribethemselvesasmorethanmoney So intruth,fundraisingandphilanthropyboilsdowntopeople therelationshipsbetweendonors,organizationsandcauses. Moneyisthemeans and issuestobecomeimportantpartnersforsocialchange. problems ofacommunity, suchasimmigration,homelessnessorhealthcarecoverage.Butsophisticateddonorsalsodeeplyinvestinorganizations addressthe leaders, policyexperts,mayors,countycommissioners,MembersofCongress,businesses,activistsandnonprofitorganizations to community Giving institutionsoftenestablishanddrivethesepartnership—communityfoundationsinparticularbringtogetherwealthyindividuals, support communities,causesandorganizations,thismeansthatpartnershipstakemanydifferentformsinclude differentplayers. want tobuildlong-lastingpartnershipswiththenonprofitorganizationsthattheycareabout.Moreover,look forcreativewaysto donorsatalllevels andmorethanever As wastrue140yearsagowhenthefirstfoundationsinvestedineducationforfreedslaves,philanthropistsareactiveparticipants, or grantandtobetterunderstandthechallengesopportunitiesthattheyface. strategies foraddressinganissue.Andyouneedtotracktheprogressofgroupswhomdonate,bothassesseffectiveness ofyourgift to buildarelationshipwiththosegroups,understandtheiruniqueroleinthenonprofitcommunity, theirchallengesandcapacityneeds, the organizationsthatfitinterestsofdonororguidelinesfoundationandyoubelieveareeffectivein whattheydo.You alsoneed youneedtoidentify trust orsupervisingagrant-givingprogramatfoundation,youwantthemoneytomakemostimpactaspossible.Therefore withacharitable that youarelookingtogive(ratherthanask)attherighttimeandcharitablecause.Whetheradvisingsomeone The samebasicframeworkforrelationshipbuildingholdstruetheprofessionalphilanthropistwhogivesmoneyaway, theonlyrealdifferencebeing Professional philanthropy federal budgetsimpacttheorganization,bothpositivelyandnegatively. stateand important asoutliningtheopportunitiesthatanorganizationispursuing.Forexample,manyfundraisersneedtoexplainhow shrinking them withothersintheorganization.Afundraiserisalsolikelytobeonediscussproblemsandchallengesdonors A goodfundraiserreportsbackregularlytodonors,tellingthemhowtheirmoneywasspent,informingofnewactivitiesordirections,andengaging comes in.Your donorneedsjustasmuchtimeandattentionafterwards,especiallyifyouthinkheorsheiscapableofgiving more moneyinthefuture. Strengthen therelationship—To paraphraseThe Carpenters’classicballad,you’veonlyjustbegunwhenyourdonorwritesthatcheckorgrant have beeninvolvedincultivatingtherelationshipwithdonor. in thebusinessas“acknowledgementprocess”andisoftensupervisedbydevelopmentassistant,withinputfromotherdevelopmentstaffthat is also known letters forhundredsorthousandsofdonorsandsendoutthemembershipgifts.Theproceduresgeneratingthesethankyou of thankingmembersfortheirdonationisoftenmoreelaboratethanthemembershipdriveitself,staffmustgeneratepersonalized thankyou personalized thankyouletterfromtheexecutivedirector, oftencomingontheheelsofaphonecallfromdevelopmentstaff person.Theprocess operations havearuleofthankingmajordonors(includingfoundationofficersandcorporatecommunityrelationsdirectors)within48hourswith as afundraiserappreciatethepersonbehindgift.Indeed,thatthankyoualonecanguaranteeanothergiftinfuture. Mostdevelopment overemphasized. Everydonor—whetherheorshehasgiven$5million—wantstoknowthathishergiftmadeadifference, andthatyou Thank thedonor—Thismayseemlikeanotherobviousstepinfundraising,butimportanceofapromptandproperthankyouforgiftcannotbe of theirgivinginterests.Again,youneedtoknowyourdonorswhenaskformoney. similar mission,andarethereforetappedo Nonprofit The Vault MBA CareerBible 206 , whichcanbejustas © 2009Vault.com Inc. Customized for: Erin ([email protected]) distribution ofgrantfunds. of trusteestooverseeoperations.Afoundation’s boardoftrusteesisultimatelyresponsibleforthefinancialhealthfoundationandeffective officers aretaskedwithspendingdownassetsinamoreaggressivemanner. Likeallothernonprofitorganizations,foundationsmustestablishaboard any givenyear, andmostgiveawayaboutthatmuch.However,and thereforeprogram somefoundationsaresetuptodissolveatapointinthefuture foundations; thosewithmultiplesourcesareknownaspublicfoundations.Bylaw, foundationsarerequiredtodistribute5percentof their assetsin arereferredto asprivate group ofdifferentfundsvaryingsize(asistrueforthecommunityfoundation).Foundationswithasinglesourceassets pocket ofawealthyindividual(inthecasefamilyfoundation),percentagecorporateprofitscorporatefoundation)orfrom making programs.Afoundationisbuiltfromapoolofassetscarefullyinvestedovertime.Thosecancomevariety ofplaces—fromthe nonprofit organizations.Foundationsarethemselvesorganizationsbutwiththesinglepurposeofsupportingothernonprofitsthroughgrant- In thesimplestterms,afoundationofficerisgatekeeperatfoundation,determininghowtodistributepoolofgrantfunds eachyeartoworthy feared byfundraisersandnonprofitexecutivedirectorsalike. courted and foundations, programofficersaretheelite,intellectualpowerhousesbehindphilanthropyinAmericaandworld.Theyadmired, Perhaps themostprestigiousjobinphilanthropicgivingworldisthatofafoundationofficer, alsoknownasaprogramofficer. Atthelargest FOUNDATION/PROGRAM OFFICER and MelindaGatesFoundation).Thefoundationrecentlyhireda managementconsultantfromMcKinseytotakeoveraspresident. largestistheBill leadership, asevidencedbytherecentchangeinguardatFord Foundation,thesecondlargestfoundationincountry(the working atnonprofitorganizationsinsomecapacity. It’s important tonotethatthelargestfoundationsarenowlookingcorporateworldfor have alsospenttime educated withabackgroundinparticularissue,suchasurban planning,reproductiverightspolicyorperformingarts.They To beinapositiontoevaluatethepotentialofnonprofitorganizations,youneedexpertiseandexperience.Foundation officersarethereforehighly to helptheorganizationfurthershapeprogramactivitiesandcampaigns. officermaywant that theyrequirethefoundationtosendalongperiodicprogress reports. Itcanalsomeanmoredirectinvolvement;thefoundation foundation staffandtheboard.Ifapproved,officer isthenchargedwithmonitoringtheprogressofgrantee; thatmaymerelymean where thefoundationofficerservesasadvocateforgrant-seekingnonprofitorganizationataseriesofmeetingsand presentations with grant proposalswithminimalinterferencefromtheboardoftrustees.Atotherfoundations,therearelengthyandcomplicated reviewprocedures, case forsupport.Theproposalreviewprocessateachfoundationisdifferent;insomecases,officershavetheauthority toapproveorreject If afoundationofficerbelievesthatnonprofitorganizationisstrongcandidateforfunding,he/shewillasksomekindofproposalmakesthe the communityandfurtherrefinefoundation’s missiontomeetparticularchallengesandneeds. not provideanyotherguidanceonwhatkindofnonprofitorganizationstosupport.Butasthatfoundationmatures,theboardoftrusteesmaysurvey example, awealthyentrepreneurmayestablishfoundationtofundnonprofitorganizationsinparticularcommunity, suchashis/her hometown,but trustees. It’s passon.For notuncommonforafoundationtochangeitsmissionandgivingprioritiesovertime,especiallyiffoundingmembers giving priorities,usuallyestablishedbythepersonorcorporationthatfoundation,andstrategicplanninginitiatedboardof meeting withleadersatothernonprofitorganizationsprovidingsimilarorcomplementaryservices.Programofficersarealsoguided bythefoundation’s interviewing staffatagrant-seekingorganization,visitingtheorganization’s facilitiesand/orthecommunitiesthatgrant-seeker serves,aswell A foundationofficerthenmustevaluatepotentialgrantees,determiningiftheyareagoodfitforthefoundation.Theevaluationprocessusuallyinvolves introduction lettertoaprogramofficer. member atagrant-seekingnonprofithasbusinessorpersonalrelationshipwithboardfoundationfundraiser writesacompelling organizations. Mostofthetime,initialcontactismadebygrant-seeker. Anexecutivedirectormeetsaprogramofficeratmeeting,board staff ofgrant-seeking up withrequests.Sothegrant-makingprocessusuallybeginsasaseriesofconversationsbetweenfoundationofficersand program officerstokeep Most foundationstodaywillnotacceptunsolicitedgrantproposals;therearesimplytoomanygroupsseekingfundingfor process forreviewinggrantapplications. percentage offoundations,sincethevastmajorityfoundationsarerunbyvolunteerboardstrustees—usuallyestablisha formal andrigorous grant-making process.Everyfoundationhasadifferentwayofdoingbusiness.Foundationsthatemployprogramofficers—and th As agatekeeper, thefoundationofficerisprimarycontacttononprofitorganizationsseekinggrantsandkeycoordinatoroffoundation’s What doesthefoundationofficerdo? career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible is averysmall Nonprofit 207 Customized for: Erin ([email protected]) including your foundation, have joined officials at local art councils and state cultural agencies to create a new mechanism for capturingdemographic including yourfoundation,havejoined officialsatlocalartcouncilsandstateculturalagenciesto create anewmechanismfor 2:05 p.m.:Rundownthestairsforameeting intheconferenceroomonRegionalArtsandCultureInformation Project.Agroupoffive funders, a littlelateformeeting. You noticethatwhileyouhavebeenon thephone,you’vereceivedthreevoicemailmessages.You don’thave timetoreviewthemnow, sinceyou’re decline. You justdon’tthinkyouhavetimetoday, especiallysinceyouneedtotryandreviewacoupleoflettersinquirytodaytomorrow. butyou opening remarksbutrathershouldbepreparedtoanswerquestions fromtheaudience.Heasksifyoucanjoinhimfordinnerbeforehand, impact ofurbanrevitalizationeffortsonartsandcultureinstitutions inthecity. You assuretheprofessorthathedoesnot needtoprepareextensive report projectandismeanttobringurbanplanningexpertseconomists, cityofficialsandleadersfromtheartscommunitytogethertodiscuss from NewYork University, who isabouttocatchthetraindownforatownhallmeetingyouhavehelpedorganize.The anoutgrowthofthe youth orchestraandanartgalleryfocusedondisplayingworkby at-riskchildren—andschedulesitevisits.You alsogetintouchwiththeprofessor 1:15 p.m.:Getbacktoyourofficemakeafewmorephonecalls.You catch up withthedevelopmentdirectorsfortwodifferentorganiza groups withaudiencedevelopmentandmarketing. effortstoassist boss wantsyoutogiveapresentationfocusedonvariousprojects youaremanaging,includingtheperformingartsreportandvarious and theboardhasaskedeachoffourprogramteamstoschedule adaylongretreattodiscussprogresstowardgoalsandlessonslearned.Your You five-yearstrategic plan two alsodiscusstheupcomingplanningretreatwithboardoftrustees.Thefoundationisenteringthirdyearits Your boss asksifyoucouldarrangeaone-on-onemeetingwithhimandthedevelopersothathecanseesystemforhimself. two ofyoucancatchuponthingsoutsideweeklystaffmeetings.You spendmostofthelunchdescribingpresentationbysoftwaredeveloper. 11:35 a.m.:StepoutthedoorwithyourbossforamealatChineserestaurantdownblock.Thisisperiodiclunchheschedulesso thatthe will beupandrunningintimeforthreeperformingartsgroupstouseitticketsalesnextseason. to introducethewebsiteandinterfaceforsystem.It’s impressiveandseemseasytouse.Thedeveloperdeclaresheisconfidentthatthesystem developer hassetupthesemonthlycallstodiscussprogressonthesystem.Today, thedeveloperistakinggroupthroughanonline presentation Thesoftware the CulturalAlliancethatwillallowabroadrangeofnonprofitartsorganizationstomanageticketssalesanddemographicinformation. development. Yourto bemanaged by foundationisoneofthreefundersthathaveinvestedinanonlineticketingandaudiencemanagementsystem 10:15 a.m.:JointhemonthlyconferencecallforCulturalAlliance,aconsortiumofartsorganizationsacrossregionfocusedonaud ience explaining thatthedirectorofdevelopmentandherassistantarebothoutwithflu. laterthananticipated, fine tosubmitaletterofintentsometimenextweek.Heisextraordinarilyapologeticthatthewillcomeseveraldays curious toseehowthenewhiresareworkingout.Thenyouspeakwithexecutivedirectorofasmallpuppettheater, assuringhimthatit’s perfectly review beforethevisit;grantfoundationgavelastyearwastohelpcompanyhireanewmarketingdirectorandcontract publicist.You’re three daysnextmonthwhenyouwouldbeavailableforasitevisit.You alsoaskthatshesendyouacopyofthecompany’s latestmarketingplanto evaluating theimpactofnewprogramsonaudienceattendance.You leaveamessageforthedirectorofdevelopmentdancecompanygivingher necessary toupdatethematall,thattheonessubmittedlastyearprovidedalotofinformationfoundation’s boardonhowthemuseumwas who hadaquestionabouthowtoupdateoutcomemeasuresintheletterofintentthatmuseumissubmityou. You tellher it’s not 9:20 a.m.:Startreturningphonemessages;youhadfivefromyesterdayvariousgrantees.You museum, callthegrantwriteratnaturalhistory week. the foundation.You alsoletyourbossknowthatyouhaveinvitedtwootherorganizationstosubmitletters,andexpectreceivethembynext off the13organizationsthathavesentyouletters,athree-pagerequestsummaryservesasfirststepinproposalsubmissionprocessfor email fromhimaskingforalistofthelettersinquirytobeconsideredatnextreviewmeetingoccurend month.You quicklytick You lunch.There’s alsorespondtoanemailfromyourboss,thedirectorofartsandcultureprogram,confirmingthatyouareavailablefor alsoan is quotedinthearticle. bolster localeconomies.You’re gladtoseethatoneoftheeconomistsyoubroughtonboardproject,aprofessorfromNewYork University, develop, asurveyofperformingartsorganizationswithcommentaryfromseveraleconomistsonthemanywaysinwhichandcultureactivities performing artsintheregion.You takeaminutetoreadthisarticleinfull.It’sfunded andthatyouhelped centeredonareportthatthefoundation new executivedirectorofthecity’s chamber orchestraandafeaturearticleintheEnquirer(theprimarynewspaperforreg questions. You sc Nonprofit The Vault MBA CareerBible 208 ion) onthestatusof © 2009Vault.com Inc. tions—a Customized for: Erin ([email protected]) without interruption. send aquickemailtoyourbossremindhimthatyouwillbeworking fromhomeinthemorning.You wantalittlequiettimetoreviewlettersofintent 9:15 p.m.:Arrivehomeafterthereception.You’re quitefull(thehorsd’oeuvreswere tastyandyouhadonetoomanybruschetta)quitetired.You perhaps thefoundationcanfindalittlemoneyforstudytodetermine theviabilityofsuchaprojectinthisregion. wonders outloudifitwouldbepossibletoreplicatethatmodel elsewhere.You makeamentalnotetocontinuethisconversation withyourboss; the city.to convincearealestatedevelopersetasidefewunitsofartist housinginanewapartmentcomplexonthesouthsideof Theprofessor arts groupsandrealestatedevelopers.HementionsaninitiativeinChicagowherethecitycommissionworkedwithlocalfoundationsbankers As yourbossheadsoutthedoor, youcatchupwiththeprofessorandcongratulatehim.You twotalkabitabouthowtobuildbetterrelationsbetween mentoring opportunitiesfortheartisticdirectoraroundfundraising. the letterofintentyoureadthisafternoonfromsmalltheatergroupfocusedonnewwork.You alldiscusswaysthatthefoundationmightfindsome meeting aboutahalf-hourlate.He’s veryexcitedaboutthediscussionoftheaterfringefestival;it’s You oneofhispetprojects. talktohimabout 7:50 p.m.:Grababottleofsparklingwateratthedrinkstableandjoinreception.You catchyourboss’eye,andhewandersover. Hejoinedthe your FeetDanceJamboreearementionedrepeatedly—twofestivalsthatfoundationhasfundedsincetheirstart. There’s festivalandtheGeton arichconversationabouttheimportanceoffestivalsincreatingsenseunityneighborhoods.Thetheatrefringe developers. You’re gladthatthefacilitator, thedirectorofartsadministrationprogramat theUniversityofPittsburgh, isstrongandunflappable. last minute.Thelargemeetinghallisthree-quartersfull.discussionlivelyandthere’s somestrongstatementsmadeagainstrealestate 6:15 p.m.:Sitdownasthetownmeetinggetsunderway. It’s startingabitlate,butthat’s largelytoaccommodatealargecrowdwhocameinatthe to seethatmembersofthelocalactor’s unionhavecome,aswellsomelocalstore ownersandoneofthebigrealestatedevelopersinarea. to hireacontractor. Asmorepeoplearrive,youtwoseparatetoshakehandswithvariousparticipants,mostofwhomaregrantees. Butyou’repleased afternoon. SheispartoftheteamleadingRegionalArtsandCulturalInformationProjectjustasfrustratedyou professor awaytogetfittedforamicrophone.You andyourfriendfromthecommunityfoundationcomplainabitaboutmeet New York Universityandacolleaguefromcommunityfoundation.Theprimaryhostofthemeeting,presidentCultural Alliance,takesthe and anumberofyourcolleaguesfromotherfoundationshavearrived.You chitchatoutsidethemeetinghallforabitwithyour professorfriendfrom 5:30 p.m.:Arriveatthelibraryfullfromatriple-deckersandwichnearbydeli.Themeetingstartsinhalf-hour, andyouseethat thepanelists with justenoughtimetograbasandwichbeforehand. 4:35 p.m.:Leavetheofficeinordertograbtraincity. You shouldbeabletogetthecentral library, istobeheld, wherethetownmeeting at anotherfoundationwithatechnicalassistancefundforsmallartsorganizations. for theorganization;perhapsyoucanhelpthemhiresomecontractorstowithfundraisingefforts.You alsomakeanotetotalkwith yourcolleague make itthroughthefirststepofreviewprocess.You decidetogivetheartisticdirectoracalltalkaboutpossibilityofsmall planning grant and riddledwithtypos.Andtheartisticdirectordoesn’tseemtoquiteunderstandwhatanoutcomemeasureis.You thinktheletterwill justdon’t then promotethoseproductionsthataresuccessfulatthefestivaltootherlocaltheateranddancecompanies.Unfortunately, theletterispoorlywritten The basicconceptdescribedintheletterisexciting;organizationwantstolinkupwithlocaltheaterfringefestivalshowcasenewworkand organization, youaskedhertosubmitaletterofintent. especially sinceyouguessedshewasn’tyet30.Afterinvitinghertoyourofficeforalongerconversationaboutthedirectionwantstake sophistication oftheproduction.You spoketotheartisticdirectorafterperformanceandagain,youwereimpressedbyherlevelof sophistication, glowing reviewinthelocalpaperofonetheirworkshopproductionsandattended.You wereimpressedwiththequalityof workandthe received yesterday. It’s fromafledglingperformingartsgroupsfocusedonincubatingnewtheateranddancepieces.Sixmonthsago, youreada 3:45 p.m.:Returntoyourofficeandreviewvoicemailmessages.Noneofthemareurgent,soyoudecidefocusonthedraftletter sign offonit,andyounowhopetheprojectcanmovealongatafasterpace. the contractor. Onceagain,theteamreviewsdraftrequest,whichhasgonethroughatleast10iterations.Itlookslikeeveryoneisfinallyreadyto later onceyouhavehiredacontractortodesignthesystem.Andnowgroupisstrugglingputtogetherrequestforproposals inordertohire the projectisgoingslowly. Thegrouphasspentmanyweeksdeliberatingonwhatkindofdatatocompile,aconversationthatyouthinkshouldhappen information aboutaudiencesthatattendartevents,aswellfinancialdatafromartsorganizationtogaugetheirhealthandgrowth.Unfortunate career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, thatit’s takingsolongjust The Vault MBA CareerBible ing earlierthis of intentyou Nonprofit 209 Customized for: Erin ([email protected]) www.americares.org Fax: (203)966-6028 Phone: (203)658-9500 Stamford, CT06902 88 HamiltonAvenue AmeriCares Foundation,Inc. www.aspca.org Fax: (212)423-9813 Phone: (212)876-7700 New York, NY10128-6804 424 East92ndStreet of CrueltytoAnimals(ASPCA) American SocietyforthePrevention www.redcross.org Phone: (202)303-4498 Washington, DC20006 2025 EStreetNW American RedCross www.americanheart.org Fax: (214)706-1191 Phone: (214)373-6300 Dallas, TX75231 7272 GreenvilleAvenue American HeartAssociation,Inc. www.aclu.org Fax: (212)549-2646 Phone: (212)549-2500 New York, NY10004-2400 125 BroadStreet,18thFloor (ACLU) American CivilLibertiesUnion www.cancer.org Fax: (404)982-3677 Phone: (404)320-3333 Atlanta, GA30329 1599 CliftonRoadNE American CancerSociety, Inc. www.aarp.org Fax: (202)434-6548 Phone: (202)434-2277 Washington, DC20049 601 EStreetNW AARP EMPLOYER DIRECTORY Nonprofit The Vault MBA CareerBible 210 www.bgca.org Fax: (404)487-5705 Phone: (404)487-5700 Atlanta, GA30309 1275 PeachtreeStreetNE Boys &GirlsClubsofAmerica www.scouting.org Fax: (972)580-2413 Phone: (972)580-2401 Irving, TX75015 1325 West Walnut HillLane The BoyScoutsofAmerica www.gatesfoundation.org Fax: (206)709-9180 Phone: (206)709-3100 Seattle, WA 98102 1551 EastlakeAvenue East The Bill&MelindaGatesFoundation www.bbbsa.org Fax: (215)567-0394 Phone: (215)567-7000 Philadelphia, PA 19107 230 North13thStreet Big BrothersSistersofAmerica www.amnestyusa.org Fax: (212)627-1451 Phone: (212)807-8400 New York, NY10001 Five PennPlaza Amnesty InternationalUSA www.americorps.org Phone: (202)606-5000 Washington, DC20525 1201 NewYork Avenue NW AmeriCorps Fax: (312)263-5626 Phone: (312)263-2302 Chicago, IL60601 35 EastWacker Drive,Suite2000 America’s SecondHarvest www.fordfound.org Fax: (212)351-3677 Phone: (212)573-5000 New York, NY10017 320 East43rdStreet The FordFoundation www.cpb.org Fax: (202)879-9700 Phone: (202)879-9600 Washington, DC20004 402 9thStreetNW Corporation forPublicBroadcasting www.carnegie.org Fax: (212)754-4073 Phone: (212)371-3200 New York, NY10022 437 MadisonAvenue Carnegie Corporation www.hrw.org Fax: (212)736-1300 Phone: (212)290-4700 New York, NY10118-3299 350 5thAvenue, 34thFloor Human RightsWatch www.habitat.org Fax: (229)924-6541 Phone: (229)924-6935 Americus, GA31709 121 HabitatStreet Habitat forHumanityInternational www.goodwill.org Fax: (301)530-1516 Phone: (301)530-6500 Rockville, MD20855 15810 IndianolaAvenue Goodwill IndustriesInternational www.girlscouts.org Fax: (212)852-6514 Phone: (212)852-8000 New York, NY10018 420 5thAvenue America Girl ScoutsoftheUnitedStates © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.marchofdimes.com Fax: (914)428-8203 Phone: (914)428-7100 White Plains,NY10605 1275 MamaroneckAvenue March ofDimesFoundation www.hsus.org Fax: (202)778-6132 Phone: (202)452-1100 Washington, DC20037 2100 LStreetNW States The HumaneSocietyoftheUnited EMPLOYER DIRECTORY (CONT.) www.soros.org Fax: (212)548-4679 Phone: (212)548-0600 New York, NY10019 400 West 59thStreet Open SocietyInstitute www.nwlc.org Phone: (202)588-5180 Washington, DC20036 11 DupontCircleNW, Suite800 National Women’s LawCenter www.msf.org Fax: +32-2-280-0173 Phone: +32-2-280-1881 Belgium 1040 Brussels Rue delaTourelle, 39 Médecins SansFrontières career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.salvationarmyusa.org Fax: (703)684-3478 Phone: (703)684-5500 Alexandria, VA 22313 615 SlatersLane The SalvationArmy www.rotary.org Fax: (847)328-8281 Phone: (847)866-3000 Evanston, IL60201-3698 1560 ShermanAvenue 1 RotaryCenter Rotary International www.rockfound.org Fax: (212)764-3468 Phone: (212)869-8500 New York, NY10018 420 5thAvenue The RockefellerFoundation www.plannedparenthood.org Fax: (212)245-1845 Phone: (212)541-7800 New York, NY10001 434 West 33rdStreet America, Inc. Planned ParenthoodFederationof www.peacecorps.gov Fax: (202)692-2901 Phone: (202)692-2230 Washington, DC20526 1111 20thStreetNW The PeaceCorps www.unicef.com Fax: (212)887-7465 Phone: (212)326-7000 New York, NY10017 3 UnitedNationsPlaza UNICEF www.teachforamerica.org Fax: (212)279-2081 Phone: (212)279-2080 New York, NY10018 315 West 36thStreet,7thFloor Teach forAmerica,Inc. www.si.edu Fax: (202)786-2377 Phone: (202)633-1000 Washington, DC20560 1000 JeffersonDriveSW Smithsonian Institution www.ymca.net Fax: (312)977-9063 Phone: (312)977-0031 Chicago, IL60606 202 NorthWacker Drive YMCA oftheUSA national.unitedway.org Fax: (703)683-7840 Phone: (703)836-7100 Alexandria, VA 22314 701 NorthFairfaxStreet United Way ofAmerica www.un.org Fax: (212)963-3133 Phone: (212)963-1234 New York, NY10017 1st Avenue at46thStreet United Nations The Vault MBA CareerBible Nonprofit 211 Customized for: Erin ([email protected]) companies alsobegantousecontractresearchorganizationsformoreoftheirR&Defforts. Pharma, the1990swerefilledwithturmoil.Therelotsofmergersandacquisitionsinindustryduringthatdecade, and pharmaceutical biologic Herceptin.Inthe1980s,drugcompaniesfacednewenvironmentalandsafetyregulationsmountingeconomic pressure The modernbiotechbusinesswasbornwhenHerbertBoyerandRobertSwansonfoundedGenentech,whicheventuallymade thebreastcancer Pharmaceutical companiesresearchedanddevelopednewcancertreatments,includingchemotherapy, inthe1970s. the 1950sand1960s,companiesstartedtomassproducemarketnewdrugs,includingblood-pressuremedications,birthcontrol pillsandValium. discovered miracledrugssuchasinsulinandpenicillin,pharmaceuticalcompaniesbegantomarketresearchers’lifesaving inventions. During manufacturers. Forinstance,FrederichBayerfoundedinGermany1863tomakesyntheticdyes.Inthe1920sand1930s,scientists Many oftoday’s bigpharmaceuticalfirmshave rootsthatgobacktothelate19thorearly20thcentury. Notallofthesecompanies startedoutasdrug From aspirintoHerceptin:abriefhistoryoftheindustry pharmaceutical industrymoveduptosecond.In2007,itslidbackthird. Pharmaceutical manufacturersdidn’tfareaswellafterward,however, bouncingwithinthetopfive.In2005,itrankedfifth,and by2006,the According totheKaiserFamilyFoundation,from19952002,pharmaceuticalbusinesswasmostlucrativeindustryinAmerica. billion inglobalreceipts.By2012,thetotalforallindustry’s worldwideplayersisexpectedtosurpass$1trillion. Big Pharmaiswheremostoftheindustry’s sales aregenerated.Duringthe2008fiscalyear, thetop-20companiesinindustry posted about$387 known as“BigPharma”becausetheyarehugeresearch,developmentandmanufacturingcompanieswithsubsidiariesaroundtheglobe.Indeed, integrated drugmanufacturers.Thelargestoftheseplayers—companieslikePfizer, GlaxoSmithKlineandMerck—aswellasahandfulofothersare Strictly speaking,theterm“pharmaceuticals”referstomedicinescomposedofsmall,syntheticallyproducedmolecules,whicharesoldbylarge,fully Small moleculesandlargecompanies WHAT’S INANAME:BIGPHARMAANDBIOPHARMA Pharmaceuticals andBiotech Because ofthesecharacteristics, biotechproductsareoftenreferredtoasspecialtypharmaceuticals. To complicatematters,somebiologicsreach rare geneticdiseases).Theirbiologics aresoldbyspecialtysalesrepresentatives,whooftenhave arelativelyhighdegreeof scientificknowledge. The biotechfirms,ontheotherhand, tendtobefocusedaroundsmallerfranchises(i.e.,theirproducts aretargetedtosmall patient populationswith to morethansixmillionpeople. a BigPharmablockbusterisAstraZeneca’s cholesterol-loweringCrestor, whichearnedmorethan$3.6billioninsales2008andhasbeenprescribed broadly actingdrugs).Byindustryconsensus,a“blockbuster”is adrugwithanannualrevenuethatreachesorexceeds$1billion. Oneexampleof fromahandfulof Pharmaceutical companiesaregenerallyorganizedaroundthe“blockbuster” model(i.e.,theyderivemostoftheirsalesandprofits Complex structures molecules (oroldchemistry),andinjectablelarge biologics). and meetinvestorexpectations.Bigdrugmanufacturerscannow claimtoresearch,manufactureandselltwogeneralclassesofdrugs:syntheticsmall In fact,innovationistheindustry’s biggestcurrentchallenge.Companiesregularlyuseacquisitionsandalliances toroundout theirproductpipelines to slowconsiderably(duecreditconcerns)attheendofdecade comparedtotheboomperiodbetween2000and2006. throughout therestofdecade—sinceit’s increasinglydifficulttofindinnovativenewdrugsthroughtraditional science—thoughthepaceisexpected invented.” (ThedeallikelyspurredEliLilly’s tocontinuein2010and $6.5billionstrategicannexationofImCloneSystems,too.)This trendislikely the companies’pre-existingalliancewithregardstoseveralpharmaceuticals,“mostofRoche’s drugsalesnowcomefromproductsGenentech acquisitions. AndRochelaunchedamassive$44billionhostiletakeoverbidforGenentechinJuly2008—Forbes.comwentsofar astosaythat,with and Abmaxis.During2007,therewere417pharma-biotechalliancesforged,473inter-biotech and projectpartnerships,and126mergers agreements. Forexample,in2006,AstraZenecaacquiredsmallbiotechfirmCambridgeAntibodyTechnology GroupandMerckpurchasedGlycoFi Most ofthelargestBigPharmaplayershaveeithergobbledupsmallbiotechsthroughoutrightacquisitionsor, alternatively, haveenteredintolicensing are movingtargets.Thisisbecausethepharmaceuticalandbiotechindustriesgraduallyintegratingintooneindustry. Before wehelpyouchartacareerintheindustry, weshouldpointoutthatboththescopeofplayersandtypesproducts theindustryproduces researchers founditincreasedpatients’riskofheartattack. and concernsoverdrugsafetyhavemadeittheindustrymanypeoplelovetohate.In2007,diabetesmedicationAvandia headlines after madethe social anxietydisorder. Yet despitelifesaving,cancer-fighting drugsandsignificantcorporatephilanthropy, morerecently, Big Pharma’s productrecalls Big Pharmaisresponsibleforallthosetelevisioncommercialsurgingustocontactourdoctorsifwesuspectsufferfromrestlesslegsyndromeor Big Pharma s. ForBig 213 Customized for: Erin ([email protected]) specific genes. Pharmaceuticals andAlnylamPharmaceuticals), afirmthatisstudyingmicroRNA,whichregulates theexpressionofcharacteristics“ordered”by betweenIsis Amgen. AndinApril2008,GlaxoSmithKline brokereda$600millionalliancewithoneRegulus Theraputics(itselfajointventure diabetes, hasacollaborationand supplyagreementwithEliLilly. Nuvelo(nowARCAbiopharma,Inc.)hascollaborated inthepastwithBayerand Big Biotech.Forexample,California-headquartered Amylin,whichhasdevelopednewmedicines (exenatide,forone)thetreatmentoftype2 withBigPharmaand hope willbebighitsdowntheline.Inrecentyears,tostayafloat, somesmallbiotechcompanieshaveenteredintopartnerships Many smaller, pipeline,whichthey younger biotechcompanies,ontheotherhand,haveyettoseeaprofit.Thesefirmsarecountingdrugsin Biogen Idecbroughtinmore$783millionprofitonsalesof$2.8 billion. companies, BigBiotechsometimeshasbigprofits.Forexample, in 2008Genentech’s revenuetopped$13.4 billionwith$3.4inearnings,while midsized orlargepharmaceuticalcompanies,theyareverticallyintegrated companiesthatresearch,developandmarkettheirproducts. Andlikelarger largest biotechsaresometimescalled“BigBiotech,”thoughthey areactuallymidsizedpharmaceuticalcompaniesinthewaytheyfunction.Like ownproducts.The “fully integrated”liketheirBigPharmacousins.Theterm integrated”meansthattheymanufactureaswellselltheir Alzheimer’s tomultiple sclerosis.Ahandfulofcompanies—suchasAmgenandGenentech—havebrokenthroughtherestpack tobecome ofdiseases,from Most healthcarebiotechnologyfirmsaresmallresearch-oriented companiesdedicatedtoapplyinggeneticscuringamultitude Small vs.bigbiotech United States. companies. Therestareprivate,discoveryresearch-orientedfirms.In2005,thehealthcarebiotechindustry’s revenuetopped$50billioninthe December 2005,andincreasefromabout1,300in1994.Ofthemorethan1,473biotechcompaniesbusinesstoday, 314arepubliclytraded since the1990s.TheBiotechnologyIndustryOrganization(BIO)reportsthattherewere1,415biotechnologycompaniesin UnitedStatesin companies; otherbiotechsformedpartnershipswithBigPharma.Theindustryturnedaround,andthebiotechnologyhas expandedrapidly By the1980s,somesmallbiotechnologyfirmswerestrugglingtostayafloat.Somebigpharmaceuticalcompaniespurchased smallerbiotech one ofthelargestandmostsuccessfulbiotechcompanies.Thefirm’s top-sellingproductsincludecancertreatmentsRituxan,Avastin andHerceptin. Robert Swanson,BoyerwentontofoundGenentechin1976,whichconsidersitself“thefounderofthebiotechnologyindustry.” Today Genentechis In 1973,StanleyCohenofStanfordUniversityandHerbertBoyerUCSFcreatedanewrecombinantDNAtechnique.Together withventurecapitalist Modern biotech’s beginnings HIV/AIDS. medicine. Biotechnologycompanieshavecreatednewvaccinesandtherapiesfordiseasessuchasdiabetes,cancer, autoimmunedisordersand biofuels) andhealthcare.Forthemostpart,whenpeoplehearword“biotechnology”—or“biotech”forshort—theythink of itsapplicationsin Today, biotechnologyisusedinfourmajorindustrialareas:cropproductionandagriculture,environmentaluses,nonfooduseofplants (suchas fruits andvegetablesthroughbreedingthemwithotherplants. practices, suchasusingmicroorganismstofermentbeveragesorleavenbread,couldbeconsideredbiotechnology. Socouldfarmers’ alterationof thereof, tomakeormodifyproductsprocessesforspecificuse.”Inotherwords,biotechnologyisanytechnologybasedon biology. Ancient Convention onBiologicalDiversitydefinesbiotechnologyas“anytechnologicalapplicationthatusesbiologicalsystems,livingorganisms,orderivatives The biotechnologyindustryisuniquebecauseitisn’tdefinedbyitsproducts,butratherthetechnologiesusedtomakethem.UnitedNations What isbiotechnology? THE MISSINGLINK:BIOTECH which helpsMRImachinescreateclearercross-sectionsofthehumanbody. are notcalleddrugs)usedinconjunctionwithamedicaldeviceorinstrument.Agoodexampleisthediagnosticimagingagent technetium99m, multiple, difficult-to-interpretsymptoms.Theseproductsarecalled“diagnostics”andmaycomefrombiologicsources.Often,diagnosticagents(they another groupofproductsaimedathelpingmedicalscientistsmoreaccuratelydetermine(ordiagnose)adiseaseconditionfrompatientpresenting to thisbroadcategoryofdrugsas“therapeutics,”sincetheyhaveatherapeuticeffectonthediseasecondition.Butbiopharma industryalsohas One finalcommentabouttheindustry’s products: bothsyntheticandbiologicdrugsaredirectedtowardthetreatmentofdisease. Theindustryrefers We’ll usetheterm“biopharma”toincludebothtypesofproducts. The dividinglinebetweenthepharmaandbiotechindustriescontinuestoblur. Thatleavesuswiththeproblemofhowtorefer totheemergingindustry. Introducing “biopharma” per year, youwouldneedonly100,000patientstoreach$1billioninrevenue. revenue blockbusterstatus,sincetheyareusuallymuchmoreexpensivethansynthetics.Consideringthatsomebiologicscost$10,000perpatient Pharmaceuticals andBiotech The Vault MBA CareerBible 214 © 2009Vault.com Inc. Customized for: Erin ([email protected]) cross-sections ofthehumanbody. clearer with amedicaldeviceorinstrument.Agoodexampleisthediagnosticimagingagenttechnetium99m,whichhelpsMRImachinescreate products arecalled“diagnostics”andmaycomefrombiologicsources.Often,diagnosticagents(theynotdrugs)usedinconjunction scientists moreaccuratelydetermine(ordiagnose)what’s wrongwithapatientpresentingmultiple,oftendifficult-to-interpretsymptoms.These onhelping medical these drugshaveatherapeuticeffectonthediseasecondition.Butindustryalsohasanothercategoryofproductsfocused “therapeutics,” since Both syntheticandbiologicdrugsaredirectedtowardthetreatmentofdisease.Theindustryreferstothisbroadcategoryas Therapeutics vs.diagnostics insulin couldalsoopenthedoortodevelopmentofgenericversionsotherbiologics. sale ofgenericinsulinwithoutclinicalstudies.Theavailabilitywouldputpricepressureonbrandedinsulin.approval theproduction and which makesdiabetestreatmentsincludinginsulin,andcompetitorLillyhavesaidtheyopposeanyFDAactionthatwouldapprove considered biologics.Insulin—createdbyextractingthegeneforinsulinfromahumancell—isalsobiologicdrug.Infact,NovoNordisk, “biologic.” Somemedicalproductsthathavebeenaroundfordecadesfitintothiscategory. organisms,they’re Becausevaccinesaremadefromliving Biologic drugsgobeyondexperimentalgenetherapies.Anythingusedtotreat,preventorcureadiseasethat’s alsomadefrom a livingorganismis Biologics expertise todevelopalternativefuels.Thefirmalsocustomizesenzymes formanufacturersintheindustrial,healthandnutritionmarkets. Biotechnology isusedtofindpossiblenewcuresforcancer, butit’s alsousedinotherfields.Verenium Corporation,forexample,isapplyingitsenzyme Not justhealthcare reactions. coulddevelopallergic of genericbiologics.Theseindividualssaybiologicdrugsareinherently variableanddifficulttoduplicate,thatpatients cultures oflivingmaterialratherthanfromchemicalrecipes.Brand-name drugmakersandmanyscientistshaveurgedcautioninthedevelopment copycat versionprovides“bioequivalence”(thesamelevelofthe druginthebloodovertimeasoriginal).Biologics,however, aremadefrom companies simplyneedtoshowthatthegenericcontainssame activeingredients,purityandqualityasthebrand-nameversion,that Typically, Genericdrug genericversionsofconventionaldrugshitthemarketshortlyafter patentshaveexpiredonbrand-namepharmaceuticals. versions ofbiologicdrugsaresometimescalled“biogenerics”or“biosimilars,”andtheycontroversial. Generic Americans couldsavemoneyonhealthcarethroughthecreationofaregulatorypathwayforapprovalgenericcopiesbiopharmaceuticals. In May2007,U.S.presidentialhopefulHillaryRodhamClintonpresentedpartsofherhealthcareproposal.Amongotherthings, Clintonsuggested Battle overbiogenerics may notmatter. in biotechorpharmaceuticals blurring. Sinhasaidthat,aslittle15yearsago,theindustriesweredistinct,buttodayquestionofwhethertowork as “biopharma.”InanApril2007articleinScience,writerGunjanSinhaarguedthatthelinebetweenpharmaceuticalandbiote ch companiesis emergingindustry pharmaceutical companieshavebeensnappingupbiotechbusinessesinordertobeeftheirpipelines.Somepeoplereferthe As discussedearlier, somebiotechfirmshavegrownsodiversethatthey’resimilartolargepharmaceuticalcompanies.Atthe Re-introducing “biopharma” condition calledGaucherdisease.However, Cerezymecostsonaveragemorethan$200,000ayear. biologic drugCerezymetopped$1.2billioninsales2008,butfewerthan10,000peopleworldwideusethefortreatment ofararegenetic For example,Genzyme’sbiologics reachblockbusterstatuswithrespecttotheirrevenue,sincetheyareusuallymuchmoreexpensivethansynthetics. with raregeneticdiseases.Becauseofthisfocus,biotechproductsareoftenreferredtoasspecialtypharmaceuticals.To complicate matters,some The biotechfirms,ontheotherhand,tendtobeorganizedaroundsmallerfranchises.Often,theirproductsaretargetedsmall patientpopulations than sixmillionpeople. Pharma blockbusterisAstraZeneca’s cholesterol-loweringCrestor, whichhadmorethan$3.6billioninsales2008andhasbeen prescribedtomore of broadlyactingdrugs.Byindustryconsensus,a“blockbuster”isdrugwhoseannualrevenuesreachorexceed$1billion.An exampleofaBig Pharmaceutical companiesaregenerallyorganizedaroundthe“blockbuster”model,meaningtheyderivemostoftheirsalesandprofits fromahandful Organizational structures career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Pharmaceuticals andBiotech same time, 215 Customized for: Erin ([email protected]) name drugsthangenerics.Inaddition, planscanaskdoctorstofilloutpriorauthorizationforms forpatientstoobtainbrandeddrugs. likely toleadanincreaseingeneric drugsales.UnderMedicarePartD,through“multitiered pricing,” planscanchargepatients moreforbrand- to prescribegenericdrugsinplace ofmoreexpensivebrand-nameproducts.Recentchangesto theMedicareprograminUnitedStatesarealso In theUnitedStates,managedhealth carehascontributedtotheriseingenericdrugs.Managed programs,suchasHMOs,often asktheirdoctors market, near42percentofthe$78billionglobaltotal. the annualbumpwasonly3.6percent—verylowcomparedto11.4 percentinthepriorperiod.TheUnitedStatesishosttolargest globalgenerics prescription marketvolumewasdispensedasgeneric.However,September 2008, therapidsalesincreaseshaveslowed;in12monthsthrough 60percentof Pharmaceuticals, anotherAmericancompanywith$2.5+billion in revenue2007.AccordingtoPharmalot.com,2008,morethan (with $11.1billioninsales2008)andU.S.-basedMylanLaboratories ($5.1billion).InDecember2008,Teva completeditsacquisitionofBarr manufacturers’ accesstothemarketplace.Sincethen,genericdrug saleshaveboomed.ThebiggestgenericdrugmanufacturersareIsraelifirmTeva In 1984,thepassageofDrugPriceCompetitionandPatent Term RestorationAct(alsocalledtheHatch-Waxman Act)increased Growth ingenerics impact ondrugspendinginthefuture. Medicare helpedboostprescriptionsalesintheUnitedStates,but theU.S.DepartmentofHealthandHumanServicesdoesn’tthinkitwillhaveahuge private drugplans.Duetothechanges,Medicarebecamecountry’s largestpubliccustomerofprescriptionmedicationsin2006.Thechangeto that day, theMedicarePrescriptionDrug,ImprovementandModernizationAct—knownasPartD—gavebeneficiariesoptiontoenrollin Before January1,2006,Medicare(thefederalhealthprogramforthedisabledandelderly)didn’tpayoutpatientprescription drugs.Beginning Medicare changeboostsdrugssales state. Asforbiotech,accordingtotheCaliforniaHealthcareInstitute,roughlyaquarterofU.S.biotechjobsareinsunnyCalifornia. Massachusetts, IllinoisandNorthCarolina.NewJerseyistheheartofindustryhas,byfar, thelargestnumberofcompanies withinasingle Atlantic States(NewYork, NewJerseyandPennsylvania)ontheWest CoastinCalifornia. Ahandfulofcompaniescanalsobefoundin Although pharmaceuticalcompaniesarescatteredthroughoutthecontinentalUnitedStates,industryisgeographicallyconcentrated intheMid- United Statestocontinuebethelargestoftop-10pharmaceuticalmarketsforforeseeablefuture,aswellfastestgrowing. leaders, especiallyintheE.U.(GermanandFrenchcompanies,particular)lostleadinnovation1990s.Standard&Poor’s expectsthe controls onthepricescompaniescancharge.Abigconsequenceisthat,withthinprofitmargins,incentiveforinnovationcurbed,andformer incursions intoitsmarket-basedpricing.Otherdevelopedeconomieswithuniversalhealthcareaccess(EuropeanUnion,U.K.,Japan)exertstringent Both areaconsequenceoftheprivatelyownedsystemprevalentinUnitedStatesandstrongindustrylobby, whichhasresisted government pricecontrols. Not onlydoestheUnitedStateshavelargestpharmaceuticalmarketinworld,butitisalsonationwithoutgovernment According totheBiotechnologyIndustryOrganization(BIO),therearealsomorethan1,400biotechcompaniesinUnitedStat es. U.S. firmsareJohnson&Johnson,PfizerandMerckCo.,whilethetopEuropean-borncompaniesBayer, GlaxoSmithKlineandNovartis. America (PhRMA),aleadingindustrytradeandlobbyingorganization.Ofthose,thetop-10companiesarereferredtoasBigPha rma. Thetop-three The U.S.pharmaceuticalindustryiscomprisedofapproximately100companies,accordingtothePharmaceuticalResearchand Manufacturersof In theUnitedStates cancers, physiciansnowhavetheoptionofrecommendingatumor-shrinking drugbeforeoperatingtominimizethescopeofinvasivesurgery. “first-line” meansthatphysiciansopttoprescribeapharmaceuticalfirstinlieuofmoreinvasiveprocedure,suchassurgery. Forexample,forsome growth reflectstheincreasingroleofpharmaceuticalsasafirst-linetreatmentoptionformanydiseaseconditionsindevelopedworld.Theterm doubled to$712billion—almostthree-quartersofatrilliondollars.(IMSderivedthisfigurefromretailsalesinmajorgloba According toIMSHealth,theglobalpharmaceuticalmarketwasvaluedat$334billionasrecently1999.By2007,totalglobalsaleshadmorethan ever-increasing groupofstartupsmostlyfocusedondiscoveryresearch. That trendhasacontractingeffectonthenumberofmiddle-tierfirms.Theoppositehappensthirdandlowesttier, which iscomposedofan threat. specialty companies.Manylargecompaniestendtoabsorbsecond-tierbeforetheycangrowenoughposeacompetitive Over 2,000pharmaceuticalandbiotechcompaniesexistworldwide.We’ve alreadydiscussedtop-tierBigPharma;themiddletier is composedof Although ahandfulofsuper-large companiesrakeinmostofthepharmaceuticalindustry’s revenue,theglobalindustryisactuallyhighlyfragmented. particularly robust.GlobalpharmaceuticalsalesinLatinAmerica2007were$42.4billion,an11.6percentincreasefromthepreviousyear. company,(25.7 percent)was in2007salesAsia(exceptforJapan)were$78billion,a13.3per Pharmaceuticals andBiotech The Vault MBA CareerBible 216 l markets.)Thisastonishing © 2009Vault.com Inc. nearly 90percent genericdrug Customized for: Erin ([email protected]) commercialize theworld’s 30best-sellingdrugs. to theworld’s largestpharmaceuticalcompanies,andoverseesmorethan15,000clinicaltrialsin100countries.Quintileshashelpeddevelopor Quintiles Transnational organizations Corporation.Covanceworks withmorethan300biopharmaceuticalcompanies,rangingfromsmallandstartup outsource atleast60percentoftheirclinicaldevelopmentworkby2008.ExamplesCROsincludeNewJersey-basedCovance and NorthCarolina’s expected to CROs) havebeenontherise.In2005,asurveybyCambridgeHealthtechAdvisorsfoundthat45percentofpharmaceuticalcompanies Increasingly, pharmaceuticalcompanieshavebeenoutsourcingdrugresearchanddevelopment.Asaresult,contractorganizations (or A riseinCROs made byAmgen.Barralsobrokegroundona$25millionbiotechfactoryinCroatia. its acquisitionofPliva,aCroatianpharmaceuticalcompany, for$2.5billion.ThecompanymadeaversionofNeupogen,white-blood-cellbooster Generic drugcompanieshavealsobranchedoutintogenericversionsofbiologicdrugs.In2006,BarrPharmaceuticalsannouncedithadcompleted such asSeasonaleandSeasoniqueoralcontraceptives. Barr’s subsidiary, DuramedPharmaceuticals, develops,makesandsellsthefirm’s proprietarypharmaceuticals,mostlyfemalehealthcareproducts, has agenericsdivisioncalledSandoz.Somegenericcompaniesalsosellbrandedpharmaceuticals.Forinstance,drugmanufacturer and To complicatethingsfurther, somepharmaceuticalcompaniesgenerateamixedproductlineofgenericsandbrandeddrugs.Forexample,Novartis manufacturers. generic drug litigation. Somebigpharmaceuticalcompanieshaverespondedtogenericcompetitionbyenteringintolicensingagreementswith this lyingdown,however, andusuallytrytoextendtheirdrugs’exclusivitypreventgenericcompetition.Theydothisin various ways,including in comingyears,genericdrugmanufacturers’profitsarelikelytoincrease.Bigpharmaceuticalcompaniesthatmakebrand-namedrugsaren’ttaking The expirationofpatentsonbrandedpharmaceuticalshasalsoincreasedgenericdrugcompanies’revenue.Asmorebrand-namedrugsgooffpatent distribution andconsistentstocking ofproductsamples,monitorthedistrict’s budget,andcontrolitsexpenses.Professional development market strategies,monitorprogress ofongoingsalesactivity, staycurrentonindustryandcompanyissuesthatimpactthe salesforce,ensureoptimal bureaus, seminars,etc.).Administrative responsibilitiesrequiresalesmanagerstodevelopbusiness plansandofaction(POAs),implement area; planandleadmeetingstoreview salesachievements;andmanagereps’activitieswhencoordinating educationalevents(e.g.,symposia,speakers assigned salesdistrictinmeetinguppermanagementgoals;recruit, hireandtrainsalesreps;ensureefficientcoverageoftheirassignedgeographic Like fieldreps,theresponsibilitiesofasalesmanagerfallintothree distinctcategories.Managementresponsibilitiesrequire asalesmanagertolead perspective onsalesactivity. leadership potential.Inparticular, thefirstlevel,districtsalesmanager, isapositionpeoplefromseveralareas ofactivitycanmoveinandouttoget plusevidenceof the salesofabroadergeographicarea.Thisisnotanentry-level jobandusuallyrequiresseveralyearsofdirectsalesexperience management ladder, followed byregionalsalesmanager, areasalesdirectorandvicepresidentofsales.Each levelhasincreasingresponsibilityfor Managing asalesforcecanbeoneofthemostlucrativetracks inthepharmaceuticalindustry. Districtsalesmanageristhefirst rung onthe Sales management possible, andevenencouraged,togainexperienceinotherareas. The goodthingaboutthesalesandmarketingfunctioninbiopharmaceuticalindustryisthat,onceyougethiredapartic ular workarea,itis marketers ofbroadlyactingagents. groups. Onanexperientiallevel,thebigdifferenceisthatveryfocuspreventsoverreachingtomassmarketnowplaguing difference fromtheirBigPharmacousinsisthatbiotechsalesrepsarespecialtyreps,whomarketproductstospecificandhighly definedpatient Themain Fully integratedBigBiotechcompanieshavetheirownsalesandmarketinginfrastructureessentiallythesamejobclassifications. and development,advertisingpromotion,marketanalysis,customercallcenter, e-business,andcommercializationstrategicplanning. Depending onthesizeofcompany, thedistinctionbetweentwoareasmaybeeitherblurredornonexistent.Typical groupsinclude training distinct groups,someofwhicharequitelarge,butallserveessentiallythesamepurpose:toprovidesupportservicesformarketingmanagers. composedofseveral Within themarketingfunctionaretwomainareasofactivity:managementandsupport.Thelatterisactually point, however, isthatallcompanieshavefieldsalesforcesrigoroustrainingdepartments. sales andmarketingfunction:insomecompanies,theyareconsideredpartofsupport,hencethe function.Themain from thebroadertraininganddevelopmentfunction,whichisusuallyassociatedwithhumanresourcedepartments.Salestrainin g groupsbridgethe three careertracks:fieldsales,salesmanagementandmanagedmarkets.Afourthtrack,trainingiscloselyassociatedwithdistinct Most companiesconsidersalesandmarketingtobeonefunction,butwithtwobasicareasofactivity. Withinthesalesfunction, youcantypicallyfind MBA-LEVEL SALESANDMARKETINGJOBS career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Pharmaceuticals andBiotech 217 Customized for: Erin ([email protected]) company. Thissenior position usuallyhassalariesrangingfrom$110,000to$120,000. forthe plans forseniormanagement,industryanalystsandinvestors. Theycompletecompetitiveanalysisandcontinuallyassesstheprospects company’sprocesses, settingtargetsandplanningguidelines.Themanager ofcorporateplanningworkscloselywiththeCFOtodevelop financial financialplanning plans (usuallyseveralyearsout)andshort-range/tactical(up toayearout).Otheractivitiesincludedesigningandexecuting It’s asignificantstepuptomanagerofcorporateplanning,jobthatgenerallyappearsatthelargercompanies. Theypreparelong-rangeandstrategic autonomously. Analysts canbringhomesalariesrangingfrom$90,000to$110,000. and securelicensesforongoingoperations.Manycompanies havesenioranalystpositionswiththesameresponsibilities,butoperatingmore more competitive?”Researchanalystsworkwithattorneystoassess intellectualpropertyandlicensingissues,helpdevelopandenforceagreements, Analysts answersuchquestionsas,“Shouldweexpandorganically oracquireothercompaniestogrow?”and“Whoshouldwepartnerwithbecome company shouldpartnerwith.Analystsgeneratetheassessments thathelpbusinessdevelopmentmanagementdeterminehowtomeetitsgoals. On thebusinessdevelopmentside,researchanalystsprovide extensiveresearchandanalysisneededtodeterminehowwithwhomabiotech BUSINESS DEVELOPMENTINBIOTECH return oninvestmentorROI,marketshare,etc.),andanalyzetacticalplansbasedhistoricperformance. for standardsalesperformancemeasurement,identifyopportunitiesandassessthreatsthecompany’s products,measurefinancial ratios(e.g., marketplace assessments,provideanalysisandconsultingsupporttosalesmarketingmanagement,developimplement tools andprocesses A marketanalysthasprimarilyanalyticalresponsibilities,whichareconsistentthroughouttheindustry. Typical performlocalhealthcare tasksareto issues. graduation andcanlandthemiftheyhavebasicscienceeducationdemonstrateevidenceofsomeunderstandingthe ind analyst orregionalanalyst.Althoughthesejobsareusuallynotentry-levelwithonlyabachelor’s degree,manyMBAstargetmarketanalystjobsafter and shiftsprogressionofdiseaseconditions—andthecompetitivelandscapeforproductsunderdevelopment.Jobshave t profile ofspecificdiseaseconditionsinwhichthecompanyspecializes,associatedtargetedpatientpopulations—including demographic trends Market analysisgroupsareresponsibleforgatheringandanalyzingbusinessinformationinspecificgeographicareastounderst and theeconomic Marketing support:marketanalysis professionals fromeverypartoftheorganization. product tomarket.Mostmanagersalsohavesubstantialcommunicationandnegotiationskills,astheyarerequired tointeractwith ofgettinga In companiesorganizedasbusinessunits,productmanagerseffectivelybecomemini-CEOsandareinvolvedinvirtuallyevery aspect expenses, andmanagedevelopentry-levelsupportstaff. in-house championforaproductorbrand.Fromanadministrativeperspective,managermustdevelopbudgets, maintain recordsof needs,andactasan a productamongitscompetitors,monitorthosecompetitorproducts,acquirebothquantitativeandintuitivefeelforcustomer manage theshort-termproductstrategyandmarketingplansforassignedproducts,overseedevelopmentofbusinessplans,specifypositioning A productmanager’s todevelopand responsibilitiesfallintotwomaincategories.Productmanagementrequiretheproductmanager managers. at theBSlevel,althoughMBAswithpreviousmarketingexperiencecanworkinproductmanagementgroups,asassistantorassociate product group productmanager, andvicepresidentofmarketingrepresenthigherlevelmanagementjobs.Nonetheseareentry-level positions The mainjobtitleinmarketingmanagementisproductmanagerandconsistentthroughouttheindustry. Fromthere,titleslike productdirector, contact withcustomerphysiciansandtargetedpatientgroups. associated productsintoseparatebusinessunits,sothatmarketingmanagementdecisionsgetmadewithfewerlayersofoversightandcloser Lambert andPharmaciatobecomethelargestcompanyinindustry),somecompanieshaveoptedorganizetherapeuticareasandtheir marketing hadasingleupwardpathtoseniorpositions.Withlargecompaniesmergingintomega-companies(e.g.,PfizeracquiredbothWarner- recent years, marketing managementaccordingtotherapeuticareas(i.e.,oncologydrugs,cardiovascularanti-hypertensives,etc.).Until Marketing managementisthecoreworkofmarketingfunctionandwherestrategyformulatedimplemented.Manycompaniesorganize Marketing management create individualizeddevelopmentplansforeachdirectreport. responsibilities requirethesalesmanagertomaintainaworkenvironmentthatmaximizesmotivation,actascoachandmentor to thesalesreps,and Pharmaceuticals andBiotech The Vault MBA CareerBible 218 © 2009Vault.com Inc. ustry’s marketing itles likemarket Customized for: Erin ([email protected]) As anexecutive,theVPcanexpecttoearnasalaryrangingfrom$160,000$190,000andalsoreceiveadditionalincentivecompensation. degree andnearlyadecadeofexperiencethatincludesknowledgeduediligence,assetvaluation,allianceintegration,portfoliomanagement. and addresstheinevitableissuesthatariseinanyrelationship.Mostcompaniesaskforimpressivecredentialstoreachthis level: anMBA,ascience partnership agreements of thelicensingpotentialtargets,leadsanddrugcandidatesaswellmanagingallcollaborations.Theymaintain oversees alleffortstoidentify, evaluateandpursuepotentialstrategicpartners,jointventuresalliances.Thispersonalsodirectstheassessment At theheadofgroupisvicepresidentbusinessdevelopment,averyimportantpositioninmostbiotechcompanies.The VPofbizdev career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Pharmaceuticals andBiotech 219 Customized for: Erin ([email protected]) www.actelion.com Fax: +416156500 Phone: +4161565 Switzerland 4123 Allschwil,Baselland Gewerbestrasse 16 Actelion Ltd. www.abbott.com Fax: (847)937-9555 Phone: (847)937-6100 Abbott Park,IL60064 100 AbbottParkRoad Abbott Laboratories EMPLOYER DIRECTORY (CONT.) www.baxter.com Fax: (847)948-2016 Phone: (847)948-2000 Deerfield, IL60015 1 BaxterParkway Baxter InternationalInc. www.astrazeneca.com Fax: +442073045151 Phone: +442073045000 United Kingdom London W1K1LN 15 StanhopeGate AstraZeneca PLC www.amgen.com Fax: (805)447-1010 Phone: (805)447-1000 Thousand Oaks,CA91320 1 AmgenCenterDrive Amgen Inc. www.allergan.com Fax: (714)246-4971 Phone: (714)246-4500 Irvine, CA92612 2525 DupontDrive Allergan, Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.cephalon.com Fax: (610)738-6590 Phone: (610)344-0200 Frazer, PA 19355 41 MooresRoad Cephalon, Inc. www.celgene.com Fax: (908)673-9001 Phone: (908)673-9000 Summit, NJ07901 86 MorrisAvenue Celgene Corporation www.bms.com Fax: (212)546-4020 Phone: (212)546-4000 New York, NY10154 345 ParkAvenue Bristol-Myers SquibbCompany www.biogenidec.com Fax: (617)679-2617 Phone: (617)679-2000 Cambridge, MA02142 14 CambridgeCenter Biogen IdecInc. www.beckmancoulter.com Fax: (714)773-8283 Phone: (714)871-4848 Fullerton, CA92834 4300 NorthHarborBoulevard Beckman Coulter, Inc. www.bayer.de Fax: +492143066328 Phone: +49214301 Germany 51368 Leverkusen Kaiser-Wilhelm-Allee Bayerwerk, Geb_udeW11 Bayer AG www.endo.com Fax: (610)558-8979 Phone: (610)558-9800 Chadds Ford,PA 19317 100 EndoBoulevard Endo PharmaceuticalsHoldingsInc. www.lilly.com Phone: (317)276-2000 Indianapolis, IN46285 893 SouthDelaware Lilly CorporateCenter Eli LillyandCompany www.drreddys.com Fax: +914023731955 Phone: +914023731946 India Hyderabad, AndhraPradesh500016 7-1-27, Ameerpet Dr. Reddy'sLaboratoriesLtd. www.gilead.com Fax: (650)578-9264 Phone: (650)574-3000 Foster City, CA94404 333 LakesideDrive Gilead Sciences,Inc. www.genzyme.com Fax: (617)252-7600 Phone: (617)252-7500 Cambridge, MA02142 500 KendallStreet Genzyme Corporation www.frx.com Fax: (212)750-9152 Phone: (212)421-7850 New York, NY10022 909 3rdAvenue Forest Laboratories,Inc. The Vault MBA CareerBible Pharmaceuticals andBiotech 221 Customized for: Erin ([email protected]) www.mylan.com Fax: (724)514-1870 Phone: (724)514-1800 Canonsburg, PA 15317 1500 CorporateDrive Mylan Inc. www.merck.com Fax: (908)735-1253 Phone: (908)423-1000 Whitehouse Station,NJ08889 1 MerckDrive Merck &Co.,Inc. www.kingpharm.com Fax: (423)274-8677 Phone: (423)989-8000 Bristol, TN37620 501 5thStreet King Pharmaceuticals,Inc. www.jnj.com Fax: (732)214-0332 Phone: (732)524-0400 New Brunswick,NJ08933 1 Johnson&Plaza Johnson & www.hospira.com Fax: (224)212-3350 Phone: (224)212-2000 Lake Forest,IL60045 275 NorthFieldDrive Hospira, Inc. www.gsk.com Fax: +442089904321 Phone: +442089909000 United Kingdom London TW89GS Brentford 980 GreatWest Road GlaxoSmithKline plc EMPLOYER DIRECTORY (CONT.) Pharmaceuticals andBiotech The Vault MBA CareerBible 222 www.sanofi-aventis.com Fax: +33153774303 Phone: +33153774000 France 75013 Paris 174 avenuedeFrance Sanofi-Aventis www.roche.com Fax: +41616919391 Phone: +41616881111 Switzerland CH-4070 Basel Grenzacherstrasse 124 Roche HoldingLtd www.pfizer.com Phone: (212)573-2323 New York, NY10017 235 East42ndStreet Pfizer Inc. www.perrigo.com Fax: (269)673-9128 Phone: (269)673-8451 Allegan, MI49010 515 EasternAvenue Perrigo Company www.novartis.com Fax: +41613248001 Phone: +41613241111 Switzerland CH-4056 Basel Lichtstrasse 35 Novartis AG www.nbty.com Fax: (631)567-7148 Phone: (631)567-9500 Ronkonkoma, NY11779 2100 SmithtownAvenue NBTY, Inc. www.tevapharm.com Fax: +97239234050 Phone: +97239267267 Israel Petah Tikva 49131 5 BaselStreet Limited Teva PharmaceuticalIndustries www.sepracor.com Fax: (508)357-7499 Phone: (508)481-6700 Marlborough, MA01752 84 Waterford Drive Sepracor Inc. www.schering-plough.com Fax: (908)298-7653 Phone: (908)298-4000 Kenilworth, NJ07033 2000 GallopingHillRoad Schering-Plough Corporation www.wyeth.com Fax: (973)660-7026 Phone: (973)660-5000 Madison, NJ07940 5 GiraldaFarms Wyeth www.watsonpharm.com Fax: (973)355-8301 Phone: (951)493-5300 Corona, CA92880 311 BonnieCircle Watson Pharmaceuticals,Inc. © 2009Vault.com Inc. Customized for: Erin ([email protected]) hopes, willturnintobigprofitsshouldthestartupgopublicorgetsold. alongside acquisitionsanddebtpurchases.Venture capitalinvestmentsareoftenmadeinexchangeforequitytheprivatecompanythat,firm companies—these arecalledventurecapitalfirms,thoughadiversifiedprivateequitymanagementcompanywilloftenincludeventureactivity salvage itselfbyloaningitmoneyinexchangeforanequitypositionoranotherformofreturn.Someprivatefirmstarget fundsatstartup Private equityinvestmentsaren’tjustaboutbuyingandsellingcompanies,however. Manyprivateequityfirmsinvestindebt, helping acompany selling theimprovedcompanytoanotherbuyerortakingitpubliconequitymarkets. themby generally bypurchasingprivateorpubliccompanies,“fixing”themsotheygeneratemorerevenue,cashandearnings,then“flipping” Wall Streetinvestmentbanksandhigh-net-worthindividuals.Themanagersoftheseprivateequitypools,orfunds,thentryto In modernprivateequity, tohedgefunds, apoolofcapitaliscreatedfromprivateinvestors,ranginguniversityendowmentsandpensionfunds stock—they buywholecompanies. share ofstockis,indeed,aprivateequityinvestor. Thekindofprivateequitywe’retalkingaboutismuchbigger;theseindividuals don’tjustinvestin In itsbroadestsense,privateequityisaninvestmentderivedfromanonpublicentity. Ofcourse,underthatdefinition,anyindividualwhoownsasingle WHAT ISPRIVATE EQUITY? Private Equity transactions, whileotherstakeaimatoverseaspurchases.Still lookatsmall,publiccompaniesorthosewithinaspecificsector. Like theirventurecapitalcousins,privateequityfirmsgenerallyfind specialtieswithintheindustry. onmiddle-market,mid-cap Somefirmswillfocus in 2006.Theyhadalreadyeclipsedthatmarkbymid-2007. response toincreasingpressurefromWashington ontheiractivitiesandprofits—privateequityfirmswereresponsiblefor$406billionintransactions closures onthesmallendofscale.Butmoneytheymanage isimpressive.AccordingtothePrivateEquityCouncil—formed byfirmsin to openingsand There areonlyabout200privateequitycompaniesoperatingat anyonetimeintheUnitedStates,andthatnumbercanvarydue Private equityintheU.S. to investorstimeandagain. reasonably beashigh.AndevenwithquestionsarisingaboutthecurrentM&AandLBOenvironments,privateequityfundshave proven theirworth have yettoberivaledconsistentlybyanyotherassetclass,includinghedgefunds.Theresimplyaren’tinvestments wherereturnscan Yet equityplacement the averageprivateequityfirmremainsdedicatedtotheconceptofbuyout.Overlonghaul,returnsfroma dabbling inprivateequityaswell,mostlythroughplacements,butoccasionallytheirown,activeeffortswell. Blackstone Groupmostnotably, haveenteredotherbusinesses,includingdistresseddebtandrealestate.Atthesametime,hedge fundshavestarted Today, privateequityfirmsareprimarilydedicatedtothepurchaseofcompaniesorstakestherein.Yet some,includingBainCapital andThe THE MODERNPRIVATE EQUITYFIRM KKR orcurrentindustryposterboySteveSchwarzmanofBlackstone. has, ofcourse,resultedinthecreationabreedprivateequitydealmakersthathavejoinedbillionaires’club,mostfamouslyHenryKravisat manage privateequitypoolsensuretheirinterestsarealignedwiththoseofinvestorsbyplacingalargechunk own wealthinthemix.This And finally, thefirmsthemselvesareoftenheavilyinvestedintheirownprivateequityfunds.Theprivate—and,recently, public—companiesthat on theirownorinpartnershipwithmoretraditionalprivateequityfirms. years. Indeed,afewhedgefundshaveblurredthelinebetweenthemselvesandprivateequityfirmsbytakingpartinpubliccompany buyoutseither and MorganStanley. throughthe Hedgefundsofteninvestinprivateequityduetotheoutstandingperformancethesehaveamassed banks alsoplaceinvestmentsinprivateequityfunds—unless,ofcourse,theycreatetheirownin-housefundsas did GoldmanSachs Public EmployeesRetirementSystems(CalPERS),placesomeoftheirmoneywithprivateequityfundstoboostreturns.MajorWall Streetinvestment astheCalifornia The institutionsandpeoplewhoinvestinprivateequityfundsaresomeofthewealthiestworld.Majorpensionfunds,such Who areprivateequityinvestors? putthatcapitaltowork, 223 Customized for: Erin ([email protected]) the planwillbeprivateequity’s savinggraceremainstobeseen,butsofarithasbroughthopewherematterslookedgrim. Whether which letssomebusinessesdelaypayingtaxesonincometheygainedthroughcancelleddebt,mayhelpoutthesedistressedcompanies. plan thatsomeinsidersaresayingmaykeepanumberofprivateequity-supportedcompaniesafloat—andoutChapter11bankrup tcy. Theclause, But theremaybehopeonthehorizonforprivateequitysector. histaxstimulus In2009,PresidentBarackObamaintroducedaprovisionwithin private equitysector. workersinthe Investcorp and3iGroupalllaidoffworkers.Somerecruitershavealsoindicatedthatthey’reseeingmoreresumes from CarlyleGroup, $1.62 billioninnetincome2007.Theprivateequityjobmarkethassufferedanumberofsetbacksaswell—inlate2008, the 2008comparedwith million netlossinthepreviousyear).Anotherprivateequitybigwig,TheBlackstoneGroup,posteda$1.16billionfor Private equityfirms,ofcourse,alsotookabigfinancialhit.KKRsawlargedownturn,posting$1billionnetlossfor2008(comparedwith$100 Almost alloftheotherprivateequitybillionaireswhostillmadelistalsosawtheirwealthdiminishsubstantially. contact theprivateequityfirm.Other times,anarticleorresearchreportonacompanyhighlights a potentialproblemthatthefirm’s experts areknown First, researchersidentifytargets. Again,somecompaniesmakeiteasybyputtingthemselveson the blockorhavingaproxy, likeaninvestmentbank, They’re tenaciousanddetermined, withtheabilitynotonlytocrunchnumbersbutalsogeta“feel” foracompanyinadmittedlysubjectiveways. volumes ofanalystreports,news releasesandarticles,lookingforopportunity. Theyinvestigatepotentialtargetsthoroughly forsignsofpossiblevalue. The keytounlockingvalueisknowing wheretolook,andthatfallstheresearchersatprivate equity firm.Thesearethepeoplewhocombthrough The researchers Naturally, thoseinthese rolesareexceptionalsalespeoplewithexperienceindealingmajorfinancialinstitutions. any fearstheymayhave.Formajoraccounts,alsobringin someofthefirm’s topleadershipasneeded tohelpclosemajorinvestments. These peoplealsoserveasinvestors’pointofcontact.Theyhelpmanage investors’accounts,letthemknowwhentheycanexpectreturnsandassuage millions ofdollarstomanage. the firm’s latestprivateequityfund,convincingmajorinstitutions—hedgefunds,banks,pensionfundsand thelike—togive firmhundredsof roles arequitesimilartoinvestorrelationspositionsatpubliccompanies, institutionalbanksandmutualfunds.Theirjobistoselltheideasbehind A privateequityfirmwon’tgetanywherewithoutmoney. To thatend,private equityfirmsemployfundraiserstohelpattract the capitalneeded.These The fundraisersandinvestorrelations players. Thefollowingisalookatthevariousrolesintypicalprivateequityfirm. From findinginvestorsandresearchingcompanies,tomakingthedealexecutingexitstrategies,aprivateequityfirmreliesondiversegroupof depth ofexperienceunmatchedbynearlyanyotherbusinesstoday. takesabreadthand these days—privateequityisfueledbyhumancapital.Andwhenanindustryhasasmanymovingpartsprivatedoes,it So who’s doingallofthis?Whomakestheprivateequityindustryrun?Likerestfinancialsector—andreally, much oftheAmericaneconomy THE PLAYERS INPRIVATE EQUITY 2009, 12ofprivateequity’s billionairesdisappeared from In theworldofprivateequity, fortunesbegantoslipawayfromitsinhabitantsastheU.S.recessionslammednearlyeveryfinancialsector. InMarch Private equitytoday most noteworthyfirmsinprivateequitytoday: And thentherearethebigones.Theyhavemoneyandclouttogoafterbiggestdealsinavarietyofsectors.Here’sa listofthebiggestand Private Equity The Vault MBA CareerBible 224 Warburg Pincus Thomas H.LeePartners Texas PacificGroup Providence EquityPartners Kohlberg KravisRoberts&Co.(KKR) Cerberus CapitalManagement The CarlyleGroup The BlackstoneGroup Bain Capital Apollo Advisors Forbes magazine’s annuallistofbillionaires(ascompared withthepreviousyear’s list). © 2009Vault.com Inc. Customized for: Erin ([email protected]) The deal-makers numbers forprivateequityfirmsaswell. have spenttimeincorporatefinance,Wall crunching Streetbuy-sideorsell-sideresearchshops,both.Afewactuarieshavefoundthemselves Needless tosay, ittakessomeonewithanincredibledepthofknowledgetoengageinthiskindwork.Mosthaveastrongfinancialbent,andsome how muchdebtitcantakeon—everything.Theresearcherscomeupwiththeplanthatwillultimatelybeexecuted. the company’s entireownership.Thisthesis outlinesareasofsavings,cost-cuttingplans,newventures,thestatecompany’s balancesheetand Finally, theresearcherscomeupwithafinalinvestmentthesisforcompanythatservesasnotonlybasisnegotiations,butagenda others areabandoned. researchers. Atthatpoint,thefirm’s overall investmentthesisistestedand,hopefully,value arediscovered,and proven.Someavenuesofpotential enters intonegotiations,there’s tothefirm’s awholenew setofdatathatneedstobeexplored.Thewould-betargetopensitsbooksandoperations Then, theresearcherscoordinatewithdealmakerstoagreeonwhethercompanyisapotentialtarget.Once is approachedand They’ll contactthecompany’s suppliersand clients.Theymayevenreachouttoahandfulofkeypeoplewithinthecompanyonaninformalbasis. investigation intothecompany’s fortunes.The firm’s researchersgatherandcollateallexistingWall Streetresearchandmediareportsonthecompany. for fixing,orananalystmaysimplynotethatacompany’s sharepricehasbeenflatforalongtime.Thatcantriggeranintensiveandsomewhatcovert private equityfirmcanfitintoone oftheseroles,butthey’rehandlingmultiplefunds,targets,deals and/orportfoliocompanies.Andthetopmanagers And ofcourse,thesearepositions infirmsthat,generally, havefewerthan500full-timeemployeesaroundtheglobe. Each person atyourtypical sure everyonegetstheirmoneyin theend—andcanoftenassistinIPOroadshows,too. involves adirectsale.Investorrelations personnelanswerquestions,provideupdatesoninvestments, assuagedisgruntledstakeholdersandmake their thesiswithinputfromoperatorsontheground,anddeal-makers areoftenpulledintoironouttheinvestment’s exitstrategy, especiallyifit All oftherolesandpeoplewithinaprivateequityfirmcontinueto interactthroughouttheinvestment’s lifespan. Theresearchersareoftenrevisiting Hitting amovingtarget of thefirm’s executivecommitteegetsinvolved. gun hasmoreexperiencethanthefirm’s assignedsupervisor. This cangenerallybeironedout,thoughonlyafteramanagingdirectorormember differently thantheresearcherswhocameupwithinvestment thesisorthefirm’s assignedin-houseoperator. trueifthehired Thisisparticularly The in-houseoperatorsandhiredgunsmustworktogether, thoughtherehavebeentimeswhentheCEOinstalledbyprivateequityfirmseesthings the top-levelpositionsandgetjobdone. To putitinanotherperspective,theprivateequityfirm’s representativesaretheportfoliocompany’s boardofdirectors,andthehiredgunstakeover to be. level executivesnotedfortheirturnaroundexpertiseandwillingnesstodowhateverittakesgetthecompanywhereprivateequityfirmwants successfulC- equity firm.Theytakeontopleadershiprolesatthenewlyacquiredcompanyandgetthingsdone.These“hiredguns”aregenerally There’s alsoawholeotherlevelofoperatorsthatfirmsuse:establishedcorporateexecutiveswhogofromcompanytoon behalfoftheprivate offering adviceonhowtogetthere. staff actsasbothtop-levelmanagersandconsultants,makingsuretheportfoliocompanymeetsitstargets,outlinedbyinvestmentthesis, equity firm,thougheachportfoliocompanyissupervisedbyoneormoremanagingdirectorsandtheiraccompanyingstaffs.The privateequityfirm’s Once adealisdoneandthetargetbecomesportfoliocompany, thefirm’s operatorsgotowork.Fewareactuallyfull-timeemployeesoftheprivate The operators calling theshotsattable,whileI-bankersarethereinmoreofaresearchandadvisoryrole. hire aninvestmentbanktodothenegotiating.Butatmostprivateequityfirms,leastoneoffirm’s topmanagers,ifnot thefounder, isreally Some firmsemploytheirownnegotiatorswhoanswertothecompany’s topleadership.Otherfirmsdon’t—likeanyotherwould-bebuyer, manysimply the overallinvestmentthesis. at thetable—thoughsometimestheyareifdeal’s bigenough.Butthey’redirectingthefirm’s negotiationsandmakingsure them, andmenlikeKKR’s HenryKravisandBlackstone’s SteveSchwarzmanarerenowneddeal-makers.That’s nottosaythatthey’retheonessitting In mostfirms,thechiefdeal-makerandheadoffirmareoftenonesame.Dealsdon’tgetdone,afterall,untiltopguysignsoffon the Universe,makingdealsworthbillionsthatcanaffectlivesofthousands.Thisisheadystuff,tobesure. investment banksandhedgefunds,toobtainthenecessaryleverageatlowenoughratesmakedealwork.Theyareold-school Mastersof company atthebestpossibleterms.Inmanycases,theyworknotonlywithtargetcompany, butalsowithsourcesoffinancing, including obtaining the Once atargethasbeenidentifiedandtheinvestmentthesisproven,deal-makersgotowork.They’reonesresponsiblefor career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible thatthedealjiveswith Private Equity 225 Customized for: Erin ([email protected]) A DAY INTHELIFE:DEALMAKER firm’s fundinvestors. and glad-handing the are oftenshuttlingbetweendifferentroles—approvingtheinvestmentthesis,sealingdeal,ensuringoperationsgosmoothly 9:00 p.m.:Callthecarandgohome. MD again. 7:30 p.m.:Convenewiththeteaminwarroomanddoleoutassignmentsforovernight.Makeafewphonecallstokeypeopleupd ate the 7:00 p.m.:Wrapuptheday’s talks. 6:00 p.m.:Havedinnersentover. Informalchattingbetweenthetwosidesoverdinner. key. We gotalotmorethantheydidoutofit. 1:30 p.m.:Therealsession.Thisiswherestuffgetsdone.Today wedrilleddownandagreeduponavaluefortheirmajorbusinessarm,whichwas 12:30 p.m.:Breakforlunch.Hitthephonestofigureoutcountermovesbasedonmorning’s presentations. what they’resaying. few hoursgoingthroughthose.SometimeswecanjustcalleachotheronourB.S.andmoveon,butsometimeshavetoretrenc h andfigureout first 10:00 a.m.:Firstnegotiatingsession.Thetargetcompanyalwaystendstocomeupwithanewwrinkleovernight,asdowe.Sowespendthe work backattheoffice. 9:40 a.m.:Inthecarsandheadingtoinvestmentbank.We haveawarroomsetupthere,too,butwe’reonly15minutesaway, alotof sowedo double checkbeforeweheadover. 9:00 a.m.:Meetingwiththeteam.We’ll kindofa havetheupdatesinpresentationbookdone,we’llastrategymappedout.Thisissimply 8:30 a.m.:Attheoffice.Checkinwithmanagingdirectorforanupdateofpreviousday’s negotiationsandwhat’s plannedfortoday. 7:30 a.m.:Pickedupbythecar. Moreemailsandphonecalls. get somechangesgoingbeforetheday’s meetings begin. 6:00 a.m.:Upandreadingthepresentationbooksdrawnupbyassociatesnightbefore.Phonecallsto(“towakemup”) Private Equity The Vault MBA CareerBible 226 © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.cerberuscapital.com Fax: (212)891-1540 Phone: (212)891-2100 New York, NY10171 299 ParkAvenue Cerberus CapitalManagement,L.P. www.adventinternational.com Fax: (617)951-0566 Phone: (617)951-9400 Boston, MA02109 75 StateStreet Advent InternationalCorporation EMPLOYER DIRECTORY www.hmcapital.com Fax: (214)720-7888 Phone: (214)740-7300 Dallas, TX75201 200 CrescentCourt,Suite1600 HM CapitalPartnersLLC www.freemanspogli.com Fax: (310)444-1870 Phone: (310)444-1822 Los Angeles,CA90025 Suite 1900 11100 SantaMonicaBoulevard Freeman Spogli&Co.Incorporated Fax: (212)759-9059 Phone: (212)355-5656 New York, NY10153 767 5thAvenue Forstmann Little&Co. www.cdr-inc.com Fax: (212)407-5252 Phone: (212)407-5200 New York, NY10152 375 ParkAvenue, 18thFloor Clayton, Dubilier&Rice,Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.silverlake.com Fax: (650)233-8125 Phone: (650)233-8120 Menlo Park,CA94025 2775 SandHillRoad,Suite100 Silver LakePartners,L.P. www.platinumequity.com Fax: (310)712-1848 Phone: (310)712-1850 Beverly Hills,CA90210 360 NorthCrescentDrive,SouthBuilding Platinum Equity, LLC www.palladiumequity.com Fax: (212)218-5155 Phone: (212)218-5150 New York, NY10020 1270 Avenue oftheAmericas, Suite2200 Rockefeller Center Palladium EquityPartners,LLC www.mdcp.com Fax: (312)895-1001 Phone: (312)895-1000 Chicago, IL60602 3 FirstNationalPlaza,Suite3800 Madison DearbornPartners,LLC www.leonardgreen.com Fax: (310)954-0404 Phone: (310)954-0444 Los Angeles,CA90025 Suite 2000 11111 SantaMonicaBoulevard Leonard Green&Partners,L.P. www.jwchilds.com Fax: (617)753-1101 Phone: (617)753-1100 Boston, MA02199 111 HuntingtonAvenue, Suite2900 J.W. ChildsAssociates,L.P. www.thl.com Fax: (617)227-3514 Phone: (617)227-1050 Boston, MA02110 100 FederalStreet Thomas H.LeePartnersL.P. www.cypressgp.com Fax: (212)705-0199 Phone: (212)705-0150 New York, NY10022 65 East55thStreet,28thFloor The CypressGroup www.suncappart.com Fax: (561)394-0540 Phone: (561)394-0550 Boca Raton,FL33486 5200 Town CenterCircle,Suite600 Sun CapitalPartners,Inc. www.welshcarson.com Fax: (212)893-9575 Phone: (212)893-9500 New York, NY10022 320 ParkAvenue, Suite2500 Welsh, Carson,Anderson&Stowe www.warburgpincus.com Fax: (212)878-9351 Phone: (212)878-0600 New York, NY10017 466 LexingtonAvenue Warburg PincusLLC www.vestarcapital.com Fax: (212)808-4922 Phone: (212)351-1600 New York, NY10167 245 ParkAvenue, 41stFloor Vestar CapitalPartners www.texaspacificgroup.com Fax: (817)871-4001 Phone: (817)871-4000 Fort Worth, TX76102 301 CommerceStreet,Suite3300 TPG Capital The Vault MBA CareerBible rvt Equity Private 227 Customized for: Erin ([email protected]) 228 © 2009Vault.com Inc. Customized for: Erin ([email protected]) 2010 andbeyond. analysts havepointedoutthattheopportunitytoprovideguidanceinpersonalinvestmentchoicesisstillaservicewillbebadlyneeded2009, management) istheindustrytotrybreakintoin2009.Privatewealthmanagement,afterall,focusesonindividuals,notorganizations,andsome Despite thefiscalcarnageinsector, banksandrisk someindustrywatchershaveindicatedthatprivatewealthmanagement(alongwithboutique trillion inclientassetsand20,000advisors. would includeCiti’s famedwealthmanagement unit,SmithBarney. Thenewfirm,whichwillbecalledMorganStanleySmithBarney, willhave$1.7 Another bigtakeovercameaboutinJanuary2009,whenMorganStanleyagreedtopayCitigroup$2.7billionforamajorityshare of amergedfirmthat business intheworld,overtakingUBS’s spot. title in2008aswell.WhenBankofAmericaboughtthefailedMerrillLynch in2008for$50billion,BofAbecamethebiggestwealthmanagement money andtouseSwisscreditcardssotheirpurchaseswouldbeuntraceable,somebankersadmittedincourtstatements.UBShadconcedea by helpingthemstashfundsinoffshoreSwissbankaccounts.SomeofUBS’s clientswereeventoldtoconcealvaluablestheypurchased withstashed That wasn’ttheextentofUBS’s woes,either. BankersatthefirmpleadedguiltytoassistingAmericanbillionairesinevading millionsinfederaltaxes forced toraiseapproximately$32billionincapitalfrominvestors.Allall,thefirmposteda$17.6lossfor2008. economic crunchmoreacutelythanUBS,whichaccumulated$50billioninwrite-downs,handedoutabout11,000pinkslipsandwas the nation.Still,there’s theeffectsof nodoubtthatsome companieswerehithard.Whenitcomestolargeprivatewealthmanagers,nonefelt The privatewealthmanagementsector, whileemergingbadlybruised,ultimatelyremainedmostlyintactfollowingtheeconomiccollapsethatshook THE STATE OFTHEINDUSTRY Private Wealth Management stock. Itistheprivatewealthmanager’s jobtobalance assortedtypesofinvestmentstocreatethemosttaxefficient combinationfortheclient. differently bytheIRS.Forexample, incomederivedfromtheinterestratesofbondsistaxeddifferently thanlong-termcapitalgainsderivedfromselling differences intaxratescantranslateintobigchangesafter-tax returns. Various typesofinvestmentsusedbythewealthyaretreatedandtaxed taxes ifitmeantthatweweremakingadditionalincome.For the wealthy, itisn’tquiteassimple.Whenmanaginglargepools ofassets, small Another problemwealthyclientsoftenencounteristaxes.None ofuslikepayingtaxes.Formostus,however, wewouldwillinglypayadditional Paying taxes managers increatingincomefortheirclientsisn’talwayseasy. but whenyouconsiderthattheS&P500overlastsixyears hasreturnedlessthan1percentannually, ofprivatewealth you’llseethatthejob to getraiseseveryyear. Withratesofreturninthestockmarketsometimesashigh20percentormore,7.5maynotseem averyhigh return, of inflation,theportfoliowitha$1millionmustreturninexcess 7.5percentjusttokeepupwiththetwo-workerhouseholdthatcanpossiblyexpect typical familywithtwoincome-earnerscanearnmorethansomeone with$1millioninthebankwholivesoffofhisorherinvestments. Indeed,because of thequestion.WithaveragewagesinU.S.atalittleover$38,000 peryearasof2006,accordingtotheSocialSecurityAdministration,average andcaviarisout dollars orsojustisn’tasabigdealitusedtobe.Sure$50,000islotofmoneyfordoingnothing.Butlivingonchampagne million inaconservativecorporatebondreturning5percentcreatesmodest$50,000yearincome,itbecomesobviousthat havingamillion to helpclientscreateenoughincomeeveryyearliveoffof.Soundseasyright?Notreally. Whenyouconsiderthatsomeonewhoinvests$1 Because therichwealthyoftenneedtolivesolelyoffoftheirinvestments,today’s privatewealthmanagersmustuseavarietyofinvestmenttechniques continue togrowtheclients’assetssothattheybecomericher. become erodedovertime.Let’s faceit,$1doesn’tbuyasmuchitusedtoforJedandGranny. Inaddition,hopefullythewealthmanagerwill needs oftheirclients.Inaddition,theymustprovideenoughexcessgrowthtoaccountforinflationinorderthatclient’s purchasingpowerdoes It isthefirstjobofprivatewealthmanagerstohelpcreate,fromamongvariousinvestmentstrategies,incomeorgrowthsufficientforeveryday Creating income know enoughabouteachareatorepresenttheirclients’bestinterestsand,whereappropriate,offeradvice. solutions towealthmanagementissues.Thoughnotrequiredbeexpertinoneparticularareaofmanagement,privatewe alth managersmust The privatewealthmanagerleveragestheexpertiseofvariousdepartmentsinsidefirm(suchastrustdepartment)to presentclientswith preservation andassetprotectionforthewealthy. Typically, privatewealthmanagementisasmallerdivisionofmuchlargerinvestmentfirmorbank. The privatewealthmanagementindustryintegratesthevariedandcomplexbusinessofmanagingbyaccountingforincome needs,taxes,estate WHAT DOPRIVATE WEALTH MANAGERSDO? 229 Customized for: Erin ([email protected]) portfolio consultants,gainingasmaller pieceofindividualclients’business,butmakingupforit by consultingwithlargernumbersofclients. up withnewproductscanbranch offfromtheclientbusinessandintoaninvestmentspecialty. Theymayendupas market strategistorin-house associates, orevenaregionaloffice. Alternatively, an associate thathasspecializedinspottinguniqueinvestmentopportunities orhashelpedcome anumberof an associatehasoftenalreadybeen promotedtothelevelofvicepresident.Assuch,heorshe can beplacedinapositionoverseeing thatlevel,however,on thefirmandopportunitiesthat havepresentedthemselves,andupto$1millionwithin10 13yearsofprivatebanking.At In time,salariesandbonusmoneyformotivated,skilledtrusted associatescantop$500,000,usuallyanywherefromfivetoeightyears,depending Vice presidents well, withthehopesthatthey’llbringwell-moneyedcolleaguesor friendsforassociatestonetworkwith. charitable eventcanmeanaroomfullofpotentialclients.Some privatebankingfirmsorganizeculturaleventsorsportsoutingsfortheirclientsas means aninvestmentontheassociate’s partinbothtimeand,attimes,money—especiallywhenbelonging totherightcluborattending theright word-of-mouth, ascurrentclientsrecommendtheassociatetotheir high-net-worthpeers.Italsocomesfromgoodold-fashionednetworking,which Likewise, associatesareexpectedtodrumupnewbusiness,and bonuses cancomeifyoumanagetogainnewclients.Sometimesthiswillfrom bank’s estateplanningservicesinsteadofsomeoneelse’s, andinthatsense,sellinganon-investmentserviceisseenasverybonus-worthy. even askclientstoreviewtheirbankerseachyear. Ofcourse,firmswillalwaysappreciateitwhenassociatesconvincetheirclientstousetheprivate their bankerissimplyinterestedinsellingthemonproducts.Thesefirms’bonusmetricsareprimarilybasedfulfillingthe clients’goals—afewfirms Some privatewealthmanagementseschewcommissionbonusesaltogether, preferringtograntbonusesthatdonotgiveclientsthe appearance that get 5.35percent—withoutalteringtheclient’s riskprofileorotherwisedeviatingfromthestategoals—thebonuswouldbehigher. banker reachedthatgoal,hewouldgetalargerbonusthanhaveiftheinvestmentonlyyielded4.85percent.Orthemanagedto complex thansafefixed-incomeinvestmentsthatgenerateincomewithlittleornorisk,astatedgoaloffivepercentyieldeachyear. Iftheprivate metrics, measuringperformanceagainsttheclient’s statedgoals.Forexample,someprivatewealthmanagementclientsmaynot want anythingmore and thecompany’s havemorecomplex investmentproducts,gettingapercentageofthebusinessprivatebankbringsinfromthatclient.Others vary, however, dependingonhowthefirmstructures compensation.Someprivatebankersreceivebonusessolelyonsellingtheclientnewservices Associate paygenerallymirrorsotherWall Streetpositions,withanewlymintedassociatemakingabout$75,000to$85,000peryear. Bonusescan service andpeaceofmind). on thelevelofserviceclientwants(andfeesheorsheiswillingtopay, toimpeccable butatthislevel,feesareasecondaryconsideration budget, realestateholdings,taxes,smallbusinesspartnerships,planningandevenpayingtheday-to-daybillsofhousehold,alldepending incomemanagement, Associates willworkcloselywithclientstocreateanoverallfinancialstrategythatencompassesnotonlyinvestment,butalso products, thoughthepracticeisstartingtobecurtailedatsomefirms. clients, butattractnewclientsaswell.Atmanyfirms,you’llalsobeexpectedtoattemptsellyouronthecompany’s proprietaryfinancial business, therealfaceofprivatebankformostclients.Thisisconsideredaveryentrepreneurialjob,inthatyou’llbeexpectedtonotonlyserve The nextrankupisassociate,orjustplainoldprivatebankeratthesmallerfirms.Theseareguyswhoworkwithclients andattractnew Associates for theclients. the oneswhodoallresearching,numbercrunching,reportwriting,andyes,coffeefetchingonoccasion,forhigherups whoareactuallyworking called analysts,justastheyareinthesalesandtradingdivisioninvestmentbankingarmeverywhereelsewithinthecorporation.They’re The careertrackfortheprivatebankerisfairlycutanddryatmajorcorporatebanksWall Streetbrokeragefirms.Undergradscominginare Analysts appropriately takencareof,or“giventheirallowances”asonebankerputit. accounting expertswithinthefirm),andevensetsupafamilyofficeforwealthierclientstopaybills,staffmakesurefamilymembersare a client’s financialposition,recommendssolid investments,helpswiththefiduciaryaspectsoftheirclient’s accounts(regularlyconsultingtaxand The primaryroleinprivatewealthmanagementisthebanker, alsocalledtheinvestmentorfinancialadvisor. Thisis the personwhoevaluates CAREER PATHS that makingtheirclientsimpervioustolawsuitsdoesn’tjustprotectassets,butalsopreventsfromevenhappening. are severaltechniquesusedtoprotectassets,includingU.S.trustslawsandforeign,offshorebanks.Advocatesofassetprotectionmethodscontend of practiceforprivatewealthmanagersiscalled“assetprotection,”whichhelpsthewealthyguardagainstlosingtheirmoneyincivillawsuits.There In today’s society, peoplewithmoneyaresometimestargetedlawsuitsjustbecausetheyhappentohavemoney. So,ani Private Wealth Management The Vault MBA CareerBible 230 © 2009Vault.com Inc. Customized for: Erin ([email protected]) relationships asinvesting. The answertoallofthesequestionsisyes.Aprivatewealthmanagermustbegoodatmanythings—heorsheasskilled Do wealthmanagersneedtobegoodatsales?Marketing?Investing?Schmoozing? JOB RESPONSIBILITIES nowhere nearthelevelwheretheyhavetobereportedSecuritiesandExchangeCommission! though still a realminwhichtheMDmaywanttofindprivatebankerofhisown—andaregenerallyhighenoughthatfirmsdon’tdiscussthem, a handfulofMDswithinanyprivatewealthmanagementfirm,andtheyareoftenontheexecutivecommitteesfirm.Atthis level,salariesenter specialty positions,theymayendupastheprivatebank’s chiefinvestmentofficer, chieffiduciaryofficerorgeneralcounsel.There aregenerallyonly the headquarterscity. Theycanbegiventhehighest-net-worthclients,orproblemclientswhosemoneyisjusttoovaluabl driven VPcanbenamedamanagingdirector. Inthesepositions,anMDcanexpecttobeinchargeofassociatesamajorbranchoffice,oreven Finally, afteryearsofservice-andincomethatcantop$2millionormoreforthebestperformingvicepresidents—asuccessful, entrepreneurial,client- Managing directors charity workandgettinginvolved inotheractivitiesthatallowawealthmanagertohavemorecontact withwealthyindividuals. boards,doing meeting orcallingprospects.Itmightbeonecomponentofa networking plan,whichmayalsoincludevolunteeringoncommunity Many managersspendtimeonthegolfcoursetomeetprospective clients.Butgolfingisn’tamarketingstrategythatcanreplace thehardworkof bring toyourclients. themselves, othersnetworkintheircommunity. Howyoumarketyourselfwillbeadecisiontomakeafterthoroughlyevaluating what strengths youcan What somefirmslackinold-fashionedmarketing,theyallow(and expect)youtomakeup.Somewealthmanagersmayusenewsletterspromote Clients thencanmeetwithvariousdepartmentsofthefirm,including theseniormanagement,rightuptoCEO. potential clientsareflowndowntoRaymondJamescorporateheadquarters andgivenatourofthefirm’s four-acre campusinSt.Petersburg,Florida. firm. Forinstance,RaymondJamesandAssociatesoffersBIO(by invitationonly)visitstoclientsmeetingcertainliquidnet-worththresholds.These wealth managementcompaniesmightsaytheyoffersomesortof superiorservicequalityoradegreeofcaringthatmaybemissing fromacompeting being “thebest,”or“betterthan”somethingsomeoneelse. Generally, exceptions.Private themarketingisprettystandard,withsomenotable to drivepromoteyourparticularbrandofgasoline.Intheprivatewealthmanagementbusiness,though,it’s tomakeclaimsof alittlemoredifficult industries. Forexample,ifyouhadownedanoilcompanyandsoldgasoline,likeJedClampett,couldsaythatyourgasolinemadecarsmorefun When itcomestomarketingitself,theprivatewealthmanagementindustryhasmorerestrictionsonwhatcanlawfullyclaim than someother management isahighlyregulatedindustry, therearesomenotablechallengestomarketing. last part(whypeopleshouldwanttodobusinesswithyou)isthemostimportantaspectofpromotingyourbusiness.And since privatewealth Marketing istheartoftellingpeoplewhoyouare—whetheryou’reaproductorservice—andwhyshouldwanttodobusines s withyou.This Marketing best partsofyourjob. clients, buildingrelationshipswiththem,andunderstandingwhattheirgoalsare.That’s whatsalesisreallyallabout.Ifyouletit,itcanbeoneofthe by identifyingaproductorserviceappropriateforthem.Thismeansthatoftenyouarenotsellinganyoneanythingatall.Rather, youarelisteningto who cansimplytalkanotherpersonintoanything.Aprofessionalsalesperson,rather, isanexpertatlisteningtowhatclientsneedandfillingthat isnotsomeone When youimproveyourlisteningskills,willfindthatbecomeatrueprofessionalsalesperson.Suchsalesperson identifying aclient’s needs. are aboutbeingnakedinfrontofastrangedoctor. Likeadoctor, aprivatewealthmanager’s bedsidemanner, goalongwayto sotospeak,will Money canbeaveryuncomfortablesubjectforpeople.Studieshaveshownthatmanypeoplearemoretalkingabout moneythenthey the rightquestionsthenactivelylisteningtoanswersforcuesandcluesaswhatclientmightbethinking. or managerforthatmatter)istoimprovehisherlisteningskills.Agoodprivatewealthwillbeabledrawoutaclient’s needsbyasking (oranyothersalesperson gasp, gulp…s...sell,thenholdonforjustaminute.Thefirststoptheroadtosuccessanyprivatewealthmanager Among theresponsibilitiesofaprivatewealthmanageraresalesandprospectingforsales.Ifyourheartfelllittlewhenyoureadthatyou’dhaveto, Sales career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Private Wealth Management e forthefirmtolose.In atdeveloping 231 Customized for: Erin ([email protected]) Downers Uppers but thenagain,theywouldn’tbethereifweren’t.Herearesomeuppersanddownersthatprivatebankersexperienceeveryday. contentintheir jobs— Like anyjob,thereareprosandconstoacareerinprivatewealthmanagement.Thevastmajorityofbankersquite UPPERS ANDDOWNERS most appropriatestrategy. or herclients selectthe manager intheinvestmentprocesswillbeexplainingimplicationsofvariousstrategiespresented,therebyhelpinghis Certainly theyneedtodevelopwell-informedopinionsaboutinvestingandvariousinvestmentstrategies.Andthemostimportantfunctionofawealth contacts? Learningaboutnewestateplanningtechniques?Orkeepingacloseeyeonthemarket? given thetime.Butthinkforamomentabouthowtheirtimeshouldbebestspent?Talking Meetingnew toclients?Prospectingfornew does notmeanthatwealthmanagerswon’thavealotofinputaboutthosedecisionsortheycouldmaketypesdecisionsthemselves Private managementfirmsprovidetheirwealthmanagerswithprofessionalstohelpthemhandleclients’day-to-dayinvestmentdecisions.This Investing Private Wealth Management The Vault MBA CareerBible 232 • Limited geographicpotential.You’re• goingtohavelivewherehigh-net-worthindividualslive,which meansamajorU.S.orworldcity, withall • Always on.Whilethemajorityofyourclientswillleaveyoualoneonweekends, holidaysandvacations,you’llconstantlyhavetobeready to fluctuations. • Income • Conservatism. • Clients. • Money. • Lifestyle. • Philanthropy. • On-the-job knowledge. It’s notjuststocksandbonds.Whileyou’llhavebackingfromexpertsorconsultantsmadeavailabletoyoubyyourfirm, • Entrepreneurship.Onceyou’reanassociateorhigher, you’llbeultimatelyresponsibleforyourclients’performance,andhavethe • Clients. you won’tgetit—atleastnotwithout amajorcommute. the expenseandheadachesthat comesalongwithit.You cancertainlyliveinthesuburbs,butifyou’re hankeringforasmall townlifestyle, the middleofahoneymoonorfamilyholiday. vacation, alaptopwithreliablewirelessconnectionisessential. Anunderstandingdomesticpartnerisalsoimportantshouldaclientcallin spring intoactionatamoment’s notice.Don’tthinkofevenheadingtothegrocerystorewithoutyourBlackBerry on,andifyou’regoingon or aconservativeinvestingtrend.Justasyourclientscanfallprey tothevagariesofmarket,yourownincomewillaswell. rejected despiteyourbestarguments. your hairouteverynowandagain. holding orsupremelywell-thought-outargumentsforeachmoveyouthinktheyshouldmake.Evenyourbestclientswillmake wanttopull do stupidthingswiththeirmoney, willneedhand- andthenblameyouforit.Afewwillcallconstantlywitheachtickofthemarket,many easily becomeahigh-net-worthindividualinyourownright. many eight-hourdays,butyoucanreasonablyexpecttohaveweekendsfree,andyou’llbeabletakevacationsliketherestofhumanity. by anystretch,it’s certainlygoodforthesoul.Andasonebankerpointedout,itcanleadtomorebusinesscontactsandpotentialclients! estate planning,you’llonlygetsmarterastimegoeson. you’ll enduplearningquiteabitaboutvarietyofinvestmentsandfinancialplanningtools.Fromrealestatetohedgefunds,fromprenups investment savvy. opportunity tobuildyourownclientbase.You’lland your havequiteabitofinputintohowmuchmoneyyoumake,basedonyourdrive generally interestingpeoplewithfascinatinglifeexperiences,andyoumayendupbecomingveryclosetothem. You’ll behelpingpeoplerealizetheirhopesanddreams,managetheresultsofalifetimehardworkplanforfutures. They’re While themajorityofyourclientswillfallinto“uppers”category, afewwillmostcertainlydriveyounuts.They’llignoreyouradvice, While you’llneverreceivemultimillion-dollarchecksforleadingamergerdeal,certainlybemakingplentyofmoney, to enough For themostpart,youcanactuallyhavealifeoutsideofworkifmanageyourtimeandclientaccountsproperly. You have won’t Many privatebankersfindparticularjoyfromhelpingtheirclientsgivemoneyaway. Whileit’s notahigh-commissionac Many ofyourclientswillberiskadverse,andinvestmentsthatcould makethem(andyou)aprettypennycouldbesummarily Feeding intotheabove,youmayenduphavingarunoflowbonuses orcommissionsduetouncertaintyinthemarkets © 2009Vault.com Inc. tivity Customized for: Erin ([email protected]) www.barclayswealth.com/private-banking.htm United Kingdom London E145HP 1 ChurchillPlace Barclays PrivateBank www.bankofny.com/privatebank/index.htm Fax: (212)809-9528 Phone: (212)495-1784 New York, NY10286 1 Wall Street Management The BankofNewYork MellonWealth EMPLOYER DIRECTORY www.credit-suisse.com Phone: (212)325-2000 New York, NY10010 11 MadisonAvenue Credit SuissePrivateBanking www.commercebank.com Fax: (856)751-9260 Phone: (856)751-9000 Cherry Hill,NJ08034-5400 1701 Route70East Commerce Atrium Commerce BankPrivateBanking www.citigroup.com Fax: (212)793-3946 Phone: (212)559-1000 New York, NY10043 399 ParkAvenue Citigroup PrivateBank www.bbh.com Fax: (212)493-7287 Phone: (212)483-1818 New York, NY10005-1101 140 Broadway Wealth Management Brown BrothersHarrimanPrivate career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.us.hsbc.com Phone: (212)525-5000 New York, NY10018 452 5thAvenue HSBC BankUSA Fax: +442079924880 Phone: +442079918888 United Kingdom London E145HQ 8 CanadaSquare World Headquarters HSBC PrivateBank www.gs.com Fax: (212)902-3000 Phone: (212)902-1000 New York, NY10004 85 BroadStreet Management Goldman SachsPrivateWealth www.fbr.com Fax: (703)312-9501 Phone: (703)312-9500 North Arlington,VA 22209 1001 19thStreet Management Friedman BillingsRamseyInvestment www.53.com Fax: (513)579-6246 Phone: (513)534-5300 Cincinnati, OH45263 Fifth ThirdCenter Fifth ThirdBancorp Fifth ThirdAssetManagement www.db.com Fax:+49 6991034225 Phone:+49 6991000 Germany 60486 Frankfurt Theodor-Heuss-Allee 70 Deutsche BankAG Management Deutsche BankPrivateWealth www.lazardnet.com Phone: (212)632-6000 New York, NY10020 30 RockefellerPlaza Lazard PrivateClientGroup www.jpmorganchase.com Fax: (212)270-1648 Phone: (212)270-6000 New York, NY10017 270 ParkAvenue JPMorgan PrivateBank www.jefferies.com Fax: (212)284-2111 Phone: (212)284-2300 New York, NY10022 520 MadisonAvenue, 12thFloor Jefferies PrivateClientServices www.northerntrust.com Phone: (312)630-6000 Chicago, IL60603 50 SouthLaSalleStreet Northern Trust Private Banking www.morganstanley.com Phone: (212)761-4000 New York, NY10036 1585 Broadway Management Morgan StanleyPrivateWealth www.morgankeegan.com Phone: (901)524-4100 Memphis, TN38103 50 NorthFrontStreet Morgan KeeganTower Morgan KeeganPrivateClientGroup www.leggmason.com Phone: (877)534-4627 Baltimore, MD21202-1099 100 LightStreet Legg MasonWealth Management The Vault MBA CareerBible Private Wealth Management 233 Customized for: Erin ([email protected]) www.tweisel.com Fax: (415)364-6295 Phone: (415)364-2500 San Francisco,CA94104 1 MontgomeryStreet 1 MontgomeryTower Client Services Thomas Weisel PartnersPrivate www.rbcprivatebanking.com Fax: (416)9746102 Phone: (416)9749419 Canada Toronto, ONM5J2J5 200 BayStreet,Suite600 Royal BankPlaza,SouthTower Banking Royal BankofCanadaGlobalPrivate www.raymondjames.com Fax: (727)573-8365 Phone: (727)567-1000 St Petersburg,FL33702 880 CarillonParkway Client Group Raymond JamesFinancialPrivate EMPLOYER DIRECTORY (CONT.) Private Wealth Management The Vault MBA CareerBible 234 www.bankofamerica.com/ustrust Toll Free:(800) 878-7878 Fax: (212)852-1140 Phone: (212)852-1000 New York, NY10036 114 West 47thStreet Management) (Bank ofAmericaPrivateWealth U.S. Trust www.usbank.com Phone: (651)466-3000 Minneapolis, MN55402 800 NicolletMall U.S. BancorpCenter U.S. BankPrivateClientGroup www.ubs.com New York, NY10178 101 ParkAvenue UBS Wealth Management www.willliamblair.com Phone: (312)236-1600 Chicago, IL60606 222 West AdamsStreet William BlairWealth Management www.wellsfargo.com Phone: (866)249-3302 San Francisco,CA94104 420 MontgomeryStreet Services/Private Banking Wells FargoPrivateClient © 2009Vault.com Inc. Customized for: Erin ([email protected]) under 4.5million,thehighestsince1992)wasenoughtolastmorethan11monthsatcurrentsalesrates.InaJune2007article in adjusted totalinfouryears.And2008,thatfigureplummetedbyanother15.5percent.Thenumberofhomeslistedforsale atthatpoint(just percent comparedtotheJuneoneyearprior. seasonally By2007,thatfigurewasdownanother10percenttojustunder5.8million—thelowest began tobeofferedcheapfillupemptyunits.ByJune2006,theNationalAssociationofRealtorssaidexisting-homesales were downnearly9 Since then,thesalesmarketfellhard—andfast.Newlyconstructedproperties—whichhadbeenbuiltupratheroptimisticallyfr om 2000to2005— accounts fora10thofthatamount. bear to,atvalues15percentto30lessthanwhattheirmortgages weregoodfor—andcouldn’ttakeoutadditionalloans. less thanwhattheyhadpaidforthem.Foreclosurefilingsincreased becausehomeownersdidn’thavetheoptionofsellingtheirhomes—orcouldn’t making paymentsonadjustable-rateloanswithinterestratesthat hadshiftedupwards.To makemattersworse,many people’s homeswerenowworth After thehousingbubbleburst,subprimemortgagecrisisexacerbated theproblemin2007and2008,whenborrowersstartedhavingtrouble of 2004and2005theresultantspiralininsurancecosts. States. ThesituationwasbadinareasofCaliforniaanddireFlorida, wheretheproblemwascompoundedbyhugepropertytaxes,hurricanes also managepropertiesoradministerrealestateinvestmenttrusts(REITs). that exclusivelyhandlecommercialrealestatearefrequentlylargerandemploymorebrokerssalespeoplethanresidential f Realogy’s competitorsincludeRE/MAXandHomeServicesofAmerica.Mostresidentialrealestatecompaniesalsodealincommercial sales.Firms Management acquiredRealogy, andthecompanysignedalicensingdealwithMeredithCorporationtouseBetterHomesGardens brand. Banker. ThecompanyclaimeditwasinvolvedinoneofeveryfourU.S.residentialrealestatetransactions2007.Duringthatyear, Apollo leaders. Realogy, a2006spin-offofCendant,hasseveralbignamesinitsstable,includingSotheby’s 21andColdwell International,ERA,Century Most residentialrealestateofficesaresmallandfocusonpropertiesintheirimmediatelocation.Butbrandnamescomefromjustafewindustry companies (suchasLennar, PulteHomes,BeazerHomesandKBHomes). affects bothconsumerconfidenceandbuyingpower).Inturn,thesefactorsalsohaveeffectsonmortgagelendershousingc economic swingsaswell,inadditiontochangesthefederalinterestrate(whichaffectsmortgagerates)andunemployment office andretaildevelopmentprojects)foundthemarketgluttedwithavailablespace,drivingpricesdown.Residentialrealestateisaffectedby skyrocketed. Thesubsequenttechnologybusthadadramaticeffectonsomepartsofthesector, too.Commercialrealestatefirms (whichdealwith helped therealestateindustryinSiliconValley inthe1990s.Therewasmoredemandforspace—bothcommercialandresidential—andassetvalues The realestatesectordependsonanumberofeconomicfactors;smallshiftscanturntrendssignificantly. Forexample,thetechnology industryboom Yes, it’s forreal to buygroceriesandsomewheresleep. industry isusuallyconsideredoneofthemostdynamicsectorsinAmericaneconomy—peoplemayselltheirstocks,butthey’llalwaysneedaplace direct contactwithrealestate;theplaceswherewelive,work,vacation,shopandexerciseareallassetstobebought,sold and rented.Therealestate Real estateistangible.It’s apieceoflandand anybuildingorstructureonit,aswelltheairaboveandgroundbelow. Everyonecomesinto A concretebusiness INDUSTRY OVERVIEW Real Estate protection. America andpromptlyrenamed, andWashington Mutual, LandAmericaFinancialGroupandIndyMacBankallfiledfor Chapter11bankruptcy responsible forabout$6trillion in commitments—hadtoberescuedbythefederalgovernment. CountywideFinancialwasswallowedbyBankof Mae (thenicknamefortheFederal NationalMortgageAssociation)andFreddieMac(FederalHome LoanMortgageCorporation)—which togetherare payment defaultsandfallingrealestatevalues.(Blameitonthe looser lendingrequirementsadoptedbytheindustryin2000.) MajorlendersFannie The situationbecameevenmoreabysmalin2008,whenbanks andotherfinancialinstitutionssufferedhugelossesrelatedtoincreasing mortgage From badtoworse BusinessWeek money fueledtheboom:housingpricesoncoastsshotup55to100percent(accountingforinflation)infiveyears.Accord ing toanarticlein to 1percentoverathree-yearperiod,andlooseningoflendingregulationsmadegettingmoneybuyhouseeasierthanever. Theinfluxofcheaper skyrocketed. Thereasonsforthiswerenumerous:followingthemarketcrashof2000,FederalReserverolledbackinterestratesfrom6.5percent In theearlypartofdecade,topicrealestatefrequentlypoppedupinnewsmedia,ashousingpricesonbothcoastsandurbanareas Real estaterollercoaster Times , MarkZandi(chiefeconomistatMoody’s Economy.com) indicatedthatpricesweredeclininginover40percentofmetroareastheUnited , inthefirsthalfof2005,realestateaccountedfor50percentgrowthGDP;normal,lessoverheatedmarketsitusually irms; andtheymay The New York New The onstruction 235 Customized for: Erin ([email protected]) highs thattheysawin2005anytimesoon. fall: theGreatDepressionof1930s.Evenifeconomyandrealestatemarketrecover, it’s unlikelythathousingpriceswillhitthehistoric If theeconomicdownturncontinuesforanextendedtime,resultswillbehorrendous,bringingtomindlasttimehousing pricestookalarge downsizing ontheirminds. Trade tocompanieswith Center;andaglutofNYCofficebuildings(constructedduringthegoodtimes)willlikelyhavetroublerentingoutspace coming sixtoninemonths.InNewYork, thefinancialcrisishasslowedbigconstructionprojects,suchasAtlanticYards inBrooklynandtheWorld In August2008,theNationalAssociationofRealtorssaiditexpectspooreconomicconditionstohaveanimpactoncommercialrealestateover The subprimemortgagecrisishashadanobviousimpactonresidentialrealestate,butit’s realestatemarket. alsocreatedproblemsinthecommercial Next ontherealestatehorizon meltdown. $700 billionbailoutpackage,underwhichthefederalgovernmentcouldpurchasebadmortgagesandotherassets,hopefullypreventingfurther “Meltdown Monday.” Thefollowingweek,FederalReserveChairmanBenBernankeandTreasury SecretaryHenryPaulsonurgedCongress topassa After investmentbankLehmanBrothersfiledforbankruptcy, stockmarketsplummetedonSeptember15,2008—adaythenewsmedia loans tofundJPMorganChase’s acquisition ofBearStearns,andtokeepmassiveinsurancefirmAIGsolvent. subprime loans.Alsoduring2008,thefederalgovernmentbailedoutmortgagelendersFannieMaeandFreddieMac,Fedmademassive The actallowstheFederalHousingAdministrationtoguaranteeasmuch$300billioninnew30-yearfixedratemortgagesfor homeowners with The HousingandEconomicRecoveryActof2008,whichattemptedtorestoreconfidenceintheU.S.mortgageindustry,in July2008. waspassed Real Estate The Vault MBA CareerBible 236 horizon. Bothformsuseacapitalization (cap)ratetocalculateavalue.Thecapismarket mechanism,sodon’tworry about what There aretwoformsoftheincome approach.OneforminvolvesisolatingNOIforoneyear, while theotherforminvolvesalongertime about NOIincessantly, somakesuretounderstandthisconceptifyouplanonbeinginvolvedwithrealestateinvesting. (NOI) incalculatingthevalueofproperty. ThinkofNOIasthereasonmostinvestorsbuyabuilding.Theinvestmentcommunitytalks The incomeapproachisthemostquantitativeofthreeapproaches. Theincomeapproachinvolvestheuseofnetoperatingin The incomeapproach to arriveatavaluation. approach depreciation. Thecostapproachisusedfortrulyuniqueproperties likechurches,whichcannotuseeitherthesalesorincome the valueoflandmustbetakenintoconsideration.The landvalueisaddedtotheimprovementsminusestimatedproper the improvementsmustbeconsideredandanappropriateamount ofdepreciationissubtractedfromthevalueimprovements.Finally, focuses onafewsteps.First,youmustdeterminethecostof replacing orreconstructingtheimprovementsbuilding.Next,ageof In marketswhereitisdifficulttofindsimilarproperties,anappraiser canvalueapropertybasedonthecostapproach.Thisapproach The costapproach properties arealike,sowhenvaluingapropertyusingthesalesapproachyoumustadjustfordifferencesbetweenpropertie s. property basedonthemostrecentsalesinformationforpropertiesinsameareawithsimilarcharacteristics.Bearmind thatnotwo For example,whenvaluingafour-bedroom, two-bathroomhouseinthePacificHeightssectionofSanFrancisco,itislogicaltovaluethat databases, suchastheMLS,tolookforhomeswithsimilarcharacteristics(e.g.,locationandhousespecifics),subject property. sales history, taxrecordsandpropertyamenitiesthatcanbeaccessedforanannualfee.Inthesalesapproach,appraiserswilluse asthe Multilisting Service(MLS),whichisusedtotrackresidentialproperties.TheMLScontainsusefulinformationabouthomes, such easier forrealestateprofessionalstoaccessmarketinformationusedinvaluingproperties.Oneofthemostpopulardatabases isthe residential andcommercialproperties.Thereareproprietarydatabasesthattrackhomebuildingsales,which makeit both The salesapproacharrivesatavalueforpropertybasedonrecentofsimilarproperties.Thiscanbeused for The salesapproach approaches beforeanyrealestateinterview. Professional appraiserswillreachavaluationaftercarefullyconsideringeachapproach.You shouldmakesuretoreviewallt There arethreegenerallyacceptedapproachestovaluingrealestate:thesalesapproach,costapproachandincome appr Valuing RealEstate © 2009Vault.com Inc. oach. come hree dubbed ty Customized for: Erin ([email protected]) career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com low financingcosts.Ifthisnewmarketdemandisgreaterthanthesupply, propertypriceswillincrease. in realestatevalues.Forexample,wheninterestratesofferedbylendersarelow, ofthe peoplewillrushtobuyahousetakeadvantage lessens theneedtomakeimprovementsorcontributecapitalproperty. Inaddition,fundamentalmacroeconomicsplaysamajor role and anaestheticallypleasingarea.Whilelocationisimportant,keepingthepropertyingoodworkingorderalsocreatesvalue becauseit and upgradeapropertyasmuchyouwant,thereisnosubstituteforbeinglocatedcloseto:transportation,goodschools,at tractive retail things inrealestatearelocation,location.”You simplycannotunderestimatetheimportanceoflocation.Whileyoucanrestore market demandthatmakerealestatevaluableregardlessoftheassettype.Thereisapopularindustrysaying,“Thethreemost important Although therearedifferentwaystovaluerealestate,afewcommonvariablessuchaslocation,theproperty’s conditionand single-family houseistypicallyvaluedbythesalescomparisonapproach. DCF but10yearsisthegenerallyacceptedperiodtovalueanasset.Thenormallyusedforincome-producingproperty, whilea time horizonandthendividingthatyear’s the NOIbyanassumedcaprate.Someinvestorsusedifferenttimeperiodswhencalculating value becauseitisassumedthepropertyeventuallysold.TheresidualcalculatedbytakingNOIofyearafter theassumed The DCFiscalculatedbasedonastatednumberofyearsandaddsupthePVs.Atsomepointinfuturecashflowsyouhave a flows. Theexponent“n”inthedenominatorrepresentsperiodornumberofyearsfuturethatyouwouldreceive cashflow. thecash present value(PV).Thediscountratefactorsintheopportunitycostofmoneyorreturnthatyoucouldexpectelsewherewith knowledge ofthemarket.Thediscountrateisnecessarybecauseitallowsyoutobringallfuturecashflowsbacktoday’s dollarsor the costofcapital.Your clientmayprovidethiscost,oryouhavetoestimatethediscountratebasedonsimilartransactionsand ratereflects theoretically providesavaluefortheasset.Note,thatthereisalsofutureresiduallistedinformula.Thediscount In theexampleabove,numeratorrepresentscashflowsthatbuildinggeneratestodayandincomingyears,which The yieldcapitalizationformusesalongertimehorizon.Itinvolvescalculatingdiscountedcashflowtoarrivepropertyvalue. our example,thevalueofbuildingwouldbe: Assume themarketcaprateforindustrialfacilitieswas10percent.To arriveatthevalueofbuilding,divideNOIby caprate.In was projectedtobe$500,000.Ifyouknewthemarketcaprateforsimilarproperties,couldarriveanestimatedvalueof property. arrive atapropertyvalue.Forexample,supposeyouwerebuyinganindustrialfacilitywhosenetoperatingincomeinthefollowingyear goes inthecalculation.Justbeconcernedwithhowitisused.InpracticecaprategenerallyusedaformulaNOIto for insidercompany profiles,expert advice, au O ern=NOIyearn+1+residualvalue Value =NOIyearn 11+discount rate au NI= $0,0 =$5,000,000 =$500,000 Value =NOI Cap Rate.10 +1 11+discount rate +1 11+discount rate +1 The Vault MBA CareerBible residual Real Estate 237 Customized for: Erin ([email protected]) annual conferencesandotheractivities. University ofWisconsin-MadisonandOhioStateUniversity’s FisherSchoolofBusiness.Theseschoolsalsohavestrongrealestateclubsthatproduce company operates.Ifit’s apublicfirm,check industry issomethingIalwaysrecommend.”Whenyouhavetheinterview, inwhich the bepreparedtotalkaboutthelocalmarket—oranyother ready toacceptthat,”headvises.“Getinthehuntassoonpossibleandnetwork,network.Usingalumsoranyone else youknowinthe Job seekersshouldn’tbeshyaboutusingtheircontacts“Thisindustryisverytoughforoutsidersornewcomerstobreakintoandstudentsshould shoot fortheskyandleverageyourMBA.” MBAs shoulddotheirhomeworkonthetypesofrolesoutthereandmatchbackgroundinterestwithbestfit.Howev er, youstillwantto speak totheirskillsets.Itisgoingbehardenoughgettheinterview, doesn’tfityourbackground. sodon’tblowitbygoingafterajobthatprobably tolookforrolesthat emphasize stronginterpersonalskills.Havingacombinationofbothiscompetitiveadvantage.Ingeneral,Itellallmystudents Employers lookforavarietyofskillsets.“Itisdifficulttonarrowitjustfewthings,”hesays.“Somepositionsareveryquantitativewhileothers necessary qualitiesfortheseroles.” that positionsinthecapitalsideofbusinessarereservedforelite,MBAsshouldpursuethesebecausemanythempossess estate investmentfirm.“Thesejobsarealmostself-selectingbecausetheytoughtogetandyouhavebesmartaggressivesucceed.Given isalsoaprincipal ofareal “In general,thehigh-profilerealestatepositionsandfinanciallyrewardingjobsareoncapitalside,”addsPagliari,who financing, whichcombinesequityandfixedincomeinvestments)privatefirms. aggressively pursuethemforemployment.Intoday’s marketplace,thismeanslookingatREITs, mezzaninefunds(fundsbuiltaround supply capitaltotheindustry. Typically thesearelarge,sophisticated,financially-orientedfirms.MBAsshouldidentify institutionsand opportunities inrealestateforMBAs.Theissueisidentifyingthebestfitcandidate.PositionsthataregoodfitsMBAswithfirms Joseph Pagliari,aclinicalassistantprofessoranddirectoroftheRealEstateCenteratKelloggSchoolManagement,says,“Therearehost JOB SEEKINGADVICEFORREALESTATE MBAS on One possibleeducationalrouteintorealestateistogetanMBAatinttutionwithaspecificprogram.Someof the bestprograms,based THE REALESTATE MBA how importantitistobepreparedanswerthequestionofwhy youareinterestedinrealestate.” business school.“Manyoftheinterviewerswantedanexplanation ofhowmybackgroundtiedtointerestinrealestate.Ican’t emphasizeenough “I wasacareerswitcherandrepeatedlyaskedininterviewsabout whyIwasinterestedinrealestate,”saysRichMonopoli,arecentgraduatefrom surprised tofindsomanyattorneysinthebusiness,”hesays. Pagliari alsorecommendstakingbusinesslawclassesbecausethere aremanylegalissuesinvolvedintheindustry. youshouldnotbe “Whichiswhy finance andeconomicprinciplesthathelpyoupricerisksarevery useful,”hesays,notingthattheabilitytopriceriskisa strongdifferentiatingfactor. For MBAstudentswhoareinterestedinrealestatebutwhoseprograms donotofferrealestateclasses,Pagliarioffersasolution. “Classesrelatedto that simplyoffersastrongrealestatecurriculumandislackinginotherareas. practical experienceandthecurriculumwillgiveyouaskillsetthatmeetyourendgoal.Don’tsacrificeoverallMBAforschool The professoralsoadvisesindividualswhoareevaluatingMBAprogramsthatofferrealestatecurriculumsto:makesurethepro fessors havesome real estatecluborbeingthedrivingforcebehindanevent,thensobeit.” estate-related activitiesatschool.“Dowhateverittakestobeabledemonstrateyourenthusiasmfortheindustry,” headds.“Ifittakesstartinga classes, especiallyifyouhavenopriorrealestateexperience.”You needtodemonstratepassionbyjoiningarealestatecluborgettingactivein To MBAstudentsjuststartingarealestateprogram whoknowtheywanttoentertheindustry, hestresses,“Don’trelyonsimply takingrealestate describe acaprateandmarketspecificslikerentalratesgeneraleconomicconditions.” “In theinterviewyouwillmostlikelybeaskedaboutwhyareinterestedinrealestateandafewtechnicalquestions,”Pagliari warns.“Bereadyto Real Estate The Vault MBA CareerBible 238 U.S. News & World Report World & News U.S. rankings, areWharton,UniversityofCalifornia-Berkeley’s HaasBusinessSchool,MIT’s SloanSchoolofManagement, The Wall Street Journal Street Wall The for thescuttlebutt.Also,becertainthey’llwelcomeyourMBA. © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.pinnaclerealty.com Fax: (206)215-9777 Phone: (206)215-9700 Seattle, WA 98121 2801 AlaskanWay, Suite200 Pier 70 Company LLC American ManagementServices www.aimco.com Fax: (303)757-8735 Phone: (303)757-8101 Denver, CO80237 Suite 1100 4582 SouthUlsterStreetParkway AIMCO Properties,L.P. EMPLOYER DIRECTORY www.davidsonhotels.com Fax: (901)821-4104 Phone: (901)761-4664 Memphis, TN38125 3340 PlayersClubParkway, Suite200 Davidson HotelCompany, Inc. www.cushmanwakefield.com Phone: (212)841-7500 New York, NY10019 51 West 52ndStreet Cushman &Wakefield, Inc. www.colonyinc.com Fax: (310)282-8808 Phone: (310)282-8820 Los Angeles,CA90067 1999 Avenue oftheStars, Suite1200 Colony Capital,LLC www.colliers.com Fax: (617)722-0224 Phone: (617)722-0221 Boston, MA02109 50 MilkStreet,20thFloor Consultants, Inc. Colliers InternationalProperty career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.loweenterprises.com Fax: (310)207-1132 Phone: (310)820-6661 Los Angeles,CA90049 11777 SanVicente Boulevard,Suite900 Lowe Enterprises,Inc. www.lincolnproperty.com Fax: (214)740-3441 Phone: (214)740-3300 Dallas, TX75201 500 NorthAkard 3300 LincolnPlaza Lincoln PropertyCompany www.hometownamerica.com Fax: (312)604-7501 Phone: (312)604-7500 Chicago, IL60606 150 NorthWacker Drive,Suite2800 Hometown AmericaL.L.C. www.homeservices.com Fax: (612)336-5590 Phone: (888)485-0018 Minneapolis, MN55402 333 South7thStreet,27thFloor HomeServices ofAmerica,Inc. www.hines.com Fax: (713)966-2053 Phone: (713)621-8000 Houston, TX77056 2800 PostOakBoulevard Williams Tower Hines www.gardencommercial.com Fax: (973)467-3480 Phone: (973)467-5000 Short Hills,NJ07078 820 MorrisTurnpike Garden CommercialProperties www.rockefellergroup.com Fax: (212)282-2179 Phone: (212)282-2000 New York, NY10020 1221 Avenue oftheAmericas Rockefeller GroupInternational,Inc. www.realliving.com Fax: (614)457-6807 Phone: (614)459-7400 Columbus, OH43215 77 EastNationwideBoulevard Real Living,Inc. www.newmarkkf.com Fax: (212)372-2426 Phone: (212)372-2000 New York, NY10017 125 ParkAvenue Newmark KnightFrank www.irvinecompany.com Fax: (949)720-2218 Phone: (949)720-2000 Newport Beach,CA92660 550 NewportCenterDrive The IrvineCompany www.corcoran.com Fax: (212)223-6381 Phone: (212)355-3550 New York, NY10021 660 MadisonAvenue The CorcoranGroup,Inc. www.shanerhotels.com Fax: (814)278-7295 Phone: (814)234-4460 State College,PA 16803 1965 Waddle Road Partnership Shaner HotelGroupLimited The Vault MBA CareerBible Real Estate 239 Customized for: Erin ([email protected]) www.tishman.com Fax: (212)739-7065 Phone: (212)399-3600 New York, NY10103 666 5thAvenue, 38thFloor Inc. Tishman Realty&ConstructionCo., www.prea.prudential.com Fax: (949)794-7035 Phone: (949)794-7900 Irvine, CA92612 3333 MichelsonDrive,Suite1000 Inc. The PrudentialRealEstateAffiliates, www.koll.com Fax: (949)250-4344 Phone: (949)833-3030 Newport Beach,CA92660 4343 Von KarmanAvenue The KollCompany EMPLOYER DIRECTORY (CONT.) Real Estate The Vault MBA CareerBible 240 Fax: (404)365-9800 Phone: (404)237-7300 Atlanta, GA30305 100 West PacesFerryRoadNW W. B.JohnsonInternational www.tcresidential.com Fax: (770)801-1256 Phone: (770)801-1600 Atlanta, GA30305 3050 PeachtreeRoadNW, Suite500 2 BuckheadPlaza Trammell CrowResidential www.zilber.com Fax: (414)274-2729 Phone: (414)274-2400 Milwaukee, WI53203 710 NorthPlankintonAvenue, Suite1200 Zilber Ltd. www.weichert.com Fax: (973)993-8284 Phone: (973)605-1616 Morris Plains,NJ07950 1625 StateRoute10 Weichert Realtors © 2009Vault.com Inc. Customized for: Erin ([email protected]) rotating acrossfirms’equity, credit,interestratesandprimebrokeragedesks. offering rotationalsalesandtradingprogramsforstudentsrecentgraduates—potentialemployeescangetfirsthandexperienceinthebusinessby Still, it’s notanentirelybleakpicturewhenitcomestobreakingintothebusiness.Severalfinancialfirms(suchasgiantCreditSuisse)arestill 2009. few oftheconcernshaveproventobefounded—onitstradingfloors,BankAmericaandCitibothsawthousandsjobcutsinlate2008into security.confidence inthemarkethasledtoalackofvolumeonsalesandtradingdesks—notmentionemployeefearsaboutoveralljob Sofar, a Unquestionably, salesandtradingisasectorthat’s undergoneaseriesofchangessincetherecessionstruckUnitedStatesinfull force.Alackof S&T today air conditioner. has crossedatradingflooronSaturdaywilltellyouthattheonlynoisetobeheardisclockstickingeveryminuteandwhirof financeanalyst who or traderventureintotheofficeonaSaturdaySunday;tradingflooriscompletelydevoidoflifeweekends.Anycorporate However, salespeopleandtradersworkmuchmorereasonablehoursthanresearchanalystsorcorporatefinancebankers.Rarelydoesasalesperson or sell,andatwhatpricetobuyisdifficultwhenmillionsofdollarsarestake. volume kicksupanotch.Traders mustrelyontheirmarketinstincts,andsalespeopleyellforbidswhenthetumbles.Decidingwhattobuy screens: apressurecookerofstress.Sometimesthefloorisquietrumbleactivity, butwhenthemarkettakesanosedive, panicensuesandthe If you’veeverbeentoaninvestmentbankingtradingfloor, you’vewitnessedthechaos.It’s usuallyalotofswearing,yellingandflashing computer THE WAR ZONE Sales andTrading the lowestpricepossible. He orshejustcaresaboutmaking thespread.Inaselltrade,thismeanssellingathighest price possible.Inabuytrade,thismeansbuyingat filter inthroughsales.Atraderfaced withabuyorderforbuy-sidefirmcouldn’tcarelessabout the performanceofsecurities oncetheyaresold. Traders makemoney bysellinghighandbuyinglow(thisdifferenceiscalledthespread). Theyarebuyingstocksorbondsforclients,andthese clients explain howconflictscanarise. moneyshould sales, butsaleswouldhavenothingtosellwithouttraders.Understanding howatradermakesmoneyandsalesperson Simply put,salespeopleprovidetheclientsfortraders,andtraders providetheproductsforsales.Traders would havenobody totradeforwithout traders frequentlyclash,disagreeandbicker. and tradingasashiny, happyintegratedteamenvironmentofprofessionalsworkingfortheclient’s interests.Whileoftenthatistrue,salespeopleand Institutional salesandtradingarehighlydependentononeanother. thoseinsales Thepropagandathatyoureadinglossyfirmbrochuresportrays S&T: ASYMBIOTICRELATIONSHIP? Salesperson: Trader: Translation: Salesperson: between interestpayments). client wantedtosell,meaningthetraderwillbuybonds,paying73.125percentof$10millionplusaccruedinterest(tofactorinearned Translation: Trader: up inhischairandyellstotherelevanttrader, “Givemeabidon$10millionMexPar, sixandaquarter, 19s.” government-issued bond(denominatedinU.S.dollars).Theemergingmarketssalesperson,seatednexttothemarke ts traders,stands Salesperson: Here’s aquickexampleofhowsalespersonandtraderinteractonanemergingmarketbondtrade. SHOP TALK “That’s thebestIcando.Themarketisfallingrightnow. You wanttosell?” “I got‘emat73andaneighth.” I amwillingtobuythematapriceof$73.125per$100facevalue.Asmentioned,the$10millionrepresentsamountparvalue Please buyatahigherprice,asIwillgetcommission. Receives acallfrombuy-sidefirm(say,Mexican Par alargemutualfund).Thebuy-sidefirmwishestosell$10millionofparticular “Done. $10million.” “Can’t youdoanybetterthanthat?” 241 Customized for: Erin ([email protected]) 6:30 a.m.:Getintowork.Checkvoicemailandemail.Chatwithsomepeople atyourdeskabouttheheadlinesin Here’s alookatdayinthelifeofsales-trader, giventousbyan associateintheequitiesdivision. A DAY INTHELIFE:SALES-TRADER Another tangiblebenefitfortheMBAcandidateisavailabilityofmoreexitoptions. generalist poolandplaceyouonadeskthatisn’tyourtopchoice. assigned thedeskthatthey’dliketoworkfor. Undergraduatesalesandtradingrecruitingprograms,ontheotherhand,mayhire youaspartofa demeaning thingsthatanundergraduateanalystdoes,butmercifullyforashorterperiodoftime.Insomecases,MBAsarealso morelikelytobe The payisbetterandyouwillgenerallyhaveafastertrackforpromotiontosalespersonortrader. TheMBAassociatewilltypicallyhavetodothesame What aresomeofthetangiblebenefitsanMBA? of theaforementionedissues,andasksomegoodquestionstogetabetterfeelforwhetheranextradegreeisbenefit. The bottomlineisthattherearenohardandfastrules.Dependingontheparticularfirmdesk,anMBAmaynotadvanceyo ur career. Beaware you’re thebrain,whichcanworktoyouradvantageevenifbosshasnopersonalbiasesaboutvalueofdegree. MBA couldpotentiallylimityourcareeradvancement.Alternatively, youcanbeinasituationwhereyou’retheonlyMBAandeveryonethinksthat your careerprospectsifthere’s adownrightdisdainforMBA-types.Alternatively, ifthedeskyou’reonispopulatedwithMBAs, thennothavingan may evenhurt doesn’t haveanMBA,thenchancesarethathavingMBAwon’taddtoomuchvalueinthisenvironment.Infact,degree else,includingtheboss, A moresubtlepointtodiscernarethedeskdynamics.lotaboutbeingonatradingisfittingin,andifeveryone so theywillhireexclusivelyoutofundergraduateprograms. MBAs. Thismayresultfrombudgetaryconstraints,orexplicitfirmpolicy. Somefirmsalsoholdtheviewthatit’s hardtoteachanolddognewtricks, to getrecognized.Whenit’s timeforapromotion,youmayalsobesomewhatbehindinthepeckingorder. hand, don’t want Somefirms,ontheother certainly anindicationthatMBAsarebetterpaid.Thisdoesn’tmeanyoucan’tbepromotedwithoutMBA;you’lljusthave toworkmuchharder If thefirmyou’reconsideringhiresbothassociatesandanalysts,butyounoticethatareofferedtwiceasmuchpay asanalysts,thenthisis hear thisonceortwice,don’tacceptitastruth.WhetheryouneedanMBAnotisreallyafunctionofthefirmworkfor andthedeskyou’reon. justbecause you need anMBAtogetpromotedonsalesandtradingdesks.Thisviewisoftenperpetuatedbepeoplewhoworkdesks,but Generally, salesandtradingisamuchlesshierarchicalworkenvironmentthaninvestmentbanking.Forthisreason,itwidely believedthatyoudon’t Do IneedanMBAtobepromotedonasalesandtradingdesk? THE MBAINS&T sharpness andtheabilitytohandlestress. for mental consider themselvessmarterthansalespeople.Thesalespeopleprobablyknowbetterhowtohavefun,butthetraderswinprize sometimes callthembullshitartistswhilesalespeoplecounterbycallingtradersquantguyswithnopersonality. Traders are tough, quickandoften Salespeople possessremarkablecommunicationskills,includingoutgoingpersonalitiesandasmoothnessnotoftenseenintraders.Traders The personalities earn acommission.Thisofcourseleadstomanyinterestingsituations,andattheextreme,salespeopletraderswhoeyeone anothersuspiciously. ordertogetthe tradeand trader tosellatalowprice.Thesalespersonalsowantsbeableoffertheclientbetterpricethancompetingfirmsin The salesperson,however, hasadifferentincentive.Thetotalreturnonthetradeoftendeterminesmoneysalespersonmakes, sohewantsthe Sales and Trading The Vault MBA CareerBible 10:30 a.m.:Onthephonewithanothertrader, tryingtosatisfyaclient. (“Iftheyhavequestionsinanotherproduct,I’lltrytohelpthem out.”) buyer orseller—there’s onesales-traderrepresentingabuyer, anotherrepresentingtheseller.”) 10:00 a.m.:Morecalls.(“Iusuallyhaveabout 35differentclients.It’s alwayslistedequities, butit’s ahugerangeofequities.The clientcanbea telling themwhatresearchisrelevanttothem,andmerchandise Ihave,ifthere’s anynewsonoftheir positions.”) 9:30 a.m.:Marketsopen.You hitthephones.(“You wanttomakeoutgoingcalls,you don’treallywantpeopletocallyou.I’mcallingmyclients, stuff available,Igetinfoout,withoutexposingwhatwehave.”) do ishelptradersexecutetheirtradingstrategies,givethemmarket color. IftheywantsomethingItrytofindtheotherside ofthetrade.Orif I have 7:15 a.m.:Equitiesmorningcall.You findoutwhat’s uptosell.(“I’msortofaliaisonbetweentheaccounts[clients]and blocktraders.WhatI 242 Journal . © 2009Vault.com Inc. Customized for: Erin ([email protected]) stocking. The smallconsolationtotheexpectant stock-traderisthatwhenhemakessubstantiallylessthan hisbudget,maybethebonddeskwillstuff consequence tothestock-trader thatgenerated$10millioninrevenueandisexpectinga$1 checkisthathe’llseealotlessthan$1million. the bondmarketfallsonhardtimes.Thismakessenseat corporatelevel(preventingmassdefections,forexample),buttheimmediate cross-subsidize theequitydeskwithbonddesk’s revenuewhenthestockmarketfallsonhardtimes,and toreturnthefavorbonddeskwhen the yearwhencompensationcommitteeisdetermininghow big thebondbonuspoolandequityshouldbe?Mostfirmstendto the otherhand,stock-tradersmakemoremoneyandsales-traders sellmorestockwhentheeconomyisrobust.Whathappens attheendof On a bonddeskandanequitydesk.Thetradersmakemore money andthesalespeoplesellmorebondswheneconomyisinrecession. Finally, keepinmindthat investmentbanksareoperatingacrossallmarketsandproductssectors.Inasimplifiedworld,the investment bankoperates vesting schedulethatstretchesoutforyears. restricted stock.Thisisamajorcomponentofpayasyoumove uptheladder,cash accordingtoa andyoucanonlyconvertthiscompensationinto of compensationthatdoesn’thittheincomestatement,butaren’t quiteasmotivatingcash.Anothergameinthecompensationisgrantingof compensation packagesthatincludeamongotherthings,cash,stock optionsandrestrictedstock.Generousstockoptiongrants control, andthelargestexpenseitemiscompensation.To keepcompensationexpenseatorbelow50percentof revenue,investmentbankshandout If youmake$10millionforthefirm,however, don’texpecttoreceiveacoolmillionforyourefforts.Wall Streetfirmsarehighlyconsciousofexpense given year. so dependingonhowcheaporgenerousyourfirmis,thisnumbercanbenormallyexpectedtofluctuatebetween0percentand 10percentinany Bonuses arenormallycomputedasapercentageofthetradingrevenueyougenerate(orcommissiondollarsthatifyou’re asalesperson), late 1990s,theyarenowrare.Salariesincreaseprimarilythroughperformancebonuses,especiallyifyou’vebecomeaposition traderforthefirm. marketofthe $80,000 to$85,000peryearplusanendofbonus$20,000$30,000.Whilesigningbonuseswerethenormduring bull helduparound Sales andtradingassociateswillstartataboutthesamebasepayastheirinvestmentbankingcounterparts.Thegoingrate has Associate pay:toinfinityandbeyond be countedonasastablesourceofMBAhiringdemand. also offeredsummerinternshipopportunities,buttheseprogramsarelessestablishedthantheNewYork-based opportunities,andthereforeshouldn’t be abletodemonstratelocallanguageproficiency, andastrongdesiretomakelong-termcommitmenttheregion.Eachofthesefirmshasrecently from AmericanbusinessschoolsdirectlyintotheirEuropeantradingdesks.MBAsinterestedinpursuingsalesandopportunitiesabroadmust hiredMBAs MBAs arealsomorelikelytohavetheopportunitygetstaffedabroad.Forexample,GoldmanSachsandMorganStanley recently with similarresponsibilitiesasanalysts,butaddmoreresponsibilityquicklyandaretypicallyonafastertrackforpromotion. First-year MBAstudentsandrecentgraduatesareeligibleforsummerassociatefull-timepositionsrespectively. Associatesstart MBA CAREERPATH bars. Maybethishappensonceortwiceaweek.”) 7:00 p.m.:Meetabuy-sidetrader, oneofyourclients,atabar. (“We entertainalotofbuy-sidetraders—dinner, wegotobaseballgames, 4:30 p.m.:Headhometorestabitbeforegoingout.(“Ileaveatp.m.orsometimes5Itdepends.”) Street toknow, orit’lldrivedowntheprice.”) (“It’s alotofhowtogettradedonewithout disclosinganythingthat’s youdon’twantthewhole goingtohurttheaccount.Ifyouhaveonestockup 2:05 p.m.:You telltheclientthatyouhavesomestockhehadindicatedinterestinpreviously, butyoudon’tlethimknowhowmuchcan unload. 2:00 p.m.:Taking acallfromclient.(“You can’tmissabeat,youareliterallyinyourseatallday.”) wants] andit’s notyou,youwanttogoback toyourclientandsaywhoitwas.) 1:00 p.m.:Watching yourterminal(“There’s alotofaction.Ifthere’s 200,000sharestradeinyourname[astockthataclienthasposition inor don’t leavetogetourlunch,weorderlunchin.”) 12:30 p.m.:Foodfromthedelicomesin.(“You We can’tgotothebathroomsometimes,sayyou’reworking10orders,youwantseeeverystock. it’s anothersales-trader. Theannouncementcomes‘overthetop,’—overspeaker. Italsocomesonmycomputer.”) 12:00 p.m.:You hearacallforthesalestockthatseveralofyourclientsarekeenonacquiring.(“It’s usuallyablocktrader, althoughsometimes client.”) 11:00 a.m.:Callinganotherclient.(“It’s fromclientto atraderatthe other end,receivingdiscussionsfromportfoliomanager;theirdiscretionvaries career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible are anon-cashform Sales and Trading 243 Customized for: Erin ([email protected]) responsibility, youshouldn’tbeexpectingtogetpromotedeverycoupleofyears. real salesandtradingresponsibility. Ofcourse,ifyoudoyourjobwell,you’llbedulycompensatedandpromoted,butafterreachingalevelofsignificant responsibility. Thefocusofpromotionsshouldn’tbetoachieveaparticulartitle(vicepresident,director, managingdirector, etc.),butrather, toearn forward tomovingoutofthebullpenandintoarealofficewithsecretary. andmoretrading Salespeopleandtraderssettleforbetteraccounts Promotions ontradingdesksaregenerallynotmuchtocelebrate,exceptthatitleadspotentiallyhigherpay. Investmentbanking associatescanlook If thisanalystisaprizedemployee,thenthebossmightofferpromotiontoassociateinorderkeepanalystondesk. One commonscenariothatunfoldsisafterseveralyears,therestlessundergraduateanalystdecidestoapplybusinessschoolandgetsaccepted. who haveademonstratedabilitytoaddvaluedeskthepotentialmoveupwithoutanMBA. much toolookforwardtoexceptperhapsathirdyearandthenbackbusinessschoolorsomeothercareer. Bycontrast,undergraduate analysts really don’t have The pathtopromotiononasalesandtradingdeskislessstandardthanitininvestmentbanking.Investmentbankinganalysts The windingpromotionroadinS&T Sales and Trading The Vault MBA CareerBible 244 © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.baisidirect.com Phone: (800)926-1111 Charlotte, NC28255 900 West Trade Street Gateway Village, Building900 Services, Inc. Banc ofAmericaInvestment www.asbai.com Toll Free:(800)800-9006 Fax: (212)299-4360 Phone: (212)698-3000 New York, NY10105-4300 1345 Avenue oftheAmericas,44thFloor Arnhold S.Bleichroeder EMPLOYER DIRECTORY www.cantor.com Fax: (212)829-5280 Phone: (212)938-5000 New York, NY10022 110 East59thStreet Cantor Fitzgerald www.bmocm.com Phone: (416)359-4000 Canada Toronto, ON M5X 1H3 1 FirstCanadianPlace 100 KingStreetWest BMO CapitalMarkets www.barcap.com Phone: +442076232323 United Kingdom London E144BB Canary Wharf The NorthColonnade Barclays Capital career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.credit-suisse.com/us/en Fax: (212)325-6665 Phone: (212)325-2000 New York, NY10010-3629 11 MadisonAvenue Credit Suisse www.credit-agricole-sa.fr Fax: +33143233448 Phone: +33143235202 France 75015 Paris 91-93 BoulevardPasteur Crédit AgricoleS.A. www.collinsstweart.com/usbusiness Fax: (212)389-8810 Phone: (212)389-8000 New York, NY10017 350 MadisonAvenue Collins StewartLLC www.citigroupcib.com Phone: (212)816-6000 New York, NY10013 388 GreenwichStreet Smith Barney) Investment Bank(formerlySalomon Citigroup’s GlobalCorporate and ww.cibcwm.com Fax: (416)956-6958 Phone: (416)594-7000 Canada Toronto, ONM5J2S8 161 BayStreet,BCEPlace CIBC World Markets www.schwab.com Toll Free:(800)648-5300 Fax: (415)636-9820 Phone: (415)636-7000 San Francisco,CA94104 120 KearnyStreet Charles SchwabCorporation Dresdner BankAG www.deutsche-bank.de Fax: +496991034225 Phone: +496991000 Germany 60486 Frankfurt Theodor-Heuss-Allee 7- Deutsche Bank www.daiwa.jp TEL: +81355551111 Japan Tokyo 100-6751 9-1, Marunouchi1-chome,Chiyoda-ku, GranTokyo NorthTower Daiwa SecuritiesGroupInc. www.fbr.com Toll Free:(800)846-5050 Fax: (703)312-9501 Phone: (703)312-9500 Arlington, VA 22209 1001 19thStreetNorth Friedman BillingsRamsey www.fpk.com Fax: (212)599-2723 Phone: (212)687-1105 New York, NY10018 420 5thAvenue, 5thFloor Fox-Pitt Kelton www.fbw.com Toll Free:(800) 436-2000 Fax: (410)468-2746 Phone: (410)685-2600 Baltimore, MD21202 100 LightStreet Ferris BakerWatts www.dresdner-bank.com Fax: +496926315839 Phone: +49692630 Germany D-60329 Frankfurt Jürgen-Ponto-Platz 1 The Vault MBA CareerBible Sales and Trading 245 Customized for: Erin ([email protected]) www.kbro.com Fax: (212)292-8101 Phone: (212)292-8100 New York, NY10022 800 3rdAvenue, 30thFloor Kaufman Bros.,L.P. Phone: (504)525-3767 New Orleans,LA70113-7115 639 LoyolaAvenue, Suite2775 Johnson Rice&Co www.jefco.com Phone: (212)284-2550 New York, NY10017-2124 212 East47thStreet,Apartment15F Jefferies &Co. www.janneys.com Toll Free:(800) 526-6397 Fax: (215)564-9597 Phone: (215)665-6000 Philadelphia, PA 19103-1675 1801 MarketStreet Janney MontgomeryScott www.jpmorganchase.com Fax: (212)270-2613 Phone: (212)270-6000 New York, NY10017 270 ParkAvenue JP MorganChase Phone: (415)283-3410 San Francisco,CA94104-3533 220 BushStreet,Suite360 Group OneTrading www.goldmansachs.com Fax: (212)902-3000 Phone: (212)902-1000 New York, NY10004 85 BroadStreet Goldman Sachs EMPLOYER DIRECTORY (CONT.) Sales and Trading The Vault MBA CareerBible 246 www.prudential.com Toll Free:(800)346-3778 Fax: (973)802-4479 Phone: (973)802-6000 Newark, NJ07102-3777 751 BroadStreet Prudential Securities www.piperjaffray.com Phone: (800)333-6000 Minneapolis, MN55402-7020 800 NicolletMall,Suite Piper Jaffray&Co. Phone: (212)952-1100 New York, NY10004-2210 74 BroadStreet,5thFloor Oscar Gruss&Son www.morganstanley.com Phone: (212)761-4000 New York, NY10036 1585 Broadway Morgan Stanley Phone: (212)370-0040 New York, NY10017-5107 331 MadisonAvenue, 12th Floor Miller Tabak &Co www.leggmason.com Phone: (877)534-4627 Baltimore, MD21202 100 LightStreet Legg Mason www.ladenburg.com Toll Free:(800)523-8425 Fax: (305)572-4199 Phone: (305)572-4100 Miami, FL33137 4400 BiscayneBoulevard,12thFloor Ladenburg Thalmann www.smhgroup.com Toll Free:(800) 900-4611 Fax: (713)224-1101 Phone: (713)993-4610 Houston, TX77002 600 Travis, Suite 3100 Sanders MorrisHarris www.rwbaird.com Toll free:(800)792-2473 Phone: (414)765-3500 Milwaukee, WI53201 777 EastWisconsin Avenue Robert W. Baird www.rbccm.com Phone: (212)858-7000 New York, NY10006-1404 1 LibertyPlaza,Room300 RBC CapitalMarkets www.sig.com Fax: (610)617-2689 Phone: (610)617-2600 Bala Cynwyd,PA 19004 401 CityAvenue, Suite220 Susquehanna InternationalGroup,LLP www.suntrust.com Toll Free:(800) 786-8787 Fax: (404)332-3875 Phone: (404)588-7711 Atlanta, GA30308 303 PeachtreeStreetNE SunTrust Banks,Inc www.bernstein.com Fax: (212)969-6189 Phone: (212)486-5800 New York, NY10105 1345 Avenue oftheAmericas Sanford C.Bernstein © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.ubs.com Fax: +41442399111 Phone: +41442341111 Switzerland CH-8098 Zurich Bahnhofstrasse 45 UBS www.tweisel.com Fax: (415)364-2695 Phone: (415)364-2500 San Francisco,CA94104 1 MontgomeryStreet 1 MontgomeryTower Thomas Weisel Partners EMPLOYER DIRECTORY (CONT.) career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.wedbush.com Fax: (213)688-6652 Phone: (213)688-8000 Los Angeles,CA90017 1000 Wilshire Boulevard Wedbush MorganSecurities www.vandermoolen.com Fax: +31205356788 Phone: +31205356789 Netherlands 1016 EDAmsterdam Keizersgracht 307 Van derMoolenHoldingN.V. www.williamblair.com Toll Free:(800)621-0687 Fax: (312)368-9418 Phone: (312)236-1600 Chicago, IL60606 222 West AdamsStreet William Blair&Co. The Vault MBA CareerBible Sales and Trading 247 Customized for: Erin ([email protected]) revenue. Securityconsulting,customapplicationdevelopmentandwebservicesconsultingarealsopromisingareasfortechcon sultants. netted WiproacontracttocontinueprovidingoutsourcingservicesforCitiatleastsixyears,guaranteeingtheIndianfirmsome$500millionin can befoundincash-strappedCitigroup’s saleofitsIndia-basedtechnologyservicesunittoWiprofor$127millioninJanuary2009—adealthatalso of sometechfunctionsmayactuallyincreaseascompaniesseektoreducecostsbyriddingthemselvescaptiveunits.Arecentexamplethis support corebusinessoperations,suchasinfrastructureorregulatoryrequirements,areareasthatwilllikelyremaininhighdemand.Andoutsourcing still existontheothersideofarecession(mergers,especially),andhelptoensurethatindustrybouncesbackquickly. Consultingprojectsthat market andincreasingindustryderegulationaroundtheworldhadbeenhelpingtokeepdemandfortechconsultingconsistent—fac tors thatshould Over thelongterm,however, theoutlookappearsalittlemorefavorable.Priortocreditcrunch,globalization,growing post-mergerintegration software tobeimplementedandintegrated.” a bitbetterthanITconsultingandsystemsintegrationservices,”accordingtothefirm,“withlattervulnerableslowdowninpurchasesof billion willbespentonITconsulting,systemsintegrationandoutsourcingservices—down3percent2008'sfigure.“IToutsourcingservicesdo for theindustry. That3percentfigureseemslikelytohaunttheconsultingandoutsourcingworld,too,withForresterpredictingthat,in2009,$484 yearsofgrowth month, ForresterpredictedthattheglobalITmarketwilldeclinebyaround3percent—downto$1.66trillion—endingsixconsecutive Meanwhile,thefollowing predicts thatITspendingwillincrease1.6percentannuallyin2009and2010,downfromaninitialprojectionof6.1percent. Reflecting thisreality, inDecember2008,leadingresearchfirmForresterResearchscaledbackitspredictionsforgrowthUnitedStates.Itnow a turnaroundinthesecondhalfof2009,whileotherscontinuetofretaboutrecession—andthereforefallspending—las ting muchlonger. very littleinthewayofconsistentopinionexistsonoutlookforITservicesindustrynearfuture.Someanalysts predictthebeginningof layoffs, ithasalsoseencompaniescurbexpenditureon“nonessentials”likeupgradeddatasystems.Andgiventheunprecedented natureofthecrisis, economy, manycompanieshavebeenforcedtobecomemorecost-conscious.Whilethathasmanifesteditselfmostobviouslyinwaveafterof businesses inaprecariousposition.Assluggisheconomicgrowthandfearsofcrashturnedintofull-onrecessiondramaticslumptheglobal Though workhasremainedsteadyatmostconsultingfirms,theongoingrecessionthatfollowed2007’s subprimemortgagecrisisonce againput Cautious clients with aneconomicrealityinwhichstayingafloatbecamethenewbenchmarkforsuccess. demand fortechconsultingservices.Unfortunately, inabidtocope muchofthatcamegrindingtoahaltin2008,asclientscutbackonspending driving up State AdministrationofForeignExchangein2006—openedupsignificantopportunitiesthefinancialservicesandbankingsectors, firms experiencedareturntoprosperity, BaselIIandChina’s thankstoclientswithampleITbudgets.Inaddition,awaveofregulatorychanges—like tech consulting environment encouragedcompaniestoinvestinITimprovementshelpboostprofitsandspurbusinessgrowth.Over20062007, period ofstagnationresultingfromthestockmarketdownturn2000and2001,economystartedtopickupagainin2004. The positiveeconomic Until thecreditcrisisbeganunfoldinginsummer2008,technologyconsultingindustryhadexperiencedamultiyearupswingspending.After The endofthesurge? THE STATE OFTECHNOLOGYCONSULTING Technology Consulting maneuver, havingsnapped upover120smallercompaniesinits24-yearhistory. beamasterofthis 2007, AccenturepurchasedCalifornia-baseddefensefirmMaxim Systemstobulkupitsservicesinthatarea.Ciscohasproven Instead ofinvestingtimeandmoneyintoexpensiveR&D,consultancies canacquiresmallerfirmswithanichetechnologyspecialty. Forexample, in targetclientbase. that asgenericsoftwareimplementers.Addingnewinformation technologiestotheirportfolioalsohelpslargerfirmsextend In addition,consultingfirmshavegonetogreaterlengthsdifferentiate theirservices,positioningthemselvesasspecialistsonthecuttingedge,rather a client’s entirebusinessprocessesinHRorfinance. liketakingover been aimingforshort-termprojectsthatrequirelesslaborandexpense, likeimplementation,aswellhigherprofitmarginservices, result, consultancieshavehadtoconcentrateonservicesthatadd tangiblevalueandboostprofitmargins.To protect profits,consultingfirmshave want toknowwhatthebottom-linesavingswillbebeforeprojects begin—aphenomenonexacerbatedbystraitenedeconomiccircumstances. Asa specific demandsrelatingtotheirindustrysector, forcingconsultingfirmstoreallyprovetheirworth.Clientsalsotendbemoreprice-sensitive,and tend tohave the gradualrecoveryofconsultingindustrythatoccurredbetween2004and2007,clientsbecamemoresophisticated now Facing amarketthat’s sensitivetoeconomicshifts,techconsultingfirmsmustcontinuallyadapttheirstrategiessuitthecurrentmarketplace.With Change isgood 249 Customized for: Erin ([email protected]) deregulation andaccesstotheWorld Trade Organization,companiesarenow moreabletotakeadvantageofVietnam’s skilledlaborandlowcosts. as therealup-and-comer, andpredictthatthecountrywillsurpassIndiaChinaasapremieroutsourcingsiteby2012.Thankstorecenteconomic Vietnam, thePhilippinesandEasternEuropeannationsaregaining popularityasviableoutsourcingcenters.Infact,industryobserversidentifyVietnam As such,Western firmshave startedlookingbeyondIndiaandChina,eyeingotheremergingcountriesforoutsourcingopportunities.Indonesia, labor. workers by2009tomeetexpecteddemand.China,whichhas also risenrecentlyasanoutsourcinghotspot,isfacingasimilardeficiencyinskilled an impendingshortageofworkerswithITskills.A2007report from Dun&Bradstreetestimatedthatthecountrywillneedhalf-a-millionmoretech Inaddition,Indiafaces firms tohirelocalstaff—somethingthatanalystssaymaylead thecountrysoonpricingitselfoutofoffshoringmarket. While thelabormarketinIndiamatures,salariesareinchingupward atarateofaround15percentperyear, forconsulting makingitmoreexpensive Where willtheygonext? been exploredforthefutureoffirmbyitsgovernment-appointedcaretakers—amongthemaprobablesale. to snapupasmanyofthetroubledfirm’s clientsaspossible.To butanumberofoptionshave date,Satyamisstillinexistence andstillservingclients, by falseaccountingpractices—arevelationthatspelledjailforRaju,disasterSatyam’s stockholdersandopportunitiesfor itsrivals,whomovedswiftly date: theadmissionbySatyamComputerServices’founderandformerCEO,RamalingaRaju,thatfirm’s earningshadbeensignificantly inflated Since late2008,however, nomediareportontheIndianconsultingindustryhasbeencompletewithoutareferencetoitshighest-profileescapade even inIndianbusinesspress.In2007,forexample,firmsmadeover75foreignacquisitions. Indeed, thesightofIndianfirmsmakinginroadsintoforeignmarketshasbecomesocommonthatit’s nolongersomethingthatpassesmuchcomment, over thepastfewyears;recently, thecountryhasexperiencedasurgeinM&Aactivity, andhasstartedtobecomeaplayerininternational acquisitions. callcenterlocation ever lesslikelyastherecessionwearson.Despitethat,IndiahasdevelopedbeyonditsformerreputationstrictlyaBPOand BPO marketwasworthsome$12.2billionin2008—somewhatshortofthe$50figurefrequentlycitedasatargetfor2012, whichisbecoming The country’s BPOmarketisstillgrowingsteadily, keepingtechconsultingfirmssuppliedwithastreamofengagements.NASSCOMreportsthatthe making Indiahometoitslargestworkforce,evenbeforeitannouncedplansin2008increasethatnumber50,000. in thenextfiveyears.Currently, IBMhasalmostone-fifthofitsemployees—about73,000—inthecountry, andAccenturehasover37,000staffthere, sixfoldto360,000 three years;andin2008,Ciscoannouncedplansforatalentdevelopmentprogramthere,aimingtoincreaseitsstaffthecountry resources andtalentintoittocapitalizeonthewell-establishedmarket.In2007,IBMannounceditsintentioninvest$6billioninIndiaovernext English-speaking populationhavegivenIndiaadistinctadvantageoverotherdevelopingcountries,andAmericanconsultingfirm s continuetopour indicated thatIndia’s outsourcingindustryrevenuewasexpectedtoexpand$60billionby2010.Thecountry’s skilledlabormarketandlarge Since theoutsourcingcrazebegan,Indiahasdominatedmarketasgo-tolocationforlowercostlabor. A2007McKinsey Global Institutereport India dominates maintenance. projects. Businessprocessoutsourcingisthefastest-growingservicessectorinmarket,withclientsalsodemandingapplicationsdevelopmentand underlined bythefactthatsince2006,manyconsultingfirmshavebeengettingaboostfromsecondroundofworkresultingfrommatureoutsourcing current turmoil—something entire ITinfrastructurefromanoffshorelocation.Thatnewmaturityiswidelypredictedtohelptheindustryweather industry—accounting foramajorchunkofoverallITconsultingrevenue—andofteninvolvesmorecomplexprojects,suchassupportingcompany’s almost$400 billion around cheapcallcentersandlow-costdataservicesforclientsthatneededtofindawaycutcosts.Nowoutsourcingisan outsourcing isexpectedtodosoatalesserrate,accordingForresterResearch.Whentookoffinthelate1990s,theseservicesrevolved slow,Outsourcing remainsacoreserviceofferingthathelpskeepprofitmarginsbuoyant.WhileoveralldemandforITconsultingmay theneedforIT Outsourcing levelingoff will growannuallyat10.5percentuntil2011,hitting$55billioninvaluethatyear. Asia isalsorisinginprominenceasamajormarketfortechconsultingservices.SpringboardResearchforecaststhatthePacificITservices jumped aheadoftheAmericasinoutsourcingactivity. 2009 wouldbetheyearthatseesEMEAfinallyoutpaceAmericasaslargestITservicesmarketinworld—in2007,regionhadalready emerged asapromisingmarket,withtherateofdemandquicklyeclipsingthatNorthAmerica.Industryobservershavelongbeenpredicting The techconsultingclientmakeupisalsoundergoingageographicshift.Today, theregionencompassingEurope,MiddleEastandAfricahas EMEA takesthelead Technology Consulting The Vault MBA CareerBible 250 © 2009Vault.com Inc. Customized for: Erin ([email protected]) web-based training modules. She has five analysts on her team. team. her on analysts five has She modules. training web-based lead totighterrestrictionsonfirmsattractingtoptalentfromoutsideofU.S.borders. B visa)tobringincheaperlabor, thenewObamaadministrationhasvowedtotakeacloselookathowprogramsoperate—somethingthatcould visas(mainly theH1- an increasingvolumeofobjectionovertheirstaffingpractices.Respondingtoaccusationsthatfirmsareabusingforeignworker stronger presenceintheWest. However,different kind—namely asthosecompetitorsgainafootholdintheU.S.market,they’refacingproblemsof which givesthemadistinctadvantageovernewcomers.Thiscouldsoonchangeascompetitorswillingtoundercutthesefirms’pricesestablish For themostprofitabletechengagements,there’s nodoubtthatAmericanfirmshavethelongstandingrelationshipsittakestoestablishclienttrust— centers intheworks. InfoCrossing. Thefirmalsoplanstorecruitabout500employeesforanewdevelopmentcenterinAtlanta,Ga.,andhastwomore U.S.development already has50U.S.officesandaheadquartersinNewYork. InAugust2007,India-basedWiproacquiredU.S.infrastructuremanagement vendor giants—like EDSandBearingPointInc.Management&Technology Consultants(whichfiledforChapter11bankruptcyprotectionearlyin2009)—and in Cincinnati,Ohio,whichopenedMarch2008.Thefirmhasnotbeenshyaboutitsintentiontostealbusinessfromthetraditionalconsulting industry traction,andtogetclosertheircustomers.Tata newdevelopmentcenter ConsultancyServicesrecentlyincreaseditsU.S.presencewitha consulting market.Outsourcingfirmslookingtomoveintohigher-profit servicesareheadingtotheUnitedStatesandEuropegain regionaland As consultingfirmscompeteforthemostlucrativeengagements,thosethatwereonceoutsourcingshopsaremakinginroadsinto the high-endIT The racetotheStates Kristine is a consultant at a major consulting firm with many IT consulting engagements. Her role is team lead of the design and developer for eight for developer and design the of lead team is role Her engagements. consulting IT many with firm consulting major a at consultant a is Kristine A DAY INTHELIFE:ITCONSULTANT as ITskillsarethetoppicksformostselectiveconsultingfirms. between ITservicesandbusinessconsultingisbecomingincreasinglyblurred.Candidateswithadeepunderstandingof conceptsaswell management, wirelessnetworkingandapplicationsengineering.Firmsarealsomoreconcernednowaboutapplicants’business savvy, astheline choosy aboutpickinghireswiththerightsetofskills.Particularlydesirablecandidatesarethoseexperienceinwebdevelopment,database While ITremains,inmanyways,ajobseeker’s market—particularlyforthosewith hard-to-findskillsandexperience—ITconsulting firmsarevery The combocandidate business strategy. andsoftwareinto the biggestplayershavealegupinwinningclientswhowishtodealwithfirmthatcanseamlesslyweavecustomizedITsolutions market byofferingoutsourcing,ITarchitectureandotherbusinesstechnologyservices.Thoughnichefirmshavetheirplaceintheindustry, to getthewordoutaboutitsITexpertise.EvenMcKinsey, longestablishedasanexclusivestrategyplayer, ofthelucrativetech isvyingforapiece Bain, consideredastrategy-heavyhouse,nowoffersITbusinessalignmentandoutsourcing.Thefirmalsopublishesresearchon technologytrends Likewise, strategyfirmsarerecentlyembracingservices,likeoutsourcing,formerlyconsideredthedomainofsoftwareimplementersandtechshops. integration. primarily onsystems buyout inJanuary2006).AnduntilIBMtookoverPricewaterhouseCoopers’strategyconsultingpractice2002,ithadfocused consulting firm.EDSwasoneofthefirstfirmstostartthistrendwhenitpurchasedA.T. Kearneyin1995(andsubsequentlysolditamanagement consulting firmsthatcanoffernontechnicalsolutionsaswellITsystems.To expandintobusinessconsulting,techfirmsoftenacquireastrategy technology playsanessentialroleinmeetingstrategicgoals;searchingforsolutionstobusinessproblems,clientsareinc reasingly turningto Another risingtrendinthetechconsultingworldismergingofbusinessandITservices.Manycompaniesarewisinguptofactthat Software, strategyandmore 7:00 a.m.:Theflightdepartsontime.Yay! Irelish mywindowseatclosetothefrontofairplane. I seeeveryweekonthisMonday morningflight.Iboardearlyalongwiththeotherpremierfliers—one oftheperksbeingafrequenttraveler. passengers 6:35 a.m.:AfteraquickstopatStarbucks, I arriveatthegate.sayhellotothreeothermembersofmyproject andcheckouttheother 6:25 a.m.:Atsecurity, Iremovemylaptopfrombagandplace itonthetray. Imovethroughsecurityquickly. Noalarmsbeep. hand. 6:10 a.m.:AttheairportIgouptoselfcheck-inkiosk.takeboarding passandheaddowntothesecurityline,laptopsmall carry-onin to NPR. tunetheradio 5:30 a.m.:Iaminacabonthewaytoairport,makingmentallistofanything thatcouldhavebeenforgotten.Iaskthecabbieto 4:30 a.m.:It’s Mondaymorning.Time to wakeup.There’s timeforashowerthisMonday morning—suchluxury! career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Technology Consulting 251 Customized for: Erin ([email protected]) 8:00 a.m.:Thebeveragecartwakesmeup.Iaskforcoffeeandscan 10:30 p.m.:Igotosleep. 9:15 p.m.:I’mreadyforbed.Clothesthenextdayarehangingincloset.Thealarmclockissetto6:30a.m. 8:30 p.m.:Time foraworkoutinthehotelgym. 7:00 p.m.:Ihavereviewed50percentofthecourseoutlines.It’s timetoheadbackthehotel.Istopbyalocaldinerforquickdinner. 5:45 p.m.:IcompleteadraftofthecourseflowinPowerPointandsendittoclientmymanagerforreview. 4:45 p.m.:Backattheprojectsite.Icheckinwithmyteammembersviaemail. board. subject mattercouldbecoveredinthemodulesthathavebeenagreedtoscopeofproject.We allsketchoutthecourse structureonawhite oftheadditional courses shouldbeorganized.Theassociatewantstoaddseveralmoreweb-basedtrainingmodules.Ipolitelysuggestthatpart 3:15 p.m.:Imeettheheadoftrainingdepartmenttodiscusscourses.Hecallsinacloseassociatewhohasopinionson how the 2:40 p.m.:Offtothe3:15p.m.meeting. 2:00 p.m.:Ifinishupthemeetingandgetdirectionstomydowntown. all brainstormideasonhowtoobtainthefeedback. and whatheorsheexpectstocompletethatweek.Two otherteammembersarehavingdifficultyobtainingfeedbackfromtheirclient reviewers.We 1:00 p.m.:Theteamholdsastatusmeeting.Ipassonthemessagefromprojectmanager. Eachmemberdiscusseswhathasbeencomplete positions intheorganization. training departmentarenervousabouttheirjobsecurityandasksthattheentireteambesensitivetohowchangesmayaffect 12:20 p.m.:Backatmydesk,Igetacallfromtheprojectmanager, inthe whoisworkingataclientsiteinanotherstate.Hetellsmethatclients 12:00 p.m.:Iscurry, alongwithtwoteammates,togetsandwichesatanearbyeatery. Mineisturkeyandcheddar. content outlinesforthetrainingmodules. 11:15 a.m.:Iremindtheteamof1p.m.statusmeeting.I’vegottostartitontime—Ihaveameetingdowntownat3:15toreview feedback onthetrainingmaterialbynoontomorrow. 11:00 a.m.:Aftercheckingandrespondingtoemail,Icallmyteammember’s clientreviewer. Therevieweragreestosendmetheteammembe that hestillhasn’treceivedfeedbackfromhisclientreviewer. That’s notgoodnews. me 10:30 a.m.:Attheprojectsite.AsIcrawlunderneathmydesktohooklaptopclientLANconnection,oneofteammembersinforms 9:30 a.m.:Iarriveatmydestinationandsharearidewithfellowconsultantstotheprojectsite. Technology Consulting The Vault MBA CareerBible 252 The Wall Street Journal Street Wall The as Idrink. © 2009Vault.com Inc. d r Customized for: Erin ([email protected]) www.acs-inc.com Fax: (214)821-8315 Phone: (214)841-6111 Dallas, TX75204 2828 NorthHaskellAvenue (ACS) Affiliated ComputerServices,Inc. www.accenture.com Fax: (917)527-9915 Phone: (917)452-4400 New York, NY10105 1345 Avenue oftheAmericas Accenture EMPLOYER DIRECTORY www.atosorigin.com/en-us Fax: +33155912005 Phone: +33155912000 France 92926 ParisLaDéfense 18, Avenue d’Alsace C Tour lesMiroirs-Bâtiment Fax: (713)403-7204 Phone: (713)513-3000 Houston, TX77056 5599 SanFelipe,Suite300 Atos Origin www.allianceconsulting.com Fax: (610)234-4302 Phone: (610)234-4301 Conshohocken, PA 19428 181 Washington Street,Suite350 Six Tower Bridge Alliance ConsultingGroup www.ajilonconsulting.com Fax: (410)828-0106 Phone: (410)821-0435 Towson, MD 21204 210 West PennsylvaniaAvenue, Suite650 Ajilon Consulting career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.cgi.com Fax: (514)841-3299 Phone: (514)841-3200 Canada Montreal, QCH3A2M8 1130 SherbrookeStreetWest Fax: (703)267-5111 Phone: (703)267-8000 Fairfax, VA 22033 4050 LegatoRoad CGI www.apc.capgemini.com Fax: +33147545025 Phone: +33147545000 France 75017 Paris 11 ruedeTilsitt Place del’Étoile www.us.capgemini.com Fax: (212)314-8001 Phone: (212)314-8000 New York, NY10022 623 5thAvenue, 33rdFloor Capgemini www.bull.com Fax: (978)294-7999 Phone: (978)294-6000 Billerica, MA01821 296 ConcordRoad Bull www.btglobalservices.com Fax: (646)487-3370 Phone: (646)487-7400 New York, NY10017 350 MadisonAvenue BT GlobalServices www.boozallen.com Fax: (703)902-3333 Phone: (703)902-5000 McLean, VA 22102 8283 GreensboroDrive Booz AllenHamilton www.cognizant.com Fax: (201)801-0243 Phone: (201)801-0233 Teaneck, NJ 07666 500 FrankWest BurrBoulevard Cognizant Technology Solutions www.cisco.com Toll Free:(800)553-NETS(6387) Phone: (408)526-4000 San Jose,CA95134 170 West Tasman Drive Cisco Systems,Inc. www.ciber.com Toll Free:(800)242-3899 Phone: (303)220-0100 Greenwood Village, CO80111 5251 DTCParkway, Suite1400 CIBER, Inc. www.deloitte.com Fax: (212)492-4743 Phone: (212)492-4500 New York, NY10019 1633 Broadway, 35thFloor Deloitte LLP www.ctg.com Fax: (716)887-7464 Phone: (716)882-8000 Buffalo, NY14209 800 DelawareAvenue CTG www.covansys.com Fax: (248)488-2089 Phone: (248)688-2088 Farmington Hills,MI48334 32605 West Twelve MileRoad Covansys Corporation www.csc.com Phone: (310)615-0311 El Segundo,CA90245 2100 EastGrandAvenue Computer SciencesCorporation The Vault MBA CareerBible Technology Consulting 253 Customized for: Erin ([email protected]) www.fujitsu.com/us/services/consulting Fax: (732)632-1826 Phone: (732)549-4100 Edison, NJ08837 343 ThornallStreet,Suite630 Fujitsu Consulting www.gfi.fr Fax: +33153934491 Phone: +33153934439 France 75008 Paris 15, rueBeaujon GFI Informatique www.getronics.com Phone: (978)625-5000 Billerica, MA01821 290 ConcordRoad Getronics www.eds.com Toll Free:(800) 566-9337 Phone: (972)605-6000 Plano, TX75024 5400 LegacyDrive EDS www.diamondconsultants.com Fax: (312)255-6000 Phone: (312)255-5000 Chicago, IL60611 875 NorthMichiganAvenue, Suite3000 John HancockCenter Consultants, Inc. Diamond Management&Technology www.detica.com Fax: +441483816144 Phone: +441483816000 United Kingdom Guildford, SurreyGU27YP Surrey ResearchPark Detica EMPLOYER DIRECTORY (CONT.) Technology Consulting The Vault MBA CareerBible 254 www.lockheedmartin.com Fax: (301)897-6704 Phone: (301)897-6000 Bethesda, MD20817 6801 RockledgeDrive Lockheed MartinCorporation www.keane.com Toll Free:(877) 88-KEANE(5-3263) Fax: (925)838-7138 Phone: (925)838-8600 San Ramon,CA94583 210 PorterDrive,Suite315 Keane, Inc. www.ibs.com Fax: (630)571-9110 Phone: (630)571-9100 Oak Brook,IL60523 2625 ButterfieldRoad Interactive BusinessSystems,Inc. www.infosysconsulting.com Fax: (510)742-3090 Phone: (510)742-3000 Fremont, CA94555 6607 KaiserDrive Infosys ConsultingInc. www.ibm.com/consulting/services Fax: (914)765-7382 Phone: (914)499-1900 Armonk, NY10504 New OrchardRoad IBM GlobalTechnology Services www.hp.com/hps Fax: (650)857-5518 Phone: (650)857-1501 Palo Alto,CA94304 3000 HanoverStreet HP Services www.oracle.com/consulting/index.html Phone: (650)506-7000 Redwood Shores,CA94065 500 OracleParkway Oracle Consulting www.mckinsey.com Fax: (212)446-8575 Phone: (212)446-7000 New York, NY10022 55 East52ndStreet McKinsey &Company www.logicacmg.com Fax: (713)785-0880 Phone: (713)954-7000 Houston, TX77042 10375 RichmondAvenue, Suite1000 Logica www.reveregroup.com Fax: (312)873-3500 Phone: (312)873-3400 Chicago, IL60610 325 NorthLaSalleStreet,Suite An NTTDATA Company The RevereGroup www.perotsystems.com Toll Free:(888)31-PEROT(7-3768) Fax: (972)340-6100 Phone: (972)577-0000 Plano, TX75075 2300 West PlanoParkway Perot Systems www.paconsulting.com Fax: +442073335050 Phone: +442077309000 United Kingdom London SW1W9SR 123 BuckinghamPalaceRoad Fax: (571)227-9001 Phone: (571)227-9000 Arlington, VA 22203 4601 NorthFairfaxDrive,Suite600 PA ConsultingGroup © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.sapient.com Fax: (617)621-1300 Phone: (617)621-0200 Cambridge, MA02141 25 1stStreet Sapient www.saic.com Phone: (858)826-6000 San Diego,CA92121 10260 CampusPointDrive SAIC EMPLOYER DIRECTORY (CONT.) www.satyam.com Fax: (703)734-2110 Phone: (703)734-2100 Vienna, VA 22182 8500 LeesburgPike,Suite201 Satyam ComputerServicesLtd. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.tcs.com Fax: (212)867-8652 Phone: (212)557-8038 New York, NY10178 101 ParkAvenue, 26thFloor Tata ConsultancyServices www.smartronix.com Fax: (301)866-0528 Phone: (301)737-2800 California, MD20619 22685 ThreeNotchRoad Smartronix, Inc. www.usa.siemens.com/it-solutions Phone: (203)642-2300 Norwalk, CT06851 101 Merritt7 Inc. Siemens ITSolutionsandServices, www.wipro.com Fax: +91808440256 Phone: +91808440011 India Bangalore, Karnataka560035 Doddakannelli SarjapurRoad Wipro Ltd. www.unisys.com Phone: (215)986-4011 Blue Bell,PA 19424 Unisys Way Unisys www.telcordia.com Phone: (732)699-2000 Piscataway, NJ08854 One Telcordia Drive Telcordia The Vault MBA CareerBible Technology Consulting 255 Customized for: Erin ([email protected]) 256 © 2009Vault.com Inc. Customized for: Erin ([email protected]) homes. mobile communications.Telecom holdsthetrumpcardwithitscontroloffiber-optic intomillionsof networkthatbringsbroadbandconnection $3.6 trillionby2011.Muchofthisgrowthcomesthankstotheascendancyinternet(andourjunkie-likeneedforhigh-speedconnections)and to Veronis SuhlerStevenson.Intheinternationalmarket,TIA(Telecommunications spendingwillreach IndustryAssociation)predictsthattelecom marksoon, according In theUnitedStates,totaltelecomspendingreachedmorethan$925billionin2008,anditisexpectedtosurpass$1trillion into internetanddigitaltelevisiontoofferbundled“triple-play”phone,TVsubscriptionpackagescustomers. internet. Becauseofthisgrowinginterrelationamongtelecommunicationproducts,industryleaderslikeAT&T andVerizon theirreach arespreading cell phoneisbusydownloadingthelatestWeird Almusicvideo,youcancallyourbestfriendacrossthecountry, to thosewhohaveyetconvertthe21stcentury. Thesevaryingformsofmoderncommunicationhavebledintoeachother, aswell—whileyour and mobile,encompassingwirelesscommunication,broadbandinternetaccess,cabledigitalTV, thoughitstillprovides landline phoneservice less theshiningsymboloftelecommunicationsandmoreanantiquatedrelicindustry’s primitivebeginnings.Telecom todayhasgonehigh-tech In simplertimes,theword“telecommunications”mightconjureanimageofatelephone—andnotmuchelse.Thesedays,however, thetelephoneis We’re allconnected INDUSTRY OVERVIEW Telecommunications to serviceJapan. Wireless boughtJapan’s No.6carrier, IDC;andin1999,GlobalCrossingteamedupwithMarubeni tobuildabrand-newnetwork, called GlobalAccess, to acquirea30percentstakeinLDoperatorJapanTelecom, combiningtheirJapaneseventuresunderJT. Afewmonthslater, Britain’s Cable& a rushofinternationaldeals,especiallyintheworld’s second-largesttelecommarket,Japan.In1999,British Telecommunications andAT&T partnered following year. Theaccordledto Nearly all telecomcompaniesaroundtheglobehadprivatizedinanticipationofthisexpandedlevelcompetition. (WTO)—which togethercontrol90percentofworldwidetelecom sales—agreedtoopenuptheirtelecommarketseachotheratthe startofthe The deal-makingwasn’tlimitedtoAmerica’s shores.Telecom becametrulyglobalin1997,when70membercountriesoftheWorld Trade Organization Not justathome announced itwouldpurchaseBellSouth. companies, butthemarketcontractedin2005whenSBCtookover AT&T (keepingthelatter’s name),andagaininMarch2006when the newAT&T and Qwest—thatdominatebothlocalphoneservicetheburgeoning DSL(digitalsubscriberline)markets.Untilrecently, therewerefivesuch a fewRBOCssolidifiedtheirpositionsanddominatedthemarketthrough mergersandacquisitions.Today, therearejustthreeRBOCs—Verizon, AT&T strongest RBOCs.ThankstothoseservicesandtheentryofBabyBellsintolongdistance,actactuallyhadopposite ofitsintendedeffect— Another provisionoftheTelecom Act,whichgave RBOCstherighttosellcabletelevisionservicesandphoneequipment,provedbeaboonfor prove sufficientcompetitioninitslocalterritory. decentralizing thesystemintoa“networkofnetworks.”TheactalsotemporarilyblockedanRBOCfromenteringlong-distance marketuntilitcould network elementstosmallercompetitors.Theincumbentswererequiredunbundletheirnetworksforreasonableprices, withthe goalof change thatbyderegulatingentryintolocalmarketsandrequiringtheBabyBells,orincumbentexchangecarriers(ILECs),retailtheir As thelong-distancemarketdiversified,localexchangeremainedrelativelyhomogenous.TheTelecommunications Actof1996aimedto Untangling thewires and GlobalCrossing—thatmakeupthebulkoflong-distancemarket. then, oneoftheBabyBells)toonceagainbecomebiggestkidonplayground.Still,itisthreeso-called“Tier 1”carriers—AT&T, SprintNextel which stillheldabout70percentofthemarketin1984,controlledonlyathird2005,butbouncedbackthatyearfollowing its buyoutbySBC(until The industrythrivedafterthebreakup,explodingintohundredsofsmallercompetitors,loweringcostlong-distancecallingdramatically. AT&T, in thelocalcallmarketasindependentexchangecarriers(LECs).ThefinalbreakupofAT&T tookplacein1984. in thecompany’s divisionintoalong-distanceretailerandsevenregionalBelloperatingcompanies(RBOCs,or“BabyBells”),which wouldcompete encourage competitioninthelong-distancemarket,DepartmentofJustice(DOJ)followedupwithanantitrustsuitagainstAT&T in1974,resulting other companies—suchasMCI,whichwasquicktogetinthegame—toplayMaBell’s sandbox.Butmonopoliesdon’tdisappearovernight:to that theutilityconstituteda“natural”monopoly. Thatmonopolycrumbledin1969,whentheFederalCommunicationsCommission(FCC)allowed Established in1877asAmericanBell,AT&T enjoyed thelargestshareoftelecomindustrypiefornearlyacentury, thankstothegovernment’s belief The belltollsforAT&T sans long-distance charges,overthe 257 Customized for: Erin ([email protected]) subject tothesamemeltdownthathitrestoftechsectorbeginninginlate2000.Againaccording companies inthefiveyearsfollowingpassageofTelecom Act.Butwiththisactivitycameincreasedscrutinyandrisk.Ultimately, theindustrywas Verizon WirelessisajointventurebetweenVerizon andVodafone. “baby” anymore—AT&T andBellSouth(whichthemselvesareintheprocessofbecoming one,afterAT&T boughtBellSouthin2006), while competitor complicated theindustry’s familytiesare,Cingularwas,atthetime,ownedby rivalBabyBells—thoughthesehugeconglomeratescan’treally becalled Cingular’s $41billion purchaseofrivalAT&T Wireless,announced inFebruary2004,followingafiercebiddingwarwithVodafone. Justtoshowhow “portability” (i.e.,lettingconsumersretaintheirmobilephone numbers whenswitchingcarriers)tookeffect.Onenotableeve The wirelessboomheraldsrenewedbusinessactivityintelecom. Competitionbegantosizzleinlate2003,asthefirstphaseofafederallawallowing of thepopulation)willtoteacellphone. reckoned thatthreeofeveryfourAmericanshadawirelessphone, anditisprojectedthatbytheendof2009,270millionAmericans (about87percent wireless’ $89billion),thesameyearthatnumberofwireless userswasestimatedtobeaboveonebillionworldwide.By2007,industryanalysts inspendingto The wirelessmarketoutpacedlongdistanceforthefirsttimein 2003,accordingtoTIAnumbercrunchers(LDposted$78billion Research Corporationprojects16percentannualgainsinwireless servicerevenuethrough2013. this upisthe$217billionAmericanwirelessmarket(2008estimate) growingbyleapsandboundspostingdouble-digitincreases. TheInsight It isatruthuniversallyacknowledgedthateverypersoninpossession ofrelativelygoodfortunemusthaveacellphone,orat leastwantone.Backing Can youhearmenow? the federalorganizationin2005. first inquiryintotheissueinMay2007,specificallylookingtoseeifbroadbandcompanieswereadhering“openinternet”principleslaidoutby FCClaunchedits The issueisanimportantone,asdemandforbroadbandhasspurredtherecoveryoftelecomcompaniesthatstartedin2006. higher ratestocertaininternetcontentproviders—creatingatoll-laneontheinformationsuperhighwayandpotentiallyfavoringsitesoverothers. more readilyaccessiblethanothers.Thecruxoftheissueiswhetherornotbroadbandaccessproviders(namely, telephonecompanies) cancharge The FCCisalsosteppingintotheringonissueof“netneutrality,” atermthatdescribestheindiscriminatenatureofWeb, wherenositesare Neutral tones Similar legislationispendinginseveralstates.Inthemeantime,AT&T andVerizon continuetolobbythegovernmentforanationwidefranchise. western andsouthernstateslikeOregon,Arkansas,ColoradoKentucky)havepassedfranchiselawslettingphonecompanies into theTVgame. AT&T but23states(mostly scoredavictoryinthefightMarch2007, whentheywonstatewidevideofranchisesinCalifornia.AsofJune2008,all into themix,andyou’vegotasubscriberfeedingfrenzy, withphoneandcablecompaniesallvyingtosellconsumersthesameservices. Verizon and march oftechnology, Throwinternetaccess thewiresandsignalsthatbringyoucableTVcanjustaseasilyphoneservice,viceversa. In recentyears,it’s gottendownrightugly, witheachindustryreachingintotheother’s theonwardandupward “goodiebag”ofproducts.Because The competitionthatbeganwhentelecomfirmsenteredthecablegamefollowingTelecommunications Acthasonlygainedmomentumsincethen. Horning inoneachother company settleddownin2005,whenitmergedwithNexteltobecometheSprintCorporation. $1billion.The customers andemployeesastheywent.In2003,Sprintreorganizedintoseparatebusinessconsumerunitsinaneffortto save In additiontoWorldCom, dumping aboutahalf-dozenotherprovidersoftelecomservicesbeganChapter11bankruptcyproceedingsin2002, beleaguered companywasvirtuallynomore,havingbeengobbledupbyVerizon inadealworth$8.5billion. had conspiredwithWorldCom, announcedinMay2004thatitwouldpay$2.65billiontoinvestorsforitsrolethescandal.Two yearslater, the conspiracy charges.InMarch2005,Ebberswasfoundguiltyonallcountsandsentencedto25yearsinprison.AccountingfirmCitigroup,which to theMCIbrand),ithadcontendwithscoresofclass-actionlawsuits.FormerCEOBernardJ.Ebbersalsofacedagrowinglistfederalfraudand emerging frombankruptcyinApril2004withalighterdebtload,moderatelyhealthyoutlookandlesstarnishedname(thecompanyhadreverted and anestimated$11billioninfraudulentexpenses—leadingtoa$100lossshareholders.Evenasthecompanyattemptedrebound, which ranafouloftheFedsin2002.WorldCom filedforthelargestbankruptcyinU.S.historyJulyofthatyear, up$41billionindebt havingracked Compounding thegloom,anumberofmajortelecomshadhigh-profileproblemsintheiraccountingdepartments.Thebiggestoffender wasWorldCom, Cooking thebooks As mergersandacquisitionsactivityheatedup,Wall Streettooknotice:accordingto Wall Streethighsandlows fell throughwhentheJusticeDepartmentfiledalawsuitthatwouldhaveblockeddeal. plummeted by$1trillionaftertheDowtookitsdive.Mergersalsofellwayside:inJuly2000,aproposedmergerbetweenSprintandWorldCom Telecommunications The Vault MBA CareerBible 258 Forbes magazine, investorspoured$1.3trillionintotelecom Forbes , theindustry’s marketvalue © 2009Vault.com Inc. nt, however, was Customized for: Erin ([email protected]) down inruralandlow-incomeareas.Thecontributionstothisfundwillpresumablybepassedonconsumerstheformofhi gher rates. FCC ruledthatVoIP companieshadtocontribute,justlikeanyotherphonecompany, totheUniversalServiceFund,whichisdesignedkeepcosts phone carriersaresaddled.But,ofcourse,themajortelecomcompaniesbusyonCapitolHill,tryingtolevelplaying field. InJune2005,the The technologyisalsoadvantageousintermsofcost.ThankstotheFCC,VoIP withwhichregular isexemptfromsomeofthetaxesandregulations deliverthatfar.)could havea(212)Manhattanareacode.(ShewouldbeallsetifonlytheplaceinChinatownwithgoodkungpaochicken Bypassing questionsoflocalandlong-distancenetworksentirely, VoIP providersallowcompletenumberportability—asubscriberinIowa,forinstance, end (accordingtoTeleGeography, anindustryresearchgroup),notcountingthemillionsofpeoplewhorelyonSkype. 2005, generating$1billion,thecountfortop-fourcableproviders—Comcast,Time Warner, CoxandVonage—stood at12millionusers2008’s to 45millionin2009.AndafterthenumberofinternetphonesubscribersUnitedStatesjumpedfrommere1.34.5during Growth intheVoIP markethasbeenexponential,especiallyinEurope,wherethe35millionsubscribersasofend2008areexpectedtogrow software touseSkype’s productshasbeen downloaded onebilliontimes. company hasamassed405millionregisteredusers,whorepresent6percentoftheentireworld’s internationalcallingminutes; and thenecessary is sentonline.Infact,VoIP isallSkypeconcernedwith,andassuch,ithasbecomeaglobalphenomenon.Whilenotrevenue powerhouse,the Skype, allowsuserstoturntheirpersonalcomputersintotelephonesbysendingvoicedataoverabroadbandconnectioninthesamewayother Cell phonesaren’ttheonlywayconsumersaremakingcallsthesedays—Voice overInternetProtocol(VoIP), offeredbycompanieslikeVonage and Off thehookandon‘net Windstream inJuly2006. in May2006underthenameEmbarq,whileAlltel,afterbeefingupitslandlinesbyacquiringValor Communications,divestedtheunitundername to spreadrisk,wirelesscompanieshavebeensettingtheirlandlineunitsuponownandseeingthemway. Sprint spunoffitslandlines Wireless—if notVoIP revenueandaway (seebelow)—isdefinitelythewaveoffuture:whilelandlineswereonceseenasasourcedependable and Cingular. Though thepresentcompanyisoneoflargesttelecomsinworld,it’s stillNo.3intheUnitedStatesbynumberofsubscribers,behindVerizon Deals keptpoppingup,asSprintmergedwithNextelinAugust2005,whenthecompanieswere,respectively, theNo.3and5 wireless carriers. abound forthosetotingundergraduate oradvanceddegreesinelectricalengineeringandrelated fields. or fiber-optic cables,telecomcompanies willalwaysneedastafftoexpand,updateandmaintainthose networks.Accordingly, technicalpositions telecom positionsareheretostay. Becausealltheindustry’s networksarebasedonsomesortof physical component,whetheritscellphonetowers While joboutsourcingcontinues tobeafactor—customerservicepositionscanhandledaseasily inNewDelhi,IndiaasDayton,Ohio—many between subscribersandmanagement. Communication servesworkerswellwithintheoffice,too,sayinsiders, becausefront-linefieldandcall-centerworkersoften serve asanintermediary equipment inthefield.Andthentherearesalesrepsthat passoutsmilesandhandshakeswithaplombinpursuitofcorporateaccounts. from agitatedsubscriberswithgraceandgoodhumor. Technicians haveface-to-facecontactwithcustomerswheninstallingorfixingnetwork Not surprisingly, excellent communicationskillsarenecessarythroughoutthetelecommunicationsindustry. havetofieldcalls Customer serviceagents Talk thetalk skill set(andkeepingituptodate)iscrucialinthisrapidlychanging industry. were primarilywithsatellitetelecommunicationsbusinessesand equipmentandserviceresellers.TheBLSinsiststhathavingadiverseflexible positions. Another21percentofjobswerewithwirelesscarriers, and15percentwerewithcablecompaniesotherprogramdistributors.Therest toiled inmaintenance,installationandrepair. In2006,wirelinetelecommunicationscarriersaccountedfor49percentofall for whichstatisticsareavailable.Oftheseemployees,nearlytwo-thirds workedinofficeandadministrativesupportorsales,whilemostoftherest But there’s stillplentyofworkoutthere.AccordingtotheBLS,telecomaccountedfornearlyonemillionwageandsalaryjobsin2006,latestyear all industriesputtogether. increasefor employment intheindustryisexpectedtogrowbyjust5percentoverperiodbetween2006and2016,comparedwithan11 percent 7,000 positions.Evenwithincreaseddemandfortelecomservices,theU.S.DepartmentofLabor’s BureauofLaborStatistics(BLS)saysthat Companies alsofeelcompelledtotrimexcessfatwhentheymerge—the2006MCI-Verizon merger, forexample,resultedintheeliminationofsome January 2008,strugglingSprintNextelannouncedthatthecompanywouldclose125retailstoresandcut4,000jobs,some7percent ofitsworkforce. 300,000 jobsduringthetroubledperiodbeginninginlate2000.Telecom firmshavestartedtocutjobsagainduringtherecenteconomicslump.In The numbersareintimidating:telecomseemstothriveonsuddenboomsandequallyrapidreadjustments.Bysomeestimates, the industryslashed A jobmarketrollercoaster WORKING INTHETELECOMINDUSTRY career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Telecommunications 259 Customized for: Erin ([email protected]) products thatarefacilitatingweb conferencesandwork-from-homeoptionsfortherestofbusiness world. golf sessions.Additionally, telecommutingisbecoming moreandacceptablethroughouttheindustry—perhapsbecause it’s thesecompanies’ their timeastheyseefit.Aslong asthey’redoingtheirparttopushthecompanyforward,noone batsaneyeatthoseextra-long lunchesormidday are allowedtobudget as well?),manyworkersreportflexible schedulingasacherishedpartoftheirjobs.Salesfolk,marketers andmanagersalike In additiontotheobviousperksinvolved withworkinginthetelecomindustry(freeTV, anyone?Howaboutfreeinternetaccess andcellphone service, Work free lead fora$1millionconsultingengagement.” the industryputsit,“networkinghastobebuiltintoyoursystem, becausethatmaninthebluesuitatofficialgatheringcouldwellbeyournext to risingthroughthecompanyranks.Infact,networkingisimportant throughoutthetelecomworld,regardlessofyourposition.Asoneconsultantin encouraged tostartwithaninternshipaftercompletingtheirdegree. Onceyourfootisinthecompanydoor, networkingiscrucial oursourcesstress, say thereisnoupwardmobilityforpeopleenteringthecompany from thisroute.Instead,thoselookingforasalespositioninthetelecomindustryare While call-centerjobsareubiquitousandopentothosewithout college degrees(andsometimesoffercommissionincomeontopofsalary),insiders Tough sell? Accordingly, technicalpositionsaboundforthosetotingbachelor’s orassociatedegreesinelectricalengineeringandrelatedfields. supported bycellphonetowersorfiber-optic cables,telecomcompanieswillalwaysneedthepeopletoexpand,updateandmaintain thosenetworks. Delhi, India,asinDayton,Ohio—manytelecomjobsareheretostay. Becauseeverypartoftheindustryinvolveson-the-groundnetworks,bethey While rumorsofoutsourcingjobsrumblethroughouttheindustry—especiallywithcustomerservicepositionsthatcanbehandled aseasilyinNew management. subscribersand serves workerswellwithintheoffice,too,becausefrontlinefieldandcall-centeroftenserveasanintermediarybetween in thefield.Andthentherearesalesreps,whopassoutsmilesandhandshakespursuitofcorporateaccounts.Insiderssaycommunication agitated subscriberswithgraceandgoodhumor. Technicians haveface-to-facecontactwithcustomerswheninstallingorfixing networkequipment Not surprisingly, communicationskillsareessentialthroughoutthetelecommunicationsindustry. Customerserviceagentshavetofieldcallsfrom Talk thetalk this rapidlychangingindustry. a trendtowardmoredurableequipment.)TheBLSinsiststhatkeepingjobskillsuptodateandhavingdiverseflexibles kill setarecrucialin repair accountfornearlyalloftherest.(Thislatterportion,however, isexpectedtodecline,duetheincreasingprevalenceofwirelessphonesand statistics areavailable.Oftheseemployees,three-fourthsofthemworkinofficeandadministrativesupportorsales,installation, maintenanceand But thereisstillplentyofworkoutthere.AccordingtotheBLS,telecomaccountedforalmostonemillionjobsin2006, latest yearforwhich through 2016. U.S. DepartmentofLabor’s BureauofLaborStatistics(BLS)saidin2006thatemployment intheindustryisexpectedtoincreasebyonly5percent 2006 MCI-Verizon merger, forexample,resulted intheeliminationofsome7,000positions.Evenwithincreaseddemandfortelecomservices, slashed 300,000jobsduringthetroubledperiodbeginninginlate2000.Companiesalsofeelcompelledtotrimexcessfatwhen they merge—the The numbersareintimidating—thetelecomindustryseemstothriveonsuddenboomsandequallyrapidreadjustments.Bysome estimates,telecom A jobmarketrollercoaster business world. industry—perhaps becauseit’s thesecompanies’ productsthatarefacilitatingwebconferencesandwork-from-homeoptionsfortherestof an eyeatthoseextra-longlunchesormiddaygolfsessions.Additionally, telecommutinghasbecomemoreandacceptablethroughout the are allowedtobudgettheirtimeastheyseefit.Aslongthey’redoingpartpushthecompanyforward,nooneinmanagementusuallybats service whilewe’reatit?),manyworkersreportthatflexibleschedulingisavaluedattributeoftheirjobs.Salespeople,marketersandmanagersalike In additiontotheobviousperksinvolvedwithworkingintelecomindustry(freecableTV, anyone?HowaboutfreeInternetaccessandcellphone Work free for a$1millionconsultingengagement.” wellbeyour nextlead industry putsit,“networkinghastobebuiltintoyoursystembecausethatmaninthebluesuitatofficialgatheringcould through acompany’s ranks.Infact,networking isimportantthroughoutthetelecomworld,regardlessofyourposition.Asoneconsultantin encouraged tostartwithaninternshipaftercompletingtheirdegree.Onceyourfootisinthedoor, oursourcesstress,networkingiscrucialtorising is noupwardmobilityforpeopleenteringthecompanyfromthisroute.Instead,thoselookingasalespositionintelecomindustryare While call-centerjobsareubiquitousandopentothosewithoutcollegedegrees(andcanoffercommissionincomeontopofsalary)insiderssaythere Tough sell? Telecommunications The Vault MBA CareerBible 260 © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.att.com Fax: (210)351-2071 Phone: (210)821-4105 Dallas, TX75202 208 SouthAkardStreet AT&T Inc. www.americantower.com Fax: (617)375-7575 Phone: (617)375-7500 Boston, MA02116 116 HuntingtonAvenue American Tower Corporation EMPLOYER DIRECTORY www.ctdi.com Fax: (610)429-3861 Phone: (610)436-5203 West Chester, PA 19380 1373 EnterpriseDrive Communications Test DesignInc www.clearwire.com Fax: (425)216-7900 Phone: (425)216-7600 Kirkland, WA 98033 4400 CarillonPoint Clearwire Corporation www.cincinnatibell.com Fax: (513)397-5092 Phone: (513)397-9900 Cincinnati, OH45202 221 East4thStreet Cincinnati BellInc. www.centurytel.com Fax: (318)388-9064 Phone: (318)388-9000 Monroe, LA71201 100 CenturyTel Drive CenturyTel, Inc. www.centennialwireless.com Fax: (732)556-2242 Phone: (732)556-2200 Wall, NJ07719 3349 Route138,BuildingA Centennial CommunicationsCorp. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.gci.com Fax: (907)868-5676 Phone: (907)868-5600 Anchorage, AK99503 2550 DenaliStreet,Suite1000 General Communication,Inc. www.czn.net Fax: (203)614-4602 Phone: (203)614-5600 Stamford, CT06905 3 HighRidgePark Frontier CommunicationsCorporation www.fairpoint.com Fax: (704)344-8121 Phone: (704)344-8150 Charlotte, NC28202 521 EastMoreheadStreet,Suite250 FairPoint Communications,Inc. www.equinix.com Fax: (650)513-7900 Phone: (650)513-7000 Foster City, CA94404 301 Velocity Way, 5thFloor Equinix, Inc. www.embarq.com Phone: (913)323-4637 Overland Park,KS66211 5454 West 110thStreet Embarq Corporation www.dycomind.com Fax: (561)627-7709 Phone: (561)627-7171 Palm BeachGardens,FL33408 11770 USHighway1,Suite101 Dycom Industries,Inc. www.crowncomm.net Fax: (713)570-3100 Phone: (713)570)3000 Houston, TX77057 1220 AugustaDrive,Suite500 Crown CastleInternationalCorp. www.idt.net Fax: (973)482-3971 Phone: (973)438-1000 Newark, NJ07102 520 BroadStreet IDT Corporation www.ibasis.net Fax: (781)505-7300 Phone: (781)505-7500 Burlington, MA01803 20 2ndAvenue iBasis, Inc. www.hickorytech.com Fax: (507)625-9191 Phone: (507)387-1151 Mankato, MN56002 221 EastHickoryStreet Hickory Tech Corporation www.mastec.com Fax: (305)406-1960 Phone: (305)599-1800 Coral Gables,FL33134 800 SouthDouglasRoad,12thFloor MasTec, Inc. www.level3.com Fax: (720)888-5085 Phone: (720)888-1000 Broomfield, CO80021 1025 EldoradoBoulevard Level 3Communications,Inc. www.leapwireless.com Fax: (858)882-6010 Phone: (858)882-6000 San Diego,CA92121 10307 PacificCenterCourt Leap WirelessInternational,Inc. www.ipcswirelessinc.com Fax: (847)885-7125 Phone: (847)885-2833 Schaumburg, IL60195 1901 NorthRoselleRoad,Suite500 iPCS, Inc. The Vault MBA CareerBible Telecommunications 261 Customized for: Erin ([email protected]) www.primustel.com Fax: (703)902-2814 Phone: (703)902-2800 McLean, VA 22102 7901 JonesBranchDrive,Suite900 Incorporated Primus Telecommunications Group, www.premiereglobal.com Fax: (404)262-8525 Phone: (404)262-8400 Atlanta, GA30305 3280 PeachtreeRoadNW, Suite1000 Premiere GlobalServices,Inc. www.nii.com Fax: (703)547-5269 Phone: (703)390-5100 Reston, VA 20191 10700 ParkridgeBoulevard,Suite600 NII Holdings,Inc. www.metropcs.com Fax: (214)570-5859 Phone: (214)570-5800 Richardson, TX75082 2250 LakesideBoulevard MetroPCS Communications,Inc. EMPLOYER DIRECTORY (CONT.) Telecommunications The Vault MBA CareerBible 262 www.teldta.com Fax: (312)630-1908 Phone: (312)630-1900 Chicago, IL60602 30 NorthLaSalleStreet,Suite4000 Telephone andDataSystems,Inc. www.sprint.com Phone: (703)433-4000 Overland Park,KS66251 6200 SprintParkway Sprint NextelCorporation www.savvis.net Phone: (314)628-7000 Town &Country, MO63017 1 SAVVIS Parkway SAVVIS, Inc. www.rackspace.com Fax: (210)447-4300 Phone: (210)447-4000 San Antonio,TX78229 9725 DatapointDrive,Suite100 Rackspace Hosting,Inc. www.qwest.com Fax: (303)992-1724 Phone: (800)899-7780 Denver, CO80202 1801 CaliforniaStreet Inc. Qwest CommunicationsInternational www.verizon.com Fax: (212)571-1897 Phone: (212)395-1000 New York, NY10007 140 West Street Verizon CommunicationsInc. www.unitedonline.net Fax: (818)287-3001 Phone: (818)287-3000 Woodland Hills,CA91367 21301 BurbankBoulevard LNR Warner Center United Online,Inc. www.twtelecom.com Fax: (303)566-1011 Phone: (303)566-1000 Littleton, CO80124 10475 ParkMeadowsDrive tw telecominc. www.vonage.com Fax: (732)231-6783 Phone: (732)528-2600 Holmdel, NJ07733 23 MainStreet Vonage HoldingsCorp. © 2009Vault.com Inc. Customized for: Erin ([email protected]) Boy, yougottacarrythatweight buses. (Airlinesarediscussedinaseparatechapter.) trucks,railroads and In general,thetransportationindustrycanbebrokenintoahandfulofsectors:airlines,aircargoandexpressdeliverycarriers, efficiency vehicles. have hamperedthetransportationindustrysincedawnof21stcentury, promptingexperimentationinalternativeenergysourcesandhigher- fuel prices health onbothdomesticandgloballevels.Assuch,itcanbesaidthateconomyisthrivinginthefaceofhigh-costimpediments—rising transportation sector—especiallyexpressserviceslikeUPSandFedExKinko’s fortheeconomy’s (nowsimplyFedExOffice)—isconsideredabellwether to keepthegoodsmoving.Becauseeconomyisintimatelyconnectedgettingthingsfromwherethey’remade bought,the thelowly pushcart— is whyittakeshundredsofthousandsworkersoperatingtensvehicles—fromthehigh-flyingairplanesdownto It’sThe vasttransportationindustrycarriespeopleandproducts(safelyontime,ofcourse)todestinationsaroundtheglobe. nosmallfeat,which Planes, trainsandautomobiles TRANSPORTATION INDUSTRY OVERVIEW Transportation andAirlines Shanghai. newairplanehubin for $100millioninDecember2004—andfurthereditsgrowth the regioninApril2007,whenitinvested$20milliontobuilda firmSinotransGroup express deliveryinChinaforthefirsttimeMay2007.UPShas operatedintheFarEastformanyyears—itboughtChinese Since thedomesticplayersaremostlyset,companieshavesettheir sightsondevelopingmarketsoverseas.FedExKinko’s offeringnext-day began presumably, alackof progress inexpandingitssaleshere. costsand, rolls intheprocess.Goingforward,companywillprovideservice onlyforinternationalpostings.Themovewasduetoescalating dominance intheworldmarketforexpressdeliveryservicesoverall. However, workersfromits DHLexitedtheUnitedStatesin2009andcut9,500 position intheU.S.market—itacquiredAirborneInc.for$1.1 billion,whichsecureditsNo.3placedomesticallyandfurtherstrengthened highest revenue,nettingmorethan$61billionforthefirstthree quarters of2008.Fiveyearsprior, stepstosolidifyits thecompanymadeaggressive Globally, hasthe theGermanlogistics andexpressdeliveryfirmDHL,runbyGermanpostalentityDeutschePostoperatingin220countries, United States,withrevenueof$42.6billionin2008.FedExisnipping atitsheels,though,withrevenueof$38billionin2008. hand, hasonly262planes,butalmost100,000groundvehicles.EvenifUPSlagsinthenumberofcargoit’s stillthemarketleaderin UPS,ontheother approximately 85,000groundvehiclesandanairfleetof675planes,FedExoperatesseparateexpress,freightunits. provider andcopyshopchainKinko’s inJanuary2004.Today, therearenowmorethan1,900FedExOfficelocationsworldwide. documentservices individual consumers.FedEx,forone,strengtheneditsmarketpositionbydiversifying,namelythrougha$2.4billionbuyoutof The packagedeliverymarketisafiercelycompetitiveone,wheretheindustryleadersvieformassivecorporatecontracts,aswellbusinessfrom The worlddelivered(ontime) when muchoftheglobalfleetwasgrounded,declineonly13.9percent.” that themonthlydropwas“unprecedentedandshocking.Thereisnoclearerdescriptionofslowdowninworldtrade—even in September2001, December 2008versus2007.TheIATA (InternationalAirTransport Association,sourceoftheabovefigures)notedinitsannualsummary financial downturnthatbecameapparentin2008,internationalaircargofell4percentforyear, andwasdownamassive22.6 percentfor domestic market.Aircargoservicesalsohavetocontendwithotherformsoftransport,likeshipsandtrucks.Forthesereasons,plustheworldwide international shippersmaybeginroutingcargothroughCanadaandMexicoinresponsetonewsecurityrestrictions,whichwillreduce activityinthe replace anagingfleetofplanes.Othersarespecifictotheaircargoindustry—forinstance,AirLinePilotsAssociation (ALPA) worriesthat costs andtheneedto Many ofthechallengessectorfacesmirrorthoseonpassengerside,includingtightersecurityrequirements,highfuel and supplychainmanagement. documents, moreandinternetshoppers,onlineretailerssmallbusinessesareusingexpressdeliverycompaniesfordire ct shippingservices Interestingly, theinternetboomhashadbothapositiveandnegativeeffectonindustry. Whiletheriseinemailhascurtailedshippingofsmaller space andservicesonothercargohaulers’vehicles. counterparts. Today, UPS,FedExandDHLdominatetheexpress-deliverysector, andallthreeoperatetheirownmodesoftransportationlease years (2001and2002).Still,afewcargocarriers,includingArrowAtlas,wereforcedintobankruptcycourtalongsidethe ir passengercarrier Unlike itspassenger-toting sisterinthesky, theaircargobusinessremainsrelativelystable,withmajorcarrierspostingprofits evenduringthebleakest Dispatching 263 Customized for: Erin ([email protected]) the industry, evenpricingsomeoperatorsoutofthemarket. sold toFirstGroupplcin2007. As insurancerateshaveincreasedtenfoldinrecentyears,access toaffordablecoverageisakeychallengefacedby a groupof65affiliatedcompanies; itwasacquiredbyGreyhoundin1987.Founded1914and acquiredin1999byLaidlawInc,Greyhoundwas fewer than10buses.MajorplayersincludeTrailways anditsrivalowner, Greyhound.Trailways hasbeenaroundfor nearly70yearsandoperates There aremorethan3,500buscompaniesontheroadsinUnited States,manyofwhicharesmall,entrepreneurialoperators—75percentoperate than 9.8percentbetweenDecember2007and2008, thebiggestleapin40years. of amultitudeeconomicpressures,moreandAmericans areoptingforcoachtravel—Reutersreportedthatthenumberofriders jumpedmore its composition;unliketheheavilysubsidizedrailandairlinesectors, motorcoachcompaniesaremorelikelytobeself-sufficient.And,perhapsbecause passengers areeitheryoung(collegestudents)orold(seniorcitizens), accordingtotheAmericanBusAssociation(ABA).The buses prefertobecalledthesedays,transportmorethan630million passengersayearintheUnitedStates.Interestingly, morethanhalfofthose Motorcoaches,as For long-haulpassengertravel,abouttheonlythingcheaperthan ridingabusisstickingoutyourthumbandhopingforthebest. bus the on Get while earmarkingfivetoeighttimesthatamountinsubsidiesfor highway maintenance,airlinesandairports. over$1.3billion, about themoneyspentonAmtrak,but,accordingtoFederalRailroadAdministration,in2008governmentgaveAmtrakslightly either directlyor,government andthemedia inthecaseofbuscompanies,formhighwaymaintenance.Thereisagreatdealcarping It shouldbenotedthatalmostnoformofpublictransportisself-supporting:allgetregularinfusionscapitalfromstates andthefederalgovernment, $850 millionthroughNovember2008. deficitofalmost railroad runningataloss:theLongIslandRailroad(LIRR),busiestcommuterraillineinU.S.,waswithanoperating in governmenthandouts,andhasconsistentlyoperatedatalossofover$1billionforyears(thefigurewas$1.120 passenger rollsandincreasedoperatingcosts,Amtrakhasbecomeincreasinglysubsidized—by2007,theorganizationhadtaken innearly$30billion trouble turninganysortofprofit;afterall,itcannotcompetewiththespeedofferedbyairlinesorlowfaresbuscompanies. Therefore,withdwindling Theoperatorstillhas legislation, AmtraktookoverthemajorityofU.S.passengertrainsunderitsNationalRailroadPassengerCorporationumbrella. railroad wasdealtaheavyblowwhentheU.S.PostalServiceturnedtotrucksandairplanesforitsfirst-classshippingneeds. Following1970s In fact,therailroadshavebeenindeclinesinceadventofautomobileandFederalAidHighwayAct1956.1960s,once-mighty While theshippingportionofrailsectorhascontinuedtochugalong,passenger-train sectorhascontracteddramaticallyinpreviousdecades. A-train the Take cost-effectively ontherails. In recentyears,growthhasbeendrivenbythepopularityofcoalandethanol,bothenergysourcesonrisethat,coincidentally, canonlybeshipped different railcarriers. billion inrevenue.Almost95percentofthattotalwasgeneratedbyonlysevenmajorrailroadsystems,althoughtheentiredustrycountsover550 trillion ton-miles(ameasureofthevolumeanddistanceindustry’s freightoutput,aton-mileisonetonshippedmile),accountingfor$54 Unlike itstruckerbrother, therailroadsawimpressiveincreasesinitstraffic2006.Thatyear, freightrailroadsintheUnitedStatesshipped1.77 Working ontherailroad specific delivery, thissectorofthetransportationindustryisexpectedtobecomeincreasinglyintegrated. such asUnionPacific,NorfolkSouthern,CSXandBurlingtonNorthernSantaFe.Withnewtechnologiesallowingreal-timecargo tracking andtime- The truckingsectoralsooverlapswiththerailroadworld,giantslikeJBHuntandSchneiderInternationalteamingup oldhandsontherails, (Formerly Yellow Roadway, YRCbeefedupitsbusinesswiththeMay2005purchaseofsupply-chainmanagementfirmUSFfor$1.5billion.) percent ofthevolumefreightinUnitedStates.ThesectorisdominatedbybulktruckerslikeQualityDistribution,JB Hunt andYRCWorldwide. Express-delivery servicesalsosharetiesand,insomecases,overlapwiththetruckingsector, whichin2007alonehandledover11billiontons—69 Keep ontruckin’ environmentally sensitiveconsumers,hybridelectricvehiclesusemuchlessfuelthantraditionalcars,reducingcostsbyashalf. companies getPRpointsfortheirefforts,what’s attracting reallydrivingthegreenmovementis,well,othergreen—cash.Alongwith percentage ofthepowerforitsretaillocationsfromrenewablesourcesandincreasingamountrecycledcontentinpackaging.While mile No.100millioninFebruary2007;onlytwoyearslater, thatfigurestandsat144million.FedExisalsoraisingthegreenstakesbybuyinga options likecompressednaturalgasandelectricity. UPS’s “greenfleet”(launchedin2000,andtotalingmorethan20,000vehicles asof2008)logged Both UPSandFedExhavetakenstepsrecentlyto“green”theirgroundservicefleets,replacingdieselvehicleswithmoreenvironmentallyfriendly Greening “Brown” Transportation and Airlines The Vault MBA CareerBible 264 07). Amtrakisn’ttheonly bus sectorisuniquein © 2009Vault.com Inc. Customized for: Erin ([email protected]) have beenresolved(noeasytask),theairlineswillbeinaposition toexpand. Ride theironhorse truck isloadedwith.Theindustryalsosupportstechniciansandmechanicswhokeepthebigrigsintopcondition. weight, operatorsmustobtainaCDLlicensefromtheirhomestate,andsomestatesemployersrequireadditionaltraining,depending onwhatthe vision andhearing;peoplewithcertainmedicalconditionsareprohibitedfromdrivingtrucksacrossstatelines.Inorderto drive trucksoveracertain so driversmustbeingoodphysicalshapeandabletoliftheavyobjects.Inaddition,truckhaveacleandriving recordaswellgood thetruck, $40,000 to$46,000ayear)andmaybeawayfromhomefordaysorweeksattime.Sometruckingjobsrequireloadingunloading where theyalsoactassalespeopleandsolicitbusinesswhilemaketheirdeliveries,othersspecializeindrivinglongdistances(averagesalary: Drivers’ responsibilitiesvarydependingonthelengthoftheirroutesandnaturegoodstheycarry. Somedriversspecializeinshorterroutes As aresult,truckingcompaniesdon'thavetospendasmuchonrecruitmentandaretakingmoretime(andcare)invettingprospectivehires. environment wheretheturnoverrateisnow65percent.Theseverelossofjobsinmanufacturingandconstructionhasalsocreatedaglutapplicants. ledtoan shipping volumesshrunk.Thosefacts(andanewertrendofbig-rigcommanderswhostayatonecompanyratherthanjumpingaround) wentbelly upand amidst anationalshortageof20,000drivers.)Andduring2008,industryloadcapacityslid7percentas3,600truckingcompanies shortages andanannualturnoverratethatapproached100percent.(Inoneoftheworstyears,2005,wascalculatedat130percent, According totheAmericanTrucking Association,some1.3millionpeopleworkedastruckdriversin2008.Foryears,theindustry struggledwithdriver Roll on,18-wheeler itself with a surplus of military aircraft and pilots without much to do, the postal service opted, in 1918, to start a transcontinental airmailservice,which itself withasurplusofmilitaryaircraft andpilotswithoutmuchtodo,thepostalserviceopted,in1918, tostartatranscontinental used extensivelybythemilitary—namely, duringWorld War Iforreconnaissance,bombingandaerialcombat. Followingthewar, when theU.S.found The airlineindustrytooktotheskies followingtheWrightbrothers’firstsuccessfulflightin1905. Aswithmanynewtechnologies,airplaneswerefirst Cleared fortakeoff in Mumbai,India)—isareminderthattheairlineindustryisstill targetforterrorists.Nevertheless, emerging, havecausedfurtherhavoc.TheJuly2007attackon Glasgow’s airport—andforthatmatter, theoneinNovember2008onseveralhotels Spats withlaborunions,troublesunderfinancedpensions, high jetfuelpricesandastringofbankruptcies,fromwhichsomecarriersarestill since slunkbackdownsomewhat).Furthermore,theIATA saystheimplementation ofsecuritymeasureshascosttheindustry$5.6 billionperyear. 2005, butbythelatterhalfof2008,carriersfacedabuyingpublic waryofexcessspendingandwereslammedbyrapidlyrising fuelcosts(whichhave terrorist attacksin to regulatorychangesandeconomicfactors.Airlineshadstarted todigthemselvesoutoftheholecausedbySeptember11 But despiteitsenormouscontributiontoworldcommerce,theindustry hashistoricallygonethroughdizzyingboomsandalarming bustsasitreacts nearly $3.6trillion,or7.5percentofworldGDP. Strictlylimitedtocommercialaviation,industryrevenuewasaround$536billionfor2008 those numbersareevenmoregargantuan:aviationandairtravel-relatedactivitiesaccountforalmost32millionjobs,withan “economic impact”of the U.S.,aviationsupports10.2millionjobsand$1.1trillionineconomicactivity,” throughtourism,shippingandbusinesstravel. Onaglobalscale, The airlineindustryconsistsofcompaniesthatmovepeopleandcargowithplanes.InternationalAirTransport Association(IATA) claimsthat“In A volatileindustry AIRLINES INDUSTRY OVERVIEW the industryfromlayoffsduringperiodsofrecession. to takepublictransportationovertheirpersonalcars.Additionally, theimportanceofpublictransportationinshuttlingpeopletoandfromworkinsulates becomes increasinglydenseanddemandforpublictransportgrows.Thegrowing“green”trendmayalsobolsterthesector, peoplechoose asmore likely todecline,theBLSpredictsdemandforsubwayandbusoperatorsincrease(byasmuch12percentthrough2016) as urban population as welltheinfrastructureofdispatchers,engineersandmanagersthatkeepwheelsmovingsmoothly. Whileemploymentinintercitytrainsis Public transportation—generallyintheformofsubwayandlight-railtrains,localintercitybuses—employsanarmydrivers andconductors, For thepeople,bypeople veterans reachretirementage. years—due toincreasedcomputerizationoftheindustry—opportunitiesareexpectedopenupforyoungwannabeengineers, asmanytrainyard training. Almost80percentoftheemployeesinthisindustryareunionized.Althoughemploymentonrailsisexpectedtodeclinenext10 subway andstreetcaroperators.Engineerpositionsarealmostalwaysfilledfromwithinarailroad’s ranksandrequiregoodvision,hearingextensive switchoperators,and jobs intheUnitedStates.Possibleoccupationssectorincludeconductorsandyardmasters,engineers,brake,signal As of2006(themostcurrentyearwithavailablestatistics),theBureauLaborStatisticsreportedthatrailtransportationworkersheldabout110,000 career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Economist The thinks thatonceeconomicissues The Vault MBA CareerBible Transportation and Airlines 265 Customized for: Erin ([email protected]) official inSeptember2005.Then, inNovember2006,USAirwaysmadeanofferforDelta(which wasrejected),andinNovember2008,Delta antitrust regulations.TheUSAirways nameshowedupagaininmergertalks,linkedtoAmericaWest for$1.5billion,andthe twocompaniesmadeit in theU.S.makeitdifficultformajor domesticcarrierstomerge.Forexample,aplanjoinUnited AirlinesandUSAirwayswasshotdowndueto Partnerships aside,theairlineindustry remainsremarkablycompetitive,andintoday’s toughclimate,it’s everyoneforhimself. Tight regulatorycontrols to mergewithAirFrancein2004. patrons;KLMwenton Dutch carrierKLMandAlitaliafellapart,forinstance,aftertheItalian airlinehadtroublesecuringfundingfromitsgovernment partnership madeupofDeltaAirLines,France,AeroMexico andothers).Butsuchpartnershipsaren’talwayssuccessful.Analliancebetween strategies. Well-known andSkyTeam alliances includeOneworld(analliancebetweenAmericanAirlines,BritishAirwaysandseveralothercarriers) (a carriers haveformedglobalalliancestoavoidsomeregulatory issues andmaximizeprofitsbysharingresources,includingroutesmarketing andU.S. demands forsubsidies.(Swissairwasresurrectedin2002asSwiss, whichwasacquiredbyLufthansain2005.)Subsidizedinternational many, othershaven’tbeen solucky. SwissairandBelgium’s keepupwith airline,Sabena,bothcrumbledwhentheirrespectivegovernmentscouldn’t Around theworld,manyairlinesstillareheavilysubsidized—or owned outright—bytheirhomenations.Whilethishasbeenasuccessfulsetupfor A globalnetwork will continuetofall(by5.7and13percent,respectively)in2009. such encouraginggains:theIATA reportedthatpassengertrafficin2008decreased5.6percent,whilecargodove23.2andpredicts thatboth improved, making2007thefirstyearsince2000thatairtransportindustrypostedanetprofit.Sadly, promisestohalt theeconomicslowdown demand forairtravelandtolowertheirfuelexpenditures,airlinesbegansnappingupnew, morefuel-efficientplanes.Thesector’s profitability traffic risebycloseto6percentbetween2006and2007,airfreightexperienceda4gain.Inorderaccommodat e thisincreased Until early2008,theairlineindustryhadstartedtoshowothersignsofrecovery. AccordingtotheIATA, sawpassenger astrongerworldeconomy recently asitcontinuestograpplewithrapidgrowthandrisingexpenses. underfinanced pensionshavealsobeenexpensiveproblemsforcarriers.AndevenJetBlue,whichhadstrongprofitsseveral years, sufferedloses billion (anincreaseof$63from2005,whenfuelcoststotaled$111billion),andaccountfor32percentallexpenses. Labordisputesand are falling,sorelianceonsuchcontractscanbeabitofgamble.TheIATA calculatedthattheindustry’s toppedoutataround$174 fuelbillfor2008 mitigated bymultiyearsupplycontractsthatlockinthecostofjetfuel.That’s beneficialtotheairlinesintimesofrisingprices,butnotwhenprices 2007 averagingabout$80perbarrel.Thehighcostofoilremainsahugechallengetotheairlineindustry;insomecases,unc ertainty hasbeen The industryhasstruggledwithprofitabilityduetoacombinationoffactors.Aircarriershavebeenhithardbyrisingfuelcosts,jetpricesin Looking up? of morethan$100billionatthattime.Accordingly, majorcarrierscontinuedtolobbythefedsforfinancialsupportinform ofsubsidiesandloans. Asia, theIraqwarandaslowdownineconomyalsohurtairlines.AccordingtoJune2004Senatereport,industrycarr ied combineddebts Though passengerconfidencecontinuedtogrowintheyearsfollowingterroristattacks,industry’s TheSARSscarein redinkkeptonflowing. court. file forChapter11.Smallerairlines,includingGreatPlains,Hawaiian,Midway, National,SunCountryandVanguard, havealsoshownupinbankruptcy the terroristattacks.Of“BigSix”—United,USAirways,American,Northwest,ContinentalandDelta—allbutone, hasbeenforcedto players wereforcedtoshouldermassivedebtloadscontinuetheiroperations;thiswasontopoftheyhadbeenaccumulatingsinceevenbefore following theattacks,monetaryhelpfornewpassengerandplanesecurityrequirements,pensionfundingrelief.Butmanyofindustry’s major After 2001,Congressgavewellover$20billiontotheairlineindustryinformofreimbursementsforlossesincurredwhile planesweregrounded Big troublefortheSix resulting fromtheSeptember11attacks. Concorde. However, theairlinerstoppedregularflightsinOctober2003duetoConcorde’s (only)crashin2000andeconomic pressureindirectly and abletocarryheavierpayloadsflyathigheraltitudes.The1970ssawtheintroductionofsupersonicairtravelwith theadventof World War IIbroughtmanyadvancestothecivilianairtransportsector:innovationsinitiallyintendedforbombersmadepassenger planeslarger, faster directions. aviation policy, asbeforethe1938CivilAeronauticsActpassed,numerousgovernmentagenciesanddepartmentspushedpulled airlinesinmany government policies;andin1938,CongressenactedtheCivilAeronauticsAct.Theairlineswerehappythatanindependentagencywaschargeof of moneyairlinesearnedforcarryingthemail.By1938,overamillionAmericanswereflyingonairplanes.Thisindustry’s rapid growthpromptednew the GreatDepression.UnderNewDeal,governmentsubsidizedairlinestocarrymail.In1934,however, postalreformsr Pan AmericanAirways Transportation and Airlines The Vault MBA CareerBible 266 educed theamount © 2009Vault.com Inc. Customized for: Erin ([email protected]) York andSanFrancisco. longer haulflights.Forexample,MidwestAirlines(formerlyExpress)connectsseveralcitiesinthetodestinations inBoston,New And inotherinstances,regionalairlineshavedecidedtospreadtheirwingsandjointheburgeoninglow-costboom.Someregionalnowdo the-way airports—examplesincludeSouthwest’s useofIslipairport,inasuburbNewYork, andJetBlue’s adoptionofLongBeach,nearLosAngeles. hubs. Insomecases,however, outofslightlyout-of- regionalandlow-budgetairlineshaveskirtedthehubquestionaltogetherbychoosingtooperate The trendisreflectedinEurope,too.Bothgloballyanddomestically, accesstomajorairport allianceswithmajorcarriersgivetheupstartregionals American Eagle. carriers havetakennotice,andmanynowcontrollinginterestsinnewerregionalairlines—DeltacontrolsComair, forinstance, whileAmericanhas travel onaregionalairline,andthatplanesservingmarketsmakeupone-thirdoftheU.S.commercialairlinefleet thewhole.Thebig according totheBureauofLaborStatistics.RecentstatisticsfromRegionalAirlineAssociationrevealthatoneinfivedomestic airlinepassengers the industry today,becoming thefastest-growingsegmentofairlinemarket.Approximately25to30regional(orcommuter)carriersoperatein Regional airlines,whichbenefitfromsmaller, newerjetsandloweroperatingcoststhanthedomesticgiants,havegainedgroundinrecentyears, Going regional with earnings.Furthermore,anyapprovedmergerissubjecttopitfallswhenitcomesintegratingdifferentsystems,unions, employeesandcultures. arealso struggling downwards) willresultin(higher)profits.FouroftheBigSixhavegoneintobankruptcysince2001,andsmallerbudgetairlines Northwest completedtheirmergerafteralengthyapprovalprocess.Ofcourse,carrierisneverassuredthatsizemanagement(eitherupwardsor to seatswithfiveinchesofextra legroom. a biggerexit-rowseatcostsanadditional $15.United’s flyerscansignupfor anEconomyPlussubscription(atseveralhundreddollars),entitling them Many largerairlinesnowcharge passengers formealsandsnacks,too.Moreover, OnNorthwest, someairlinesnowchargepeoplefor extra legroom. but XMradioandDIRECTVarefree.Chargingforamenitiesthat previouslycamegratisallowscarrierstokeepticketpriceslow, yetstillturnaprofit. Low-budget airlineshavealsorealizedthatconsumersprefertopick andchoosetheirperks.Anin-flightcocktailonJetBluewillstillsetyouback$5, … andincreasingincome bonus miles.Accordingtoa2006 saved moneythroughonlinebooking,andtheyencouragecustomers tobookdirectlythroughairlinewebsitesbyofferingincentivessuchasonline in procurementprocessesinvolvingsuppliers,andslashingcommissions oncepaidregularlytomiddlemensuchastravelagencies.Airlineshave Other cost-cuttingmeasuresintheairlineindustryincludestreamlining fleetsandretiringolderplanes,cancelingunprofitableroutes,greaterefficiency liberal workrulesandaless-seniorworkforceoverall,low-costcarriers beattheirestablishedrivalsintermsoflaborcosts. cents, respectively. Those penniesaddupovertime,andso-called“legacy”carriersareunderpressuretopinchthemeverharder. Butwithmore about 11.4centsforeachseatonmileflown,budgetcompetitorslikeSouthwestandJetBluelightentheirloadswithCASMsof9.18.4 seat mile(orCASM),acomplexformulainvolvingairplanecapacity, operatingcosts,routelengthsandotherfactors.Whereas American Airlinesspends Above all,cost-savingsarecrucialtothesuccessoflow-budgetcarriers.Onewayaircarriersmeasuretheirfiscalhealthis throughcostperavailable Cutting costs… branched outintolong-haulflightsacrosstheAtlanticandPacific. Korea’s largestairline,KoreanAirLines,announcedplanstostartalow-fareunitcompetewithdiscountcarriersinAsia.Somebudgetairlinesalso discount airlines.ExamplesareSingapore-basedTiger Airways,PakistanicarrierAeroAsiaandJakarta-headquarteredAdamAir. InJune 2007,South The boominlow-budgetcarriersisn’tlimitedtoNorthAmericaandEurope.Therearealsolow-fareAsia,wherethere arenowabout45 2006, threeyearsafteritsfirstplanetookoff,andTed, neveragame-changer, officiallyexpiredinJanuary2009. have triedtotakeadvantageofthelow-costboom,suchasUnited’s Ted andDelta’s Song,butwithoutmuchluck;Songwasreabsorbed intoDeltain 2004, whilelow-costcarrierRyanair, operatingout ofIreland,rankedasonethetopperformersinindustryworldwide. Someofthelargerairlines 1999and customers havewarmeduptothebudgetboom,aswell.British-basedeasyJetincreaseditspassengerflowmorethaneightfold between The budgetcarrierphenomenonhasrockedEurope,too,whereabout60low-costcarriersoperatedin2006,comparedtojustfour in1999.European short haulsinregionalmarkets,today’s topdiscountairlinesregularlyoffercross-countryandeveninternationalflights. reduced serviceexpectationspost-September11th.Expandedrouteshavehelped,too.Whereoncelow-budgetcarrierslimitedtheirflightstorelatively The differenceisinthebrandingandpublicacceptanceofthesecarriers,fueledpartbySouthwest’s customer-centric approach, andbycustomers’ has gottenagooddealofattentionlately. aroundsince1971. Butbudgetflightisn’tanewphenomenonintheindustry—infact,Southwesthasbeen The growingAmericanbudgetairlinesector—consistingoftopperformerslikeSouthwestAirlinesandJetBlue,plusanum ber ofupstarts— The budgetboom career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, International Herald Tribune Tribune Herald International article, onlinebookingsavestheairlineindustry$2billionayear. The Vault MBA CareerBible Transportation and Airlines 267 Customized for: Erin ([email protected]) Louis Gallois,theCEOofAirbus, calledonaircraftmakerstoworktogetherinventmoreenvironmentally friendlytechnology airplane emissions.InJune2007, theIATA askedtheaerospaceindustrytobuildzero-emissionsairplanes withinthenext50years. Laterthatmonth, number ofbusinessestogo“carbon-neutral.” Now, membersoftheairlineandaviationindustries arefinallystartingtoaddressconcernsabout airline industryforignoringitscomplicity inalltypesofpollution.In2006,AlGore’s documentary Global warmingisalwaysahottopic, andairplanesareoneofthebiggestcontributorstocarbon emissions.Environmentalists havelongblamedthe It’s noteasybeinggreen Dreamliner tosometimeafterMarch2010—providedtherewere nofurtherproblemswaitinginthewings. Boeing’s firstdeliveryofthe787 clientsarestillwaitingafteraseriesofdelays(astrike,economy-relatedlayoffs,designproblems)pushed theofficial in October2007. in 2010.ByJune2007,Airbushadfivecustomerswhoagreed topurchase148A380s,andthefirstplanesweredeliveredSingaporeAirlines However, inOctober2006, Airbusannouncedthatnewjetdeliverywouldbedelayeduntilthesecondhalfof2007,withindustrial ramp-up finished and fuel-efficienttechnologyareestimatedtomatchorexceedBoeing’s 20percentfuelsavings,andslashcost perpassenger. fiber components install bedrooms,gyms,barsandlounges.Theconservationend, though,iswheretheA380packsitsbiggestpunch:carbon designed theplane.Thedouble-deckerleviathan,largestplaneeverbuilt,boastsa262-footwingspanandextraspacecomp anies canuseto industry andrepresentedajointeffortwithFrance,Britain,GermanySpain,allofwhomcontributedtothe10-year, $13billion programthat at thestartof2005agalaeventduringLeBourgetairshowinToulouse, France.Designedtocomfortablyseat555,the Meanwhile, Airbus,theFrenchfirmandBoeing’s jumbo-jet,theA380, rivalforNo.1aircraftmakerintheworld,unveileditsownbrand-newupscale past 580,makingitthefastest-sellerinaviationhistory. order Boeing’s newpassengerjet,whichpromisesfuelsavingsofupto20percent.ByJune2007,thenumberordersforplanehadsoared board ofdirectorsgavethecompanygo-aheadtooffer787Dreamlinerforsale.ThefollowingApril,Japan’s AllNipponwasthefirstairlineto Inlate2003,Boeing’sMajor carriershopetosavemoneyinthefuturebyinvestingnewplanesthatofferalowercostofownershipandoperation. Investing inadream(liner) with mahoganywoodtrimming.” infine-grainedleather wide seats(thatfoldedintobeds)infirstclass,whichitclaimedwere“thelargestthesky…exquisitelyupholstered York’s JFK,BerlinandDüsseldorf.Inaddition,Singapore Airlinesupgradeditsbusinessandfirst-classcabins.Oncertainf airport byaddingdaybeds,showers,agourmetrestaurantandbiggerbar. Lufthansaalsospentmillionstoupgradedeluxelounges inParis,New days, thispracticehasfaded,replacedbyplansoffinancialausterity).Forexample,Lufthansaexpandedtheairline’s first-classloungeintheMunich Established airlinestriedtocatertheluxurymarketaswell(althoughduetightcreditmarketsandtighterconsumercorporatebudgetsthese none ofthesesurvived;thelasttogo,L’Avion, wasmergedintoBritishAirways’subsidiaryOpenSkies. and Frenchfood.Florida-basedcompanyDayJetownedseveralsmalljetsrananairtaxiserviceforbusinesstravelers.Byearly2009,however, on gourmetmeals.L’Avion, abusiness-classairlinethatofferedservicebetweenParisandNewYork, boastedthatpassengerscouldenjoycomfyseats airlines MaxJet,SilverJetandEosflewbetweenNewYork andLondon;onEos,launchedin2005,theairline’s “guests”slepton6’6”bedsanddined During thehightimes(around2005),newsecond-levelairlinessprangup,attemptingtoattractsuper-wealthy andbusinesstravelers.Upscale The (dying)lapofluxury In June2007, happened andintroduceda“passenger’s billofrights.”InMay2007,Neelemansteppeddownastheairline’s CEO. hours. IttookJetBluenearlyaweektoresumenormaloperations.JetBlue’s forwhat founderandthen-CEODavidNeelemanapologizedpublicly their own.WhenanicestormhitJetBlue’s hub atJFKairportinNewYork inFebruary2007,passengersweretrappedonthetarmac foreightormore Low-fare carrierssuchasSouthwestandJetBluewereoncethedarlingsofairlineindustry;however,have hadtroublesof SouthwestandJetBlue How lowcanyougo? longer safelyfree. soft drink isno a marketingfiascoasitset$7priceforspecialhypoallergenicpillowandblanketset.Insomecases,eventhecomplimentary industry startedchargingforhandlingthesecondpieceofluggage(andonAmerican,evenfirstoneincurreda$15charge).ThenJetBluecreated blood (money)fromastone(theshell-shockedpassenger).Baggagefeesopenedthedoor, asfirstUnitedandUSAirways,then therestof moreways towring In fact,thesituationgotslightlyoutofhandduringsummer2008,ascarriers,squeezedbyskyrocketingfuelcosts,found Transportation and Airlines The Vault MBA CareerBible competition fromotherairlinesthatlearnedtocopysomeaspectsofbudgetairlines’low-costmodels. to lockinlowfuelpriceshavebecomelesssuccessful,andpassengersresistedincreasesfares.Low-costcarriersalsofacedgreater unit costs—theexpensestoflyeachseatonemile—rosealmost20percentdueincreasedlaborcostsandhigherfuelprices. The airline’s hedges 268 The Wall Street Journal Street Wall The reported onagrowingprofitsqueezeatSouthwest.Thepaperthat,overthepastfouryears,Southwest’s An Inconvenient Truth Inconvenient An was asurprisehit,andled lights, itrolledout35-inch A380rockedtheairline . © 2009Vault.com Inc. Customized for: Erin ([email protected]) Airline’s parentAMR,AirCanada,UnitedandSAS)reachednearly25,000. forced to“downsize”thousandsofemployees.During2008andearly2009,thetotalnumberlayoffsannouncedbyjustafewcompanies(American crisis forcedcarrierstocutbackonroutes.TheDelta-Northwestmergerwasboundcreatelotsofredundancy, butairlineslargeandsmallwere Overall, thenumberofemployeeswasbuiltbackupstartinginmiddledecade,onlytofallagain2007and2008asglobaleconomic kiosks thathavesprungupatairportsinrecentyears. used tobefilledwithliving,breathingemployees.Inothercases,airlinesalsoreplacedpeoplemachines—considerthes elf-service check-in years tokeeptheairlineflying,andwereunhappybecausetopexecutivesgotbonusesworthmillions.Airlinesalsostartedoutsourcing manyjobsthat first timeinsixyears,employeeswereangryduringtheairline’s annualstockholdermeetinginMay2007.Theyhadagreedtosalarycutsrecent annualprofitforthe 2007, NorthwestAirlinesexitedbankruptcyprotectionfollowinga20-monthreorganization.AlthoughAmericanpostedan 25percent.InMay percent paycut.OtheremployeesatDeltaalsoagreedtocuts,includingCEOGeraldGrinstein,whosesalarywaschoppedby groups agreedtosalaryandbenefitcutshelpkeepairlinesfromgoingbankrupt.Forexample,inJune2006,Delta’sunion agreedtoa14 pilots Labor painsaren’tnew, ofcourse;theindustryregularlyhitsacost-cuttingsegmentcycle.Inmiddlelastdecade,several employee Most othercarriersfollowedsuit. flight schedules. Airlines andUSAirwayswerethefirsttomakedramaticcuts,layingoffabout20percentoftheirrespectiveworkforcesparing September 11th,Continental airlines totrimcostsfromtheirlaborbudgets.Onewaythey’vedonethisisbycuttingstaffsthebarebones.Following regulations andaworkforcemadeupofhighlyspecializedrarelycross-trainedprofessionals—halfwhomareunionized—makeittoughfor According totheBureauofLaborStatistics(BLS),laborcostsmakeuproughly40percentmanyairlines’operatingcosts.Passengersafety Labor pains variety). program, startedin2008,aimstohelpEurope’s airtransportationsectordeveloptechnologiestoreduceaircraft-relatedpollution (evenoftheaudible Skyprogram. The In anothereffortinitiatedacrossthepond,EuropeanCommissionproposeda$2.1billionpublic-privateplan,dubbedClean tackle climatechange. projects intended to percent by2020.BransonhaspledgedtoinvestalloffutureprofitsfromtheVirgintransportcompaniesintobiofuelR&Dand Richard Bransonhasrepeatedlystatedhisintenttoreduceenvironmentalimpact,andcommittedimprovingtheairline’s fuelefficiencyby30 coconut oils—tookapassenger-free transatlanticflight,becomingthefirstcommercialairlinetopoweranaircraftpartlybybiofuel. Virgin’s founder includeda mixtureof The industryisdefinitelyonthelongroadtowardthatgoal.Inearly2008,aVirginAtlantic747—usingcorn-derivedfuel airlines, claimsitisthelargestflightattendantunion. and AerospaceWorkers (IAM), andtheAssociationofFlightAttendants-CWA (AFA-CWA). TheAFA, at20 whichrepresents55,000flightattendants Many airlinejobsarealsounionized.UnionsincludetheAirLine PilotsAssociationInternational(ALPA), the InternationalAssociation ofMachinists family members. and profitsharing.Oneperkthatattractsmanypeopletotheindustry isfreeorreduced-fareflightsforairlineemployeesandsometimeseventheir In theairlineindustry, most recievestandardbenefits,suchashealthinsuranceandpaidvacation—andmanyalsohavebenefitslikeretirementplans industry areinornearthecitiesthatserveasmajorairlineshubs. Forexample,manyofNorthwestAirlines’jobsareinMinneapolis-St.Paul. Due tothefactflightsleaveatallhours,manywhoworkin the industryhaveschedulesthatarevariableorirregular. jobswiththeairline Most flight crewsarethemostvisibleinindustry, mostairlineemployeesdon’tflythefriendlyskies.Rather, theyworkinairport terminalsorinoffices. The airlineindustryhiresawidevarietyofemployeesrangingfrompilotsandflightattendantstoticketagents,salespeoplemanagers.Although any destinationacrosstheglobe,Americanreallyisn’tthatbad.” may notbethebestplacetowork.However, ifyouvaluework/lifebalance,enjoysolvingchallengingbusinessproblemsandlove flyingfirstclassto the airlineindustryistough,explaining,“Ifmakinglotsofmoney, gettingbigbonusesandsecuringpromotionopportunitiesareimportanttoyou,AA the Iraqwar).However, agreesthatworkingfor workhoursareprettylight,andthetravelbenefitscanbefantastic.”AninsideratAmericanAirlines a glutofMBAsthathavenevermovedupduetotheincrediblyheavytollexactedbyseveralworldevents(thedot-combust,Sep tember 11th,SARS, the traditionalorlegacycarrierssince2001.”Thissourcefeelscareerdevelopmentopportunitiesareextremelylimited.Thecontactadds,“Thereis been]particularlybrutalfor One managerforamajorairlinesays,“Thisisnotplacethefaintofheart.Theindustrychaotic,and[ithas Not justplanejobs career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Vault MBA CareerBible Transportation and Airlines 269 Customized for: Erin ([email protected]) and perksaren’twhattheyusedtobe. from bankruptcy, theBLSsays,largerairlineswillstarthiringagain.However, theairlineindustryisoftenasturbulentskiesitflies,andsalaries population andgreaterdemandforairtravel.TheBLSpredictsemploymentgrowthinitiallyinlow-costlocalcarriers.Afterlargerairlinesrecover Industry employmentislargelyatthemercyofeconomy, thoughtheBLSexpectsjobstoincreasesomewhatindependentlydueagrowing The futureofairlinecareers or psychologicaltests. manager saysquestionsincluded,“Whatisyourgreatestaccomplishment?”Somerespondentssaytheyalsoneededtopassamedicalexamination youhandled it.”A ones?” Anotherticketagentsaysonequestionwas,“Describethemostdifficultproblemyoudealtwithatapreviousjobandhow “Do youworkbetterbyyourselforinagroup?”,loseyourtempereasily?”,and“Howimportantitistospendtheholidayswithloved An airlineticketagentsaysinterviewquestionsincluded“Wheredoyouseeyourself10yearsfromnow?”,“Howdealwith difficultpeople?”, airlines sayagroupinterviewispartofthehiringprocess. a numberofpeople[is]thenorm.”AmechanicwithContinentalreportsthatgettingjobentailedthreeinterviews.Flightattendantsforvarious were tworoundsofinterviews.OnecontactinHR,whoworksforAmericanAirlines,notes,“Theinterviewprocesscanbelengthy, andmeetingwith agent forContinentalsays:“Thehiringprocesswasverylong.Ittookaboutsixmonthsfromresumesubmittedtobeinghired.” Thesourcesaysthere Most employeesatairlines,regardlessoftheirposition,saytheinterviewprocesscanbelongandusuallyinvolvesmultipleinterviews.Areservations Navigating airlineinterviews Transportation and Airlines The Vault MBA CareerBible 270 © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.klm.com www.airfranceklm-finance.com Fax: +331415600 Phone: +33141567800 France 75747 Roissy, Cedex-CDG 45, RuedeParis Air France-KLMGroup www.aircanada.com Fax: (514)205-7859 Phone: (514)205-7856 Canada Dorval, QCH4Y1H4 7373 Côte-Vertu BoulevardWest Air CanadaCentre Air Canada EMPLOYER DIRECTORY www.aa.com Fax: (817)967-9641 Phone: (817)963-1234 Fort Worth, TX76155 4333 AmonCarterBoulevard AMR Corporation(AmericanAirlines) www.ana.co.jp Fax: +81367351005 Phone: +81367351000 Japan Minato-ku, Tokyo 105-7133 1-5-2 Higashi-Shimbashi Shiodome CityCenter All NipponAirwaysCo.,Ltd. www.alexanderbaldwin.com Fax: (808)525-6652 Phone: (808)525-6611 Honolulu, HI96813 822 BishopStreet Alexander &Baldwin,Inc. www.alitalia.com Fax: +390665624733 Phone: +3906656221 Italy 00148 Rome Viale AlessandroMarchetti, 111 Alitalia—Linee AereeItalianeS.p.A. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.continental.com Fax: (713)324-2687 Phone: (713)324-2950 Houston, TX77002 Department HQSEO 1600 SmithStreet Continental Airlines,Inc www.chrobinson.com Fax: (952)937-6714 Phone: (952)937-8500 Eden Prairie,MN55347 14701 CharlsonRoad C.H. RobinsonWorldwide, Inc. www.bnsf.com Fax: (817)352-7171 Phone: (817)352-1000 Fort Worth, TX76131 2650 LouMenkDrive Corporation Burlington NorthernSantaFe www.british-airways.com Fax: +442087594314 Phone: +448708508503 United Kingdom London UB70GB Waterside, Harmondsworth British AirwaysPlc www.arkbest.com Fax: (479)785-6004 Phone: (479)785-6000 Fort Smith,AR72903 3801 OldGreenwoodRoad Arkansas BestCorporation www.maersk.com Fax: +4533634108 Phone: +453363 Denmark Copenhagen 1098 Esplanaden 50 A.P. Moller-MaerskA/S www.delta.com Fax: (404)715-5042 Phone: (404)715-2600 Atlanta, GA30320-6001 1030 DeltaBoulevard Delta AirLines,Inc www.csx.com Fax: (904)633-3450 Phone: (904)359-3200 Jacksonville, FL32202 500 Water Street,15thFloor CSX Corporation www.con-way.com Fax: (650)357-9160 Phone: (650)378-5200 San MateoCA94403 2855 CampusDrive,Suite300 Con-way Inc. www.expeditors.com Fax: (206)682-9777 Phone: (206)674-3400 Seattle, WA 98104 1015 3rdAvenue, 12thFloor Washington, Inc. Expeditors Internationalof www.estes-express.com Fax: (804)353-8001 Phone: (804)353-1900 Richmond, VA 23230 3901 West BroadStreet Estes ExpressLines,Inc. www.lufthansa.com Fax: +492218263646 Phone: +492218263992 Germany D-50679 Cologne,21 Von-Gablenz-Straße 2-6 Deutsche LufthansaAG The Vault MBA CareerBible Transportation and Airlines 271 Customized for: Erin ([email protected]) www.jbhunt.com Fax: (479)820-3418 Phone: (479)820-0000 Lowell, AR72745 615 J.B.HuntCorporateDrive J.B. HuntTransport Services,Inc. www.jai.com Phone: +81354606600 Japan Shinagawa-ku, Tokyo 140-8605 4-11 Higashi-shinagawa2-chome Japan AirlinesCorporation www.iberia.com Fax: +34915874741 Phone: +34902400500 Spain Madrid 28006 Velázquez 130 S.A. Iberia, LíneasAéreasdeEspaña, www.hubgroup.com Fax: (630)964-6475 Phone: (630)271-3600 Downers Grove,IL60515 3050 HighlandParkway, Suite100 Hub Group,Inc. www.genco.com Fax: (412)820-3689 Phone: (412)820-3700 Pittsburgh, PA 15238 100 PapercraftPark GENCO DistributionSystem,Inc. www.fedex.com Fax: (901)395-2000 Phone: (901)818-7500 Memphis, TN38120 942 SouthShadyGroveRoad FedEx Corporation EMPLOYER DIRECTORY (CONT.) Transportation and Airlines The Vault MBA CareerBible 272 www.njtransit.com Phone: (973)491-7000 Newark, NJ07105 1 PennPlazaEast New JerseyTransit Corporation www.mta.info Fax: (212)878-0186 Phone: (212)878-7000 New York, NY10017 347 MadisonAvenue Metropolitan Transportation Authority www.mta.net Fax: (213)922-2704 Phone: (213)922-2000 Los Angeles,CA90012 1 GatewayPlaza Transportation Authority Los AngelesCountyMetropolitan www.koreanair.com Fax: +82226565709 Phone: +82226567857 Korea Seoul 157-712 1370, Gonghang-dong,Gangseo-gu Korean AirLinesCo.,Ltd. www.kcsi.com Fax: (816)983-1108 Phone: (816)983-1303 Kansas City, MO64105 427 West 12thStreet Kansas CitySouthern www.jetblue.com Fax: (718)709-3621 Phone: (718)286-7900 Forest Hills,NY11375 118-29 QueensBoulevard JetBlue AirwaysCorporation Phone: (804)231-8000 Richmond, VA 23224 1000 SemmesAvenue Overnite Holding,Inc www.nwa.com Fax: (612)726-7123 Phone: (612)726-2111 Eagan, MN55121 2700 LoneOakParkway Northwest AirlinesCorporation www.nscorp.com Fax: (757)664-5069 Phone: (757)629-2600 Norfolk, VA 23510 3 CommercialPlace Norfolk SouthernCorporation www.saia.com Fax: (770)232-4066 Phone: (770)232-5067 Johns Creek,GA30097 11465 JohnsCreekParkway, Suite400 Saia, Inc. www.sabre-holdings.com Fax: (682)605-8267 Phone: (682)605-1000 Southlake, TX76092 3150 SabreDrive Sabre HoldingsCorporation www.pacer-international.com Fax: (925)887-1503 Phone: (925)887-1400 Concord, CA94520 2300 ClaytonRoad,Suite1200 Pacer International,Inc. www.osg.com Fax: (212)578-1832 Phone: (212)953-4100 New York, NY10017 666 3rdAvenue Overseas ShipholdingGroup,Inc. © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.singaporeair.com Fax: +6565429605 Phone: +6565414885 819829 Singapore 25 AirlineRoad Airline House Singapore AirlinesLimited www.schneider.com Fax: (920)592-3063 Phone: (920)592-2000 Green Bay, WI54306 3101 SouthPackerlandDrive Schneider National,Inc. EMPLOYER DIRECTORY (CONT.) www.sefl.com Fax: (803)794-8131 Phone: (803)794-7300 Lexington, SC29073 420 DavegaRoad Southeastern FreightLines,Inc. www.sirva.com Fax: (630)468-4761 Phone: (630)570-3000 Westmont, IL60559 700 OakmontLane SIRVA, Inc. career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.usps.com Fax: (202)268-4860 Phone: (202)268-2500 Washington, DC20260 475 L'EnfantPlazaSW United StatesPostalService www.ups.com Fax: (404)828-6562 Phone: (404)828-6000 Atlanta, GA30328 55 GlenlakeParkwayNE United ParcelService,Inc. www.up.com Fax: (402)501-2133 Phone: (402)544-5000 Omaha, NE68179 1400 DouglasStreet Union PacificCorporation www.united.com Phone: (312)997-8000 Chicago, IL60601 77 West Wacker Drive UAL Corporation(UnitedAirlines) www.wmata.com Fax: (202)962-1409 Phone: (202)962-1234 Washington, DC20001 600 5thStreetNW Transit Authority Washington MetropolitanArea www.washcorp.com Fax: (406)523-1399 Phone: (406)523-1300 Missoula, MT59808 101 InternationalWay The Washington Companies www.usairways.com Fax: (480)693-5546 Phone: (480)693-0800 Tempe, AZ85281 111 West RioSaladoParkway US AirwaysGroup,Inc. www.werner.com Fax: (402)894-3927 Phone: (402)895-6640 Omaha, NE68145 14507 FrontierRoad Werner Enterprises,Inc. The Vault MBA CareerBible Transportation and Airlines 273 Customized for: Erin ([email protected]) their overallfortunesplummetinsizeversusthepreviousyear. remains interestedinnewprojects“albeitwithasenseofcaution.” it didafterthelasteconomicslowdownin2001.JohnTaylor, vicepresidentofresearchfortheNationalVenture saidtheindustry CapitalAssociation, That doesn’tmeandealsaren’tbeingdone.To the contrary, insiderssayinvestmentactivityremainshighandthattheindustryisstillfaring betterthen drastically curbedtheappetiteforIPOsandmergersacquisitions—twoofbiggestwaysVCfirmscashinontheirinvestm ents. global creditcrunchthathasparalyzedequitymarkets.Thebiggestdownsideforventurecapitalistheeconomic environmenthas in sixyears,VCfirmssunk$28.3billion3,808dealsthe2008fiscalyear, accordingtothe Venture thelargestannualdecrease capitalistsscaledbacktheirdeal-makingactivityin2008,butthatdoesn’tmeantheentireindustryislockedup.In job asaVCanalyst?Want toscoutoutthenextblockbusterdeal?Thenboneuponmostrecentdatathere. conditions. ApullbackintheU.S.mightmeanasurgeofnewdealsoverseas,onesector’s glutcouldmirrortheriseofanother. Lookingtosecurea kindsofeconomic more targetedpace.VCfirms,likeinvestmentbanksandbigprivateequityshops,aredesignedtomakemoneyinthemidstofall holdings. Thatdoesn’tendentirelywhentheeconomybeginstoslip.Instead,venturecapitaliststendentrench—pickingde als ataslowerand intomajorstock a gambleandpumpmoneyintoideasthatcouldleadtosplashyinitialpublicoffering,cashinbyconvertingtheirinvestments In goodtimes,VCfirmswillsinkbillionsofdollarsintoanybusinessproposalthatcouldbecomethenextGoogleorFacebook.Theyarewillingtotake batch ofindustrydata,andexpertssaythisisparamountforanybodylookingtojoinventurecapital’s ranks. what kindofupstartcompaniesaresafetoinvestinto,andothersbeavoided.Thekeyunderstandingthisshiftisbyporing overthemostrecent short-term economicturbulence.However, adownturnintheeconomymeansventurecapitalistschangecourse.Theirstrategydrastically shiftsinto lessworriedabout More goodnewsisthatventurecapital(VC)firmsexpecttonurturestartupsforupfiveyears,andmakesthemsomewhat funding. earned dollarsoutonthetown).Inaddition,healthcare-relatedstartupshavetakenveryfewhitslately, beenabletosecure andhavelargelystill continued toraisemillionsinfunding(whichmaybeanoutgrowthofconsumers,fearfultheeconomicturn,choosingspendlesstheirhard- Despite theharshfiscalconditions,thereareareaswithinventurecapitalthatstillflourishing.Companiesbasedaroundsocialonlinegaminghave The goodnews dropped offthe industry’s troubles,investorsArthurRockand MichaelMoritz,twobigplayersintheworldofventurecapital,sawtheirfortunesdwindleastheyboth Asevidence ofthe Fewer entrepreneurshavecomeforwardtocreatestartups,andfundraisingforthoselookingcapitalhasprovendifficult. The venturecapitalindustry, likeotherfinancialservicessectors,hascertainlytakenahitsincetheU.S.economybegantocollapseatendof2007. capitalists. last twotothreeyears,andinvestorsofallclassesusethesepatternsengageintheproverbial“buylowsellhigh.” The samegoesforventure valuations tendtogetoverheated,oroverlydepressed,andthatleadsacyclicalshiftinsentiment.Wall momentumthatcan Streettendstodevelop It’s nosecretthattheU.S.economygoes through cycles,andisnowinthemidstofanother“correction.”Everythingfromhousingpricestostock VENTURE CAPITAL TODAY Venture Capital so theyaresell-sidefirms. selltheseservices, stocks. Commercialbanksgetin ontheactionformanagingdepositaccounts,makingandthen managing loans,etc.Again,they motivation istosellsuchservices,characterizingthemassell-siders. Meanwhile,majorbrokeragesarepaidafeefortheserviceofbuyingandselling firm’sinvestment bankreceivesafee(between2percentand10 ofthemoneyraisedbysellingstock).Aninvestmentbanking primary accounting affairsofthetransactionaswellsalethose securitiestoinstitutionalorindividualinvestors.Forprovidingtheseservices,the For instance,whenalargecompanywantstosellstockaninvestment bank’s corporatefinancedepartment handlesthelegal,tax,advisoryand commercial banksareonthesell-sidebecausetheyoffersuchservices asfloatingnewcompaniesonthestockexchangeorissuingdebt. brokeragesand they controlafundorpoolofmoneytospendonbuyinganequity interestin,orassetsof,operatingcompanies.Investmentbanks, The financialindustrycanbedividedintotwogeneralsegments: thebuy-sideandsell-side.Venture capitalfirmsareon THE FINANCIALINDUSTRY ANDVENTURECAPITAL already up-and-runningandcompetinginthemarketplace—thantheyhavesince2000. 50 percentincreasefortheyear. thatare Inaddition,VCfirmsinvestedmoremoneyincompaniesthesecondstageofdevelopment—companies Forbes’ annual billionairelistin2009.Andthey’renottheonlyones—severalventurecapitalistswhostillmade MoneyTree Report MoneyTree notes thatthecleanenergysectorsawsteadygrowth—anover MoneyTree Report MoneyTree . Thedropwasanothereffectofthe the buy-sidebecause Forbes’ latest listsaw 275 Customized for: Erin ([email protected]) such aninvestment.Insteadof directly participatinginindividualstartupfundings,manywillallocate 5percentto7percentoftotalfundshigher- companies, duetothelargeamount oftimerequiredtofindandexecuteaprivatetransaction,as wellastheongoingcommitmentoftimetomonitor diversified investmentstrategies, typicallywithpublicinstrumentsincludingstocks,bonds,commodities, currencies,etc.Theyrarelyinvestinprivate These groupsincludeadiverse collection oflimitedpartnershipsandcorporationsthatmanage between $5millionto$100+billion.Mostfocuson Asset managementfirms andpensionfunds expensive moneyonseveralfronts. ofdeals,thisis While thereisacrediblevaluepropositiontousingprivateplacements andparticipationbyinvestmentbanksinfundingsometypes competency, thedownside isthatthestart-upcompanymaynotbenefitfromexpertise,operationalsavvyandrolodexofventurecapitalfirm. is notWallhistorically beenseenashavinglessperceivedvalueintheearly stagesoftheventureprocess.Sinceearly-stageinvesting Street’s core While thesetransactionsmayincludeatraditionalventurefundas partoftheround,inmanycasestheydonot.Asawhole,investmentbankshave enable abroadswathofinstitutionalandwealthyprivateinvestors toputtheirmoneyworklikemajorventurecapitalfirms. typically between$5millionand$50million—sometimesinthebillions forfundsmanagedbysomeofWall Street’s biggestnames. Inessence,they individuals, corporations,assetmanagementfirms,and/orpension fundstomakeadirectinvestmentintoprivatecompany. These funds raise Investment bankssuchasindustryleaderGoldmanSachsGroup, Inc.thatrepresentthesell-sideofadealmayorganizegroupverywealthy High-net-worth privateplacements significant returnontheirinvestment,theyarealsothrill-seekersofasort—motivatedbygettingclosetotheexcitementnewventure. of common,theirequityrarelyhasthesamelevelpreferencesorsecuritydemandedbylaterstageinvestors.Thoughangels, ofcourse,expecta aversion iscompoundedbytheirgenerallylowerpositioninthecapitalstructure.Whileangelgroupsmaybeabletonegotiatepreferredstockinstead deteriorate. WithlessmoneytoinvestacrossfewerdealsthantheirVCbrethren,manyoftheseindividualshavealowertoler accused ofbeingfairweatherfriends;onethefirstsourcesprivateequitytodryupwhenpublicmarketsfallormacroec onomic conditions better coordinationofduediligencein“vetting”newdeals.Angelsarenotwithouttheirownissues,however. Collectively,angel investorshavebeen Angels areofteninvolvedwithhiring,strategy, theraisingofadditionalcapital,andfundamentaloperatingdecisions.These This grouphasinjectedmorethan$100millionacrosssome150startups. venture financing. about 150formerandcurrenthigh-techentrepreneursexecutiveswhomeetmonthlytoconsiderpleasfromthreestartupsfor from seedfundingtoprofessionalventureinvestors.Perhapsthebest-knowngroupofangelsisSiliconValley’s “BandofAngels,”aformalgroup emergence ofangelgroups.Theseinvestoralliancescreatemorestructureforinvestors,andaefficientconduitmovingstartupsalong hasseenthe large numberofnewcompaniesseekingfundingaswelltheriseinwealthyindividuals,recentyearsindustry his VCfirm,VulcanVentures. Intelco-founderAndyGrovehasmadeangelinvestmentsinnumerouscompanies,includingOncology.com. Giventhe professional field.Microsoftco-founderandmulti-billionairePaulAllenhasmadeheadlinesforhisangelinvestingaswellasinvestmentsthrough Angels canbedoctors,lawyers,formerinvestors,thoughincreasinglytheyareentrepreneurswhohavehadalucrative exitintheirchosen of funding.Astheprofessionalinvestorscomeintoplay, venturecapitaliststakeoverboardseatspreviouslyheldbyangels. through thedifficultinitialstagesofgrowth.Thatsaid,mostvalueaddedbyangelinvestorsoccursinpre-institutional (orSeriesA)rounds first investorsegmentwhohavetheopportunitytositonboardofdirectorsandcontributeexperiencecontacts,guidin g youngcompanies According tobusinessfinance.com,angelsfundanestimatedone-seventhofthe300,000start-up/earlygrowthfirmsinU.S. Theyareoftenthe one dayoftravel. seed andearlystagerounds,averaging$50,000to$500,000.Angelspreferinvestwithintheirimmediategeographicarea,andonaverage These arehigh-net-worthindividualswhonormallyinvestbetween$15,000and$1millioninexchangeforequityayoungcompanythroughoutthe Angels entrepreneur tofind,itcanalsobebittersweet.Ifastartupfails,tellingAuntEdnathatshe’s losthernesteggcouldbethelowpointofone’s career. product, technologyormarket,andaresimplymakinganinvestmentinsomeonetheyknow. Whilethisisprobablytheeasiest mo amounts investedperindividualarequitesmall,averaging$5,000to$10,000.Thesepeoplemaynothaveanin-depthunderstandingofthebusiness, ofdevelopment. The Sometimes referredtoas“friends,familyandfools,”thisisusuallythefirstsourceoffundingforstartupsatideastage Friends andfamily nature andthatmanybuy-sideorganizationscrossorganizationalboundaries. investment. Descriptionsofeachsegmentthebuy-sideareincludedbelow. Keepinmindthatthesedefinitionsareintendedtobe very generalin public offering.Venture capitalisaboutbuildingyoungcompaniesa Venture Capital The Vault MBA CareerBible 276 ance forlosses.Thisrisk alliancesalsoallowfor © 2009Vault.com Inc. ney foran Customized for: Erin ([email protected]) solutions. You makeanotetoyourself tocallthembackgetastatusreport. for companieswithanalternative solution.You happentoknowabouttwosmallcompanies,onein Boston,oneinDenver, thathavealternative all hope.You learnfromananalystthat AT&T createsanopportunity hasdecidedtostopitstrialofanewtechnology becauseitdoesn’twork,which a mistake.You firm.You findoutfromanentrepreneur youwerehopingtobackthathewantshissonbeaco-founder andownerofthe abandon You findoutfromanotherVCthatthe companyyoualmostinvestedintwomonthsagowasjustfunded byacompetingfirm.You wonder ifyoumade 11:00 a.m.:Phonethepeoplewhocalledduringyourmeeting.These includeentrepreneurs,analysts,otherVCsandyourlunchappoin of yourmind,youknowthemarketforgooddealsisverycompetitive, andyoudon’twanttorejectadealtooquickly. actually exist(youdon’tknowfirsthand,soyouwillneedtocallaround), andyoumaylearnsomethingbytakingittothenextstep.Plus,inback invest. You haveidentifiedmay wishyoucouldjustkillthedeal,butmanagementteam isreasonable(thoughnotgreat),thecustomerneedthey In theend,youdecidetomakesomecallsgathermoreinformation aboutthemarket,butyoufeelthatthere’s averylowprobabilityyouwouldever or not. you thinkofhowtopolitelyextractmoreinformationaboutthose threeissues,allthewhileevaluatingwhetheryouwouldwanttoworkwiththisteam presentation. You sitpolitelythroughthepresentation,andidentify threecriticalissuesfacingthecompany. Duringthequestionandanswerphase, During the10-minutedelay, thepartnertalkswithteaminformally, andlearnsmoreabouttheopportunity thanheorshewouldinanyone-hour work withyourassistanttomakefourphotocopiesbeforethemeeting canproceed. some challenges.Thecomputerprojectingtheentrepreneur’s presentationand presentationcrashes, soyouhavetotaketheirpaperversionof partner (GP)sitsinwithyou.TheotherGP, whoplannedtobethere,cannotmakeitbecause hehasaconferencecallwithportfoliocompanyfacing 9:00 a.m.:You attend ameetingwithgroupofentrepreneurswhowanttomaketheirpitch.You readthebusinessplanforfiveminutes. Onegeneral personal acquaintances. 8:00 a.m.:Respondtoemailsorvoicemailsfromthedaybefore.Peopleyouarecommunicatingwithprimarilyentrepreneurs,other VCs with eachofthepeopleintheiroffices,exchanginglatestwordaboutandtechnologyyoufollow. information interesting.Theothermembersofyourfirmhavemoreexpertiseintheareascoveredbyarticles.You stayandtalkforafewminutes the 7:45 a.m.:Clipoutsomeinterestingarticlesandputthemintheinboxesofotherassociatesorpartnerswithanoteexplainingwhyyoufound an emailasaremindertocallthemduringbusinesshours. team hascontactedthecompanies.SearchInternettofindoutmore.Offourcompaniesyoufind,onlyoneholdsyouri 7:20 a.m.:Readtradepressandnoticefourcompaniesyouhaven’tseenbefore.Checkyourfirm’s onyour internaldatabasetoseeifsomeoneelse billion dollars.Theycareaboutmakingquickmoney. fluctuations tomakemoney, andareoftenconsideredhighrisk/highreturninvestors.Thesizeofthesefundsrangesfromafew milliontoseveral takebets onmarket These areentitiesthatbuyandsellpublicmarketinstrumentsincludingstocks,bonds,commodities,currencies,etc.firms Hedge funds Chrysler willreapbigfinancialrewardsforCerberusiftheautomakergoespublic. of reorganizingChrysler—anAmericaniconitboughtfromGermancartitanDaimlerAG(famousforitsMercedesbrand).Onceturnedaround, the bigpayoffforLBOsiswhentheymakemoneybringingthempublicagain.Forinstance,private-equityfundCerberusCapitalnowinprocess to findanunder-performing publiccompany, takethemprivate,andthenreorganizeusingloans.That’s whyitiscalledleveragedfinance.And Internet phenomenon.However, theirmainstrategyistobuyvulnerablepubliclytradedcompaniesthatcanhandthemahugeprofit. Thestrategyis have theireyeonopportunity. BigPEfirmslikeBlackstoneandKKRhaveentiredepartmentsempoweredtoinvestseedmoneyintothenextbig Consider privateequityfirmstobethebigger, badderversionofventurecapital.Theyrarelyinvolvethemselvesinupstartcompanies,butcertainly Private equityfirms total investmentexposureof$42.6billion.And,sinceitsinceptionin1990,theprogramhasgenerated$12.5billionprofit. Program had System (CalPERS)isoneofthelargestplayersinthisspace.AsSeptember2007,theirAIM(AlternativeInvestmentManagement) risk alternativeinvestmentslikeVCpartnerships,hedgefunds,anddistressedturnaroundsituations.TheCaliforniaPublicEmployees’Retirement A DAY INTHELIFE:VENTURE CAPITALIST of moneyintopublicmarkets.Thesegroupsalsotakerelativelyriskybetsonmarketfluctuations. hugesums Sell-side companiessuchasmerchantbanks,commercialbanksandinvestmenthavetradingdepartmentsthatcontrol invest Trading 7:00 a.m.:Arriveattheoffice.Read career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, The Wall Street Journal Street Wall The , payingcarefulattentiontothe“Marketplace”sectioncoveringyourindustryfocus. The Vault MBA CareerBible nterest. Sendyourself Venture Capital 277 tment. and Customized for: Erin ([email protected]) Uppers VC UPPERSANDDOWNERS Venture Capital The Vault MBA CareerBible that acompanyyouturneddown,whichwasinvestedinbysomeoneelse,isabouttogobankrupt.Atrainmissed;bulletdodge d. business ideasandrecentsuccesses.You findoutthatacompetingfirmjustmade30timestheirmoneyondealyouneversaw. You alsofindout 7:00 p.m.:DinnerwithtwootheryoungVCsdowntown.You deals,cool talkmostlyaboutlife,sports,travelandrelationships,butalsothelatest area. 6:30 p.m.:You stand aroundthehallstalkingwithothermembersofyourfirm,brainstormingandfillingeachinaboutwhat’s inyour happening to gathersomearticlesaboutthetechnologyareasyoucover. 5:30 p.m.:You make callstotheWest Coast.You alsocheckyourstocksandconfirmdinnerplans.You Web dosomemiscellaneous surfingonthe are “duediligencemachines,”doingthehardworkofmakingsureacompanyiswhatitsaysis. much negativeinformationaspossible.You mayhave.VC firms needtodiscoveranypotentialcharacterorpersonalityflawsmemberoftheteam customers, andtheyseemedhappyforthemostpart.Today, ideaistogetas youarecallingthepersonalreferencesofmanagementteam.The 4:30 p.m.:You makeduediligencecallsforapotentialinvestmentyouhavebeenfollowingtwomonths.Lastweekcalledthecompa the recruitersactuallyhavetimeandinterestindoingsearch.You talktotworecruitersandleavevoicemailsfortheotherthree. 3:30 p.m.:You calltherecruiters,explainingsituationandaskingabouttheirrecentexperiencesinsimilarsearches.Thecritical element iswhether contacts. company overthenextsixmonths.Atendofcall,GPgivesyouthreenamesandnumbersrecruiters,whichaddtoyourowntwo executive recruiterstohelpfindanewCFOforit.TheGPofferstalktwoM&Afirmsgetfirstopinionaboutwhatmight bedonetosellthe 3:00 p.m.:You andapartnermeetwithportfoliocompanyonconferencecall.Theisfacingsomechallengesyouofferto s about hismarketspace. minutes. You spendmostofthe30minutesprobingaboutcompetitorswhomightbebetterthancompanyyou’retalkingtoand findingoutmore companies. You getthroughtooneCEO,andalthoughyoucantellinthefirstfiveminutesthatwon’tbeinterestedinvesting, youtalkfor30 for 90minutes,soyouneedtohaveanopenblockoftime.You CEOsoffourother leavethestandardpitchaboutyourfirmonvoicemailof to beinafriendlyandupbeatmoodmakethesecalls,soyoubatchthem.Also,ifactuallygettouchwiththeCEO, maybeonthephone 2:00 p.m.:Callnewcompaniesyouhaveheardaboutoverthelastfewdays.Ideally, youcoulddothistaskalittlebiteveryday, butyoufindneed services quickly. It’s afunlunch,freelymixingpersonalandprofessionalinformation. in touchwithherovertheyears,andtrytoseeeveryquarterhearlatestbuzzmakesureshewillbeavailable whenyouneedher 12:30 p.m.:Lunchwithanexecutiverecruiter. Thispersonisveryexperiencedinfindingmanagementtalentyourareaofexpertise.You havekept 278 • You haveaccesstothebestinformationsystems. • You couldsuddenlybecomerichifoneofyourcompaniesdoesextremely wellandyouwereabletoco-investorhavecarry • Your jobistoabsorbandenjoythepositivecreativeenergyofentrepreneurs anddirectittowardsuccessfulexecution. • You venture haveaccesstothebestminds—thepeopleyouworkwitharetypicallysomeofsmartestandmostinteresting.Successful • Over thelongterm,financialsecuritywillceasetobeanissue,becausejobiswellpayingandyoushouldeventuallyget “carry”orequityin • You oftengettobetheonemakingdecisionsbecauseyouhavemoney. otherpeople’sThere isareasonthatveryfewpeopleeverwillinglyleavetheirVCcareers.Whereelsecanyouhavesomuchfuninvesting money • capitalists haveinterestsandhobbiesasdiversemountainclimbing toplayingjazzinnightclubs. the firm. (plus someofyourown),whilebeing“inthemiddleitall?” © 2009Vault.com Inc. . creen ny’s Customized for: Erin ([email protected]) is alistofsomethenegativeswehearfromthosewhohaveworkedinindustryforwhile. Because somanythinkoftheventurecapitalindustryas“thehotjobtohave,”peopleoftenforgetquestionwhetheritis rightjobforthem.Here Downers • Because youreject99ofevery100entrepreneurs,canmakesomeenemies,nomatterhowniceandhelpfultrytobe. No onelikes • It canbearguedthatventurecapitalisfundamentallyanegativeprocess.Becauseyoureject99ofevery100plans,yearafteryear, overtime • VC isaslowpathtowealthcomparedwiththeimmediatecashincomeyougetininvestmentbanking,hedgefundsorevenmanagement • haveprideof Unless youworkwithahands-on,early-stageVCfirmknownfortakinganactiveroleinbuildingsuccessfulcompanies,don’t career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com rejection, andpassionateentrepreneurshavelongmemories. rare gem,ifyouaren’taneternaloptimist? to home,venturecapitalmightnotbeforyou.Whatfunisitsearchthroughhundredsandthousandsofbusinessplansideas forthatone hitstoo close your life.Whatiswrongwithmypartners?spouse?me?Oh,theangst!Ifthisreaction maybleed into The technology?dealterms?strategy?Ifyoutendtohaveacontrariandisposition,afterjustfewyears,thatmentality you focusonfiguringoutwhatiswrongwithacompany. You canthenrejectitandgetontothenextdeal.Whatiswrongwith themanagement? consulting. ownership inanything.You’re justaninvestor, notabuilder. for insidercompany profiles,expert advice, The Vault MBA CareerBible Venture Capital 279 Customized for: Erin ([email protected]) www.eastoncapital.com Fax: (212)702-0952 Phone: (212)702-0950 New York, NY10017 767 3rdAvenue, 7thFloor Easton CapitalInvestmentGroup www.drapertriangle.com Fax: (412)288-9799 Phone: (412)288-9800 Pittsburgh, PA 15222 2 GatewayCenter, Suite2000 Draper Triangle Ventures L.P. www.dfj.com Fax: (650)233-9233 Phone: (650)233-9000 Menlo Park,CA94025 2882 SandHillRoad,Suite150 Draper FisherJurvetson www.benchmark.com Fax: (650)854-8183 Phone: (650)854-8180 Menlo Park,CA94025 2480 SandHillRoad,Suite200 L.L.C. Benchmark CapitalManagementCo., www.battery.com Fax: (781)478-6601 Phone: (781)478-6600 Waltham, MA02451 930 Winter Street,Suite2500 Battery Ventures www.austinventures.com Fax: (512)476-3952 Phone: (512)485-1900 Austin, TX78701 300 West 6thStreet,Suite2300 Austin Ventures, L.P. EMPLOYER DIRECTORY Venture Capital The Vault MBA CareerBible 280 www.kpcb.com Fax: (650)233-0300 Phone: (650)233-2750 Menlo Park,CA94025 2750 SandHillRoad Kleiner PerkinsCaufield&Byers www.kineticventures.com Fax: (301)652-8310 Phone: (301)652-8066 Chevy Chase,MD20815 2 Wisconsin Circle,Suite 620 Kinetic Ventures L.L.C. www.in-q-tel.com Fax: (703)248-3001 Phone: (703)248-3000 Arlington, VA 22219 P.O. Box749 In-Q-Tel, Inc. www.hcp.com Fax: (781)861-5499 Phone: (781)861-5500 Lexington, MA02421 92 HaydenAvenue Highland CapitalPartners,Inc. www.greylock.com Fax: (781)622-2300 Phone: (781)622-2200 Waltham, MA02451 880 Winter Street Greylock ManagementCorporation www.epvc.com Fax: (858)731-0281 Phone: (858)731-0300 La Jolla,CA92037 2223 Avenida delaPlaya,Suite300 Enterprise PartnersVenture Capital www.oakinv.com Fax: (203)227-0372 Phone: (203)226-8346 Westport, CT06880 1 GorhamIsland Oak InvestmentPartners,L.P. www.morgenthaler.com Fax: (216)416-7501 Phone: (216)416-7500 Cleveland, OH44113 50 PublicSquare,Suite2700 Terminal Tower Morgenthaler www.wpgvp.com Fax: (650)234-8333 Phone: (650)234-8300 Menlo Park,CA94025 2200 SandHillRoad Lightspeed Venture Partners www.rho.com Fax: (212)751-3613 Phone: (212)751-6677 New York, NY10019 152 West 57thStreet,23rdFloor Carnegie HallTower Rho CapitalPartners,Inc. www.pacven.com Fax: (818)990-6556 Phone: (818)990-4141 Encino, CA91436 16830 Ventura Boulevard,Suite244 Pacific Venture Group www.oxbio.com Fax: (617)357-7476 Phone: (617)357-7474 Boston, MA02116 222 BerkeleyStreet,Suite1650 Oxford BiosciencePartners © 2009Vault.com Inc. Customized for: Erin ([email protected]) www.srfunds.com Fax: (972)702-1103 Phone: (972)702-1100 Dallas, TX75240 13455 NoelRoad,Suite1670 2 GalleriaTower Sevin RosenFunds www.sequoiacap.com Fax: (650)854-2977 Phone: (650)854-3927 Menlo Park,CA94025 Building 4,Suite180 3000 SandHillRoad Sequoia Capital EMPLOYER DIRECTORY (CONT.) career message boards,expertresume reviews,theVault JobBoardand more. Visit Vault atwww.vault.com for insidercompany profiles,expert advice, www.sunamericavc.com Fax: (310)772-6705 Phone: (310)772-6000 Los Angeles,CA90067 1 SunAmericaCenter, 37thFloor SunAmerica Ventures, Inc. www.sproutgroup.com Fax: (212)538-8245 Phone: (212)538-3600 New York, NY10010 11 MadisonAvenue, 13thFloor Sprout Group www.tridentcap.com Fax: (650)289-4444 Phone: (650)289-4400 Palo Alto,CA94301 505 HamiltonAvenue, Suite200 Trident Capital,Inc. www.tcv.com Fax: (650)614-8222 Phone: (650)614-8200 Palo Alto,CA94301 528 RamonaStreet Technology CrossoverVentures The Vault MBA CareerBible Venture Capital 281 Customized for: Erin ([email protected]) for jobseekersandprofessionals.To seeacompletelistofVault titles,gotowww.vault.com. Much ofthematerialin and specificemployers. employment trendsandspecificemployersintheirindustries.We annuallysurvey10,000sofemployeestobringreaderstheinside scooponindustries Vault istheleadingmediacompanyforcareerinformation.Ourteamofindustry-focusededitorstakesajournalisticapproachincoveringnews, Vault Editors About theEditor 282 The MBA Career Bible Bible Career MBA The is excerptedfromVault titlesforspecificindustriesorcareertitles.Vault publishesmorethan120titles © 2009Vault.com Inc.