CANADA: Pay expectations of MBA graduates plunge

On her site where she matches up MBA graduates and employers, Maggie Austring has job-seeking candidates fill out a field in their on-line applications to identify what annual gross salary they expect. When she launched the site last May, she put in a $30,000 (US$24,000) category, never thinking anyone would fill in that low a number.

Austring has not only seen people checking off $30,000, she has now seen a rise in that category and wonders what would have happened had she put in a $20,000 option. The downturn in the economy has tempered the salary expectations of MBA holders who are seeking jobs.

According to Austring, President of, salary expectations have gone down by an average of $10,000 to $20,000, with many asking for $30,000 less than what they envisioned they would be asking when they began their studies.

"Two years ago, MBAs were hot items with a lot of employers wanting to hire people right away at $70,000." Now, she says many potential employees have not dared to ask for that kind of salary and many of her candidates are now asking for $40,000 to $50,000.

Yet the lowered salary expectations have not emerged from any mass layoffs of MBAs. While many companies are reluctant to bring in high-priced middle management, that is just part of the story. This race to the bottom seems to be coming from the candidates themselves, whose collective confidence has been shaken by all the other dismal news and whose lowered expectations are being jumped on by firms looking for a bargain.

Last Christmas, Dil Vashi began to reassess his chances of immediately working as a financial analyst or a management consultant. With a freshly-minted MBA from Jacksonville State University in Alabama, where he had won a business scholarship to assistant-coach in their golf programme, the 24-year-old had spent the previous three months looking for work to no avail.

Vashi had sent his CV to about 120 potential employers, having no preference for any particular industry. He was not receiving any firm offers and was having to work at his old summer job in a factory, where he earned $9 an hour. He was thinking perhaps it might be best if he got his foot in the door at a bank by applying for a teller job.

As it turned out, Vashi never did apply to the bank. In February, he began a new job working with an outfit that buys and sells micro businesses. The work he's doing, delving into the books and operations of businesses whose products range from fertiliser to funerals, touches on the financial analysis and management consultancy he had been looking for

But he is earning a lot less than he had ever expected: his base salary is $42,000, a far cry from the $60,000 that he had expected when he was still in school.

In this changing environment, many MBA holders may need to look at their degrees not as a ticket to a great starting salary, but as a way to provide a company with some needed skills they would welcome in a difficult economy. That is according to Kirk Hill, who runs a career centre out of the business school at Simon Fraser University in Burnaby, British Columbia.

"The MBA is not a guarantee to a high salary. But it helps open doors," he explained.
Hill, who is also the president-elect of the Canadian Association of Career Educators, sees an upside to the situation, saying with lower salaries many small companies will now be better able to compete with the large ones for valuable MBA holders.

Austring says not all provinces nor all industries are experiencing lowered MBA salary expectations. Her own province, Saskatchewan, has not experienced the employment free-fall of Ontario and has seen job-seekers able to demand better salaries.

Hill says the Vancouver region has also been insulated from some of the lowered salary expectations of MBAs from other parts of the country. He cites several factors, including an increase in infrastructure spending, the approaching 2010 Olympic games and "a technology sector that's holding up". And there are other pockets of insulation around the country, namely the niche retail sector, crown corporations, utilities and construction.

Mark Gibson is bucking the trend and has actually raised his salary expectations. The 51-year-old Montrealer who graduated with an executive MBA from the Université du Québec à Montréal in 2005 was recently grossing $45,000 at a start-up company that distributed systems for heating up hot-water tanks with solar-thermal power.

It ran out of money and had to close but he is now working on resurrecting it and is on the cusp of seeing a government subsidy announced that would potentially shoot up public demand for his product. Having worked for a year helping run the business and with a background in start-ups, he is now the right person for the job, and expects to earn a $60,000-a-year salary.

While most MBAs will be asking for lower salaries throughout this economic downturn, those who are in the right province, in the right industry or have found themselves to be the person for the job can still find themselves with the salary that those who invested in an MBA had always expected from the outset.

* This article was first published in the Globe and Mail on 18 March and is republished with permission.