Twelve months ago consultancy firm Hill & Knowlton released a report stating that MBA students were more attracted to the idea of working for a listed company than one that is family-owned. Have attitudes changed over the past 12 months as the global economic crisis damaged the reputations of many listed companies?
Only 24% of the students surveyed for the report said they were interested in working for a family firm compared to 61% who said they would like to work for a publicly-listed company.
The report declared that family-owned businesses were failing to build a positive reputation in the same way that publicly listed companies were. It said: "Publicly-traded companies seem attractive to almost all but the same cannot be said of companies which are family-owned."
Since the report was published time has not been kind to listed companies. Their performance and reputation has suffered as the global economy has slumped. But in comparison the family-owned business model has been lauded for its long-term, rather than short-term strategic thinking.
Hill & Knowlton has yet to carry out a follow up study taking the new economic environment into account and says it has no plans to do so. But given that the MBA students in their report put such a large amount of emphasis on company reputation, is it possible that their attitudes have changed over the last year?
Cathy Butler, MBA Careers Director at the University of Cambridge's Judge Business School, says students are now looking at all their options, not just the "dream job" many hanker for in a listed company. "One of the reasons behind this may be a reaction against the performances of PLCs in the last year," she states.
However, she believes the major factor behind this opening up of attitudes comes from a pragmatic rather than a moral basis. "Students are having to be quite pragmatic about their career vision given the state of the job market," she says. "Many students choose an MBA to make a big switch from the industry or sector they are currently in. But switching is hard in this current climate. There are so many people in the job market that recruiters from listed companies can take people who are a very good fit. Why gamble on someone switching? Students have to think that their dream job at a listed company is not going to happen straight away. They have to take stepping stones."
One of these stones may be a family-owned business. She says: "We are advising them to look at family businesses or consultancy work. Some of our international students who have come from a family business may go back to work for them rather than with listed companies. We are also seeing more students deciding this is the best time to set up their own companies."
John Ward, clinical professor of Family Enterprises at the Kellogg School of Management in Chicago, USA, has also seen a change of attitude again fuelled by the job climate. "The state of the economy means that there are less recruiting opportunities within listed companies. MBA students are having to look more broadly for opportunities," he explains. "But the poor performance of listed companies in the downturn in comparison with family businesses is also prompting a more positive view of working for a family business."
Recruiting for the family business
Ward says that he has also noticed that students from family businesses are increasingly returning directly to their family business for internships and jobs.
"These students have even begun to think more about recruiting for their family businesses from the schools that they attend," Ward states. "This is more possible as students from business families are now more confident in the positive impression that family businesses have on campus."
Over in Navarra, Spain, Dr Josep Tapies, chair of family-owned business at IESE Business School, argues that the change in attitude is not just down to the recession. "Every year that passes you see more MBA students looking at family businesses as a good place to work. The economic downturn has just accelerated that process. Students see family businesses as an easier place to make a more solid career as they can keep in touch with the ownership," he says.
Back-up data on this attitude change is hard to find. But a recent survey from the Graduate Management Admission Council, the association of leading graduate business schools worldwide, stated that 31% of 2009 graduates were looking for jobs at employers with more than 15,000 employees, down from the 37% who were in 2007.
But Cana Witt, MBA development manager at the UK's Lancaster University Management School, has seen no evidence of a change in attitude. "Listed companies remain the ideal," she states. "But students will certainly find it tougher in this climate. They will have to be less choosy. At this time they are just happy to get a job anywhere. But they are not particularly targeting family businesses."
Claire Hudson, careers director at Manchester Business School in the UK, says family businesses are limiting their chances of hiring MBA students by not making themselves as "visible" as listed companies or public sector organisations such as the NHS. She explains: "We don't hear that much from family businesses, small or large in scale. They may hire MBAs but not necessarily have an MBA hiring programme. Are the opportunities within these businesses being made fully aware to students?"
She says family businesses should make themselves more open, especially in the current job climate. "If a student is going to an interview with a PLC then all the information is on their website. That's less the case with a private company," she states. "There is also the issue of career progression. Students will look at whether the senior positions are taken up by family members. They think how far they can progress if they joined. We would welcome family businesses coming to talk to our students."
What of the relative performances of listed companies and family businesses during the downturn? "Businesses which have racked up record losses would not deter MBA students. They will see it as a challenge to go in and help them get back to growth," Hudson says.
This does not surprise Ken McCracken of Family Business Solutions. "Stock market companies are seen as something which every MBA student should aspire to. Everything else is seen as being slightly less worthy. These views are still deeply entrenched," he says.
This is despite the "gloriousness of the listed company model" taking a hit hard in the last 12 months in comparison to family businesses, McCracken argues. "Family businesses are more likely to see through the bad times and students will have seen this on an emotional level. But how much do they know about a family business model?" he asks. "There is still a gap of understanding about family businesses. Students don't get it and many would not even know that Mars was family owned."
McCracken says business schools should develop more family business modules and courses. "There will be students who want to look afresh at family businesses after seeing a lot of the PLC palaces crumble," he says. "This climate can encourage a broader look at company structures in the MBA.