The compensation packages awarded college graduates with masters of business administration (MBA) degrees reflect a shift in power balance between employers and employees. Until recently, corporate downsizing resulted in hiring freezes and massive layoffs, with management being particularly hard hit. Graduates with business degrees spent months pounding the pavement in search of jobs. Now, with the economy booming, employers are scrambling to fill management positions. The result is a hiring frenzy which raises issues of compensation fairness, hierarchy, and the role of marketplace forces.
The current employment picture represents a seller's market for college graduates, with employers going to unprecedented lengths to secure the cream of the crop. This year graduating MBAs will probably have an average starting salary of something above $70,000 a year. They also will receive a one-time "signing bonus" of something over $20,000. Such signing bonuses were unthinkable in the past. As an executive with a headhunting firm notes, "Signing bonuses, which a year ago were atypical, are now the norm" (Hirsch, 1997, p. 53). The fervor with which employers now court recent MBA graduates can be traced, in part, to the fallout of past decades of corporate greed.
America's economy underwent a fundamental change as a result of corporate excesses and increased global competition during the 1980s and 1990s. Corporations assumed massive amounts of debt to finance mergers, leverage buyouts, and other creative management schemes. Former junk bond multimillionaire Michael Milken became symbolic of the avaricious mindset of this era. A characteristic of the financing frenzy was a decline in spending on true wealth, e.g., equipment, new plants, research and development, etc. As the economic bubble burst, corporations turned to austerity measures defined by euphemisms such as "downsizing" "rightsizing" and "restructuring." These terms t...