JULY 9, 2007
INVESTIGATIONS
The Professor Is A Headhunter
As companies compete fiercely for top talent on campus,
they're forging closer relationships with influential faculty members—and
they're not shy about spreading around the cash it
When Exxon Mobil Corp. (XOM) recruiter Jane L. Wood wants to hire a gifted business school graduate, she often gets in touch with Naveed Saleem, a business professor at the University of Houston, Clear Lake. After conducting preliminary interviews, Wood sits down with Saleem to determine which students he believes would excel as Exxon managers.
Then Wood cuts the university a modest check, money the school can spend on anything related to the professor's program. Saleem says the contribution is "basically a token thing." But Wood acknowledges that Saleem's recommendations make a big difference to ExxonMobil. "He looks out for me," she says. "When I come to campus, I'm blessed with these students on my schedule."
Around the country, B-school and undergraduate professors with ties to big companies routinely recommend their best students as potential hires. Of course, recruiters continue to avail themselves of campus job fairs and more traditional means of scouring for talent. But more often than most students realize, money is part of the recruiting process. Sometimes the school benefits, as happens at the University of Houston. In other situations, professors themselves receive the corporate largess.
Direct payments to professors who offer recruiting tips are rare, according to company and campus officials. Instead, professors who receive corporate consulting fees or research grants sometimes pass along promising names as part of their relationship with companies hungry for talent. In one unusual case, Valero Energy Corp. (VLO) recently provided gas cards to graduate teaching assistants at four Texas universities in exchange for the names of undergraduates deemed suitable for a company internship program. "There's a tremendous amount of money changing hands," says Maury Hanigan, who runs a New York-based firm that scouts MBAs for corporate clients. "It's all dressed up to pass the sniff test."
DODGING BUREAUCRACY
Schools have a range of policies on the issue. Seeking to avoid even a
whiff of favoritism, the University of Virginia's Darden School of Business
cautions faculty against offering potential employers any kind of recruiting
help before the company approaches students. (The guidelines do not cover
traditional letters of recommendation.) The University of Chicago's Graduate
School of Business lacks formal rules in this area, but Dean Edward A.
Snyder says he encourages professors to help make connections between
compatible employers and students. However, taking money for recommendations
would be improper, Snyder says, echoing a view commonly held by his peers.
"You'd be picking talent for one company, as opposed to picking talent
and matching across companies," he says.
Procter & Gamble Co. (PG) was one of the first companies to link college funding to recruiting. Nearly 30 years ago, the giant consumer-products maker began funneling modest sums to more than 100 schools that P&G saw as likely to produce dynamic executives, says James Mead, who oversaw worldwide personnel for the company in 1979, when the practice began. Mead, who now runs the executive search firm James Mead & Co., says P&G consolidated the number of schools where it recruited from 450 to 135 by identifying the business programs that produced the most managers for the company. The payments helped P&G gain the favor of particular schools and assured that on recruiting days, its interview slots were filled with top students' names, Mead explains. P&G says it no longer makes such payments and scaled back its financial support to higher education in about 2002.
Not long ago, it took more effort for companies to build relationships with professors. In most cases, they went through the campus career office, a process that some recruiters say can be bureaucratic and time-consuming. But with detailed bios for most professors online nowadays, companies have no problem bypassing the career centers and going to the professors directly. "We can't prevent faculty from communicating," says Jody Queen-Hubert, who heads Pace University's Co-Operative Education & Career Services. "And we can't prevent employers from contacting faculty." In many cases, companies don't pay schools or professors explicitly for recruiting help but establish more subtle financial relationships. The accounting firm Ernst & Young maintains a list of about 2,800 top accounting professors. E&Y financially supports academics in a number of ways, including paying for what Ellen J. Glazerman, the firm's head of faculty relations, calls "buyout time," when a professor takes a semester off to develop a new course. Glazerman says some professors routinely identify top performers for E&Y—sometimes even intervening on behalf of job candidates who perform poorly in initial interviews.
General Electric Co. (GE), which hires about 1,000 undergraduates and several hundred MBAs each year, has developed relationships with professors at some 40 universities who, it says, help identify up-and-comers. "We'll say, 'Hey, work on this with your PhD candidates, and we'll help fund it,'" says Steve Canale, GE's recruiting head. "As a by-product, we get insights into top [student] talent."
The National Association of Colleges & Employers cautions against the mingling of financial support with more targeted recruiting. Many schools adhere to its guidelines. Others have devised their own rules. One is Darden. Its MBA Policy Committee has maintained guidelines for more than a decade that instruct faculty to "refrain from making evaluative statements about students, including any suggestion of those who should be contacted or interviewed...prior to [recruiters] interviewing the students in question." The purpose of such rules is to make the recruiting process fair and open, says James R. Freeland, associate dean for faculty. All recruiters get equal access to the same students, and students can talk to all of the companies that are hiring.
Freeland recalls an incident in which a senior faculty member persistently called the registrar's office, seeking student grades and transcript information to pass along at a company's request. The professor, still a member of the faculty today, was "trying to tell recruiters who the best students were," says Freeland, who politely told the professor to back off.
Faculty support for Darden's guidelines isn't universal. "I think the policy is misguided in some ways," says Timothy M. Laseter, a Darden professor and former partner at the consulting firm Booz Allen Hamilton. Laseter recommended students to his former firm until being informed by a colleague that doing so violated Darden's policy. While Laseter says he now adheres to the school's rules, he argues that restricting faculty matchmaking can hurt talented students. Laseter on occasion does paid consulting work for Booz Allen and writes for its quarterly journal, but he says that his informal recruiting for the firm stemmed from loyalty, not from any financial incentive.
Not long ago, Laseter recommended a student named Angela C. Huang, whom Booz Allen had initially overlooked after she applied for an internship. Huang struck Laseter as perfect Booz Allen material: She was intellectually curious and deeply analytical. At his urging, the firm took a second look, and Huang now works as an associate in the
Booz Allen office in Cleveland. "Tim probably sees the best candidates for Booz Allen," says Peter Sullivan, who runs the firm's MBA recruiting operation. "And God love him for it."
FRINGE BENEFIT
Many professors outside of business schools also participate in the annual
recruiting ritual. Doing the right thing in this setting is something
that Princeton chemistry professor David W.C. MacMillan says he often
struggles with. MacMillan has lucrative relationships with such big pharmaceutical
companies as Amgen (AMGN ) and Merck & Co. (MRK ) Some pay him consulting
fees. Bristol-Myers Squibb Co. (BMY ), meanwhile, funds fellowships for
chemistry students at Princeton, to the tune of about $100,000 a year.
Many of the same companies welcome MacMillan's recommendations on which students to hire, he says. MacMillan adds that he encourages students to take jobs at companies that he believes would be a good fit, rather than funneling top talent to the company that gave him his most recent consulting gig or batch of research money. Amgen declined to comment. Merck and Bristol-Myers Squibb say recruiting is a secondary benefit of research funding.
The relationship between talent-scouting professors and corporate recruiters seems likely to deepen. Consulting fees are an important part of many professors' incomes. What's more, recruiters operate in a frenetic market for talent, where it's not unusual for top students to receive multiple offers. And when companies have a sudden need for talent, their methods can get very creative.
Exhibit A: Valero Energy. Last year the oil refiner had more than 100 intern slots, up tenfold from the previous summer, according to Dan Hilbert, who until recently was Valero's manager of global recruiting. Less than two weeks before a career fair at the University of Texas campus in San Antonio, the company still had a handful of openings. Waiting until the fair would have meant losing candidates to rivals, says Hilbert, who now runs his own consulting business.
In an April interview with BusinessWeek, Hilbert said he approached graduate student teaching assistants at UT-San Antonio and three other schools in the area, offering them $25 gas cards—"they call them 'beer cards,'" he says, redeemable at gas stations—in exchange for the names of undergrad prospects. Persuading a candidate to take an internship at Valero was worth another gas card, this time for $100.
It worked. According to Hilbert, seven graduate assistants took the bait and turned over the names of their best and brightest, even complying with his instructions to avoid students with tattoos and facial hair. In a week's time most of the open internship slots were filled. Valero says it does not endorse using gas cards as an incentive to provide student information. Hilbert is unapologetic. "This is putting allies in behind the fortress wall," he says. "We bent the rules to best suit us."
Bruce L. Howard, UT-San Antonio's associate director of employer relations, who oversaw the job fair, was surprised when BusinessWeek told him Valero had used graduate assistants for recruiting purposes. Valero posts job openings for all students to see, he says. But using insiders to pinpoint the top students? That, says Howard, "is close to treachery.