Why Stanford students should work on Wall St.

Teryn Norris and Eli Pollak have written a strongly-worded editorial today in the Stanford Daily blasting the finance industry's recruitment of top students. To quote:

Why are graduates flocking to Wall Street? Beyond the simple allure of high salaries, investment banks and hedge funds have designed an aggressive, sophisticated and well-funded recruitment system, which often takes advantage of student's job insecurity. Moreover, elite university culture somehow still upholds finance as a "prestigious" and "savvy" career track.

Their solution is to encourage more students to pursue "socially productive careers in public service, entrepreneurship and scientific research." They also want universities like Stanford to develop systems to encourage interest in these "alternative career tracks."

I wish it were that easy.

I've analyzed the problem before, but I have since gone through the recruiting process myself, which included some of America's top banks. I would like to discuss the difference in recruitment between Bain & Company and the U.S. Foreign Service. I realize Bain is not an investment bank, but its recruitment strategy is for all intents and purposes the same as that of other management consulting firms and investment banks and provides a useful vignette.

Bain visited the Stanford campus early in the year to present their company's pitch, offering a selection of nice snack foods and networking opportunities with maybe two dozen of their consultants. Those interested in applying dropped a cover letter, transcript and a resume into Stanford's online career system, and decisions on interviews came back a week or two later. Interviews were held on campus for the first few rounds, and second-round interviews were held in the office you applied to (in my case, Palo Alto, located about 1.5 miles off campus). The process was efficient and friendly - I truly felt that the whole process was about building a relationship with me as a future employee, and I have nothing but praise for their approach. Truly, the process could not be easier.

Simultaneously, I was applying for the U.S. Foreign Service to be a diplomat. Outreach for the Foreign Service is actually quite strong at Stanford, despite the blanket claim of Norris and Pollak's Op-Ed. The CDC regularly hosts ambassadors and other officials to discuss opportunities with the State Department. Of course, attendance varied: the public service events attracted about 6-7 people and Bain's event easily had 200 students. Nonetheless, they continue to show up and make their case. I was convinced, and started down the process.

The first step is to take the Foreign Service Officer Exam (FSOE), a test of general knowledge about what a diplomat does. The test is not particularly difficult, and I didn't study for it beyond reading some example questions available at the CDC Library. I passed the test quite handily. I was then asked to fill out a form of essay questions about my life and my preparation for being a diplomat, which I did the same day I received it.

Two months later, I got a letter saying that my application had been denied, since my statistics major was not the right fit for a Foreign Service Officer. Interestingly, a few months later I was one of the only students outside of the Political Science bubble to be accepted to Condi Rice's seminar on American Foreign Policy. Also interesting is the fact that I am overseas on a Fulbright looking at industrial policy in East Asia.

I want to make a couple of observations. First, I never met a recruiter at any time in the State Department's recruiting process. There was no personal connection, none of the close contact that makes management consulting and investment banking so popular. The lack of relationship building was quite noticeable. Second, the amount of paperwork required in the process was quite frankly ridiculous. **The FSOE asked me this multiple-choice question: "What is an email attachment?" **Just to be clear: this test is considered relatively difficult and the pass rate is astonishingly low.

So, what is a student to do? There is the easy path with a nice high-speed conveyor belt to a well-paying job. Or, there is a hard path through the woods with multiple hoops to jump to get a low-paying job in the public service sector. Or, if we consider scientific research, a student has to go through the PhD application process, which is even more unwieldy than the process for government jobs. I'm sorry, but the choice in this case is obvious.

I used to be more service-oriented. I wanted to work in government, to improve the process, to make a difference. It might be surprising for those outside the Cardinal Bubble, but many of Stanford's top, top students wanted the same thing. I know them, and I have talked to them. But America is not Japan (or really any industrialized country) where top students are automatically funneled to positions of bureaucratic power. Instead, they compete with everyone. America's top firms are offering you authority over millions of dollars, and the government wants you to prove knowledge of file attachments. It's insulting, and it's over, at least for me and my friends.

Let Goldman Sachs, J.P. Morgan and McKinsey come and recruit. They're the only ones that understand the value of an elite education, and work diligently to secure top talent. Until public service organizations, governments, non-profits, etc. are willing to be a little more elitist, they have no right to complain. Top students are going to go where they are wanted. That is not taking advantage of "student's job insecurity." That's just common sense.

Discussion

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