One statistic that stood out last year was the increased proportion of people with work experience who joined B-schools. How do B-schools manage the placement of these students? Most of the top B-schools now run a separate 'Laterals' program that provides companies with an option to hire students with work experience directly for the middle-management positions. We decided to dig deeper to find out more about the people who leave their jobs for pursuing MBA, and determine how they can leverage their experience during lateral placements.

We have categorized students with work experience into four segments:

• Switchers: This group is interested in changing their career track altogether. They want to try out something new. More often than not, they have not decided upon which functional stream they will finally select and wait until they have dipped into all the subjects to make their choice. In addition, they are willing to cast aside their experience and join as freshers.
• Climbers: Climbers are those who wish to obtain a management degree so that they can go back to the industry in which they were working. What they expect is a direct climb of two or three rungs in the hierarchical ladder when they return. An example would be that of a programmer who wants to be a Project Manager.
• Jumpers: Jumpers are an interesting lot. They look forward to jumping across streams within the same industry. A typical example would be that of a technical lead who wants to join the Marketing/Strategy/Business Development team. The Jumpers often foresee the possibility of hitting the glass ceiling in the absence of a formal management degree and pursue their MBA to fill the gap.
• Multipliers: The Multipliers join the course primarily in anticipation of future monetary benefits. This group expects their compensation to be a multiple of what they were earning before. Just like Switchers, they too are not initially clear about what function they would finally select.

A classical 'Lemons problem' exists here. A 'Lemons problem' occurs whenever information asymmetry in a market makes it impossible to determine the actual quality of the object being sold. Applying the concept to the B-school scenario, we can see that Climbers and Jumpers are the best hires for companies in the industry in which these students have worked - as compared to Switchers and Multipliers. However, the presence of the latter two segments of students during the laterals makes it very difficult for companies to differentiate. Grades, which are often touted as a signal of quality, turns out to be a non-starter as this is a competitive advantage that can be easily emulated by Switchers and Multipliers. The problem is compounded further due to the conditions in the job market that forces the students to hedge their risks by applying to almost every company that comes for campus recruitment.

Fortunately, there is a way to handle this situation. This requires a quantum shift in the strategies adopted by both the students and the companies.

Strategies for the Students

Leverage your Technical skills: This is the most important asset for students who desire to return to the industry in which they were working. It is necessary for these students to have a holistic understanding of this industry, its structure, and revenue streams. There should be a clear pattern of competence building by selecting electives and projects relating to the industry. This, as a signal of quality, can have an immense impact. Climbers and Jumpers are the ideal candidates to exploit this opportunity.
• Leverage your People Management skills: The students should expect to be quizzed on peer 'networking' and people management skills. Learning ability, appreciation of new technology, international exposure/knowledge of foreign languages and ability to work in different geographies with diverse workforce are all points that will place the candidates in a favorable light.
• Leverage your Project Management skills: Climbers have a big advantage here. They are interested in this job description and have been directly/indirectly involved in it. The candidates would do well to take up leadership roles to manage clubs, events etc. during their years at B-school. These students can also take up projects during the course that reinforces this skill. The aim should be to acquire a healthy mix of 'hard' and 'soft' skills.

Strategies for the Companies

• Use the right signal of quality: Generally it has been observed that companies - in the absence of any other indicator - select grades as the most tangible signal of quality. This is often misleading, especially when it comes to laterals. For example, Climber and Jumpers are interested in a particular industry and hence spend a disproportionate amount of time researching about it. Obviously, this is a trade-off, (with grades), that they make consciously, and hence they should not be penalized for it. Thus, companies should give due consideration to this fact while selecting candidates.
• Betting it right: Climbers and Jumpers expect the companies to give due importance to their experience, not just in terms of compensation but also in terms of the designation offered. That being the case, the companies should sufficiently differentiate the offers made during the laterals to those made during the final placements.
• Changing the mindset: It is a perception that management students from the top B-schools are avid job hoppers, more so during the initial years. However, it must be recognized that students with experience have already had exposure to the industry and look forward to grow with one company rather than switch incessantly. Recently, there was a quote by a HR Manager in a leading magazine: "If they don't want us, we also don't want them". We believe this is as much a problem with the 'marketing' of the candidates by the B-schools as it is with the positioning by these companies.

Thus, we believe a qualitative shift in the way the students and companies approach laterals is required to ensure a net gain for both the stakeholders.

Contributed by -
Renjit George Philip & Rohit Mathur
PGP - I, Class of 2004,
Indian Institute of Management, Bangalore