Perhaps schools are partly to blame?
By Della Bradshaw
The inauguration of Barack Obama as president, deeply significant for the people of the US, had additional resonance for the country's business schools.
The replacement of the MBA graduate by the younger lawyer in some way reflects one of their recent concerns: the perception of business among those in their 20s - potential MBA applicants.
US business schools have been reporting for the past five years that these students, " generation Y ", are increasingly focused on management rather than business.
They are eschewing the 80-hour working week of the investment banker or management consultant for more time with their families and more socially rewarding jobs in not-for-profit companies or government.
Business school professors are worried the suspicions that surrounded big business following the Enron and Worldcom bankruptcy listings in 2001 and 2002 have been exacerbated by the credit crunch and financial crises of the past year.
Though most business schools plead innocence over the crisis, they acknowledge the perception that their MBA graduates are seen as part of the problem.
" It's a bit superficial but it [the accusation] is there, " says Michael Osbaldeston, director of Cranfield School of Management in the UK.
" Yes, business schools will be blamed for some of the excesses that we have recently observed and for some of the mistakes made by business leaders, " says Arnoud de Meyer, director of the Judge Business School at the University of Cambridge. " We probably deserve some of that blame. "
Luis Palencia, associate dean for the MBA at Iese Business School in Spain agrees. " I believe by omission we are responsible."
One of the undoubted ironies is the effect the financial crisis has had on the business school funding model.
In November, Harvard University president, Drew Gilpin Faust, issued a statement that sent a chill through every US university. " We need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint, " she wrote.
The devaluation of endowments is one of three financial pitfalls for business schools, particularly those in the US. Schools also face a reduction in the annual fund - the money students and alumni give to help in the day-to-day running of the school. These gifts often count for between 10 and 15 per cent of the operating budget.
And for schools that earn large amounts of their income from short non-degree programmes there are clear signs that corporations will no longer support this expense.
Figures circulating in the industry suggest business has already declined by between 15 and 20 per cent, particularly in open enrolment programmes.
The problems for US schools do not stop there. The credit crunch has affected both scholarships and student loans, says Larry Mueller, director of financial aid at the Darden School of Business at the University of Virginia.
A sharp drop in endowment income means a sharp drop in money for scholarships. Mr Mueller says the school is continuing to put money behind its scholarship programme. But he points out: " Continuing to pour money into scholarships is unsustainable. "
And while domestic US students can receive loans through government- financed schemes, those applying to US business schools from overseas have to get their money from private funding schemes and those have evaporated.
The result has been that the number of international applications this year to US schools has plummeted, often by about 20 per cent.
With business schools in Europe and Asia growing in reputation, many non-US students are opting instead to study there. In this year's Financial Times ranking, a European business school - London Business School - has been ranked number one (jointly with the Wharton School at the University of Pennsylvania) for the first time. And there are three Asian schools in the top 20, including one, Ceibs in Shanghai, in the top 10.
Domestic US applications continue to rise dramatically. GMAC, the council that administers the Graduate Management Admission Test, had its best year in 2008: 262,000 tests were taken.
With the prospect of people " hiding out " for two years, the US MBA has traditionally been seen as an attractive proposition during a recession.
But not everyone is convinced this will hold true this year.
Beth Flye, head of admissions at the Kellogg school at Northwestern University, believes that many potential applicants see the market as too competetive so are sticking to their jobs for the forseeable future, while others are concerned that the recession will last longer than the two-year degree.
Perhaps the most difficult question of all for MBA students is where they will work on graduation.
The schools likely to be hardest hit are those that place large numbers of students in the finance sector, such as NYU Stern and Columbia Business School in New York.
Gina Resnick, who heads the career management centre at Columbia, where half the students usually go into finance-related jobs, says that recruiting is down and there is a lot of uncertainty. She predicts that students will face a protracted job search this year and there will be a lot more hiring for one-off specific jobs. But, she adds, students are " very pragmatic " .
In Europe the first health indicators of the job market came from IMD and Insead, both of which graduate a class in December.
At IMD the news is good. Katty Ooms-Suter, director of admissions and careers, says that 82 per cent of the 90-strong class had a job offer on graduation, but she points out that most of those went into industry, where IMD has a particularly strong recruitment record.
At Insead, which graduated 460 MBAs in December, it was tougher. Jake Cohen, dean of the programme, says that 65 per cent of the class had accepted an offer on graduation. But he is not optimistic. " I do believe July 2009 will be very bad. We've never lived in such a market. "
Both Insead and IMD point out that students on their programmes are flexible about the regions of the world in which they work and are happy to travel.
It is an attitude that needs to be adopted in US schools too, says Joe Thomas, dean of the Johnson school at Cornell University." If there's a global market in automobiles there is no reason why there shouldn't be a global market in talent as well. "
While business schools are fighting the twin fires of funding and recruitment, many of them will have little time to reflect on the bigger question of whether the MBA is doing its job - teaching the right subjects to the right people. Others are already pondering these issues.
A solution to the current malaise, argues Prof De Meyer, will involve significant changes. " We will have to rethink the basis of finance, we will need to understand how to adjust globalisation to a more regulated world. We need to give our students more insights into what the new role of business in society will be and how business has to take the rest of society more into account in its strategies. "
Other European schools, too, believe the time is right for a sea-change in business education. " We are in a changing paradigm, " says Laurent Bibard, dean for MBA programmes at Essec in France. " Students don't believe what we teach any more, if we don't take into account the value questions. "
