Who Needs Harvard?

Why big corporations are hiring fewer Ivy Leaguers.

A coveted undergraduate admission to an Ivy League college is a ticket to success, right? But a recent paper by Peter Cappelli and Monika Hamori, both of the University of Pennsylvania, suggests that the prestigious degrees aren’t as valuable at America’s largest corporations as they were a generation ago. If you want to run GE, you might be better off attending the University of Connecticut than Yale.

Cappelli and Hamori compared the résumés of the top 10 executives at Fortune 100 companies—the 100 largest companies by revenue in the United States—in both 1980 and 2001. These were so-called “c-level posts”—CEO, chief operating officer, chief financial officer, chief technology officer—plus division heads and senior vice presidents.

The figures tell a story of American business dynamism. In Joseph Schumpeter’s great formulation, the top ranks of American business are like a hotel where the guests are always changing. Only 26 of the 1980 Fortune 100 companies retained their status in 2001. By 2001, the executives had also grown younger (the average of the sample fell by about four years). The executives were also much less likely to have been educated at an old Eastern university where pride in high SAT scores compensates for pathetic athletic teams and lame parties.

Between 1980 and 2001, the percentage of top executives whose undergraduate degrees came from Ivy League schools fell by nearly a third from 14 percent to 10 percent. Others who paid through the nose for their sheepskins also lost ground. The percentage of top execs who attended private non-Ivy schools (Williams College, Notre Dame, Stanford, etc.) fell from 54 percent in 1980 to 42 percent in 2001. Meanwhile, the proportion of those who attended public universities soared from 32 percent to 48 percent. A similar dynamic was seen in graduate degrees as well: far fewer on a percentage basis from Ivy League schools and far more on a percentage basis from public universities.

At some level, this is a numbers game. While the Ivy League schools remain small and exclusive, public universities have been expanding rapidly, establishing new programs, and pumping more minnows into the corporate stream every year. Several Ivies don’t have MBA programs, and there are top-notch business schools at Northwestern, Stanford, University of Chicago, University of Michigan, and University of Virginia. But the authors conclude that the shift has less to do with demographics and more to do with corporate practices. In other words, the bosses aren’t as snowed by polished young Ivy grads as they were in the past.

I’d offer a couple of other, less quantifiable explanations. Something has changed about the character of the student bodies at many Ivy League schools in recent decades. With the rising ability of the wealthy to smooth the path to admission by paying private-school tuition and hiring college advisers and SAT-prep tutors—and with college tuition far outpacing financial aid growth—rich kids are more likely to get in, and to attend, Ivy League schools than in the past. A widely quoted study from the Century Foundation found that 74 percent of the students at 146 selective colleges surveyed came from the top socioeconomic quartile, while only 10 percent come from the bottom half! Harvard President Larry Summers devoted his 2004 commencement speech to this phenomenon. On a percentage basis, fewer Ivy League graduates than public school graduates today need to find stable, high-paying jobs at big companies. More of them can afford to traipse around Asia for a year or pursue a career in film-making. It could be that the already rich and comfortable are simply less interested in pursuing careers in large corporations than their less-comfortable public-school peers for purely economic reasons.

And for those Ivy League graduates eager to make their mark on the business world, things have changed as well. The Ivy League may no longer be the gatekeeper for management trainees at General Electric and Chevron. But it is most definitely gatekeeper for other elite employers: McKinsey & Co., Goldman, Sachs, private equity firms. A sharp kid with a degree in economics from Dartmouth is far less likely to seek a career at General Motors or American Express and far more likely to sign on with a venture capital firm or a hedge fund. An ambitious smoothie seeking to trade off reputation and old-school connections won’t interview at Philip Morris or Wal-Mart, she’ll interview at Boston Consulting Group or Morgan Stanley.

The numbers crunched by Cappelli and Hamori suggest that big-time corporate America is less interested in Ivy League students today than it was in the past. It could also be the other way around.