It has been nearly a decade since disgruntled School of Management alumni hired a pilot to fly a banner proclaiming “15 Lousy Years” over the Yale Bowl during a Yale-Harvard football game. The students were voicing their frustration at then-SOM Dean Michael Levine, whom alumni and students accused of trying to convert the innovative business school into a traditional cookie-cutter institution.
Throughout its 23-year history, the School of Management has been a powerhouse for students aspiring to head non-profit groups or governmental bodies in need of business-minded leaders. Among consulting firms, investment banks and private corporations, however, the school, which used to be called the School of Organization and Management and used to offer a master’s of private and public management degree instead of the more common master’s of business administration, has been traditionally stigmatized by a lackluster reputation.
Levine’s attempts to reform the school fell short. But a decade later, under the helm of new dean Jeffrey Garten, a former Lehman Brothers managing director who boasts 13 years of Wall Street experience, the School of Management is finally catching the attention of the corporate world, with starting salaries increasing and new consulting firms recruiting on campus each year. In a year SOM has has jumped from 16th to 12th in U.S. News and World Report magazine’s rankings of America’s best business schools and has, since 1996, crept up from 22nd to 20th to 19th in Business Week magazine’s rankings.
But now some SOM students, alumni and faculty are concerned that the school’s legacy as a public-sector powerhouse could potentially be swept away by the movement towards traditional business training. These reforms, they worry, could leave SOM as nothing more than a safety school for future consultants and investment bankers who have their eyes set on more reputable schools like the University of Pennsylvania’s Wharton School or Harvard Business School.
Garten said the new changes in the school seek to supplement the school’s public and non-profit management legacy, but some students find it difficult to see recent changes in the same light.
“Part of the problem with a school looking to move up in the rankings is that there’s a certain sector of the business community who see non-profit as a sideshow, or even an opposition, to being a top-notch business school,” said Daniel Gottlieb SOM ’01, who heads SOM’s not-for-profit management student interest group. “So the school is taking some pains to distance itself from [non-profit].”
Twenty-three years in the making
When the Yale School of Organization and Management opened its doors in 1978, it differentiated itself from other business schools immediately, professing: “Our mission is to educate leaders for business and society.” The school’s emphasis on socially conscious ways of conducting business defined the new professional school in its early years.
Developing a first-rate program in not-for-profit management allowed the new business school to carve itself a niche in the business school community. It did not take long for the school to fulfill its goals on the not-for-profit front.
“I think that idea was there at the beginning,” said SOM professor Douglas Rae. “By the mid ’80s, with [prominent professor] Sharon Oster at the center of that part of the school, we had become prominent in non-profit management.”
By the mid-1990s SOM gained a stranglehold on the number-one ranking in U.S. World and News Report’s not-for-profit management index.
But other components of the school had not increased as steadily in reputation. When Michael Levine accepted the school’s deanship in 1990, the two camps that had formed in the school — which were academically centered on the disciplines of operations research and organizational behavior — had a series of clashes that would mire the school in administrative limbo for the next five years.
Levine left in a huff in 1993, leaving the School of Management bruised and without a dean until Jeffrey Garten filled the breach in 1995.
Progress under Garten
Garten’s push to make SOM more attractive to private-sector recruiters has been extensive.
In 1996, Garten set up the Yale School of Management Advisory Board, which brought business leaders like the chief executive officer of AT&T Corp., the chairman of the New York Stock Exchange and the president of Goldman Sachs Group Inc. to advise the School of Management.
Students and faculty said that Garten’s ability to market the school personally to the business world is also contributing to SOM’s rising reputation.
“Garten has a lot of connections and he’s brought a lot interesting people to campus,” Cebra Graves SOM ’02 said.
Garten has made use of connections he established with major corporate leaders through his experience as President Bill Clinton’s undersecretary of commerce for international trade from 1993 to 1995 and as a managing director for Lehman Brothers.
He has established the Leaders Forum, a popular program that brought Dell Computer Corp.’s Michael Dell and Ford Motor Company’s William C. Ford Jr. to campus this year. Garten also writes a weekly column for Business Week on major challenges facing global business leaders.
In addition to highlighting the school’s name in the marketplace, Garten has helped institute changes that make it easier for students to access the corporate world. In 1998, the master’s of private and public management degree was converted to an MBA to eliminate the inconvenience of graduates having to explain to recruiters that their degree represented an MBA education.
In terms of allocating financial resources, Garten has also focused on boosting the traditional business school aspects of the school.
In 1998, Garten opened the doors to the new International Center for Finance, which administrators hope will establish SOM and Yale as bastions of financial research. Four of seven of new senior faculty hires in the past three years. have been in finance
The results are telling. The admissions office reports that since 1995, applications have grown by 75 percent, contrasting against recent trends of dropping applications experienced by other business schools. Its applications have increased to 2,446 for a school that enrolls only about 200 students each year. The admissions rate has plummeted from 30.9 percent to 17 percent.
The career development office reports that the number of firms recruiting on campus has grown 63 percent, with top firms McKinsey and Co. and Booz Allen and Hamilton hiring a record number of SOM graduates.
Students ask: What about non-profit?
But these numbers do not address the fact that a significant portion of the School of Management student body considers not-for-profit management a high priority.
In their summer internships — which are required for graduation — 7 to 15 percent of the student body worked for non-profit organizations, an unusual number for MBA programs.
Some members of this contingent feel non-profit interests have been excluded from the administration’s recent activity.
“The money line is that being the best business school in the world at non-profit [management] is not going to help [our rankings],” Gottlieb said.
Students expressed concern that the school is marketing its formal business curriculum at the expense of its non-profit and public management programs.
“What’s really going on is that the current dean is focused on marketing the school as an MBA program,” Graves said.
Graves asked how far the push to create a more traditional business school will go.
“We can put in a lot of money in for finance, but there’s the University of Chicago, and Wharton, and Columbia, and they’re all in [big cities]. We’re never going to be one of those schools,” he said. “But the way things are going, it seems that there is a possibility of losing our top status as a strong non-profit management institution.”
While Gottlieb said he is particularly frustrated by what he considers the school’s inattention to the public sector because not-for-profit is his prime interest, some students who plan on going into the private sector are also concerned about the new changes.
“There seems to be a mainstreaming of the school in many degrees,” said Graves, who will work for the Boston Consulting Group next year. “And there is some frustration at the student level.”
Graves said that the diverse interests of SOM’s student body helped attract him to the school.
“A lot of the students who came to SOM, even those in for-profit, came to be around students from other walks of life,” Graves said.
Currently, about 15 percent of incoming students come to the SOM from the government sector and 15 percent from the non-profit arena. But Graves expressed a fear that as the school becomes more focused on the for-profit sector, the school may attract more for-profit-oriented students at the expense of students interested in non-profit.
“I get a gut feel that we’re attracting more applications from people interested in for-profit management,” Graves said.
But Garten said that SOM is trying to make new additions to the non-profit program at Yale.
“It is my hope that we can add some new [courses in non-profit and public management], because I very much believe in the value of this kind of teaching,” he said. “We are also making an effort to include more cases of management challenges in the non-profit and public sectors in all of our courses.”
Garten said Nathaniel Leventhal, who just retired as president of the Lincoln Center, will come to SOM next year to teach a course on the management of non-profit institutions. But Garten said that first and foremost, he wants SOM to be a first-rate school for teaching business fundamentals.
“Every student must focus on acquiring hard-edge business skills in areas such as finance, accounting, organizational behavior, marketing, operations and strategy,” he said. “I believe, as someone who has worked in the government, and the non-profit arena, and on Wall Street, that these skills are the prerequisite for success in any sector, and therefore this has to be our primary mission.”
Some students also feel that because the School of Management has held onto the number-one ranking for non-profit management for over five years, improvements in other sectors are the logical next steps in building a stronger SOM.
“Because our non-profit is already strong, there’s no need [to direct our attention specifically towards it],” Mark Salierno SOM ’02 said. “There’s a nice balance.”
Some faculty members even feel that recent administrative actions over the past five years do not translate into a change in focus of what is important to teach and what is not.
“I’ve heard for many years this kind of story,” said William Goetzmann, director of SOM’s International Center for Finance. “But I’ve lived through all of these processes as an undergraduate, as an MPPM student, as a doctoral student, and as a faculty member, and there was no golden age when there were lots of offers for not-for-profit management – that has been eroded away.”
Gottlieb, however, said that the school’s curricula could use improvement.
“From a curriculum standpoint the offerings are pretty slim,” he said. With Sharon Oster on sabbatical, Gottlieb could name only three courses offered this year addressing the non-profit sector — one on the intricacies of non-profit accounting, one on managing an endowment, and a third on marketing services rather than goods.
The non-profit program at Yale needs more coordination, Gottlieb said.
“The curriculum right now is a hodge-podge,” Gottlieb said. “There’s no way of knowing, and there’s no way for me to tell a prospective student interested in non-profit, that if you come here, you’re going to learn the X,Y, and Z [of this field].”
Faculty members said they have also been discussing the tension between non-private sector and private-sector approaches to teaching business.
“There are differences of major emphasis among different faculty here, just as in departments of any major university,” Rae said.
Garten said that he doesn’t want to set up a separate non-profit concentration, and instead wants to integrate public management into all SOM courses.