Paris Inc. Ferrari or Twingo?

Michael Segalla, Ph.D. Professor of Management

HEC Paris School of Management

Research Associate Investissements d'Avenir

(ANR-11-IDEX-0003 / Labex Ecodec / ANR-11-LABX-0047)

27 November, 2014 IX Forum for Innovation and Research

Paris – Ile de France Capitale Economique

Questions Why should Paris focus on attracting students and recent graduates starting their careers?

This market segment is more dynamic, creates a critical mass of young people that attract more young people, increases the chance that at least some of them will stay and start their careers here.

Why do you suggest that Paris is not currently the “best” place to start a career?

Earlier this week Paris was named the #1 Student City in the world. This comprehensive ranking clearly indicated the many ways Paris excels. But too many students come to Paris for our great, subsidized education but leave to go elsewhere for their first jobs. London, for example pays more for CCI finance graduates (HEC, ESCP, ESSEC) than Paris. North America pays more for life sciences graduates than Europe.

Two of HEC’s MBA degrees are ranked #1 and #4 in the world. Doesn’t this lead to more MBA recruitment from France?

France is actually doing better for recruitment than the rest of Europe (6% vs 0% growth). But it is still lagging behind almost all the other major MBA recruitment markets. We could do better.

Are lower salaries the only detriment to more recruitment for jobs in Paris?

Salaries might be considered a leading indicator of career opportunity in a company. A firm that can not afford competitive wages to young graduates might not be able to offer them the training and experience they want to fuel their career success. Increasingly, it appears that decision-making is being moved out of France to regional or global HQs. If graduates want to have a real impact on their company’s strategy they often need to leave France.

Your data shows increasing HEC graduate flows to the USA. Isn’t it good to gain experience there and bring it back to Paris?

An international experience is extremely important to career success. Our graduates are intelligent, motivated, multilingual and, we like to believe, well-trained. They quickly move up the career hierarchy and generally have salary levels that match their important responsibilities. The problem is that they are often in posts that are higher than any available in France. Coming home is essentially a demotion.

What changes are needed to attract more students to study in Paris?

Campus France, a unit of the l'Enseignement supérieur and des Affaires étrangères, estimates that 295,000 foreign students come to French schools with each spending about 5,763 Euro per student. Compared with what French students spend in the USA (1,870 Euro) Paris is over-priced, even with schools that have very low tuition rates. We need to bring the price down. Additionally, there are many students that come to privately organised educational programs. Foreign schools often simply rent space, hire their own professors, and directly offer a “summer program” to their students. These appear to be under the radar and represent a significant lost opportunity to keep foreign student in Paris.

What are your recommendations for the French government?

If we think of Paris as a fantastic department store, we should also think about the shoppers who are coming to our store, looking at all our great merchandise, but who walk out without buying. We need to improve our sales ability to attract the talent we want. We need to sell more.

What are your recommendations for French companies?

HEC is producing Ferrari-class managers but firms are driving them like Twingos! Unleash their potential.

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The Products of Paris, Inc.

• What could it sell? – High Culture – anything made before your birth – Low Culture – anything that is fun or exciting – Convenience – everything easy to find and buy – Style – a place of elegance and fashion – Health & Security – a place of safety and medicine – Action – a place to start and grow a business – Education – a place to learn and find experience

• Firms seldom sell to all sectors of a market. They must choose.

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The Customers of Paris, Inc.

• Who does Paris want to attract and retain? – Senior executives and foreign expatriates?

– Accomplished scientists and researchers?

– Artists , writers, and philosophers?

– Younger professionals launching their careers?

– Students beginning their careers?

• What attracts young talent? Not Paris, what Paris can offer. – 88% - Interesting and engaging work

– 84% - Good benefits – including health insurance

– 82% - Secure job

– 81% - Opportunities for promotion

– 77% - Opportunities to learn new skills

– 63% - Geographic Location

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Chao, Georgia T., Philip D. Gardner. 2007. What Do Young Adults Want? Important Characteristics of Early Career Jobs. Michigan State University White Paper for MonsterTrak. http://ceri.msu.edu/publications/pdf/JobChar4-16.pdf

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Real Wages - Paris, Inc. not Great but not Bad

The Economist. 2014. "Doom and gloom: Secular stagnation in Graphics. Nov 19th 2014, 14:15 by THE DATA TEAM http://www.economist.com/blogs/graphicdetail/2014/11/secular-stagnation-graphics

France

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Worker Population - Paris, Inc. not Great but not Bad

France

© 2014 - HEC Paris / Labex Ecodex

The Economist. 2014. "Doom and gloom: Secular stagnation in Graphics. Nov 19th 2014, 14:15 by THE DATA TEAM http://www.economist.com/blogs/graphicdetail/2014/11/secular-stagnation-graphics

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Real GDP - Paris, Inc. not Great but not Bad

France

© 2014 - HEC Paris / Labex Ecodex

The Economist. 2014. "Doom and gloom: Secular stagnation in Graphics. Nov 19th 2014, 14:15 by THE DATA TEAM http://www.economist.com/blogs/graphicdetail/2014/11/secular-stagnation-graphics

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Attracting Talent - Paris, Inc. Sourcing Talent

• MBA graduate demand by firms (increase in 2014) – Asia: 11% Central Europe: 10%

– North America: 10% Latin America: 7%

– Western Europe: 0% France: 6%

• MBA graduate sourcing by European recruiters – Central Europe: 50%

– Global: 36%

– Global Non-EU: 24-34%

Source: TOPMBA Jobs and Salary Trends Report 2014/15 http://www.topmba.com/why-mba/publications/jobs-salary-trends-report-2014-15

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Attracting Talent - Paris, Inc. Paying Talent

• Life Science Salaries in North America & Europe (a)

– In universities: $89k vs $65k – In companies: $130k vs $92k

• MBA Salaries (2014/2013) – North America: $129k (up 15%) – Western Europe: $113k (up 3%)

• French Finance Graduates in London and Paris (b)

– HEC Paris, ESCP, and ESSEC finance graduates earn, €93,526 (average, range €59k - €142k) working in Paris €144,429 (average, range €69k - €247k) working in London

Sources: (a) Madhusoodanan, Jyoti. 2014 Life Sciences Salary Survey. The Scientist. November 1, 2014 http://www.the-scientist.com/?articles.view/articleNo/41316/title/2014-Life-Sciences-Salary-Survey/ (b) Customized Report by Emolument Salary Comparison Report: London – Paris . www.emolument.com, 25/11/2014

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59,230 62,844

93,526109,914

142,117

68,709

89,410

144,429172,267

247,330

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Average Salary of HEC Paris, ESCP, and ESSEC Graduates working in Finance

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Retaining Talent - Paris, Inc. Keeping Talent

• Where is our talent? Where are they going? – 86% current HEC graduates reside in France (a)

– 49% French HEC students plan to reside in France (b)

– 26% non-French HEC students intend to leave France (b)

– 2% (n=856) of HEC’s graduates reside in the USA (a)

– 3% of France’s total population moved to USA since 1960 (c)

– 4.3% average annual increase in HEC graduates moving to the USA

since 2000 (b)

• 28% of the world’s top young economists are French (d)

– How many live or work in Paris? ONE

Sources: a) HEC Alumni Association, b) HEC IPAS Survey, c) Migration Policy Institute, d) France 24 - http://www.france24.com/en/20140829-france-top-economists-young-imf-list-piketty-duflo/

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Career Junction – Paris, Inc. A waypoint not the destination

More from France than to France

More to Anglophonia

than from Anglophonia

Segalla, Michael. 2014. HEC Paris International Preferred Attributes Survey 2004 - 2014. N=2,862

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Attracting Talent - Paris, Inc. Job Opportunity and Salary

• Job and Salary Data Analysis

– Paris is the #1 student city in the world (a)

– North America: More Jobs, Higher Pay, Lower Tax

– France: Fewer Jobs, Lower Pay, Higher Tax

– Paris will lose the talent it trains if it does not offer competitive job opportunities and salary

– Secure careers must be based on competitive jobs

Sources: a) QS Best Student Cities 2015 http://www.topuniversities.com/city-rankings/2015#sorting=rank+custom=rank+order=desc+search=

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Market Share - Paris, Inc.

• Why attract more students to France? – $27 billion spent in USA by foreign students in 2014 – 340,000 jobs were created by this spending in USA – 505,608 USA students went to the UK since 1997 – 128,532 French went the USA to study since 1996 – $287 million spent by French students in America

• Foreign students in France spend – France is currently the 4th destination for American

students (UK, Italy, Spain, France, China) – 242,445 USA students came to France since 1996 – €1.7 billion

Sources: a) Institute of International Education, Open Doors Data, 2012, 2013, 2014. http://iie.org/Research-and-Publications/Open-Doors/Data/International-Students/Leading-Places-of-Origin ; U.S. Department of Commerce; Campus France, Le Point, 26/11/2014.

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Recommendations - Paris, Inc.

• Increase university recruitment activity and resources – 78% of surveyed universities gained international market share by

increasing recruitment activities • 71% through greater visibility and growing reputation • 41% through more inter-university linkages • 28% due to less restrictions for student visas

• Reduce disincentives to stay in Paris after graduation – 38% lost recruits because of too little support staff and resources – 35% lost recruits by visa delays / restrictions

• Offer something extra – 28% of surveyed universities are engaging their alumni networks – Recruit in growing markets (42% China, 27% India, 26% Brazil) – Create a “reverse VIE” by offering an automatic summer-work visa to

all students studying in Paris, not only a French university like the VLS-TS extended stay visa. Source: Institute of International Education, Fall 2014 International Student Enrollment Survey

http://iie.org/Research-and-Publications/Open-Doors/Data/Online-Enrollment-Survey-Reports

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Sell the Future Not the Past

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Bibliography and Data Sources • BAMAT, Joseph and Sébastian SEIBT. 2014-08-29. France shines in IMF list of world’s promising economists.

France 24 - http://www.france24.com/en/20140829-france-top-economists-young-imf-list-piketty-duflo/

• “25 Top Economists under 45” http://www.imf.org/external/pubs/ft/fandd/2014/09/25under45.htm

• French tax simulator by Le Figaro http://www.lefigaro.fr/simulation-impot-sur-le-revenu/

• American tax simulator by tax calculator.org ttp://www.taxcalculator.org/?gclid=CJyK4tOaj8ICFS0Q7AodmEwAbg

• The Economist. 2014. "Doom and gloom: Secular stagnation in Graphics. Nov 19th 2014, 14:15 by THE DATA TEAM http://www.economist.com/blogs/graphicdetail/2014/11/secular-stagnation-graphics

• TOP MBA Jobs and Salary Trends Report 2014/15. http://www.topmba.com/why-mba/publications/jobs-salary-trends-report-2014-15

• Customized Salary Comparison Report: London – Paris www.emolument.com, 25/11/2014

• Madhusoodanan, Jyoti. 2014 Life Sciences Salary Survey. The Scientist. November 1, 2014 http://www.the-scientist.com/?articles.view/articleNo/41316/title/2014-Life-Sciences-Salary-Survey/

• HEC Alumni Association. Annuaire 2009-2010. http://www.hecalumni.fr/en

• Segalla, Michael. 2014. International Preferred Attributes Survey. http://msforms.hec.fr/html/ipas2014-a.htm

• Migration Policy Institute. Legal Immigration to the United States, 1820-Present. http://www.migrationpolicy.org/programs/data-hub/charts/Annual-Number-of-US-Legal-Permanent-Residents?width=1000&height=850&iframe=true

• Le Point . 26/11/2014 à 16:1 5. Les étudiants étrangers peuvent rapporter gros. http://www.lepoint.fr/economie/les-etudiants-etrangers-peuvent-rapporter-gros-26-11-2014-1884715_28.php

• Chao, Georgia T., Philip D. Gardner. 2007. What Do Young Adults Want? Important Characteristics of Early Career Jobs. Michigan State University White Paper. http://ceri.msu.edu/publications/pdf/JobChar4-16.pdf

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