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Changing fields: AIG bonuses as education

BY ADAM SULLIVAN | MARCH 30, 2009 7:40 AM

Most UI business students are fully aware of what life after graduation holds: a slew of employment challenges spawned by the economic crisis that has hogged newspaper headlines for more than six months.

“It’s no secret the job market clearly has become much more difficult for today’s graduates than what it would have been three or four years ago,” said Roger Ferguson, the CEO of TIAA-CREF.
Ferguson delivered a lecture on campus last week outlining challenges the financial sector faces as it tries to claw itself from the grips of economic recession. One of the biggest hurdles, he said, is the recent lack of public confidence in business people.

Many are upset about the sizable bonuses given to executives at companies that have received federal bailout money, Ferguson said. The hallmark: American International Group made plans to pay its executives $165 million in bonuses, even after receiving a $170 billion federal rescue package. A Gallup poll published earlier this month found 59 percent of Americans are personally “outraged” by the bonuses.

“There is a lack of trust and confidence right now in executives across the board,” Ferguson said. “There are a number of things they can learn as lessons. You really have to show leadership in the sense of being very transparent. Anything that you are willing to say and do behind closed doors, you have to be willing to do and say out in the open.”



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For UI business students, the bonus controversy is a lesson in business ethics, said Curt Hunter, the dean of the UI Tippie College of Business.

“For us, it’s a teaching moment. We talk about it in our classes. What’s ethical, what’s not, what’s gray,” Hunter said. “It’s very difficult to teach ethics, but we try to get our kids exposed to the things they’ll face when they get out in the real world.”

Business jobs are hard to come by, he said, but UI alumni are highly coveted.

“Iowa grads are very sought out. A lot of companies, despite having to shed employees, are trying to hang onto their Iowa grads,” Hunter said. “Our students are doing quite well. We stick it out, we work hard, and we deliver.”

Still, the job market is grim.

The national unemployment rate is around 8 percent, according to the U.S. Bureau of Labor Statistics. Iowa’s unemployment rate rests just under 5 percent.

And experts expect those numbers to rise.

Paul Krugman, a Nobel Prize-winning economist, said during a guest lecture a the UI last week he expects the national unemployment rate to surpass 10 percent.

“I’ve actually been thinking about this a lot,” said Wei Bui, a UI junior accounting student. “I think the job market is terrible right now.”

But, he said, he’s taking the right steps to make himself employable after graduation; rather than focusing entirely on being a good on-paper candidate, he believes it’s important to hone people skills.

“I think people get caught up in really hard-core technical skills, and I don’t think they understand how important it is to have really good communication skills,” he said. “People, I think, are focused on their GPAs. They get really good grades and can give you all the answers, but they talk like shit. They can’t communicate at all.”

Ferguson’s advice to combat what could become an even higher unemployment rate is to be flexible and persistent in pursuing a desired career path.

“You’ve got to follow your passions. If you really want to do what it is you’re interested in and have real commitment to it and are ready to work the extra three or four hours in it everyday to become an expert, I believe at the end of a college career you will be able to find a job,” he said. “Because what employers are looking for is ultimately a real passion.”


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