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Grads falling victim to 'blow-up offers'

Firms renege on job offers amid weak economy

Geeta Gupta's California dream ended abruptly. The Massachusetts Institute of Technology senior had the credentials to get the job she wanted, where she wanted it, in Silicon Valley. By graduation, having discarded various employment options, she accepted an offer to be an analyst for a small consulting firm there.

Things unraveled fast. A month after MIT's June 9 commencement, R.B. Webber & Co. delayed her Aug. 4 start date. The final blow was delivered at the end of July by a partner at the firm who called her parents' New Jersey home. "I said, `Basically, you're telling me I don't have a job?' " Gupta recalled saying to the partner as she absorbed the news. "The phone conversation was less than half a minute long. I was so shocked I didn't know what to say."

Employers whose financial fortunes sour suddenly have in recent years yanked supposedly firm job offers from new graduates, leaving even those from top-drawer schools such as MIT, Harvard University and Stanford University in the lurch and forced to find other employment. These "blow-up offers," as college administrators call them, are continuing fallout from a US job market that shrinks, month after month, and they disrupt the well-laid plans of aspiring lawyers, consultants, or executives.

"If you're in the job market, and you gave up your job search early based on good faith the company will honor it and then, in April or May, they pulled the plug, you're not going to be very forgiving," said Daniel Nagy, associate dean at Duke University's Fuqua School of Business. "You and I both know this is business if you're hemorrhaging money," he said, but "some [employers] didn't need to do it quite like they did."

A survey Nagy conducted found that 2 percent of 2003 graduates at 10 leading business schools nationwide, from the Tuck School of Business at Dartmouth College to the Haas School of Business at the University of California, Berkeley, said their prospective employers reneged on job offers after they had accepted them.

Gupta's situation was unavoidable: Her prospective employer went out of business, a partner confirmed. But Gupta, an aerospace engineering major who had been pursued by employers during MIT's yearly recruitment season, suddenly found herself scrambling for another position. R.B. Webber also withdrew its offers to other graduates, she said. Gupta recently began working at Accenture consulting, in the Wellesley office.

Withdrawn offers reached a near-crisis at some US colleges following the stock market's collapse, which also caused on-campus hiring overall to plunge by one-third in the 2001-02 academic year. Vanishing dot-coms and major employers such as Cisco Systems, Dell Inc., and now-defunct Arthur Andersen accounting reneged on job offers to hundreds of 2001 and 2002 graduates.

The number of withdrawn offers has slowed amid a general decline in on-campus recruiting. Employers that are hiring may select one or two graduates per campus, rather than, say, a dozen recruits in past years. Many employers pulled out altogether, others cut way back.

But "blow-up offers" persist, often among law or consulting firms that cater to the high-tech industry. The number of offers withdrawn from 2003 graduates was "enough to raise concern," said Duke's Nagy. The past few years has been the worst job market campus administrators can remember for their graduates, who, according to the US Bureau of Labor Statistics, enter a job market with 10 percent unemployment in their age group.

Reneging on an offer causes tensions with campus career administrators. To maintain good relations with campus contacts, employers often compensate disappointed graduates, giving them several weeks' severance, reimbursing moving costs, or allowing them to keep signing bonuses. A prestigious institution such as Harvard Business School can exert considerable influence to pressure an employer to reinstate an offer.

"The school has stepped in when there was a feeling something was amiss to try to find out what's happened," said Jim Aisner, Harvard Business School spokesman. In extreme cases, he said, employers might be banned from recruiting on campus the following year. Withdrawn offers were rare among Harvard's 2003 MBA graduates, "but when this does occur, we take that seriously and then look at each incident on a case-by-case basis."

Reneging "incurs a lot of ill will" among campus officials, in part because it is traumatic for the young people, said Robert Taggart, associate dean for the MBA program at Carroll School of Management at Boston College. "It's particularly tough for the undergraduates -- it's their first real job and to all of a sudden be faced with something like that."

The Boston law firm of Testa, Hurwitz & Thibeault upset the future plans of Daniel Flynn, Boston College Law School class of 2002. He had barely settled into his $135,000-a-year job as corporate associate for Testa, Hurwitz when he was laid off in January, after a few months on the job, as part of a companywide layoff of 34 new associates. Flynn recalled a partner came into his office, shut the door and said, "We hoped the economy would pick up but it hasn't so we're going to let you go."

Flynn and his wife got by financially. What was more difficult was he had begun his third year feeling confident his job after graduation would be set at Testa. "When you're in law school, you have great access to recruiting. Then when I was laid off, I was all of a sudden a lawyer without the access to the campus recruiting cycle," he said.

Testa, Hurwitz's layoff was the only one in its history, and partner William Schnoor said it was a last resort. On college campuses, he added, "We're very mindful of the importance of our reputation as a great place to work."

Things worked out for Flynn: In May, he accepted a position as a litigator at a rare Boston law firm that is expanding, Donovan Hatem LLP; he was among 26 additional lawyers hired by the firm.

The job market for graduates isn't the disaster it was two years ago but it faces a long recovery. Gupta's unfortunate experience was rare last year at MIT which saw employers withdraw offers from about 20 graduates in 2001, said Deborah Liverman, assistant director in the engineering school. "At a place like MIT, the students will still get jobs," she said. "The difference is that before they'd have three or four job offers and decide between them. Now they get one job offer, and they take it."

Kimberly Blanton can be reached at blanton@globe.com.

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