INVESTING IN AN MBA
How much will it cost?
Is it is good investment?
Will it pay-off for me?
posted by MBAblogger @ 8:26 AM
2 comments
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Friday, April 29, 2005
Is it is good investment?
Will it pay-off for me?
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2 Comments:
When there were relatively few MBA programs around there would be no doubt of the answer to this question – of course an MBA was a good investment as it was almost certain to have a positive impact on salary both immediately and also in the longer term. Then, even though the investment was considerable, it was fairly clear that it was a good price to pay for the benefits obtained. Now – so the argument goes – there are so many MBA programs throughout the world that any exclusivity is lost and MBAs are ‘two a penny’. The counter argument to this of course is that as more and more people get MBAs you cannot afford to be one of the few without one as this would put you at a disadvantage in competing for jobs. This is the ‘necessity’ rather than an advantage‘ argument.
Lets look at two assumptions here:-
Firstly is the benefit of an MBA mainly to do with salary? Obviously not – as there are other things to gain, e.g more mobile career, greater career choice, more satisfying job, networking opportunities, intellectual stimulation etc. However for most people salary is one measure. They expect to get some salary benefit, i.e to earn more in their lifetime with an MBA than they would have without, and for them the some noticeable benefit in the short term is important.
Second point. Is this what MBA programs aim to deliver? Its certainly one aspect of the offering for full time programs - hence some of the Rankings take salary increase as a measure when judging programs and Schools, and Schools provide the data. Its not however the same for part time and executive programs as they are intended for people in employment, and it is not in the interest of the Schools to suggest or to provide evidence that graduates from such programs go on to other jobs at a higher salary on completion. Sure, such graduates may get better paid jobs within their present company, but especially when a company sponsors one on such a course it is not likely that they will be guaranteeing promotion, so Schools tend not to see salary are a main pay-off for such programs. Much the same will apply for distance and on-line programs as most of the people following them are in employment. In some cases their participation in the program will be known to their current employer – and some times not. Even so, Schools tend not to emphasize the salary benefit for such programs, to avoid giving companies that do sponsor students on them the impression that they run the risk of loosing them to a higher paying job elsewhere at the end.
So, we are talking essentially about full time programs, for which the cost to the participant (fees + materials/books + accommodation + living costs + travel + loss of salary) is higher and the hoped for salary benefit is more important and more urgent.
There will be a tendency to assume that the major financial benefit will come from obtaining an MBA from one of the major Schools. This is doubtless true as such Schools retain their reputation and ‘cachet’ even in a crowded market, whereas lesser Schools do not stand out from the crowd. But this is just part of the story as lesser Schools can also give significant financial boost. Study of the major rankings support this view. Take for example the Jan 2005 Financial Times ranking of full time programs. In the Americas the highest % increase in salary was for IPADE – a Mexican School. It had a 199% increase compared to Yale at 174% and Columbia at 173% – (ranked 2nd and 3rd for salary increase). Consider also CEIBS – a Chinese School with an increase of 191% . This compares, for example, to Harvard at 140% which is not in the top 10 North American Schools, unlike Brigham Young University which was ranked 4th. So, it is not a straightforward picture. However it is probably a good rule of thumb to assume that major Schools generally do well on this score, but also others do well in special circumstances. What are those circumstances?
People who obtain an MBA – from pretty well anywhere - who are in a country where MBAs are not common, should do well. Major Schools in countries were there are few Business Schools offering MBAs could provide significant salary benefits. Clearly (as the FT point out) Country of work is as important as place of origin of qualification.
Taken for the Financial Times (Jan 2005), these are rankings of Schools based only on the % salary increase (comparing salary on start of MBA to 3 years later) measure:
NORTH AMERICA:
IPADE
Yale
Columbia
Brigham Young,Marriott
Virginia Tech
Dartmouth, Tuck
Univ of Chicago
Notre Dame,Mendoza
Rochester,Simon
Vanderbilt,Owen
EUROPE:
IESE
ESADE
Instituto Empresa
London
Bocconi
Manchester
Lancaster
Rotterdam
HEC Paris
Oxford,Said
ASIA PACIFIC:
CEIBS (China)
Chinese Univ of Hong Kong
Coppead (Brazil)
Hong Kong Univ of Science and Tech
Cape Town
Melbourne
Aus Grad School of Management
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