How Trustworthy Are MBA Rankings?

How Trustworthy Are MBA Rankings?

From a purely academic tool to a mass media opinion-making machine,  MBA rankings have changed dramatically since 1977 when they were first invented. In the beginning it was the Carter Report, whose criteria were limited to the publications of faculties in academic journals. The Ladd & Lipset Survey, which started in the same year, examined how faculties ranked schools, and deans voted for the best programmes in the MBA Magazine, now defunct. But it wasn’t until 1988 when Business Week published its first ranking that the whole game of assessing, criticising, and wooing between business schools and big media really began.

Just like ROI, rankings are a helpful tool if used properly, as they contain a lot of valuable information for applicants. But being critical is useful in this case. The drawback of rankings is inherent in their huge influence, as they tend to overshadow more important factors. Such as, for example, whether a school is really suitable for a candidate, whether it fits his/her career goals, and whether is recognised by the applicants’ preferred industry. Rankings also contribute to the culture of shallow evaluation of business schools. They cannot give all the answers, no matter how exhaustive and detailed they seem to be.

Check out: Which Business School Rankings to Check Out

Salary after graduation

To demonstrate some of the benefits of rankings, we will review one of the most interesting aspects for prospec-tive students  - the change of salary after graduation. For this purpose, we shall rely on the Financial Times’ data. It is no surprise that the schools from the developing world are leaders when it comes to biggest percentage increase. For the last two years the Chinese Shanghai Jiao Tong University: Antai is the champion. In 2015 its graduates saw a 160% boost to their income, compared to their pre-MBA days to 93,690 USD and in 2014 the rise was 166% to 84,890 USD. Chinese schools dominate, and in 2013 all the positions in the top five were from China. China preserved its first four places in 2014, and the fifth was taken by the National University of Singapore Business School. In 2015 the first, Shanghai Jiao Tong University: Antai, is followed by the Chinese Fudan University School of Management and CEIBS. The fourth and fifth positions are for the Indian School of Business and the National University of Singapore Business School respectively.

The way the first places are determined depends on the schools providing good education at reasonable prices and on graduates receiving attractive salaries. Asia, mainly due to the lower income level of countries such as China, also reflects a higher ratio of prior to post MBA salaries. This rule is valid, as a whole, for the booming developing countries and explains the high pay percentage boost we observe. But this is also proof that the industry acknowledges the quality of the good business schools and pays their alumni well. Undoubtedly, the influx of investments into Asia over the last two decades has made it a vibrant place for studying MBA. However, there are some geographical specifics one should be aware of. For example, the top Chinese business schools may be relatively internationalised but the same cannot be said about the situation in the job market in mainland China. In contrast, in Singapore there are more career opportunities for expatriates, especially in line with the scope of the job market.

If we look down this ranking, the last two places are taken by the University of St Gallen in Switzerland and University of Baath School of Management in the UK. The first’s mean salary is 104,891 USD and reports 58% increase in pay, and the second has a salary of 96,846 USD which represents a 55% increase. These are still more than decent numbers and they indicate that one shouldn’t be mesmerised by the huge percentage boost in Asia.

And if we really want to find out who gets the highest pay, we have to go west. According to the 2015 figures for weighted salary, the best paid alumni three years after graduation were those of the “usual suspects”. Disciples of Harvard received almost 180,000 USD, followed closely by the graduates of Stanford, Wharton, and Columbia. Logically, this list is more sustainable than the one for the salary percentage increase. The top five in 2014 reflects the same participants except that Stanford is the leader, Harvard is second, and Kellogg third. Stanford also took first position in 2013 with an average pay of close to 195,000 USD, Harvard was second again, and the rest of the positions were the same as in 2015.

At the bottom of the ranking for weighted salary are Fudan University School of Management in China with about 91,000 USD and McGill University: Desautels in Canada with close to 90,000 USD. It is paradoxical that Fudan was second for salary increase with 148%: in this ranking it is also second - but from the bottom. A great illustration of the combination of impressive development and imbalances so typical for China.

Good old Europe lags behind America significantly in terms of weighted salary three years after graduation. The highest salary (approximately 155,000 USD) went to graduates of INSEAD which ranked 10th, followed by London Business School (about 154,000 USD) at 12th place, IE Business School at 14th place, IMD at 16th, and Cambridge Judge Business School at 18th place with 147,000 USD. One of the reasons for this balance of power is that Americans simply pay more for MBAs. Better handling of the financial and economic problems of the US does not weigh here so much. And should the trend in the currency markets of weak euro and strong dollar prove sustainable, this distinction could deepen even further. However, applicants must take into account that generally the ROI in Europe should be higher than in America, mainly because the degree is shorter. The Old Continent’s other big advantages are that the MBA is more internationalised and that there are greater chances for realisation in the job market.

MBA rankings methodology

The rankings of the Financial Times, Forbes magazine, The Economist, Business Week, The Wall Street Journal, and US News & World Report have gained global recognition over the years. However reputable they are, it would be wise to look not only at the publications, but also at the methodology they are based upon to understand whether they fit with your own preferences. Forbes magazine’s biennial ranking takes into account only the return of investment in the five years after graduation. The Financial Times’ formula includes the weighted salary of MBA graduates (20%); salary increase (another 20%) in the last three years; number of articles by faculty members in academic journals (10%); international mobility (6%); doctoral rank (5%) and faculty with doctorates (5%). Business Week’s methodology relies mainly on the opinion poll of students and corporate recruiters - 45% each. The remaining 10% apply a scholarly criterion - publications in academic journals.

Yet, when choosing a business school, accreditations reflect the quality of education more adequately, as rankings may be compiled from incomplete facts and figures. The main accreditation bodies - EQUIS, managed by the European Foundation for Management Development (EFMD), the Association to Advance Collegiate Schools of Business (AACSB), and the Association of MBAs (AMBA) - certify institutions after a careful review of their academic standards. When a school receives an accreditation it has the obligation to preserve the criteria it was accredited for. This is a more relevant proof of merit than a place in a Top 20 that may simply not exist the following year.

Check out: Why Care about Master’s and MBA Accreditation

This article is original content produced by Advent Group and included in the 2016-2017 annual Access MBA, EMBA  and Masters Guide under the title “Stripes of Fame”. The digital guide file will soon be available for download.


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