Boost to earnings from MBAs falls

Boost to earnings from MBAs fallsThe MBA degree, once seen as the quickest route to a fat salary, no longer delivers quite the financial fillip it once did.

In spite of a return to economic growth, the financial returns from completing a full-time MBA have fallen over the past three years and while a graduate can still expect to nearly double their salary, the average boost to earnings is down by almost a third from the qualification’s heyday. This is particularly true in the US, home to 50 of the world’s top 100 business schools, where there is growing disaffection with the qualification on the part of both employers and potential students.

Since the financial crash of 2008, many would-be MBAs have been reluctant to give up a secure job in order to go to business school, which frequently costs well over a hundred thousand dollars in terms of fees, living costs and lost salary. Many believe the returns no longer justify the investment.

The result has been that while the top few business schools go from strength to strength — Stanford Graduate School of Business in California, for example, admits just 6.5 per cent of applicants — those lower down the rankings, with fewer resources, are floundering. “Students say that if they can get into a top school they will go. If not, they won’t,” says Garth Saloner, dean of Stanford, ranked fourth in the world this year, behind Harvard Business School, London Business School and the Wharton school at the University of Pennsylvania.

The past year has already seen several second-tier schools close down their full-time programmes as application numbers dwindle. More are expected to follow, says Alison Davis-Blake, dean of Michigan Ross business school, as programmes become economically unviable. “The segment of the market that is healthy is quite small.”

Recruiters are increasingly hiring more people from pre-experience masters programmes, whereas MBA students typically have several years’ professional experience under their belts and expect to command higher salaries. According to the 2014 recruiter survey from the Graduate Management Admissions Council (GMAC), those who have studied on specialised programmes in finance, accounting and management are particularly in demand...


Read full story: Financial Times

Leave a Reply

Your email address will not be published. Required fields are marked *