New Research Indicates Which MBA Programs Offer Greatest ROI
How much of a difference does the name of
the business school on your resume really make?
Here at AdmissionsConsultants we
asked ourselves that question as we were researching our
book: Top MBA Programs: Finding the Best
Business School for You. In order to answer the
question we decided to ask those people who have the
most influence over MBA graduates' post-business school
careers: corporate recruiters.
We created over 2,800 composite
resumes for second-year MBA students with
backgrounds in accounting, biotech, consulting,
engineering, financial analysis, information technology,
investment banking, public sector, real estate, supply
chain management, and underwriting. Then, we
regionalized each composite, in other words, we changed
each resume's undergraduate school and employer
locations so they represented the 10 regions defined by
the MBA Career Services Council's Standards for
Reporting MBA Employment Statistics. These
fictionalized graduating students had identical
undergraduate schools, grades, extracurricular
activities, foreign language skills, fictitious
employers, and job accomplishments. The only thing which
was truly different about our composites was the name of
the business school they had attended.
We asked recruiters from all over
the world to estimate how much each "candidate" could
earn in his first job after business school. The
results, from well over 300 recruiters, demonstrate to
what extent a program's "name brand recognition"
influences future career prospects and compensation.
Indeed, we found, the school name made a great deal of
difference – as demonstrated in this chart. The
difference between a highly competitive school and a
less competitive top-tier school was nearly $20,000
across the board.
In other words, even when
controlling for factors such as undergraduate schooling
and work experience, the resumes with the top schools'
names commanded a significant premium in the workplace.
We believe that this premium could increase in a
stronger economy when employers have larger payroll
budgets. To quote one recruiter from the United Kingdom,
"12-18 months ago I would have expected that these
candidates would have been able to add £10,000 - £15,000
to their starting salary and their background prior to
the Masters would have been less important." Clearly, in
any economy, the reputation of your MBA program has a
significant impact on your future.
We had many other findings from this study.
All of our graphs, including those for each of
the 10 regions and various job functions, show similar
nonsymmetrical skews, i.e. the very top school names are
further above the mean and median than the very bottom
school names are below the mean and median.
All 31 schools profiled in
Top MBA Programs
are very highly regarded, representing the crème de la
crème of graduate business educational programs. For
comparison purposes the survey also included some
composites of graduating MBAs from some less prestigious
2-year. Students from these less competitive business
schools earned an average of 20% less than any of the 31
schools listed here. (See graph below.)
Candidates who pursue a career in a highly
competitive field such as strategy consulting,
investment banking, private equity, or venture capital,
will most certainly benefit from attending one of the
very top business schools. We heard repeated comments
about consulting and I banking composites who were
attending the least selective of our 31 profiled
Recruiters give advantages to candidates who had
already lived or worked in the same geographic region as
the job they are applying for. Each composite resume
reflected interest in a specific region by listing
summer internships, undergraduate schools, and pre-MBA
employment in the same geographic region. Most MBA
students find it easiest to secure a summer internship
in the same region as their MBA program. (Approximately
half of second-year students find their positions
through their career services office.) Hence, our
composite resumes may not have been entirely accurate in
portraying the chances of getting back to the region to
actually compare the relative value of the b-school
The saying goes:
"You're only as good as your
last position." The survey saw that truism come into
play repeatedly, particularly for the "candidate" with a
public sector background. However, this was also the
candidate who received the biggest increase in salary
with a Harvard MBA: a whopping 55% higher salary than
with the least competitive school's degree. This
difference suggests that highly competitive schools give
their graduates the greatest "fresh start value"
following a low-paying pre-MBA job.
Although some regional differences remain, the
rapid spread of information through the Internet and the
increasing transiency of the workforce have lessened the
importance of geographical differences among the top MBA
We believe that our average salaries are a bit
lower than those reported by the schools for a few
reasons: (1) our averages reflect an equal weight from
each of the ten regions as defined by the MBA Career
Services Council's Standards for Reporting MBA
Employment Statistics, (2) we reached out to
recruiters beyond the ones who come to these schools'
campuses in full force each year. However, while these
recruiters are going to place a lower value on these
graduates, we steadfastly believe that the relative
value on the b-school brand names remains constant.
We don't believe for even a minute that this
study quantifies the full difference between the
educations offered at the top MBA programs. For
starters, the differences in alumni networks and
opportunities, particularly in highly competitive fields
such as strategy consulting and private equity were not
captured in our study.
two more factoids that shouldn't surprise anyone: There
is no one perfect resume format and the recruiters did
rather consistently comment that they liked the
composites with the most job continuity.
book, Top MBA Programs: Finding the Best Business
School for You, gives business school applicants
advice about the admission process and choosing their
best fit MBA program. It also provides in-depth
descriptions on 31 top schools. Finally, Top MBA
Programs contains an interactive school selection
tool on an accompanying CD-ROM that allows users to
build their own customizable rankings. The CD-ROM offers
over 80 selection criteria to its users. Information
gleaned from this study on recruitability by region and
industry is also included in this school selection tool.
Such a resource is doubly valuable to MBA applicants
since the corporate recruiter study demonstrates how
much a business school's name matters.
you find our research helpful in your b-school selection
and admission process. If you have any questions about
our study, our book, or if you just want to discuss your
profile or bounce a question off us, please don't
hesitate to call us at 1.800.809.0800 (+1 703.242.5885
outside the US and Canada). We're here to help
and we look forward to speaking with you soon!