Winners & Losers In The 2011 Financial Times MBA Ranking

Tulane University’s Freeman School

The classical definition of “authoritative” is “able to be trusted as being accurate or true” and “considered to be the best of its kind and unlikely to be improved upon.”

The new 2011 MBA ranking published today (Jan. 31) by the Financial Times hardly meets the test of this definition.

If anything, this survey makes the best possible case for treating rankings not too seriously. After all, what can be said of a survey filled with so many dramatic year-over-year changes that they strain credulity?

A close examination of the big winners and losers in the Financial Times‘ latest survey reveals volatility that is so extreme that it cannot be justified by what has occurred at any of these schools over the past 12 months.(For a more detailed analysis of the FT’s methodology and how the ranked schools fare in other rankings see “Wharton and London First in New 2011 FT Ranking.” Instead, the reshuffling of this B-school deck is the result of differences among ranks that are so miniscule as to be completely meaningless. Exactly how far ahead or behind any given school is in the Financial Times’ survey is impossible to know because the newspaper does not include an index of its total score for each school’s rank.


For the business schools, the Financial Times’ 2011 annual ranking is a wild and out-of-control roller coaster ride. In a single year, more than 40 percent of the sample–at least 40 schools out of 100 listed–had either double-digit increases or decreases in their ranks. Some of the changes are so dramatic, they seem nearly impossible: Tulane University’s Freeman School, for example, fell at least 40 places from 61st in 2010 to off the list of 100 this year. McGill University’s Desautels School of Business jumped 38 places to 57th from 98th in 2010. A dozen schools had changes in ranks of 25 places or more.

And then there are the 14 new schools that made the Financial Times’ 2011 list. Seven of them achieved ranks this year that would have required double-digit increases to make the top 100, including the Indian Institute of Management, which debuted with an 11th place ranking. That means if the IIM just missed last year’s Financial Times’ list and was ranked 101st, it had to jump 90 places to gain a ranking of 11. Apparently, there is an explanation, but it’s not provided by the Financial Times. The school apparently didn’t participate in the survey in 2010. (Some 156 schools completed the FT’s survey this year, though 48 were excluded because of “insufficient alumni data.” That means that fewer than 20% of the alumni surveyed failed to respond to the FT or that fewer than 20 alums responded.)

In comparison, in last year’s BusinessWeek ranking, the biggest swings were represented by the fall of 16 places for University of Maryland’s business school and the rise of six places by Southern Methodist University’s Cox School. These changes occurred over a two-year period because BusinessWeek’s ranking is biennial.

The newspaper attributed IIM’s rise to what it called “impressive salary data, both in terms of  the average three years after graduation ($174,440) and increase in earnings following the MBA (152 percent).” The FT said the compensation numbers were consistent with another part of the newspaper’s methodology–its alums top the list for career advancement, a measure that compares students’ job titles before and three years after the completion of their MBA. The explanation is an unwittingly good example of a problem in ranking schools based on advances in pay (40% of the FT’s ranking is based on two measures–current salary and salary increases three years after graduation).

Most of the IIM’s grads are in one of the two hottest economies in the world. The result: upwardly mobile professionals in India are getting sizable increases in pay and responsibility because of the massive growth in that country’s economy where almost all the IIM grads stay. So the IIM’s rise in the ranking is largely a function of the success of the country’s economy–and not necessarily the MBA program that the FT is evaluating. Indeed, the five schools whose alums had the highest percentage increases in pay all were in Asia. Alums of the Indian School of Business had the largest single increase over the past three years–187% which resulted in a “weighted salary average” of $134,406–that is still nearly $50,000 a year below the reported number ($183,260) for Stanford alums. Alums of CEIBS in Shanghai was next with a 155% increase in three years, followed by IIM’s 152% rise, Hong Kong’s UST Business School with a 142% rise, and the National University of Singapore whose alums reported a 140% increase.


In the Financial Time’s inaugural ranking in 1999, 20 of the top 25 schools were based in the U.S. This year, only 11 of the top 25 business schools are located in the U.S. The FT says that the “diminishing dominance” of U.S.-based schools is partly the result of declining returns on the investment in an MBA, especially in the U.S. In other words, the “diminishing dominance” is not related to the quality of the MBA education or experience provided by a specific school. It’s more directly a function of the economy of a given country in which a school is located. In 2007, the U.S. economy’s gross domestic product grew by only 2%, compared to 11.9% in China and 9% in India. In 2008, the U.S. economy grew by only 1.1%, compared to 9% in China and 7.4% in India. And finally in 2010, the U.S. economy shrank by 2.6%, while China’s economy moved ahead by 9.1% and India by 7.4%. MBA graduates who left school in 2007 and rode this wave of prosperity in China and India obviously benefitted greatly from these vast differences in economic performance.

This is why rankings that put a lot of weight on pay and then mush together schools for different parts of the world are even more problematic than most. They’re not measuring MBA programs as much as they are measuring the economic growth of a country–and the fact that most of these increases are based on much lower starting salaries than those of MBA grads from the best U.S. programs. Evenafter adjusting salaries on the basis of highly controversial Purchasing Power Parity calculations, the FT finds that MBA alums from Stanford ($183,000), Wharton ($171,600), Harvard ($170,200), No. 7 Columbia ($163,400), No. 9 MIT ($158,400), No. 18 Dartmouth ($155,000), and No. 12 Chicago ($151,400) lead all of the FT-ranked schools with the exception of IIM’s $174,400, which is based on a small sample size. In fact, the “weighted salary average” for Tuck alums three years out is $10,000 more than No. 1-ranked London Business School.

Not surprisingly, the most volatility occurs in the bottom half of the top 100 list. The likely reason: the statistical differences among these schools are so small that tiny changes in any of the metrics used by The Financial Times can have a major impact on a school’s rank–though there would be no meaningful change in the MBA program’s quality.

Of the winners in the survey, there are 21 schools that had double-digit increases (see table of the biggest winners on the next page). Besides the huge leap by the Indian Institute of Management in Ahmedabad, there also was a gain of at least 78 places by the National University of Singapore which was ranked 23rd and wasn’t ranked at all last year. The biggest U.S. winner in the Financial Times ranking is Penn State’s Smeal School of Business which jumped by at least 42 places to gain a rank of 59. It was unranked by the FT in 2010.