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.

  • Interestingly one the top European schools – SDA Bocconi – is entering India in the form of MISB Bocconi next year. This provides an opportunity to Indian students to do an International quality management program in India. This now seems like the way to to go – get an international class education in the country with the super-hot future.

  • sbk1337

    @Question_to_ponder: You’re a bit mistaken.

    FT does not categorize on the basis of the ‘name’ of the program, whether it’s MBA, MS or PGDM. They categorize on the basis of the ‘nature’ of the program.

    The FT MBA rankings are for programs which are similar to an 1 year or 2 year full-time MBA program in the US which accepts only applicants with at least 2 years of work experience, irrespective of whether the program is ‘named’ as MBA or not. On the other hand the MIM category is for programs which differ from the US kind of MBA in that they accept fresh graduates too and mostly prefer applicants with less than 3 years of work experience.

    Now the IIM in ‘this’ FT MBA ranking represents the newer PGPX (Post Grad Program for Executive) program which is of 1 year duration and accepts only applicants with at least 7 years of work experience. So, they ‘qualify’ FT’s ‘criteria’ for being ‘equivalent to an MBA’. Earlier IIM A was not seen in the MBA rankings because PGPX hadn’t completed 10 years from its inception and FT doesn’t consider programs less than 10 years old. However, I remember, IIM’s 50 year old 2-year duration PGPM program, which doesn’t require any minimum amount of work-ex to get in, did make it to the MIM ranking last year.

    ISB, from its inception (I think in the year 2000 or 2001), has only one program, which is a 1-year PGP program, which requires at least 2 years of work experience but more is preferred (the average class has an work-ex of 5yrs). ISB just completed its first 10 years, so they too qualify FT’s definition of ‘MBA’.

    Hope that clears it all.


  • Anne

    As a recent graduate of the USC Marshall School of Business and current student at Manchester Business School, I beg to differ with these ratings. MBS, ranked 29, does not hold a candle to USC, at 64. The education I received is simply no comparison. I rely very heavily on my USC knowledge here in the UK where I am relearning concepts covered in my freshman and sophomore business classes! It truly is sad, but my dad jokes that he is getting a return on his investment. USC’s tuition, after all, could buy a house… I studied abroad during my time at USC as well and returned home very thankful for my experience but it increased my appreciation for USC dramatically. I realize these rankings are based on financial returns in terms of salaries, etc, but as far as a raw educational experience goes, USC outshines Manchester in every way imaginable. Fight on!

  • Zambroda

    I’ve worked with people from IIM and found the majority of them lacking “management” skills. Yes they are numerically good but management is about the combination of analytical and people skills, something IIM grads seem to be missing.

  • Arthur Dullsworthy

    Think of the cost of b-school as insurance for successful 20 somethings against regression to the mean. A form of put!

  • Question_To_ponder

    I dont understand why IIM’s and ISB should be ranked in the global B-School rankings with colleges that give MBAs. Both institutes don’t give an MBA; they give a PGPM(Post graduate in management). Given that FT ranks the other non-MBA giving management schools in the masters in management category, that would be a natural and separate place for them. FT thinks they are smart by comparing Apples with Oranges!

  • Arthur Dullsworthy

    John, I’m aware that FT is looking at the salary bump five years from enrollment. But your argument would only be valid if nearly everyone in India was seeing 152% more income after five years, which implies a compounded growth rate for India’s economy of more than 20%. BBC reports that annual growth as of 8/31/2010 was 8.8% More than 11% less growth than your argument would need. On the other hand, if your argument is that IIM is capturing salary increases available to ALL super smart people in India, I think I could argue that Wharton, Stanford and Harvard are doing just the same. Is it so amazing that Stanford’s class, who enter with an average income of $85,237 (highest average for the entering classes at HSW) are earning $183,260 five years later at age 31? Not if they’re that smart, which may be why the b-schools are a poor investment except for smart people who are risk averse (possibly the definition of being smart in our era). Consider it a form of career insurance at a cost of tuition plus the opportunity cost of two years’ income foregone. In any case, FT’s use of PPP opens the door to consideration of diversity in applicant preference. E.g., if I attend a b-school in Alabama (Manderson?) and end up taking employment there, my income five years after entering b-school may end up north of $200K in NYC money (cost of living in Alabama being far lower than in NYC not to mention the sheer hell of finding a place to live in NYC). FT exploded authority of the ratings because Alabama does make sense. Harvard, Wharton and Stanford probably don’t

  • FT rankings are always most arguable but it is considered as most valuable rankings…I think FT rankings not only based on metrics(salary,placements,alumni) but also based on some instincts of the editorial team of FT….

  • Ian McCarthy

    The FT MBA ranking, like all the other MBA rankings is imperfect and crude, but still somewhat useful.

    In addtion to flaws in the ranking method, I wonder how gaming or the effects of MBA globalism might be fueling the volatility in this league table.

  • Arthur,

    It’s not “the salary jump at IIM” that is counted by the FT. It’s the salary increase that occurs three years after graduation. That increase reflects the growth of the economy and the success of those firms in an economy that affords greater opportunity than one that is contracting. If you’re in a company growing by leaps and bounds, you’re going to greatly benefit. Your annual increases will be larger; you’ll have access to greater mobility and therefore higher pay by virtue of your increasing responsibility. And if just about 100% of your graduates stay in these economies as occurs at a place like IIM the impact of this effect is far greater as well.

  • Arthur Dullsworthy

    I don’t think the rate of growth in India’s economy accounts for the the salary jump at IIM, i.e., you haven’t explained it away. MBAs don’t prosper by going into mature firms in stagnant industries.

  • Reader

    “The new 2011 MBA ranking by the Financial Times hardly meets the test of this definition.” … After reading this statement, I will never give any credibility to FT again.

  • Amandeep Singh

    IIM Ahmedabad didn’t participate in the survey last year. That’s why the name was missing in 2010 list. Next year, we can expect IIM Bangalore and IIM Calcutta as well.