How Yale SOM Climbed Into The Top Ten

by John A. Byrne on

The new home of Yale University's School of Management: Evans Hall. Photo by Chris Choi

The new home of Yale University’s School of Management: Evans Hall. Photo by Chris Choi

Yale University’s School of Management came out a big winner in this week’s Financial Times‘ 2014 Global MBA ranking. The school climbed four places to finish in the world’s Top Ten for the first time in seven years. Even more impressive, SOM has soared a total of ten places in the past 24 months. In 2012, just before the arrival of new Dean Edward “Ted” Snyder, the school languished in in a three-way tie for 20th place, with the Indian School of Business and the University of Oxford.

What’s behind the vastly improved performance? The answer to that question turns out to be far more revealing about school rankings than it is about Yale SOM. One of the great mysteries of any ranking is what causes a business school to move up or down the list. When there are few metrics used to crank out numerical rankings, it’s much easier to figure out why a school’s performance improved or declined. But when there are many metrics–like the 20 different measurements that go into the FT ranking–it can be complete guesswork.

Nonetheless, consider this: Yale moved up four spots, even though it actually lost ground in nearly half–nine out of 20–of the metrics used by The Financial Times to rank full-time MBA programs. In only seven of the 20 categories did Yale show an improvement (in four metrics the school’s performance was equal to its last ranking). What’s more, the nine metrics in which Yale performed more poorly are weighed a formidable 68% in the methodology. The weight of the improved metrics represents just 22% of the total ranking. Still, Yale’s back in the Top Ten hunt.

DOWN IN ALUMNI SALARIES, INCREASES IN PAY, AND JOB EMPLOYMENT

The statistical alchemy that leads to this counter-intuitive result is beyond reasonable explanation. That’s especially so because the schools near the top of a ranking tend to be far more entrenched than those toward the middle or the bottom. This is because the differences in the underlying scores for schools are usually greater at the top than they are toward the bottom where they are so bunched together that many numerical ranks are statistically insignificant. So it should take meaningful changes to impact a school’s Top Ten rank.

In the most important components of the Financial Times’ ranking–compensation and placement–Yale was down in all four key measurements (see our comparison table on the following page). The school’s “weighted salary” for alumni three years after graduation–accounting for a fifth of the entire ranking–fell by nearly $8,500 to $150,880 from $159,370. The increase over pre-MBA salaries for alumni was 114%, four percentage points lower than the 118% a year earlier and ten full percentage points below the 124% increase in 2012 when Yale ranked 20th. Yet, salary increases are given a hefty 20% weight in the rankings methodology.

And the school’s “value for money” rank fell by three places to 83rd out of the top 100 ranked schools from 80th a year ago. The percentage of the latest graduating class that was employed three months after graduation fell last year to 85% from 86% a year earlier and 91% in 2012.

SIGNIFICANT GAINS ON THE FT’S INTERNATIONAL METRICS

Yale SOM also fell slightly in another key criteria: faculty research, which accounts for 10% of the ranking. The school’s FT rank on research published in 45 academic and practitioner journals was 23rd, down four places from 19th in 2013. Yale also was slightly down in “doctoral rank”–the number of doctoral graduates from a school in the past three years; the percentage of international faculty at the school, the percentage of women on the school’s advisory board, and the “aims achieved” rank–the extent to which alumni fulfilled their stated goals or reasons for doing an MBA.

Obviously, it wasn’t all bad news–otherwise Yale could not have gained four places, right? That’s true. The school’s “career progress rank”–calculated according to changes in the level of seniority and the size of company alumni are working in now versus before their MBA studies–jumped by 12 places to 20 from 32. The number of female students and faculty also is up.

The biggest gains in the FT metrics occurred on the international side and are in fact a reflection of the school’s new strategy under Dean Snyder. Among other things, he created a novel partnership of nearly two dozen business schools across the world that share research, teaching materials and students called the Global Network For Advanced Management. And Snyder also created a new one-year master’s program for MBA graduates of schools that are network members.

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  • Applicant

    Assuming there is a numerical formula to the FT rankings, it’s pretty safe to say that the schools Yale leapfrogged must have been also seen some key metrics drop (likely even more so). Historical trending doesn’t tell a complete story – a proper analysis should include benchmarking vs. a comparable school in rankings – i.e. Haas in this case.

  • Rely

    Seriously.. Does anyone really consider Yale som a top 10 school? It’s a top 20 school..

  • Raleigh

    Relax, sport.

  • OhDenny

    Yes, the FINANCIAL TIMES.

  • Interesant

    The US News two years ago also did consider Yale SOM a top 10 school. It seems they have the momentum going in favor of them and it may go beyond top 10 at this rate?

  • Renault

    Well, I guess you could make a case that they’re #10.

  • guysmiley

    Top 10 in the world or top 10 in the US? I’m pretty sure Yale SOM was ranked #10 in the US News rankings for 4 straight years from 2009 to 2012. Looks like it dipped to 13 last year, but given the slim margins between the schools in that group, I wouldn’t be shocked if it were back at 10 this year. More importantly, if the question you’re asking is really about perception, or how people “consider” the school, I think you’d find it’s definitely a Top 10 US school (in fact, just check the recruiter ranking). In terms of its international reputation, I bet it’s even stronger than its US reputation and would have a higher ranking internationally.

    From what I’ve gathered, Yale SOM’s ranking has long been weighed down by its salary data and job placement record (which seems to be borne of its philosophy) but not by its reputation, which seems to be strong. But to answer your question, yes, it seems like a lot of people consider it a top 10 school.

  • JohnAByrne

    Guysmiley,

    Top Ten in the world, given that the FT is a true global ranking.

    I’ve also had some other thoughts about how this occurred since writing the article earlier in the week. The gains made by Yale on the international metrics have had a bigger impact than many would think because all of these things are comparative. So those gains would be far more beneficial to Yale’s standing in the FT ranking because other U.S. schools aren’t doing nearly as much. Yale is significantly outdistancing its U.S. peers on these measurements and putting more space between them and everybody else.

    The other metrics–even though they account for more weight on the surface–are so close that the differences become less meaningful. That’s where all the best schools are pretty much neck-and-neck in the race. So even Yale’s slight fall in those metrics doesn’t end up counting as much.

    When I designed the BusinessWeek ranking system, this was also a true and rather hidden aspect of the weighting. The student satisfaction scores were closely clustered across the best schools, but the corporate recruiter scores were not. So ranking differences on the MBA satisfaction part of the survey didn’t get a school as much credit in the overall ranking than differences in the recruiter survey. The upshot: we technically gave both these components the same weight, but in fact, the recruiter survey counted a lot more because the data was as closely clustered.

    Make sense? My additional two cents, for what it’s worth.

    Best,
    John

  • GuySmiley

    John,

    Thank you, that does make a lot of sense. Maybe this is a cynical question, but do you think that this is what motivated Yale to spearhead its global network of schools? Are there other metrics where the data is less closely clustered? Which of these do you think will be the next big battleground for business schools?

    Your post prompted me to check the rankings and I’m curious if you have any insight into why Yale suffers so badly in the BusinessWeek and Forbes rankings. Is there something in the BusinessWeek formula that kept Yale out of the top 20?

  • JohnAByrne

    With Forbes, I think it’s the comparatively high percentage of grads who go the social enterprise and non-profit route. It just brings down the ROI. With BW, it has to do with the smaller set of recruiters who go to SOM. Schools with smaller pools of talent have long been slightly disadvantaged in the BW recruiter survey.

    As to motivation, Dean Ted Snyder is now making a very real impact on the school. He has smartly positioned SOM as the most global of the U.S. schools and reached out to other departments and colleges to better leverage Yale University’s clout. Also have to give him a lot of credit for doing something unique in creating both the global network of schools to share students and teaching materials but also the one-year master’s program for the best grads of those schools.

  • YaleAlum

    John, you are absolutely right: we have a much higher % of people going to public sector and non-profit than any other school. This speaks to our DNA as a Master in Private and Public Management. I personally see Yale SOM as good as having a joint degree from HBS/HKS but in only 2 years. Obviously the the HBS/HKS brand name is much more significant, BUT in terms of education and network is the same or better.

    I prefer Yale to remain low the Forbes rankings but have the career and personal diversity that our class has vs. other schools where over 60% are i-bankers, consultants, PE (nothing personal against my colleagues! i come from PE background).

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