2015 Financial Times Global MBA Ranking

Stanford Graduate School of Business

NO. 1 IN CAREER PROGRESS BUT STANFORD STILL TAKES A SLIP AT THE TOP

Never mind that Stanford ranked first among all the schools in the FT’s “career progress” category, presumably the reason why most people get an MBA in the first place. But that category accounts for only 3% of the ranking’s methodology. Stanford also ranked second for being most recommended by alumni, after only Harvard. That latter category represents a mere 2% of the methodology.

Yet, according to The Financial Times’ numbers, the MBA alumni at UC-Berkeley’s Haas School of Business had a year-over-year increase in salaries of $9,031 to $158,518, something that helped to lift Haas into tenth place on the global list from 11th a year ago. It is the first time Haas was in the FT’s top ten. Berkeley ranked 31st as recently as 2009.

Stanford’s slippage brings up another awkward problem for The Financial Times and other organizations that rank MBA programs. With increasing numbers of Stanford graduates pursuing their own startups, it’s very likely that a three-year look at salaries and pay increases is an obsolete way to judge an MBA program–especially when those factors weigh so heavily in a ranking.

After all, at an arbitrary three-year mark many entrepreneurs are paying themselves minimal salaries at that stage to build their companies and their real wealth. Stanford, more than any other MBA program in the world, is bound to pay the price for this change because the highest percentage of any graduating class that launches a new business is at the West Coast school. In fact, a then all-time high of 16% of Stanford’s Class of 2011 chose to start their own companies at graduation.

THE UNCERTAIN MATH IN THE FT’S METHODOLOGY

How real these salary changes are is open to serious question, anyway. The numbers—all adjusted by the FT to account for purchasing power parity and industry career choices—are self-reported by alumni. Significant changes could occur due to sample size, exaggeration by a survey respondent, or even worse, unnecessary and flawed adjustments made by the British newspaper’s methodology. The FT even admits that its three-year weighted salary metric “includes data for the current year and the one or two preceding years where available” so it’s not exactly a true three-year average.

The Financial Times ranking is arguably the most consulted global list of full-time MBA programs, largely because U.S. News does not rank schools outside the U.S. and Bloomberg Businessweek separates U.S. and non-U.S. schools in different rankings. But there are significant flaws in the methodology the FT uses to rank programs, including the use of far too many metrics–20 in all–that include measures that have nothing to do with the quality of a school’s MBA offering. It’s also widely acknowledged to favor non-U.S. business schools.

HARVARD ALUMNI REPORTED THE HIGHEST AVERAGE SALARIES THREE YEARS AFTER GRADUATION

Harvard’s first place result, the sixth time it has taken the top slot since the FT’s first ranking in 1999, owes a great deal to the fact that its alumni have the highest average salary three years after graduation: $179,910, nearly double their pre-MBA pay. The FT quoted several graduates from its survey results. “Harvard Business School has opened a lot of doors and made people almost irrationally willing to hire me,” one graduate told the FT. Added another: “Alumni are incredibly generous with their time. Everyone will meet you for a coffee to share insights, advice and introductions.”

The FT said “Harvard is among the top schools for career progression and its MBA was the most highly recommended by graduates of other schools. It also comes second for research and its doctoral program.”

One big surprise this year: The University of San Diego School of Business Administration became the highest new entrant in this year’s ranking, in 66th place. Yet, it has one of the smallest incoming classes of any of the ranked programs, with just 40 new students a year. The FT’s methodology rewards the school for having 53% of its students from overseas—what many would regard as something of a red flag and a sign that it cannot attract enough qualified domestic applicants.