The Vertigo In The Financial Times 2015 MBA Ranking

Rochester's Simon Graduate School of Business is ranked 35th among the top 100 U.S. business schools by Poets&Quants.

                             Rochester’s Simon Graduate School of Business

The year-over-year changes in MBA programs at the best business schools tend to be minuscule, if there are any changes at all. MBA experiences never undergo revolutionary change. Truth is, they evolve over time, little by little.

So it may come as a surprise when an annually published ranking that purports to measure the quality of these programs shows dramatic, if not shocking, changes in a single 12-month period.

That’s the case yet again with The Financial Times’s 2015 ranking published today (Jan. 25). Nearly one in every three–or exactly 33 of 100–experienced double-digit gains or falls. Unexplainably, the University of Rochester’s Simon School of Business plunged 30 places to 85th this year from 55th only a year ago. What happened? The school got a new dean who hasn’t had time to change anything in the MBA program.

A NEW DEAN TRIES TO EXPLAIN WHY HIS SCHOOL FELL MORE THAN ANY OTHER THIS YEAR

In an email to faculty, staff and students today, Simon Dean Andrew Ainslie called the results “disappointing, but in no way do they define the extraordinary talent of our faculty, students, and alumni. While we would like the various rankings to accurately reflect the state of the school and the momentum we are building right now, (the) Financial Times is different from most others as it is highly lagged. FT surveys alumni three years removed from the program (this year, the MBA Class of 2011). The result reflects where we were then versus where we are today.”

Ainslie, who has been in the job for less than seven months, went on to say that Simon’s 2011 graduates “experienced the tail end of a series of years where Simon Business School was disproportionately impacted by the economic downturn and the move away from our traditional strength of hiring in the financial markets.” In 2011, he noted, the placement rate at graduation was 64% and subsequently climbed to 65% in 2012, 67% in 2013, and 79% in 2014. Three months post graduation, those numbers were 89% in 2011, 92% in 2012, 91% in 2013, and 95% in 2014. “These are dramatic improvements and demonstrate the changes that the CMC, under Karen Dowd’s leadership, has been able to implement,” wrote Ainslie. “In that same time span, average starting salary increased from $76,000 in 2011 to $92,000 in 2014.”

The dean was gracious enough not to attack the FT’s methodology. In truth, the FT showed only a $2,286 year-over-year decline in alumni salaries which were $108,321 this year. That’s less than a third of the drop recorded by Stanford University’s Graduate School of Business, according to the FT. Simon MBAs experienced salary increases of 102% over their pre-MBA pay, one of only 30 schools in the 100 to double or more than double a person’s salary. The school’s “placement success rank” slipped just five places to 44th, a rank better than No. 4 INSEAD’s 51st placement rank or No. 11 Ceibs 80th rank.

Clearly, a lot more is going on here than a tough placement year for a school to plunge 30 places in 12 months.

CARLSON PLUNGED FROM 54TH TO 83RD

Simon’s scary fall wasn’t an anomaly. The University of Minnesota’s Carlson School of Management plunged 29 spots from 54th to 83rd, while the University of Illinois’ business school at Urbana-Champaign lost 27 positions from 44th to 71st. If you were to ask the deans of those schools to explain why their institutions fell so dramatically in stature, they would just shake their heads. There’s nothing wrong with those MBA programs.

The culprit is a highly flawed and intellectually dishonest ranking system that puts numerical ranks on schools whose underlying index numbers are so close as to be statistically insignificant. Unlike Bloomberg Businessweek and U.S. News & World Report, which provide those index numbers that are used to determine a school’s numerical rank, The Financial Times chooses to hide that data from its readers. So no one knows how remarkably close one school is to another on its list.

The yo-yo results, however, indicate that the methodology used by the FT cranks out index numbers so close to each other that extreme volatility is pretty much the norm. Those unexplainable wild swings from year-to-year, of course, only undermine what little credibility a ranking could have. Nonetheless, The Financial Times is an authoritative source of business information and that gives this silly ranking enough credibility to harm the reputation of very good schools and programs.

ROLLER-COASTER RESULTS THAT RAISE MAJOR CREDIBILITY ISSUES

And of course for every school that goes up, there’s inevitably another that goes down. And for every school that pops up on the list, there’s another that falls off. This year, in fact, ten schools which failed to make last year’s FT ranking appeared on the new 2015 list. Eight of the ten had to rise by at least double digits to achieve their 2015 rank. The Chinese University of Hong Kong, unranked last year, came in at No. 30 this year, ahead of the University of Virginia’s Darden School, Carnegie Mellon University’s Tepper School, and UNC’s Kenan-Flagler Business School. The implied increase for the school is at least an unbelievable 71 places, if CUHK just missed last year’s top 100.

The MBA program at the University of San Diego–which made the FT 100 for the very first time debuting at a rank of 66–beat the business schools at Ohio State, the University of Wisconsin, Washington University, and Babson College. The implied increase for San Diego? A remarkable 45 positions, if the school would have clocked in at 101 a year ago.

Such results boggle the mind–and all rational explanation, which is why the authoritative nature of the FT ranking has been greatly diminished over the years. The most recent informal survey of MBA applicants by mbaMission, a leading admissions consultant, found that only 10.2% of the respondents considered the FT their most trusted source of business school rankings. The most trusted? U.S. News & World Report which was cited as most trusted by 46.1% of the respondents. Of course, U.S. News does not rank schools outside the U.S. which gives the FT a bit more clout than it deserves.

DON’T MISS: HARVARD TOPS 2015 FINANCIAL TIMES RANKING FOR SIXTH TIME

  • Jonathan Seidman

    Makin is 100% correct.

  • SHFlip

    Did you see any difference between applicants of the M7 plus LBS/INSEAD group and the next tier of programs in terms of interview performance?

    I realize that once you get through to interviews then it’s all about the interview performance, but would you say it was harder for that next tier to get through the initial CV screen and to the interview stage because of the perception of “not quite elite”?

  • Jacob

    Ha, interesting! I didn’t realise Gladwell wrote about rankings! Thanks for pointing that item out. I took a quick look at the points you cited there look solid and, indeed, similar to my conclusions.

    Btw, these recent exchanges show how timely is the symposium I hope to hold in August. I hope the reviewers of the submission are following this!

  • Max Lai

    CUHK ranked higher than University of Virginia’s Darden School, Carnegie Mellon University’s Tepper School, and UNC’s Kenan-Flagler Business School. Only HKers and Chinese will believe that.

  • Guest

    Oh you work for Nate?

  • Makin Bank

    Yes bc it is a fact, sorry but you go to a top FT program for the job afterwards. Not denying an MBA is a package but the most important item in there is the job prospects. Granted everyone has different career goals but by and large it’s fair to say that top tier MBA students went there to land a job with an elite firm or get a solid startup gig. Perhaps the goals for lower tier schools are different.

    A top MBA is less about the education and more about the networking sorry it’s a sad truth. While it helps to have great professors to learn from (esp the heads of major firms, NGOs, government leaders) I do believe (not a fact) you can get a similar quality business education by online tools.

  • JohnAByrne

    Absolutely right. This goes to the heart of Malcolm Gladwell’s blistering criticism of the U.S. News methodology. See here:

    http://poetsandquants.com/2011/02/11/malcolm-gladwell-trashes-college-rankings/

  • Jacob

    Makin, before I reply to your comment, I was wondering if you can explain the meaning of that last word in your reply:’period’. What does it mean?? That you delivered such a bright and tight argument that no one can disagree with it? Or that all you were interested in is writing those sentences and now you couldn’t care less about listening to anyone’s reply?

    I do think that a good MBA is a package, which includes educational content, learning experiences and social networking with peers and future employers. But how do you know that one can learn the ‘same stuff’ from MOOCs? An opinion? A belief? Impression? Please don’t take it personally, there is no intention to offend, just wondering if there is anything factual behind your loose statements.

  • Jacob

    A. We will need to trust that Deans are closely aware of the actual
    educational experience of students in at least 100 Schools. This is not
    the case. Deans are aware of few schools, typically those most similar
    to theirs and/or some that are near them. It is just how social networks
    and identity forces work. Most of what Deans can tell us are program
    reputations, which are very rough and inadequate estimators of
    educational quality and suffer from time lag.
    I didnt fully understand the reference to the USN specialty ranking, though.

  • John

    Thank you for your reply.
    Perhaps I should clarify my post a little bit. What I’ve seen is that the modal student at LBS/INSEAD is closer to the 8-15 range US schools, which does not necessarily mean that the average or median is at that level. However, since Europe is a smaller MBA market and there are fewer top schools, what happens is that the variation in student quality at schools like LBS and Insead is higher – from what I’ve observed. In other words, there are HBS-caliber folks there, along with Booth-caliber ones, but there are also a lot of people who are at the level of the lower top 15-20, who wouldn’t be able to crack the M7 in the U.S. The student body at U.S. programs tends to have much less variation in comparison, which is mostly a function of the sheer size of the U.S. market – more candidates, more schools, and more top schools.

    So, LBS and INSEAD are indeed targets for top employers in Europe because the top candidates who want to stay there go to one of these schools. However, not all candidates there at the same top level.

    As you also pointed out, it doesn’t matter if you go to LBS/Insead if you don’t have what it takes to get one of these top jobs, and there are such people at these and all other schools. I see lots of people here who tend to believe that once you belong to one of these schools, recruiters tend to see all people from there as equivalent.

  • Ex-MC

    While I agree with you on Stanford (I don’t think anyone can seriously argue LBS > GSB or HBS), I don’t necessarily agree with your general point about the difference in student quality between the M7 and LBS/INSEAD from someone who has actively recruited MBAs.

    While I worked for an MBB firm we’d recruit from a wide range of schools (I spent time in both the NY and London office) but we’d typically break them into two groups: 1) the M7 plus LBS and INSEAD 2) the next tier of quality but not quite elite programs. The bulk of our hires would come from that first group and generally there was little to separate recruits in terms of performance, although if I were to generalize I would say the European students tended to be slightly better when you put them in front of a client while the US students were razor sharp and more focused on the quant aspect of the job, but that really is splitting hairs. We had no reservations about interviewing and hiring recruits from the second bucket (think Fuqua, Darden etc), but the class make-up tended to be heavily weighted towards the first group.

    I’m now in the corp strat team of a well-known global pharma company and the same buckets hold true for the most-part. There’s a little more geographic concentration though with the US offices tending to focus more in their own backyard and likewise with the European offices. That said, the program is a global one and provided there’s no visa/work authorization issues, most MBA students will cycle through 2-3 offices during their time in the leadership program before settling on a concentration and longer term posting.

    That’s a long way of saying there’s not a whole lot of difference between the M7 and LBS/INSEAD in the eyes of recruiters (albeit an admittedly tiny sample size). And FWIW we would regularly ding candidates from the top schools without an interview because they didn’t have the attributes that we were looking for – so no school, not even HBS, is a silver bullet if you don’t have the skills and experience that the job demands.

  • Ben Franklin

    How about just referencing Deans’ program survey results or maybe even the USN specialty ranking (i.e. Marketing vs. Management vs. Finance, etc.)?

  • Makin Bank

    Educational quality is secondary to job opportunities for the FT crowd. You can learn the same stuff from MOOCs, you go to a top Bschool to make contacts and land a top-tier job, period.

  • Elitist

    How many of your 2Ys went on to MBB, Goldman, Google? Granted I realize that students of Simon aren’t targeting elite jobs but this should also play into the ranks.

  • Jacob

    No easy or simple answer to that. There are several good ways to do it but they are going to be resource intensive. Consider, for example, how you assess knowledge acquisition across a diverse set of institutions. In many countries, there is a standardised test, administered at a national level, to assess knowledge of high school leavers. This allows a more objective comparison of what was learned/acquired.
    One idea is to create such a test, comprised of both academic and workplace input and give it to a sample of MBA students in each program to complete when they graduate. Obviously, resource intensive. On the other end, a simple and low-cost method is to control, statistically, for the ability and skills of the entering cohort when assessing outcomes at graduation/post-graduation; GMAT scores are obvious candidate.

    Then, there are self-report methods: when surveying graduates and alumni, to ask them questions about which competencies they developed and to which degree, as a result of attending the program. It will take effort, but similar things have been done before, so no great innovations are involved or necessary.

  • LEONARD

    I do agree that LBS and INSEAD are comparable to US schools ranked 8 to 15. Just look at Economist and BW rankings, Stanford is 9th on economist, and HBS is 8th in BW! so, insead is comparable to them. We agree then here.

  • JohnAByrne

    I think you’ve made a very good observation here.

  • Ben Franklin

    If you were researching MBA programs and assessing their ‘educational quality’, how exactly would you suggest going about that process?

  • Claus

    Jesus christ..holy spoon…300 Years old, are you a tortoise?!

  • Ben Franklin

    I was born in Britain 300 years ago and fled the Old World due to religious oppression – and I was getting tired of fish and chips and sub-par dentistry…ahem. You want my SSN as well?…perhaps you can find that in the Library of Congress.

  • John

    When I was applying for my MBA, I saw a lot of profiles of people who got admitted to LBS, and I’ve seen many alumni profiles on LinkedIn as well. By and large, these students are in line with what you can see at the U.S. bschools ranked in the 8-15 range. Not bad at all, but not better than the students at schools like Wharton or Booth.But arguing how it is better than Stanford, for example, is plain ridiculous – you just need to take a look at stats and student backgrounds to see that this is not the case.

    LBS, like INSEAD, has the advantage of being one of a couple of very good MBA programs in Europe, with little competition from schools of its caliber since students from the top US programs don’t compete in the same markets. Therefore, they can help their students get pretty good jobs in Europe and claim to be the best in their segment. This would be much harder if there were many more students from top US schools competing for the same jobs. In the end, employers hire people with experience and skills, they don’t hire schools, so this “my school is better than yours therefore I’m better” argument is kind of dumb.

  • Claus

    Again, how old are you?

  • Jacob

    I am in the business of teaching MBAs (mostly in exec/PT programs) and I’ll be honest, so many responses here are disappointingly lacking intellectual rigour. I see so few references to FACTS and DATA. Set attitudes, stereotypes and opinions plague most of the arguments. I would like to see more Evidence Based discourse. Consider this: when we (Social/Organizational Sciences) want to evaluate the effect of a program on learning and performance outcomes, one of the main things to do is to ‘control’ for the core ability of participants BEFORE they enrol in training. If you take a very bright and ambitious group of people and get them to spend a year or two in a program, even if the program is mediocre, you will get, on the other side of it, a bunch of very bright, talented and motivated alumni who will go to high places and good earnings. So when you look at any rankings, consider what you learn from them.

  • Ben Franklin

    I wouldn’t dare wage war against my forebears, Santa. Not quite sure how you saw it that way, but cheers anyhow!

  • Ben Franklin

    I’m sure the future MBAs will be able to find a way to bring the Eurozone back into it’s winning ways. We’re counting on those EU business schools to turn things around, because it’s actually creating global economic headwinds. Until then, I think I can (and gladly will) keep making my lemonade.

  • George Washington

    Benny Boy! I’m asserting that outside of the boundaries of the US of A (which accounts for roughly 95% of the world’s population), the only MBA ranking of any stature is the FT.
    You need a little more experience in a globalised world (nb the correct English spelling – English being the language that we are using to communicate). LBS is equal to, and perhaps greater than, the M7. If you cannot comprehend matters that exist beyond your national borders, then go – as the Americans like to say – make lemonade.

  • Hate the Player, not the Game

    Rumours have been abound on the MBA forums the past year, that there are certain schools whose Deans are coaching alumni in how to respond to the surveys. After the farce that is this year’s rankings, the FT either needs to broaden its auditing program so that it more closely and more often audits those outside the top 20, or it will risk losing its hegemony over other MBA ranking systems.

  • Bastion

    All bullocks, I’m a current student at Rochester and I can tell you this ranking that Simon received is absolute bullocks. Does not represent the quality or the strides the school has made in recent years. That’s why you have to take these rankings with a massive grain of salt. 30 places? I have a bridge to sell you, poets and quants readers.

  • George Washington

    I think you need to learn what global means. Here’s a hint, it exists beyond the borders of the US. Stop making your fellow countrymen look bad with navel-gazing view of the world. LBS is certainly on par, if not better, than Wharton, Stanford, Columbia, MIT, Booth. This has been the case for many years. It’s a moot point.
    At the end of the day, it’s just a ranking system. Take it or leave it. The real mystery is, why do Americans always get so worked up over rankings?

  • Ben Franklin

    Tell that to all the schools’ Deans, students, and stakeholders who were blind-sided by the results of this highly influential Global MBA Ranking. Without fact-driven, critical articles such as these or “insecure” people such as you and I, the MBA universe might actually begin to believe what they read in FT.

  • ferdinand

    Seems John doesn’t like to talk about dead programs..better to forget IMD. It doesn’t belong to the MBAs anymore. .

  • I

    There are some very insecure people on this site whose life consists mainly of arguing over MBA rankings online. Sad.

  • Claus

    holy dong! calm down my friend, it is all about MBA programs rankings, not about war between “americans” and the rest of the world!! Jesus..how old are you?

  • Ben Franklin

    You can call all of these programs more “global” than various US schools using whatever metric you want, but the US university system is the global leader in research and most of the leading US schools have become global hubs for business knowledge. US schools have forged close relationships with the most respected MNCs in the US and around the world, which took decades to develop. This knowledge transcends borders or languages or geography itself! The FT can try to bask in the Euro/Asian schools being more “globally-focused” with more “global-reach”. If that were the case, then why do more international students and professors (by raw numbers) come to the US to get educated and teach!?

    Why do all the “leading” Euro/Asian MBA programs have much smaller class sizes, with far smaller endowments, with less overall quality? You can’t tell me that at least some of these Euro and Asian schools didn’t surprise even you…

  • Zem

    IMD is for executive MBA, there is no traditional MBA as we are familiar with. It is very different and IMD itself demand prospective students not to compare it with any full time MBA programs.

  • Claus

    Sir, FT ranking called “Global”, means that it does not intent by any mean to amuse the “americans”! americans have their own US NEWS and its enough and have the important statistics for americans, GPAs, GMATs, Admission rates, ..etc etc.., these things are not important for “Global” citizens who aspire for “Global” career! Furthermore, FT offers you “americans”, the option to chose the criteria you like and serve your goals, so that you can go to the interactive table and tick the factor you like and disable the factors you do not like. and you will get the ranking that align with your perception and emotions. OK..

  • Ben Franklin

    How is small LBS ranked higher than Wharton, Stanford, Columbia, MIT, Booth? How are all these well-established US schools free-falling in ranking when their Weighted Salaries went up!?

    This points to the Female statistics and/or the International statistics that FT uses. These two categories are not nearly as important to the MBA universe as FT makes them out to be. This is author’s bias and it should be weighted down. The Alumni Recommends rank (weighted at a mere 3%) should be one of the most heavily weighted inputs!

    In my opinion, this methodology was put in place as a crutch for European schools (where most of FT’s stakeholders/readers reside). As an unintended result, the International statistics drastically supported the rise of Asian schools as well. Ceibs…Hong Kong University? Really…?

    Moreover, their Weighted Salary conversion using PPP doesn’t account for where the polled alumni actually live and work, but rather where their school is located!? The IMF deemed China the world’s largest economy in 2014 using this same PPP metric. Yet, China has a $10Tn economy vs. the US’s $17Tn! These are all major flaws that undoubtedly contributed to the wild (unexplainable) swings we’re seeing.

  • Emas

    Morover, FT is a great ranking, nothing to say about that. But going deeper in the criteria that it takes into account, I guess that a lot of them are not of interest of someone that has to decide which program attend.

  • Emas

    Can’t believe how FT is letting Tuck going down in the ranking. The BS employment statistics are top-notch.
    Really a poor description of a school value.

  • tenderX

    John, It’d great to highlight more on IMD problems this year. Beside fall in rankings, employment, and salaries, the school harshly hit by the raise in swiss franc. I strongly believe IMD is gone and no longer a top tier, at least for next few years..