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The Vertigo In The Financial Times 2015 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.