Big Changes In U.S. News Ranking Of MBA Programs

How The Top Ten Schools Performed On U.S. News’ Peer & Recruiter Surveys

School	2016 Peer	2016 Recruiter	2015 Peer	2015 Recruiter
1. Harvard	4.8	4.6	4.8	4.6
2. Stanford	4.8	4.5	4.8	4.6
2. Booth	4.7	4.5	4.7	4.4
4. Wharton	4.7	4.5	4.7	4.5
5. MIT	4.7	4.5	4.7	4.5
5. Kellogg	4.6	4.5	4.6	4.4
7. Haas	4.6	4.3	4.5	4.3
8. Tuck	4.3	4.2	4.2	4.0
8. Yale	4.3	4.3	4.1	4.3
10. Columbia	4.4	4.1	4.4	4.2

Source: U.S. News & World Report MBA Rankings

THE DETAIL IN THE RANKINGS REVEAL ITS MANY FLAWS

It’s also because the job market has been so strong in Silicon Valley that it breeds overconfidence. This past year, at least five Stanford grads reneged on offers they had accepted, according to the school. “The strong market has allowed them to defer decisions about multiple offers and in some cases to remain focused on searching for an ideal opportunity,” says Maeve Richard, director of Stanford’s Career Management Center. Those trends are not likely to please the corporate recruiters who fill out U.S. News‘ survey, making Stanford only one of two schools in the Top Ten, along with Columbia, that had a decline in their recruiter scores (see above table).

Also according to U.S. News, Harvard MBAs attracted slightly higher average salaries and bonuses than their West Coast counterparts, $149,784 to $145,173. But U.S. News does not figure in “other guaranteed compensation” nor stock grants. If other guaranteed comp were added, even without stock grants, Stanford MBAs actually outearn HBS grads in total median starting compensation, $160,287 to $151,211.

This fine level of detail on how one school’s MBA program does better than another reveals the inherent flaws in any ranking. It goes to show that what you measure counts–and what you don’t measure doesn’t. It also shows that what is measured can sometimes be interpreted so simplistically that it can defy logic.

HOW U.S. NEWS RANKS THE FULL-TIME MBA PROGRAMS AT BUSINESS SCHOOLS

The methodology used by U.S. News takes into account a wealth of proprietary and school-supplied data to crank out its annual ranking of the best business schools. The magazine does its own survey of B-school deans and MBA directors (25% of the score). It also does its own survey of corporate recruiters (accounting for 15% of the overall ranking). U.S. News said it averaged the recruiter scores over the past three years for the ranking. The magazine failed to disclose the response rates for either survey.

Other metrics included in the ranking are starting salaries and bonuses (14%), employment rates at and three months after graduation (7% to 14%, respectively), student GMATs and GREs scores (about 16%), undergrad GPAs (about 8%), and the percentage of applicants who are accepted to a school (a little over 1%). This is the fourth year U.S. News included GRE scores in its ranking methodology.

While the metrics employed by U.S. News may appear to make sense, they yield very close results–in many cases the difference between an MBA program ranked 35 and 40 is statistically meaningless. The fall this year of NYU Stern proves this point. The school’s peer and recruiter scores didn’t change at all year over year. The average GPA and GMAT for the incoming cohort was just about the same, 3.51 this year versus 3.52 last year, and 720 this year compared to 721 a year earlier, respectively. The Class of 2015 actually had higher starting salaries and bonuses of $137,534, up from $135,933.

IS THE NINE-PLACE DROP BY NYU STERN JUSTIFIED?

So what in the world would cause a top-flight school like Stern to plunge nine places? According to U.S. News, it was a issue of “non-reporting.” Otherwise, there were relatively minor changes in the acceptance rate for the MBA program as well as the employment rate for the latest graduating class. The acceptance rate inched up to 20.0%, from 18.1% a year earlier. Some 89.0% of last year’s MBAs had jobs three months after graduation, down from 90.4% the previous year. Yet, the rate at graduation last year–78.8%–was significantly better than in 2014 when it was 74.9%. Such minor and inconsequential changes would not have caused that big of a drop. But U.S. News felt obliged to punish the school for initially refusing to supply data to it.

Though HBS graduates had the highest average starting salary and bonus, alumni from the Tuck School of Business at Dartmouth College were close behind, with $148,025. U.S. News said that almost half of the 128 schools that submitted salary data to U.S. News had an average starting salary and bonus of more than $90,000 for their 2015 graduates. The average for all schools was $91,940.

Oddly, only two two schools – Coastal Carolina University in South Carolina and the University of South Florida – reported that 100% of their 2015 MBA graduates were employed three months after graduation. Among all ranked MBA programs, the average was 84%, according to the magazine.

This year U.S. News assigned numerical ranks to 94 schools, ending the list with three schools tied at a rank of 92: the University of Houston, the University of Kentucky and the University of Mississippi. As many as ten MBA programs fell completely out of the ranking, including the the University of Oregon, Auburn University, Clemson, and Thunderbird.

(See following pages for the full ranking)