Ranking The 2016 Business School Rankings

1B) INSEAD Edges Out London Business School To Top Poets&Quants‘ International Ranking: Harvard vs. Stanford. Booth vs. Kellogg. Columbia vs. NYU. Yale vs. everyone.  These are some of the biggest B-school rivalries in the United States. Across the pond, you’ll find an equally fierce clash: INSEAD vs. London Business School. For the second consecutive year, France wrestled away the gold (How often do you hear that?).

It was a neck-and-neck competition, no doubt. So what tilted it in INSEAD’s favor? If anything, LBS lost it more than INSEAD won it. The big difference: INSEAD knocked LBS out of the top spot in the Financial Times, the first time INSEAD topped the FT list. And in The Economist ranking, though INSEAD fell two spots to 4th among international schools, LBS didn’t make up any ground, holding onto the 9th spot. A deep dive into the stats shows why. LBS outdistanced INSEAD in the diversity of recruiters and students. LBS grads boasted higher starting salaries too. However, it couldn’t keep pace with INSEAD when it came to the quality of the faculty, network and educational experience. While each gained one spot in the Bloomberg Businessweek ranking — with LBS finishing 2nd and INSEAD 3rd) — they basically just checked the other’s gains. As a result, INSEAD maintained its hold, albeit tenuous, on the top spot.

Mind you, P&Q’s American and international rankings don’t fit an apples-to-apples comparison. For one, Bloomberg Businessweek and Forbes rank these categories separately, while The Financial Times and The Economist pool them together. With U.S. News being an American ranking only, P&Q has also adjusted its scale to account for its absence, with the Financial Times and Forbes rankings each given a 30% weight and Bloomberg Businessweek and The Economist each carrying 20%.

Despite this wrinkle, the P&Q international ranking also remained a model of stability. IMD was perhaps the biggest noise-maker in 2016, leapfrogging HEC Paris to tie IE Business School for the 4th spot, enjoying jumps in both The Financial Times and The Economist (while earning the highest marks from students in Bloomberg Businessweek).  In contrast, ESADE fell to two spots, the result of a 12-spot freefall in The Economist ranking, spurred by ranking below the top 100 in faculty quality, along with low scores in career services (98th) and student quality (77th). However, there was one program that cannon balled into this seemingly-tranquil ranking: Melbourne Business School. It rocketed from 38th to 20th in just one year. Its secret? It stumbled into Bloomberg Businessweek’s top ten international schools on the wings of top ten finishes in job placement and recruiter and student surveys — a clear indication that the school is on the upswing in stakeholders’ eyes.

2) Booth Ties Stanford in Topsy-Turvy U.S. News Ranking: U.S. News has been considered the gold standard of business school rankings for nearly a generation. Why? It transparently covers all of the bases. Academic and recruiter surveys constitute 40% of the weight. Placement data, including employment rates and starting pay, accounts for 35% of the ranking, while student inputs such as GMAT and GRE scores, undergrad GPAs, and acceptance rates round out the rest of the methodology. In theory, it is a perfect blend of hard data and qualitative sentiment, boasting inputs, outputs, and feedback. Unfortunately, it also creates a self-reinforcing halo effect. The big name schools attract the best students with the highest outputs who, in turn, often develop into the top employment candidates that recruiters target. As a result, it is often as difficult to dislodge an MBA program out of U.S. News’ Top 20 as it is to fire a government employee.

That is, unless you’re the Yale School of Management. In 2016, Yale climbed five spots to tie Tuck at 8th. Mainly, the school’s inputs and outputs closed in on those of their peer schools, particularly in the areas of undergraduate GPA and placement. The school’s GMATs continued to rise, with the Class of 2017 bringing a 721 average to New Haven, higher than either MIT’s Sloan School of Management or U.C.-Berkeley’s Haas School of Business. Even more, the school had seemingly gained greater esteem among deans and MBA directors, creeping up 0.2 of a point to 4.3. So what’s holding Yale back from moving into the rarified air that Harvard, Wharton, Stanford, and Booth enjoy? Think starting pay. A school known for placing a higher percentage of graduates into public service and fund-raising roles, its $139,310 starting compensation fell well below such lower ranked programs as Cornell (Johnson), Michigan (Ross), and Virginia (Darden).

The University of Chicago’s Booth School of Business also left a mark, joining Stanford for runner-up honors to No. 1 Harvard Business School. Although Booth grads earned less in 2015 than their Stanford counterparts, they also enjoyed a nearly 9% higher placement rate within three months of graduation (95.0% vs. 86.2%). That said, Boothies would be wise to keep the champagne on ice until at least March, as Stanford maintained a decided seven-point edge in incoming GMAT scores along with a far more daunting acceptance rate (6.1% vs. 24.4% in 2015). Other big 2016 gains were made by Vanderbilt Owen (27th to 22nd), Rice Jones (33rd to 25th), Wisconsin (33rd to 27th), and the University of Illinois (47th to 39th). At the same time, USC (Marshall) took the steepest tumble west of Stern, going from 25th to 31st, despite posting enviable recruiter scores equal to such higher-ranked programs as Washington University (Olin) and Indiana University (Kelley).

3) INSEAD Proves International Programs Have Arrived By Topping Harvard in Financial Times Ranking: Looking for a ranking that tries to cover all of the bases? You’d be hard-pressed to find a more hard-working one than The Financial Times. It weaves 20 different variables into its ranking. Of course, the question with FT has always been, “Do you want to work harder or smarter?” The answer isn’t necessarily flattering. The ranking ignores student quality inputs altogether. And you won’t hear from recruiters — the ultimate consumers of the MBA product ­—either.

What do you get? For one, The Financial Times is global and it’s big on demographics, as in the percentages of female and international faculty, students, and board members. That’s 15% of the ranking, more than the combined weight covering alumni recommendations, placement, goal fulfillment, and career progress. More egregious, the percentage of Ph.D. graduates, which has nothing to do with MBAs, is given the same weight (5%) as student-facing faculty with doctorates. Oh, and pay is a big deal here: 20% of the ranking is predicated on average salary within three years of graduation, with salary increase given an equal weight. As a result, the FT ranking, like U.S. News, remains steady to a great extent.

Despite the ranking’s flaws, it captured the spirit of the times in 2016, proving that international MBA programs had truly come of age. It started with INSEAD beating out Harvard as the world’s #1 program. How did that happen? Although Harvard grads earned nearly $7,000 more than their INSEAD counterparts, INSEAD neutralized the advantage by producing higher salary increases for its graduates. In the survey, INSEAD alumni found greater value in the program, with the program ranking 10th against Harvard’s 82nd in this criterion. While HBS boasted a higher percentage of female representation at the school top-to-bottom, INSEAD capitalized on European programs’ inherent diversity by hammering Harvard in terms of international faculty, students, board members, mobility, coursework, and even number of languages, all evidence of the inherent bias in favor of non-North American programs. Game, set, match — INSEAD.

The undercard was nearly as intriguing once you get past LBS, Wharton, and Stanford, which rounded out the top five (with Wharton once ranking #1 for nine consecutive years from 2001-2009). The University of Cambridge (Judge), which ranked a ridiculously low 62nd with The Economist in 2016, snuck into The Financial Times’ Top 10 after being buoyed by high marks in degree value and career progress. On the other hand, IESE dove nine spots, with humdrum starting pay being its albatross. Another FT trend: It was a great year for Chinese programs. Led by the Hong Kong University of Science and Technology at 14th and CEIBs at 17th, several Chinese business schools jumped by 10 spots or more in 2016. They included Nanyang Business School (40th to 29th), and Shanghai Jiao Tong (55th to 39th). For that, you can thank lower paid students entering business school, with an MBA being a near-guaranteed ticket to a better tax bracket in Asia.

Overall, Stanford graduates earned the highest pay according to FT data at $185,939 in weighted salary within three years of graduation. Mexico’s Ipade grads, however, enjoyed the biggest pay boost, a 190% jump in salary to $105,844. Grads from Berlin’s European School of Management and Technology experienced the most value from their degree, while Indian Institute of Management Ahmedabad alums derived the most career advancement after earning their MBAs. Not surprisingly, Harvard was the most recommended business school by FT survey respondents, followed by Stanford, MIT (Sloan), Wharton, and the London Business School.

Next Page: Bloomberg Businessweek