Turning the Tables: Ranking the MBA Rankings

3. U.S. News & World Report. The magazine ranks U.S. schools every year, using a vast amount of information and data that ultimately puts Harvard Business School and Stanford in a tie for the first spot. The methodology takes into account its own survey of b-school deans and MBA directors (25% of the score), corporate recruiters (15%), starting salaries and bonuses (14%), employment rates at and shortly after graduation (14% to 7%), student GMATs (about 16%), undergrad GPAs (about 8%), and the percentage of applicants who are accepted to a school (a little over 1%). If you want a ranking that pretty much includes all the obvious factors of quality, this is your best bet. In it’s latest survey, released in mid-April of 2010, U.S. News ranked 97 schools. The latest top five in the 2010 survey has Harvard and Stanford tied as number one and Chicago and Wharton tied at number five:

1. Harvard Business School
2. Stanford University
3. MIT (Sloan)
4. Northwestern University (Kellogg)
5. University of Chicago (Booth)
6. University of Pennsylvania (Wharton)

Pro: U.S. News puts a good deal of effort into the ranking, cranks it out on an annual basis, and measures a lot of different factors that are clear indicators of quality. There are a lot of ties in its ranking of schools (four schools, for example, are tied at rank 33, while another four are tied at rank 40). That’s to be applauded because U.S. News is acknowledging that the differences are so small among these schools that it would be intellectually dishonest to say one is better than the other.

Con: About 60% of the ranking is based on data supplied by schools who therefore have plenty of reason to present the information in the best possible light to get a better ranking. There’s no way to independently check or audit the data provided by business schools. The ranking is completely U.S.-centric when there are many non-U.S. schools with better programs not listed at all. Finally, some of the ingredients in this ranking stew seem a bit silly: Why even bother to include the percentage of applicants accepted when you weight it at little more than one percent?

4. Financial Times. This 2010 ranking is the 12^th year the Financial Times has ranked the best MBA schools. The winner: London Business School. The ranking is based on data collected from business schools and from alums three years after graduation. This survey includes responses from 8,001 alums of the Class of 2006 those most of the results are combined with two previous class surveys. The ranking also includes a research component, weighted at 10%, counting papers written by the faculty of each school in 40 academic journals during the past three years. For my money, it’s the best all-inclusive global ranking of the top 100 business schools, far better than The Economist list.

1. London Business School
2. University of Pennsylvania (Wharton)
3. Harvard Business School
4. Stanford University
5. Insead in France and Singapore

Pro: Arguably the single best global ranking of business schools which gives you a very good read on what the best MBA-granting institutions are around the world.

Con: The Financial Times is trying so hard to be global that it ranks many non-U.S. and European schools far too highly over institutions that have significantly better MBA programs. It’s just not even credible to think that London Business School can give you a better MBA education than Harvard, Stanford, Wharton, or Northwestern. The FT ranking also puts far too much weight (40%) on how much alums of these schools make three years after graduation. MBA compensation, after all, has more to do with what fields grads go into (investment banking and consulting usually pay the most) than the quality of the education. Insiders also believe this data, reported to the FT by the schools, is being fudged by some schools who also include in the number their Executive MBA grads who already have high paid jobs. For example, the reported “weighted salary” for an MBA from The Indian School of Business is $141,291, a sum that exceeds what MBAs are making, at least according to the FT, at Oxford, Cambridge, Northwestern, Berkeley, Duke, Michigan, and New York University, among many of the other top schools in the world. It simply strains credulity.

The FT also includes in its ranking other factors that have no impact on quality, such as the percentage of women faculty at a school. It may be politically correct to toss a factor like that into the mix, but you can’t presume it means the MBA program is less valuable because there are fewer female instructors on the faculty. The FT’s own methodology fails to clearly explain all the data it uses to rank schools so there’s a bit of a black box game. It notes, for example, that “eleven of the ranking criteria are based on data” from business schools. But it only mentions four of these 11 criteria, such as percentage of grads employed three months after graduation and an unexplained “FT doctoral rank,” whatever that means. The heavy reliance on unaudited data from schools also is suspect because some schools are likely to report information in the best possible light to gain a higher ranking.