Several top European business school tumbled in The Economist’s latest MBA ranking, paving the way for a comeback of sorts for U.S. management education. The Economist yesterday named the University of Chicago’s Booth School of Business the number one MBA program in the world, followed by Dartmouth’s Tuck School of Business, Berkeley’s Haas School, and the Harvard Business School. Under the headline “America Rules the Roost,” the British publication said that the rise of those prestige U.S. institutions displaced last year’s number one school in ranking, IESE Business School at the University of Navarra in Spain, as well as last year’s number two player, IMD, the International Institute for Management Development in Switzerland. IESE fell to fifth place, and IMD to sixth. Even more shockingly, London Business School plunged 11 places to 19th from 8th on the list. INSEAD in France fell to 23rd from 19th.
Much of the drop was attributed to a decline in both career opportunities and starting compensation for graduates of the best European schools. The Economist places 55% of the weight of its ranking on pay and employment rates at graduation. The data The Economist used, moreover, was not for the latest graduating class, but instead for the Class of 2009, a particularly difficult time for the economy and for the MBA market. If the magazine waited just a few more weeks, it would have been able to crank out its ranking with the most recent numbers for the Class of 2010. BusinessWeek’s new ranking will be disclosed on Nov. 11 at 5 p.m. That latter date allows BW to report up-to-date information rather than year-old data.
At 19th-ranked London Business School, for example, average salaries of new MBAs dropped from $117,000 for the Class of 2008 to $100,600 for the Class of 2009. The Economist also reported that percentage of students employed within three months of graduation plummeted a full ten percentage points, to 81% from 91% for the Class of 2008. At IMD in Switzerland, average salaries fell to $114,415, from $127,200. “This compares badly with many of the American schools where the drop has not been as dramatic,” The Economist said. The publication cited salaries at Berkeley which essentially remained stable at a $108,400 average. The reason why European grads often have higher starting salaries than U.S. students is because they are typically older and have more work experience.
The biggest gains in the top ten were made by Dartmouth’s Tuck School, which zoomed to number two from a sixth-place showing a year earlier. Chicago, which has been ranked number one in the U.S. by BusinessWeek, moved up three places from fourth to claim the big prize as the top school in this global ranking. All the gains were not made by U.S. schools, however. HEC School of Management in Paris jumped five places to ninth from 14th, while York University’s Schulich School of Business moved up two spots to tenth from 12th.
Throughout the list of the top 100, there were some shocking changes that again raise questions about the credibility of The Economist survey. A drop of 11 places by London Business School, which is ranked number one by The Financial Times global rankings, is one of the biggest surprises. According to the new ranking, there are two other business schools in the United Kingdom that supposedly have better MBA programs than London: 18th ranked Cranfield School of Management and 21st ranked Henley Business School. The reason: Cranfield and Henley fell less than London; Cranfield dropped three places, while Henley fell four.
ROLLER COASTER RESULTS.
There were plenty of other head-shaking results, though. The University of Virginia’s Darden School leapfrogged 13 spots to come in 11th compared to the previous year’s 24th showing. Columbia Business School jumped eight places to 12th from 20th in 2009. The University of Southern California’s Marshall School of Business shot up 18 places to 18th from 36th, while Carnegie Mellon’s B-school leaped 12 spots to 21st on the list, from 33rd last year. MIT’s Sloan School moved up six spots to 13th from 19th in 2009. The Economist explained some of the wild swings by saying, “Our latest ranking is probably the most turbulent in that short history. Usually, schools move up or down just a few places year on year. This time around, however, swings have been wilder.”
Even more perplexing are The Economist’s sub-rankings in which the magazine lists the top ten schools in various categories, ranging from “increase salary” to “potential to network.” Not a single U.S. school made the top ten list of a salary increase, even though U.S. schools fared better in this year’s ranking. Oddly, IESE, which fell out of the top spot to Chicago, was ranked second on salary increases for its grads. Just as peculiar, The Economist named Thunderbird in Arizona as the school with the best “potential to network.” That seems a highly improbable possibility given the huge budgets and expansive alumni networks of many of the prestige schools.
The Economist also reported that the best U.S. schools had average GMAT scores that significantly exceeded the top European schools. The Economist said it uses GMAT scores “as a proxy for students’ intellectual prowess.” Chicago reported an average GMAT score of 717 for its students, while Stanford MBA candidates hit an average of 730. “In contrast,” The Economist noted, “the two highest-ranked European schools, IESE and IMD, both reported lower GMAT scores this time–683 and 671.”
The magazine said that the highest-ranked B-schools in Asia and Australia also had a tough year due to a down market for MBA jobs. Graduate pay fell at Melbourne Business School, The Economist reported, although Melbourne says the magazine made an error in its calculations, reporting that Melbourne MBAs made $71,200, 22% lower than the actual average of $91,772. The upshot: Melbourne fell to 46th place in the latest ranking, from 17th place in 2009. The Economist has not yet acknowledged the error or changed the result.
If the five major MBA rankings–BusinessWeek, U.S. News & World Report, Forbes, The Financial Times, and The Economist–the Economist’s methodology is considered the least credible by Poets&Quants. Because 80% of the ranking is based on unaudited information from business schools, there’s a high likelihood that some data has been fudged. The Economist also throws into its ranking formula criteria that has little to do with the quality of education, such as the percentages of international and female students (giving these two questions alone nearly a 17% of the weight in the ranking), the range of overseas exchange programs (a 6.25% weight), and the number of languages offered (also given a 6.25% weight). That latter metric would be something more appropriate to an evaluation of undergraduate education. The former measurements are more “politically correct” than they are accurate indicators of quality.
Chicago’s first place finish is largely the handiwork of its departing dean, Ted Snyder, who will be taking over the Yale School of Management next year. The school has accomplished a major turnaround under his leadership as witnessed by its earlier high rankings in the BusinessWeek surveys. Northwestern’s Kellogg School, meantime, was ranked 16th by The Economist, a drop of one spot from its 15th place showing in 2008.