London Business School and the University of Pennsylvania’s Wharton School are locked in a first place tie in the new 2011 global MBA rankings published by the Financial Times today (Jan. 31). Wharton scratched its way into the tie after being in second place last year when London was the sole winner in the widely-watched FT survey.
Perhaps the single biggest surprise of the new ranking is the appearance of the Indian Institute of Management for the very first time in the Financial Times survey. Though highly selective in India, the school has only been ranked by The Economist at 85th last year. The Institute landed in the 11th spot in the FT survey. The newspaper attributed the IIM’s rise to what it called “impressive salary data, both in terms of the average three years after graduation ($174,440) and increase in earnings following the MBA (152 percent).” The FT said the compensation numbers were consistent with another part of the newspaper’s methodology–its alums top the list for career advancement, a measure that compares students’ job titles before and three years after the completion of their MBA.
On the strength of an extraordinary 142% increase in alums’ salaries over three years, the Hong Kong University of Science & Technology rose to sixth–a jump of three places from 9th last year and 16th two years ago. Barcelona-based IESE also made its first Top 10 appearance in the FT list, ranking ninth with MIT’s Sloan School of Management (see our analysis on the big winners and losers in the survey).
The top ten business schools worldwide, as ranked by the Financial Times are: London Business School (1), University of Pennsylvania: Wharton (1), Harvard Business School (3), Insead (4), Stanford University GSB (5), Hong Kong UST Business School (6), Columbia Business School (7), IE Business School (8), MIT Sloan School of Management (9) and IeseBusiness School (10).
Of the five major MBA rankings, the Financial Times is only one of two (besides The Economist) that combines both U.S. and non-U.S. schools together in a single ranking. BusinessWeek and Forbes both rank non-U.S. schools separately. So does Poets&Quants. The result of the combined FT global ranking is an often highly quirky list with a bias toward non-U.S. schools due to the FT’s methodology (see our analysis on the strengths and flaws of each major ranking). The University of Chicago’s Booth School of Business, for example, which is ranked number one by both BusinessWeek and The Economist, ekes out a ranking of just 12th in the new FT survey–even behind the Indian Institute of Management, which had never made any other list before.
There are many more anomalies across the surveys. The Economist, for example, ranks Shanghai-based CEIBS 100th, while the Financial Times 2011 rank for the same school is 17. Berkeley’s highly reputed Haas School of Business is ranked 25th in the new FT survey, though The Economist ranks it third best in the world. These dramatic differences are the result of the different methodologies used to rank business schools by The Economist and the FT.
POTENTIAL FLAWS IN THE FINANCIAL TIMES METHODOLOGY.
No ranking of MBA programs is without flaws, but the Financial Times methodology is especially peculiar among the most popular rankings of business schools. The FT uses a mix of 20 different criteria, including many that what could be considered “politically correct” metrics that have little to do with the actual quality of an MBA program. For example, the FT ranks schools on such factors as the percentage of women students and faculty, the number of women on a school’s advisory board, the percentage of international students and faculty, the number of extra languages required to be spoken at graduation, and the percentage of international directors on a school’s board. It also includes such things as the percentage of faculty with PhDs as well as the number of doctoral graduates from a school and how many take up jobs with the school that awarded their degree. What any of this has to do with the quality of the MBA or the MBA experience is open to question.
The single most important metric in the Financial Times methodology is pay. Just two out of the 20 criteria measured, “weighted average salary” of alums three years out as well as the “salary increase” for those same alums above pre-MBA, accounts for 40% of the weight of the methodology. This information, moreover, is voluntarily reported by alums in a survey to the FT that every respondent knows will be used for ranking purposes. The result: it’s possible that these numbers are exaggerated by respondents to help their alma mater. Another worrisome matter is how the FT manipulates the actual salary numbers in an effort to create a level playing field from one country to another by adjusting them using the World Bank’s purchasing parity power index. The result: all of this pay data, accounting for the largest single weight in the ranking, is significantly inflated in poor countries that lead to many distortions.
And despite the fact that so many metrics are tossed into the rank of each school, there are numerous ties in the 2011 survey. some 45 of the 100 schools occupy ranks that are tired with other institutions. In the top ten alone, there are ties at first, fourth and ninth place. There are four schools tied for rank 64th and also for rank 65th. The large number of ties suggests that the actual differences among the school ranks is so small as to be statistically meaningless (See the full list of the top 100 schools and how they compare with other rankings on the next page).