Stanford Beats HBS in U.S. News Ranking

Stanford’s Graduate School of Business edged out Harvard Business School to gain first place honors in the 2011 U.S. News & World Report ranking out today (March 15). The two premier schools were in a dead tie in the ranking last year.

The top ten saw only slight changes. The big news already reported due to a sneak preview: Yale University’s School of Management cracked into the magazine’s top ten by tying New York University’s Stern School for tenth place. Yale was 11th last year, while NYU was ninth. Wharton, No. 5 in 2010, moved up two places to grab a tie with MIT Sloan School at number three.

Northwestern University’s Kellogg School of Management dropped one spot to fifth place, to fall into a tie with its long-time rival, the University of Chicago’s Booth School of Business, which also had been ranked fifth in 2010 by U.S. News.

The U.S. News ranking has come under heavy criticism of late from none other than bestselling author and New Yorker staffer writer Malcolm Gladwell who recently attacked the magazine’s methodology. His conclusion: the ranking is largely the result of completely arbitrary judgments made by the magazine and have little if anything to do with the quality of the schools or the programs they offer. Nonetheless, the U.S. News ranking–while not as influential as either BusinessWeek or The Financial Times–does carry considerable weight among the general public. (One other note: As a marketing ploy, U.S. News claims this is a 2012 ranking to give it greater shelf life. It is based on 2010 data and released in 2011 which is why we label it a 2011 ranking.)

U.S. News said it surveyed more than 430 accredited master’s programs in business to come up with its ranking. Typically, the magazine ranks 100 schools. This year, it has 111 schools that are ranked. The magazine only ranks U.S.-based schools, unlike BusinessWeek, The Financial Times, or The Economist which publish global rankings, either combined or separate.

The magazine ranks U.S. schools every year, using a vast amount of information and data. 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 three months after graduation (7% to 14%, respectively), student GMATs (about 16%), undergrad GPAs (about 8%), and the percentage of applicants who are accepted to a school (a little over 1%).

So how did Stanford edge ahead of Harvard this year and break through last year’s tie? According to U.S. News, Stanford bested its East Coast rival on the “recruiter assessment” survey (gaining a 4.6 out of 5.0 score vs. Harvard’s 4.5), on its acceptance rate of applicants (6.8% vs. Harvard’s 11.2%, on average starting salary and bonus ($131,949 vs. $131,759), on average undergraduate GPAs (3.69 vs. 3.67) and average GMAT scores of incoming students (728 vs. 724), and on 2010 graduates employed three months after graduation (92.4% vs. 90.1%. There is only a significant difference in one of these measures–the percentage of applicants accepted–which can easily be attributed to Stanford’s much smaller intake of students and the allure of California, factors that have nothing to do with the quality of one institution over another.

Harvard, meantime, bested Stanford in only one of the metrics used by U.S. News to rank business schools: percentage of MBAs employed at graduation (78.6% vs. Stanford’s 75.8%). The two schools had identical “peer assessment” scores of 4.8 out of 5.0. All told, the differences between the two titans of graduate business education was two index points–Stanford was awarded 100 points and Harvard was awarded 98 points. By the time you reach the last school in U.S. News’ top ten, which is Yale University’s School of Management, the index score falls to 81, the peer assessment score drops to 4.1, and the recruiter assessment score hits 4.0 (see the next page for a full table of the data used by U.S. News to rank schools).

  • A large part of the value of the MBA is the “stamp of approval” on the resume, showing that you have already been thoroughly evaluated and you are among the best in your industry. Harvard and Stanford are clearly the toughest to get in to, with a slight edge to Stanford. In fact, I would venture to say that the number of students admitted to H/S that chose to attend a different MBA program can be counted on 1 hand.

    Also, in response to the B-school guy, 84% vs 80% yield for H/S doesn’t give a clear picture of which school applicants prefer because of the difference in class size. Consider the following scenario: Stanford admits 400 applicants, Harvard admits 1000 applicants. Assume that 5% of applicants decline for personal reasons at each school (not doing an MBA). Assume that 200 of those applicants are admitted to both schools, 150 go to Stanford and 50 go to Harvard. This would make Stanford yield 77.5% (310/400), and Harvard yield 80% (800/1000). (Even though 75% of dual admits went to Stanford)

    These numbers might not be exactly accurate, but it shows how class size can skew the assumed meaning of yield. (I think Stanford wins about 65% of dual applicants in reality).

  • Andrew C.

    Per the matriculation rate, Columbia is also pretty high on that list because they have the early decision program. Without it, I doubt Columbia’s % would be in the top 5; well at least not higher than those of Wharton or Sloan.

  • Melissa,
    Yes, I know, it’s hard to imagine that a flawed ranking might be influential. But each of these exercises by major global media brands is done with good intentions. A tremendous amount of effort is invested by the staffs of U.S. News, BW, Forbes, the FT, and The Economist to “get it right.” Rankings are widely read and do influence behavior. There is no doubt about that whatsoever, regardless of how counter intuitive many of the results are. The fact that there are so many rankings tend to dilute their individual influence, but ask any administrator which two are most important and you’ll discover that BW and the FT will stand out. And yes, I did work for BusinessWeek. In fact, I created that ranking back in 1988.

  • B-school guy,
    Interesting numbers that show how applicants pick the schools. Thanks for providing them.

  • Melissa Thomas

    “Nonetheless, the U.S. News ranking–while not as influential as either BusinessWeek or The Financial Times–does carry considerable weight among the general public.”

    Are you kidding me? How on earth is either BusinessWeek or the Financial Times more influential? Amongst whom? No one takes those rankings seriously. You wouldn’t have happened to work for BusinessWeek in the past, would you?

  • B-School guy

    If you look at yield rates (enrolled/admitted) i.e. what percent of people that got into these school chose to go – you get a different picture. I believe this is a more telling sign in terms of reputation:

    Rank School yield
    1 Harvard 84%
    2 Stanford 80%
    3 Columbia 72%
    4 Penn 71%
    5 MIT 65%
    6 NYU 61%
    7 Chicago 61%
    8 Northwestern 58%
    9 Berkely 58%
    10 Tuck 55%
    11 Duke 53%
    12 Yale 45%

  • Bruce Vann

    I personally prefer Forbes’ rankings to most others. P and Q’s rankings are pretty comprehensive too. I’d take either.

  • Bruce Vann

    Johnnie, which employment numbers? ROI? Starting salary? Salary after 15 years?

  • Johnnie Walker

    US News put a lot of work in these rankings but I think rankings should solely based of employment numbers and academics.

    All students are interested in their chances of landing a good gig after graduation. All employers are interested whether the hired student has learned something and/or is qualified.

    The rest is kind of blurry and should not account.

  • Bruce,
    Right you are. Thanks for catching the error. It’s fixed.

  • Bruce

    I thought that Dartmouth was number 2 on Forbes list. here it says that Forbes ranks it at number 7 along with Cornell.