MBA Rankings Largely 'Follow The Money'

In “All the President’s Men,” a man in the dark shadows of an underground garage uttered one of the more memorable phrases in any movie.

“Follow the money,” advised Deep Throat, the code name for the crucial source of The Washington Post stories that broke the Watergate scandal in the early 1970s.

Despite claims that MBA rankings measure the overall quality of a business school or the value of the degree a school grants, most major rankings have followed Deep Throat’s counsel. By and large, MBA rankings follow the money.

According to a new analysis of the top five most influential MBA rankings, salary and placement data vastly outweigh any other criteria in determining a school’s rank–not the value of an alumni network or the quality of the faculty or the learning experience in and outside a classroom (see table below).

NEARLY HALF THE WEIGHT IN THE TOP MBA RANKINGS REFLECT SALARY & PLACEMENT

In fact, 45% of the total weight in the five top rankings reflect salary and placement figures–often from surveys of alumni with response rates that can be questionable.

Alumni opinion? That’s worth about 15%. Recruiter opinion? Another 12%.

What about the actual quality of a class, measured by GMAT scores, grade point averages, admission acceptance rates or work experience? Those metrics account for about 9% of what the top five rankings measure.

Faculty? The published research by a business school’s professors, as well as the number of profs with Phds, account for about 8% of the weight in the top five rankings. Not all that much, given the importance business schools place on the quality of their faculty.

The logic behind the emphasis on MBA pay and jobs is simple: What the market actually pays for an MBA really determines the worth of the degree. Most people sign up to go for an MBA degree to get a better paying job and career. Otherwise, the significant investment in the degree would make little sense.

Comparison of Common Ranking Criteria

Source: Matt Turner, PhD market researcher at UT-Austin’s McCombs School of Business

Problem is, MBA compensation also is a reflection of the career paths of a school’s MBAs as well as geography. MBAs who take jobs in consulting are paid a lot more than MBAs who go into marketing or retail. “The highest salaries are a reflection of consulting jobs,” says Matt Turner, a market researcher at the McCombs School of Business at the University of Texas at Austin. “So, if you are interested anything other than consulting, what does a school’s high average starting salary really tell you? It’s pretty irrelevant.”

BusinessWeek’s Historical MBA Rankings — 2010 to 1988

Financial Times’ Historical MBA Rankings — 2012 to 2001

Ranking The Rankings