Of the 20 metrics used by the FT to evaluate schools, there is a little-noticed calculation the British newspaper makes on an MBA’s 2014 value for money. Though it only accounts for 3% of the ranking’s methodology, most applicants would agree of its importance.
The FT is a bit elusive in describing exactly how it figures out how each business school ranks on “value for money.” The newspaper merely states that it is “calculated using salary today, course length, fees and other costs, including lost income during the MBA.” Sounds reasonable enough, even though that explanation is remarkably vague.
THE BEST SCHOOLS IN THE WORLD RANK LOWEST IN 2014 VALUE FOR MONEY
So guess which schools are dead last among the Top 100 ranked by The Financial Times yesterday (Jan. 26)?
New York University’s Stern School of Business, Stanford University’s Graduate School of Business, the University of Pennsylvania’s Wharton School, and MIT Sloan—even though these schools have among the highest reported salaries for their alumni three years after graduation. In fact, no school on the FT list beats Stanford’s average “weighted salary” of $184,566. Yet, Stanford is ranked next to last on “value for money.”
Come again? That is the nonsensical and peculiar result of The Financial Times’ calculation.
Those elite business schools have plenty of prestige company. Among the bottom 15 schools on “value for money” are Harvard Business School, the University of Chicago’s Booth School of Business, Dartmouth College’s Tuck School, UC-Berkeley’s Haas School, and Northwestern University’s Kellogg School of Management.
In other words, the schools that generally are considered to be the very best in the world have the worst “value for money” scores in The Financial Times ranking of the Top 100.
THE HIGHEST RANKED SCHOOL? THE MBA PROGRAM WITH THE LOWEST EMPLOYMENT RATE
And the schools ranked highest on “value for money?” No. 1 is Coppead Graduate School of Business in Brazil, which according to The Financial Times, had the lowest employment rate for any of the 100 programs it ranks. Only 27% of the school’s MBAs had jobs or job offers three months after graduation. The average “weighted salary” at Coppead, no less, is $88,256—$96,310 below the annual pay a Stanford alumnus gets.
In second place was The Lisbon MBA in Portugal, with an MBA employment rate of 68%, followed by Switzerland’s IMD, with a 78% employment rate. Only two U.S. schools make the Top 25. The highest ranked U.S. school on this measurement was Texas A&M University’s Mays School, which came in 19th. Brigham Young’s Marriott School is ranked 25th.
Of course, one major reason for these odd results has to do with the fact that one-year MBA programs have an inherent advantage over two-year experiences. The tuition is nearly half as much and you only lose one year of income when enrolled in those programs. But clearly the calculation that is being made by The Financial Times is that you have a job—when oftentimes it may take months to find employment. That’s a calculation that is not being made. Never mind that most of these poorly ranked U.S. programs are so resource rich that they grant the most generous scholarship aid to graduate students on the face of this earth.
None of this is intentional on the part of the editors and writers at The Financial Times. This is just what happens when well-intentioned people do something they know little about, kind of like the people who created and traded mortgage-backed securities on Wall Street before the 2008 collapse.
There are many other reasons why most observers believe the FT ranking is biased against U.S. schools. This is just one of them.
Bottom line: It’s just another reminder to use all rankings with a great degree of caution—and one very big grain of salt.