How Yale SOM Climbed Into The Top Ten

The new home of Yale University's School of Management: Evans Hall. Photo by Chris Choi

The new home of Yale University’s School of Management: Evans Hall. Photo by Chris Choi

Yale University’s School of Management came out a big winner in this week’s Financial Times‘ 2014 Global MBA ranking. The school climbed four places to finish in the world’s Top Ten for the first time in seven years. Even more impressive, SOM has soared a total of ten places in the past 24 months. In 2012, just before the arrival of new Dean Edward “Ted” Snyder, the school languished in in a three-way tie for 20th place, with the Indian School of Business and the University of Oxford.

What’s behind the vastly improved performance? The answer to that question turns out to be far more revealing about school rankings than it is about Yale SOM. One of the great mysteries of any ranking is what causes a business school to move up or down the list. When there are few metrics used to crank out numerical rankings, it’s much easier to figure out why a school’s performance improved or declined. But when there are many metrics–like the 20 different measurements that go into the FT ranking–it can be complete guesswork.

Nonetheless, consider this: Yale moved up four spots, even though it actually lost ground in nearly half–nine out of 20–of the metrics used by The Financial Times to rank full-time MBA programs. In only seven of the 20 categories did Yale show an improvement (in four metrics the school’s performance was equal to its last ranking). What’s more, the nine metrics in which Yale performed more poorly are weighed a formidable 68% in the methodology. The weight of the improved metrics represents just 22% of the total ranking. Still, Yale’s back in the Top Ten hunt.

DOWN IN ALUMNI SALARIES, INCREASES IN PAY, AND JOB EMPLOYMENT

The statistical alchemy that leads to this counter-intuitive result is beyond reasonable explanation. That’s especially so because the schools near the top of a ranking tend to be far more entrenched than those toward the middle or the bottom. This is because the differences in the underlying scores for schools are usually greater at the top than they are toward the bottom where they are so bunched together that many numerical ranks are statistically insignificant. So it should take meaningful changes to impact a school’s Top Ten rank.

In the most important components of the Financial Times’ ranking–compensation and placement–Yale was down in all four key measurements (see our comparison table on the following page). The school’s “weighted salary” for alumni three years after graduation–accounting for a fifth of the entire ranking–fell by nearly $8,500 to $150,880 from $159,370. The increase over pre-MBA salaries for alumni was 114%, four percentage points lower than the 118% a year earlier and ten full percentage points below the 124% increase in 2012 when Yale ranked 20th. Yet, salary increases are given a hefty 20% weight in the rankings methodology.

And the school’s “value for money” rank fell by three places to 83rd out of the top 100 ranked schools from 80th a year ago. The percentage of the latest graduating class that was employed three months after graduation fell last year to 85% from 86% a year earlier and 91% in 2012.

SIGNIFICANT GAINS ON THE FT’S INTERNATIONAL METRICS

Yale SOM also fell slightly in another key criteria: faculty research, which accounts for 10% of the ranking. The school’s FT rank on research published in 45 academic and practitioner journals was 23rd, down four places from 19th in 2013. Yale also was slightly down in “doctoral rank”–the number of doctoral graduates from a school in the past three years; the percentage of international faculty at the school, the percentage of women on the school’s advisory board, and the “aims achieved” rank–the extent to which alumni fulfilled their stated goals or reasons for doing an MBA.

Obviously, it wasn’t all bad news–otherwise Yale could not have gained four places, right? That’s true. The school’s “career progress rank”–calculated according to changes in the level of seniority and the size of company alumni are working in now versus before their MBA studies–jumped by 12 places to 20 from 32. The number of female students and faculty also is up.

The biggest gains in the FT metrics occurred on the international side and are in fact a reflection of the school’s new strategy under Dean Snyder. Among other things, he created a novel partnership of nearly two dozen business schools across the world that share research, teaching materials and students called the Global Network For Advanced Management. And Snyder also created a new one-year master’s program for MBA graduates of schools that are network members.

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