The Vertigo In The Financial Times 2015 MBA Ranking

Rochester's Simon Graduate School of Business is ranked 35th among the top 100 U.S. business schools by Poets&Quants.

                             Rochester’s Simon Graduate School of Business

The year-over-year changes in MBA programs at the best business schools tend to be minuscule, if there are any changes at all. MBA experiences never undergo revolutionary change. Truth is, they evolve over time, little by little.

So it may come as a surprise when an annually published ranking that purports to measure the quality of these programs shows dramatic, if not shocking, changes in a single 12-month period.

That’s the case yet again with The Financial Times’s 2015 ranking published today (Jan. 25). Nearly one in every three–or exactly 33 of 100–experienced double-digit gains or falls. Unexplainably, the University of Rochester’s Simon School of Business plunged 30 places to 85th this year from 55th only a year ago. What happened? The school got a new dean who hasn’t had time to change anything in the MBA program.

A NEW DEAN TRIES TO EXPLAIN WHY HIS SCHOOL FELL MORE THAN ANY OTHER THIS YEAR

In an email to faculty, staff and students today, Simon Dean Andrew Ainslie called the results “disappointing, but in no way do they define the extraordinary talent of our faculty, students, and alumni. While we would like the various rankings to accurately reflect the state of the school and the momentum we are building right now, (the) Financial Times is different from most others as it is highly lagged. FT surveys alumni three years removed from the program (this year, the MBA Class of 2011). The result reflects where we were then versus where we are today.”

Ainslie, who has been in the job for less than seven months, went on to say that Simon’s 2011 graduates “experienced the tail end of a series of years where Simon Business School was disproportionately impacted by the economic downturn and the move away from our traditional strength of hiring in the financial markets.” In 2011, he noted, the placement rate at graduation was 64% and subsequently climbed to 65% in 2012, 67% in 2013, and 79% in 2014. Three months post graduation, those numbers were 89% in 2011, 92% in 2012, 91% in 2013, and 95% in 2014. “These are dramatic improvements and demonstrate the changes that the CMC, under Karen Dowd’s leadership, has been able to implement,” wrote Ainslie. “In that same time span, average starting salary increased from $76,000 in 2011 to $92,000 in 2014.”

The dean was gracious enough not to attack the FT’s methodology. In truth, the FT showed only a $2,286 year-over-year decline in alumni salaries which were $108,321 this year. That’s less than a third of the drop recorded by Stanford University’s Graduate School of Business, according to the FT. Simon MBAs experienced salary increases of 102% over their pre-MBA pay, one of only 30 schools in the 100 to double or more than double a person’s salary. The school’s “placement success rank” slipped just five places to 44th, a rank better than No. 4 INSEAD’s 51st placement rank or No. 11 Ceibs 80th rank.

Clearly, a lot more is going on here than a tough placement year for a school to plunge 30 places in 12 months.

CARLSON PLUNGED FROM 54TH TO 83RD

Simon’s scary fall wasn’t an anomaly. The University of Minnesota’s Carlson School of Management plunged 29 spots from 54th to 83rd, while the University of Illinois’ business school at Urbana-Champaign lost 27 positions from 44th to 71st. If you were to ask the deans of those schools to explain why their institutions fell so dramatically in stature, they would just shake their heads. There’s nothing wrong with those MBA programs.

The culprit is a highly flawed and intellectually dishonest ranking system that puts numerical ranks on schools whose underlying index numbers are so close as to be statistically insignificant. Unlike Bloomberg Businessweek and U.S. News & World Report, which provide those index numbers that are used to determine a school’s numerical rank, The Financial Times chooses to hide that data from its readers. So no one knows how remarkably close one school is to another on its list.

The yo-yo results, however, indicate that the methodology used by the FT cranks out index numbers so close to each other that extreme volatility is pretty much the norm. Those unexplainable wild swings from year-to-year, of course, only undermine what little credibility a ranking could have. Nonetheless, The Financial Times is an authoritative source of business information and that gives this silly ranking enough credibility to harm the reputation of very good schools and programs.

ROLLER-COASTER RESULTS THAT RAISE MAJOR CREDIBILITY ISSUES

And of course for every school that goes up, there’s inevitably another that goes down. And for every school that pops up on the list, there’s another that falls off. This year, in fact, ten schools which failed to make last year’s FT ranking appeared on the new 2015 list. Eight of the ten had to rise by at least double digits to achieve their 2015 rank. The Chinese University of Hong Kong, unranked last year, came in at No. 30 this year, ahead of the University of Virginia’s Darden School, Carnegie Mellon University’s Tepper School, and UNC’s Kenan-Flagler Business School. The implied increase for the school is at least an unbelievable 71 places, if CUHK just missed last year’s top 100.

The MBA program at the University of San Diego–which made the FT 100 for the very first time debuting at a rank of 66–beat the business schools at Ohio State, the University of Wisconsin, Washington University, and Babson College. The implied increase for San Diego? A remarkable 45 positions, if the school would have clocked in at 101 a year ago.

Such results boggle the mind–and all rational explanation, which is why the authoritative nature of the FT ranking has been greatly diminished over the years. The most recent informal survey of MBA applicants by mbaMission, a leading admissions consultant, found that only 10.2% of the respondents considered the FT their most trusted source of business school rankings. The most trusted? U.S. News & World Report which was cited as most trusted by 46.1% of the respondents. Of course, U.S. News does not rank schools outside the U.S. which gives the FT a bit more clout than it deserves.

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About The Author

John A. Byrne is the founder and editor-in-chief of C-Change Media, publishers of Poets&Quants and four other higher education websites. He has authored or co-authored more than ten books, including two New York Times bestsellers. John is the former executive editor of Businessweek, editor-in-chief of Businessweek. com, editor-in-chief of Fast Company, and the creator of the first regularly published rankings of business schools. As the co-founder of CentreCourt MBA Festivals, he hopes to meet you at the next MBA event in-person or online.