A QUALITY MBA STILL BOASTS A SHORT PAYBACK: 4.2 YEARS
An MBA from a quality school has a short payback–4.2 years in 2013. Most statistics only reveal the salary an MBA graduate a year after matriculation. But one year is a short time to measure the real value of a degree that people use over decades. This measure of return underestimates the value of any business school or its alumni network. Attending business school can be lucrative in ways that don’t show up on a paycheck, at least not immediately after graduating.
Another concern widely reported is that there are fewer middle-management positions available for MBAs today. That’s simply untrue. According to the GMAC 2015 Corporate Recruiters Survey Report[i], approximately 80% of companies surveyed are hiring recent business school graduates into middle-management level positions. Many of these firms are attracted to newly minted MBAs because they are skilled in business and marketing analytics, communication, and problem solving. These skill sets appeal to employers across all industries. In addition, the GMAC reports that, globally 84% of employers plan to hire MBA graduates this year, compared with 74 percent that hired them in 2014, and 59% of these companies plan to increase the number of new MBA hires they bring on board in 2015 compared with 2014.
Unfortunately, there are no shortcuts to academic and personal success. Some students have tried alternative, less expensive substitutes to higher education, such as online alternatives. While these substitutes are friendlier on your wallet, they typically fail to deliver the value they promise.
THREE REASONS WHY PURE ONLINE OPTIONS ARE UNLIKELY TO SUCCEED
There are at least three reasons why pure online options are unlikely to succeed: 1) There is huge value to be had by interacting with a faculty member and asking questions while participating in a class. Harvard’s amazing success with the case study methodology amply demonstrates that. 2) At some level, scarcity will cease to exist if we all start trying to scale up by offering online products. In that case, they truly will become valueless and 3) the best pedagogical tool available to us is student groups. Our students learn from each other as much as they do from the professor and it is hard (if not impossible) to replicate that online.
Learning on one’s own is brutally hard. I did this as an 18 year old when I had to spend a year studying physics on my own out of a textbook after leaving high school in order to get into an engineering program. It was an incredibly tough process, on par with the difficulty of the first year of my PhD at the University of Chicago! There is no doubt in my mind that the full-time, in-class MBA along with plenty of feedback and interaction will continue to be the best MBA experience possible for a while to come.
Is business school expensive? Yes. Does it take time to pay off? Yes. But the MBA continues to be by far the highest ROI graduate degree there is, and the full-time MBA has the best payoff of all. And that’s not only true of the “elite” schools; it’s true of at least the top 70 programs. And finally, MBAs gain skills and a network that will last a lifetime, and that’s the most important ROI there is.
Bottom line: Don’t be discouraged by the debates about the value of doing a full-time MBA. A degree from far more than the “elite” schools will deliver incredible, lifelong value. And I beg of those of us that are providing these transformative experiences to our students: please, let’s not be our own naysayers!
[i] Boyd, Emma. Is an MBA Worth the Cost? Financial Times, Web. April 29, 2014
[iii] Bones, Chris. The Fading Lustre of the MBA, Financial Times, Web. January 5, 2014