London Takes First In BW Global Ranking

The Canadian business schools took a beating in Bloomberg Businessweek's 2016 international MBA ranking but was it justified?

The Canadian business schools took a beating in Bloomberg Businessweek’s 2016 international MBA ranking but was it justified?

Only 12 months ago, Bloomberg Businessweek proclaimed that the best MBA program outside the U.S. was in Canada at Western University’s Ivey Business. But in today’s new international ranking, Businessweek apparently has had a change of mind. Ivey slid nine places to finish 10, replaced by London Business School.

As MBA rankings go, that is one of the most dramatic declines to ever befall a No. 1 school. What caused the drop? According to Businessweek, Ivey fell from first place to sixth in its highly flawed survey of MBA employers. Ivey also slipped in Businessweek’s student survey, salary and job placement ranks, though improved its position in an alumni survey from 18th to 13th

In fact, every Canadian business school lost ground on the list, essentially suggesting a sample problem with the employer survey, especially when three MBA programs in Canada fell nine positions in a single year. Queen’s University’s Smith School of Business dropped nine places to finish 18th, from ninth a year ago; the University of Toronto’s Rotman School of Management fell five places to rank 23rd, from 18th in 2015; McGill University’s Desautels Faculty of Management lost nine places, dropping to 25th, from 16th a year earlier, and HEC Montreal slipped two spots to place 31st, from 29th.

EMPLOYER SURVEY RESULTS TO BLAME FOR DRAMATIC CANADIAN TUMBLE

In each downfall, declining positions in Businessweek’s employer survey appeared to be the culprit. Queen’s Smith School fell 13 spots in that portion of the ranking to 15th, from its lofty second place finish a year earlier; Rotman fell six places to ninth, from third; McGill lost a dozen positions to drop to 29th, from 17th, and HEC plummeted 10 plaes to 31st from 21st among employers.

For prospective MBA students, the drop in Canadian schools is oddly ironic. At a time when there are student visa issues in the post-BREXIT Britain and when U.S. President-elect Donald Trump is publicly discouraging immigration to the U.S., the Canadian schools are among the most welcoming to international students due to the country’s pro-immigration policies. If anything, Canadian business schools are in the best position in years to pick off the best and brightest student immigrants interested in an MBA degree.

London only had to move up one spot from last year’s ranking to claim first. Not far behind on the 2016 list was INSEAD, Oxford Saïd, Cambridge Judge, and IESE Business School in Spain. Oxford had to move up three places from sixth to gain its third place finish, while Cambridge climbed four spots to rank fourth. It was the first time that London won the No. 1 spot in this ranking since 2012 when the school’s full-time MBA program last topped the list. In that year, Ivey Business School ranked seventh.

Among other big movers, Melbourne Business School jumped 14 places to finish ninth this year, up from 23rd a year earlier. Imperial College London gained five spots to rank 15th.

INTERNATIONAL RANKING BASED ON SAME METHODOLOGY AS U.S. LIST

This year Businessweek ranked 31 full-time MBA programs outside the U.S., two more than last year. The magazine said that the new results are based on surveys of more than 1,000 recruiters, 15,000 alumni, and 9,000 recent graduates. The international ranking follows last month’s release of the magazine’s U.S. ranking (See 2016 Bloomberg Businessweek MBA Ranking Of U.S. Schools).

The international ranking is based on the same methodology as Businessweek’s U.S. list. This way of ranking full-time MBA programs, adopted last year, puts a 35% weight on a survey of MBA employers who are asked to identify just ten schools and assess the track record of graduates in their companies. INSEAD won this contest, followed by London Business School, Oxford, IESE in Spain, and ESMT (European School of Management and Technology) in Germany.

A survey completed by school alumni accounts for 30% of the ranking and is based on the increase in their median compensation over their pre-MBA pay, job satisfaction, and their opinions of the MBA experience. The top alumni survey winners were Oxford Saïd, IE Business School in Spain, Cambridge Judge, SDA Bocconi in Italy, and the National University of Singapore. Businessweek then adds in a separate student survey of recent graduates that is weighted 15%. That survey includes 27 questions that contribute to a school’s rank. IMD in Switzerland topped the student survey this year, followed by INSEAD, Melbourne, London Business School, and Cambridge Judge Business School.

IMD WAS RANKED FIRST IN SALARY, MANNHEIM FIRST IN JOB PLACEMENT

Finally, Businessweek tosses in two metrics from school reports: the job placement rate three months after graduation and starting salaries, each counting for 10% of the methodology.

IMD was first in the salary category, largely because its graduates are among the oldest MBA students in the world and therefore have more work experience to leverage in a salary negotiation. IMD students reported the highest pre-MBA salaries, averaging $80,000. London Business School was second, followed by HEC Paris, the University of St. Gallen, and INSEAD. In job placement, the top school this year was Mannheim in Germany, with ESIC Business & Marketing School in Seville, Spain, next, then London Business School, CEIBS in China, and Imperial College London. Oddly, INSEAD was 25th in job placement out of the 31 ranked schools, with 81.6% of graduates employed three months after graduation (compared with 92.7% at London or 97.9% at Mannheim).

So what was behind the major tumble by all the Canadian schools? The methodology behind Businessweek’s employer survey where something as simple as response rate for a school’s recruiters or sample error can cause less-than-credible movements in a MBA program rank. This is especially an issue because the sample of employers is not controlled to insure that the same people are responding each year. Instead, you can get a completely different set of respondents from one year to the next.

PROBLEMS WITH A FLAWED METHODOLOGY TO RANK SCHOOLS

This has become a much greater problem ever since the magazine changed its method of surveying MBA recruiters in 2014. Instead of sending a single survey to each major MBA employer—to the corporate official who oversees MBA hiring—Businessweek surveys every recruiter who comes on a business school campus, getting these lists from the schools. However, most companies sent to the schools alumni who work for them. So having alumni fill out these surveys causes significant bias in the sample. This change forced Businessweek to concede that alumni tended to rate their own schools “significantly more favorably than non-alumni.”

In 2016, Businessweek sent surveys to 11,877 recruiters for the international ranking. Some 1,055 at more than 500 firms returned the survey, though there are probably no more than 250 firms worldwide that actively recruit MBAs at more than half a dozen schools.

The alumni and student surveys also are less than a true measure of a school’s quality because respondents know their answers will impact their alma mater’s standing in the ranking. As a result, they are likely provide less-than-candid answers. That bias occurs across the sample but it is a fact that every year several schools have hard-to-explain scores that seem to defy logic. A few disgruntled alums or students, moreover, can also have a disproportionate impact on the satisfaction rates in the alumni and student polls.

BEST EMPLOYMENT RATE: MANNHEIM; HIGHEST MBA SALARY: IMD

Even so, users of rankings rarely read the fine print and organizations that rank programs rarely, if ever, point out the limitations of their lists. So most prospective students eyeing these rankings will take them at face value.

Some of the most revealing data in the Bloomberg Businessweek ranking is employment rates three months after graduation as well as salary and average debt. International business schools are generally less transparent than their U.S. counterparts with basic statistics on the health of their MBA programs. The new data–largely collected from alumni and students–shows that the best programs for employment are Mannheim, ESIC, London Business School, Imperial College London, and IE Business School (see table on following pages).

When it came to post-MBA salary, IMD led with average salaries of $150,000, $20K more than London Business School and $30K more than INSEAD. And whose graduates racked up the most student debt? The University of Toronto’s Rotman School of Management where average debt totaled $73,000, followed by London Business School where student debt averaged $70,000.

Questions about this article? Email us or leave a comment below.