The Wackiest Business School Ranking Ever

Who said bankers don’t have a sense of humor?

Indeed, the newsroom at Dealbreaker, a snarky Wall Street blog, must have popped a rib laughing when their inaugural MBA rankings were passed around. Then, reality set in. Do you cop to your miscalculations, scrap your methodology, and start from scratch? Or, do you take the easy way, heralding your ranking as a great step forward that reflects a new world order?

You guessed it — bravado first, shame later.

At Poets&Quants, we often pile on The Economist for its cluttered methodology that yields bipolar ranking swings and flaky results (ay, mate…did you know Queensland is a top 10 MBA program?). Compared to Dealbreaker, The Economist is a model of steadiness and reason.

TEXAS FIELDS A FAR BETTER BUSINESS SCHOOL THAN FOOTBALL TEAM

How off-kilter is this ranking? Picture this: the University of Texas is a top 5 MBA program, ranking ahead of (gasp!) Stanford! Everything may be bigger in Texas, but even that whopper would be tough to fit into a 10-gallon hat. Emory’s southern gentility makes for a gracious community. So don’t expect Goizueta to crow about miraculously leapfrogging Wharton in Dealbreaker’s rankings (There are plenty of Wharton haters who’ll do it for them). Wouldn’t you love to be at NYU today? Sometimes derided as the refuge for Columbia rejects, Stern managed to edge out their uptown rival. Call it revenge of the nerds…on a higher caste of nerds, at least.

However, the biggest fatality in this wreck of a ranking had to be MIT. The inventor of modern finance and pioneering force behind experiential learning, Sloan scandalously finished 17th. You can almost picture Dean David Schmittlein playing Donald Trump in a press conference and calling on Dealbreaker. Fake news? Ha! Try fake ranking. But Schmittlein is too wise to give this any attention.

Of course, fake rankings are nothing new. Not long ago, we wrote about a goat farmer who created a nonsensical ranking of online MBA programs so he could get paid for clicks by sub-standard schools on the list with a few legitimate players to make the ranking seem credible (see Why A Goat Farmer Ranks Business Schools). And every year, Princeton Review publishes its fake ranking on what is supposed to be the best 294 or some odd list of business schools with a methodology so vague you have no idea what they are ranking. And now there’s Dealbreaker in search of clickbait.

The big takeaway from this new list: The true test of a business school’s strength is its ability to transcend a cockamamie ranking methodology. That’s Harvard’s gift. Like jellyfish and Louisiana politicians, the HBS brand can survive just about anything. It finished first in Dealbreakers’ ranking…and by a mile too. On a 100 point scale, it managed a 73.57, well above the Windy City duo of Northwestern (52.51) and the University of Chicago (51.79). Still, a 73 when most indexes logically start at 100 as they do in U.S. News, Poets&Quants, and Bloomberg Businessweek? Talk about tough grading! The silver lining: Now, Harvard knows what it’s like to be graded on a curve. Not so fun, is it?

DEALBREAKER RANKING DEFINED BY VAGUENESS AND SMALL SCOPE

So what’s behind this ridiculous ranking? Well, it stems from the best of intentions (which, as you know, is the Autobahn to the abyss). Give Dealbreaker credit: They wanted to make their ranking simple. Mission accomplished. The ranking is divided into just three measures.  Some 40% of the weight was allocated to placement in the Dealbreaker 50, a set of employers from “banks, funds, tech firms, and other select companies.” Another 40% was given to school representation in c-suite positions in Fortune 500 companies. The rest? It was based on salary-to-debt outcomes from CommonBond, a provider of student loans.

What could possibly go wrong from that?

Ah, where do you even begin!

For one, the firms comprising the Dealbreaker 50 are grist for a Nancy Drew mystery. It’s a bigger secret than Coca-Cola’s recipe or Jimmy Hoffa’s (ahem) residence.  Dealbreaker admits that its companies were “determined through a combination of audience analytics and the editorial judgment of the Dealbreaker team.” Too bad they don’t disclose the names. We can probably take it on faith that Goldman Sachs, JPMorgan, Google, Amazon, and Apple are represented. What about those consulting firms that often get first dibs on B-schools’ best-and-brightest?  By definition, you can assume rapidly-growing mid-sized firms, a popular staple of MBA hiring, are excluded (as are startups). Let’s not forget public service, which gets the short shrift here too.

As a result, readers have no idea how big the sample is, let alone the true composition of companies or industries. You don’t even know how Dealbreaker figured out how many MBAs work at these undisclosed companies and what schools stamped their diplomas. Guess you’ll have to rely on “editorial judgment.” Then again when has that phrase ever inspired confidence?

FORGET BIG GIFTS, C-SUITE EXECS WORTH 40% OF THE RANKING WEIGHT

The other big component of this ranking, c-suite positions in the Fortune 500, suffers from similar shortcomings. Call this a legacy measure that equates status and luck with quality. Fair enough, but does it actually gauge the performance of the school today — or 10, 20 or 30 years ago? Rock star alumni may bring attention to their alma maters (Just look at HBS’ Jeffrey Skilling), but their inclusion fails to measure alumni engagement or the willingness of graduates to help their successors. Isn’t the network why many MBAs really head back to campus in the first place?

There’s nothing wrong with this ego massage of a metric. Every ranking has its excesses. U.S. News indulges the opinions of deans and directors, who can barely keep tabs on their own programs let alone their peers. Get this, The Financial Times actually devotes weight to the number of PhDs a school churns out. Seriously! However, the c-suite from elite firms covers a sliver of each school’s alumni population. The numbers could be even smaller; Dealbreaker lists the pool as the Fortune 500 in its methodology and the Fortune 100 in its story (Oops!). Either way, are big names worth 40% of the weight when they show up on campus once a year at best? Probably not.

In the least, Dealbreaker found a way to integrate the mother of all metrics: graduate pay. Even here, the results are nebulous at best. Like everything else, Dealbreaker doesn’t disclose the salary-to-debt outcomes from its “proprietary data” from CommonBond, which would have an incredibly small sample of graduates who have actually borrowed money from the firm.  Mind you, it is refreshing to see debt finally factored into the ranking equation. However, the ratio overlooks a key point. The higher the starting pay, the faster you can pay off debt.

Take Emory, for example. According to SoFi, a rival of CommonBond, Emory students collected $131,651 in starting pay against $86,613 in debt in 2016, meaning graduates made $45,000 more than they owed. Compare that to NYU, where the ratio was $145,999 in pay against $108,567 in debt — a $37,000 difference. However, NYU grads will theoretically earn $14,000 more per year, not counting accrual, rendering the debt point moot after the second year.

HAUGHTY GOALS PRODUCE HORRIFIC RESULTS

The viability of this measure is further compromised by the nature of CommonBond data. Unlike school-supplied data, it relies on a subset that may not fully align with market reality. Think about it: CommonBond consolidates and refinances student loans. Their respondents are debtors! Like the companies and executives that account for 80% of the ranking, the debtors are only a portion of their respective classes. Student debt rates in the Class of 2015, for example, ranged from 42% (Rice) to 55% (Harvard) to 61% (Duke). As a result, this measure is automatically skewed against schools with generous financial assistance packages or reasonable tuitions and living costs, not even accounting for the still smaller samples of CommonBond customers.

The Dealbreaker ranking does live up to its goal of being an outcomes-based ranking (though Forbes had already cornered that niche years ago). Their charter even reads like Martin Luther tacking a ranking onto big media’s door: “We’re not interested in “expert opinion about program quality” or “how students feel just before they graduate” or a school’s “reputation as measured by an online poll.” Well, that takes a lot of survey work and time, or in other words, real resources and effort.

Like you, we’re interested in results. All you need to know about an MBA program’s reputation and quality is whether it helps you get the job you want at the company you want, and whether it gets you paid.”

That’s good copy, but Dealbreaker’s results put the “rank” back into “ranking.” It doesn’t pass the smell test. Think of it as a market correction that turns a dip into a depression. It may be worth a chuckle, but you wouldn’t want to stake a career on it.

To see the Dealbreaker ranking compared to the Poets&Quants ranking, go to the next page.

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