‘OUR STUDENTS ARE WILLING TO BE PATIENT’
So Stanford, a school with the highest average GMATs, the lowest acceptance rate and the highest median pay, got clobbered in this ranking. But it’s not because of a weak job market in Silicon Valley. In fact, it’s anything but weak. The reason Stanford is an aberration—and is also being penalized for it by U.S. News’ methodology—is because MBAs are so confident in their job searches that they are exceptionally choosy about the jobs they want and will accept. And more often than ever before, many of the opportunities they are seeking are with startups and early-stage companies that don’t hire early.
“Because the market for our graduates remains very strong, they are willing to be patient and take the time to find the opportunities that fit them best,” explains Yossi Feinberg, senior associate dean for academic affairs, who oversees the Stanford MBA program.
It’s an example of how rankings metrics can often have perverse effects on outcomes–and that’s besides the more worrisome flaws in U.S. News surveys of deans and recruiters. The response rates on the magazine’s poll of recruiters hasn’t been revealed in years and U.S. News now mushes together three years of results, presumably because the one-year sample size is so low. Many of the recruiters who complete these surveys are alums of the schools and often don’t recruit at programs that are not their alma maters. Most deans, moreover, have little to scant knowledge of what is going on at other schools they are asked to rate.
FLAWS IN U.S. NEWS’ METHODOLOGY ALLOWED WHARTON TO TIE HARVARD
Regardless, the U.S. News metrics, which worked to disadvantage Stanford, had the opposite effect on Wharton. For one thing, U.S. News uses “average” salary and bonus, a metric that is less reliable than “median” in its methodology. Averages can often be skewed by a few outliers, a circumstance that can lead to major distortions in reported pay numbers. That clearly was the case this year for Wharton which was able to provide U.S. News with numbers that claim Wharton MBAs are the highest paid in the U.S. at with average salary and bonus of $158,058, better than Stanford’s $153,563 or Harvard’s $153,830.
In truth, total median pay–including median salary, median sign-on bonus and median other guaranteed compensation adjusted for the percentage of graduates receiving bonuses–shows that graduating MBAs at six other U.S. schools had higher comp numbers than Wharton. No. 1 Stanford was at $163,823, nearly $15,000 more than Wharton’s median of $148,892. MBA grads at Harvard, NYU Stern, UVA Darden, Michigan Ross, and Dartmouth Tuck all made more last year than Wharton MBAs who pretty much pulled down what grads at Yale’s School of Management made. Yet, “average salary and bonus”–not total median compensation–represents 14% of U.S. News‘ methodology.
Then, there is yet another less visible flaw in how U.S. News‘ counts these all-important pay and employment numbers supplied by the schools. Wharton’s reported pay and employment numbers are based only 92% of its graduating class. The numbers from Harvard, Kellogg, Tuck, U.C. Berkeley, UVA Darden and many other schools are reflective of 100% of their graduates. The numbers from Stanford, Chicago Booth, MIT Sloan, Duke Fuqua, Yale SOM are based on 99% of their graduating classes.
In fact, at least 44 other prominent U.S. schools, including Temple University’s Fox School in Philadelphia, have higher reporting rates for career outcomes than Wharton. The reporting rate at Wharton, moreover, has been declining for several years. It was two points higher last year at 94% and two additional points higher in 2014 at 96%. Ten years ago, it was 97%.
Maryellen Reilly, deputy vice dean of admissions, financial aid and career management, defended the credibility of the school’s employment statistics. “Given our large student population, getting 85%+ to report is an extraordinary accomplishment, as it is all voluntary reporting,” she said in a statement. “Based upon the information we receive from our students and from employers we are confident that what is reflected is an accurate representation of the employment outcomes for our students.”
ACCEPT THESE RANKINGS WITH A VERY BIG GRAIN OF SALT
Typically, however, graduates who fail to report back to their alma maters about their outcomes are among the least satisfied in the class, often because they don’t have jobs or they took jobs that pay them less than expected. Wharton’s pay and placement numbers—the very stats that got the school its first place ranking this year—would have substantially benefited from this anomaly. Wharton wasn’t the only elite school to base its employment report on a smaller sample. Columbia Business School was at 90% last year, down from 92% a year earlier, while Michigan Ross was at just 87%, down from 99% in 2012. Ninth-ranked Columbia and 11th-ranked Ross both rose by one place in this year’s U.S. News‘ ranking.
Unlike the Financial Times, which penalizes a school for lower reporting rates on placement metrics, U.S. News accepts whatever a school provides, regardless of the underlying size of the sample. The MBA Career Services & Employer Alliance, a trade group of business school career officials and employers, requires that employment reports are based on 85% of a graduating class. But some B-school veterans believe that a standard allowing schools to exclude 15% of its graduates provides too much wiggle room to significantly influence the actual numbers.
All of this is to remind users of these rankings to take them with one very big grain of salt. Over time, business school rankings are incredibly helpful to determine where a school stands among its peers. But they are always the result of dozens of often mindless decisions that can produce some pretty perverse outcomes.
THE TOP 25 BUSINESS SCHOOLS ON CORE METRICS
|School||GMAT||GPA||Accept Rate||Pay||Jobs at Grad||Jobs Later|
|11. Michigan (Ross)||708||3.44||26.3%||$145,926||85.6%||91.8%|
|12. Duke (Fuqua)||695||3.47||22.1%||$144,799||83.1%||91.6%|
|12. NYU (Stern)||710||3.51||23.1%||$145,413||82.1%||91.8%|
|14. Virginia (Darden)||712||3.50||26.5%||$150,823||80.7%||90.2%|
|15. UCLA (Anderson)||715||3.52||20.7%||$140,457||73.8%||87.7%|
|16. Cornell (Johnson)||700||3.37||27.6%||$146,252||79.8%||90.1%|
|17. Texas (McCombs)||699||3.42||28.0%||$135,194||77.5%||89.2%|
|18. UNC (Kenan-Flagler)||700||3.37||36.4%||$131,908||75.1%||90.4%|
|19. Carnegie Mellon (Tepper)||686||3.30||30.3%||$140,289||76.0%||85.2%|
|20. Emory (Goizueta)||683||3.30||33.1%||$138,864||84.0%||93.1%|
|21. Georgetown (McDonough)||692||3.40||44.6%||$124,417||69.1%||90.3%|
|21. Indiana (Kelley)||670||3.34||31.4%||$128,637||83.9%||94.0%|
|21. Washington Univ. (Olin)||688||3.46||29.7%||$115,830||78.5%||96.3%|
|24. USC (Marshall)||692||3.37||33.3%||$126,934||75.2%||91.5%|
|25. Arizona State (W. P. Carey)||682||3.54||14.3%||$116,575||78.7%||95.1%|
|25. Vanderbilt (Owen)||691||3.40||45.5%||$129,587||80.3%||90.1%|
Source: Schools reporting to U.S. News & World Report. Pay equals average salary and bonus for the Class of 2016. Job stats are for accepted offers, not offers
(See the following pages for the full ranking and year-over-year changes)