MIT's MBAs Outdid Harvard On Pay This Year

A collage of photos from MIT Sloan’s 2018 employment report

Here’s one for the books: Graduating MBAs from MIT’s Sloan School of Management this year actually outlearned their cross-town counterparts at the Harvard Business School for the first time ever. Median total compensation for Sloanies jumped 6.5% to $161,355, edging out Harvard’s $160,268 total.

In both cases, the starting pay numbers are records. They include median base salaries, with sign-on bonuses and other guaranteed compensation adjusted for the percentage of MBA graduates reporting those extras. At MIT Sloan, median starting salaries rose by $10K to $135,000, while sign-on bonuses came to $30,000, received by 70.3% of the class, and other guaranteed comp totaled $27,000, reported by 19.5% of the graduates. On an average basis, MIT Sloan MBAs made even more: $166,906 in salary, sign-on bonuses and other guaranteed comp.

While Harvard’s median base was $5,000 higher at $140,000, MIT’s MBAs managed to eke out the win due to higher sign-on bonuses than HBS’ $25,000 reported by a larger percentage of the class, 65% at HBS versus the more than 70% at Sloan (see Harvard MBAs Now Landing Starting Pay Over $160K). At Sloan this year, those signing bonuses jumped 20% from $25,000 last year.

NEARLY A THIRD OF MIT’S CLASS OF MBAS WENT INTO CONSULTING

All this makes MIT Sloan MBAs the most highly compensated of 2018–at least until Stanford GSB releases its 2018 employment report during the week of Dec. 10th. Stanford MBAs typically lead all other business graduates in the annual pay sweepstakes.

Of course, one reason why Sloan beat Harvard in pay this year has to do with industry choice. Some 31.6% of Sloan’s class took jobs in consulting versus the 25% over at Harvard. That is significant because the industry offering the highest starting salaries was consulting where the median base at Sloan was $147,000, considerably above the $132,500 in investment management. What’s more, a higher percentage of graduates who go into consulting get sign-on bonuses than many other fields. The highest paid salary in consulting was $185,000, not nearly as big a pay day as the Sloanie who landed a $230,000-a-year gig with an investment management firm, presumably a hedge fund. Of course, students who ventured into the investment management field at Sloan made up for that salary difference with median sign-on bonuses of $52,5000, compared to $30,000 in consulting.

Susan Sandler Brennan, assistant dean of Sloan’s career mangement office, attributes the unusual $10K jump in median salaries to a confluence of factors all coming together at the same time. She cites “a strong employment market, which supports higher salaries; students well-equipped by individual career coaching and new salary data tools to negotiate a favorable offer (negotiation also built into our required Career Core course); increasing recognition of the desirability of MIT Sloan students, for their combination of STEM backgrounds and rigorous analytical skills, and premiums paid based on geographic and functional considerations.”

97.1% OF THE CLASS OF 2018 HAD JOB OFFERS WITHIN THREE MONTHS OF GRADUATION

One example of that latter factor, adds Brennan, is that employers in the Bay Area who hire for product management roles might pay more when an undergraduate engineering degree is preferred. “While consulting salaries were level, we saw salary increases in other areas including software/internet/computers/electronics, Investment management, and oil/energy,” Brennan told Poets&Quants.

In a year when one school after another has been setting new records in MBA starting pay, Sloanies had a truly exceptional year. Besides beating out HBS in total pay, employment rates were among the highest ever. Some 90.9% of the class had job offers at gradution, up from 90.1% a year earlier, with 85.9% accepting those offers of employment, up from 84.2% last year. Within three months of graduation, 97.0% of the class reported offers, accepted by 93.6%, about the same as last’s year’s 97.1% offer rate accepted by 93.4%.

MIT Sloan also uses its employment survey to discover why MBAs accept the jobs they do. Overwhelming, the number one reason is ‘growth potential,’ following by job function. The big surprise here? Compensation ranks very low. Only 1.5% of this year’s grads say they accpected job because of the pay it provide. That compares to 35.3% who took a job for its growth potential (see below chart).

AMAZON IS TOP EMPLOYER FOR THE SECOND YEAR IN A ROW

While consulting again proved the most popular sector for Sloan’s grads, technology was not far behind. Tech firms employed 29.4% of this year’s class, down a touch from the 31.8% last year. The big news: Financial services made something of a comeback, though it remains far below the 26.6% of the Class of 2013 which chose that career field. Some 16.4% of this year’s graduating class went into financial services, up from 13.7% a year earlier.

For the second year in a row, Amazon hired more Sloan MBAs than any other company. The ecommerce giant employed 27 members of the class. Amazon overtook Sloan’s long-time number one employer McKinsey & Co. two years ago. This year, in fact, McKinsey fell to third place behind The Boston Consulting Group which hired two dozen Sloanies compared to McKinsey’s 22 (see table on top employers of Sloan MBAs over the years).

Also among the school’s top employers this year were Bain & Co. (15), Google (10), Deloitte Consulting (9), Fidelity Investments (6) and Goldman Sachs (6). Four companies—Analysis Group, Microsoft, Testa Motors and Wayfair—each hired five Sloan MBAs, while Ford Motor and IBM employed four each.

Of the 402 graduates in the Class of 2018, some 307 were seeking employment. Some 44 members of the class were sponsored and returned to their pre-MBA employers, while 39 students started their own businesses. MBA entrepreneurs this year accounted for 9.7% of the class, a big jump from the 4.6% in the Class of 2017.