Stanford Repeats At No. 1 In Financial Times 2019 MBA Ranking


The Financial Times global ranking is the most closely followed in Europe and Asia, while U.S. News’ entirely U.S.-centric ranking has become the most influential in the U.S. The FT’s methodology is based on 20 different metrics, including several that tend to favor non-U.S. schools. Among other things, metrics that add score points to a school’s standing include the percentage of students, faculty and trustees who carry passports from a country where the school is not located, whether students and alumni worked in foreign countries, whether students had an international course experience and whether the school requires students to learn extra languages prior to graduation. What any of these criteria have to do with the quality of an MBA degree is a matter of opinion. This year removed its PhD graduates metric and replaced it with a new criterion: Corporate Social Responsibility. With a weight of just 3%, it is based on the proportion of teaching hours from core courses dedicated to CSR, ethics, social and environmental issues.

Often, an even greater impact on a school’s rank can be the result of the FT’s decision to use a purchasing power parity (PPP) formula to convert and count actual salary data — the most heavily weighted metric in the methodology. Such currency gymnastics favor schools that supply graduates to countries with high rates of poverty. With the PPP adjustment, for example, it’s probable that CEIBS would not have finished in the top five. The school’s latest employment report shows that the median base salary for MBAs in 2018 was $64,469. The FT’s adjusted salary today figure for CEIBS alumni is $177,126.

This adjustment has an especially negative impact on all U.S. schools because the vast majority of international students who get an MBA in America want to live and work in the U.S. where their compensation would not be inflated by the PPA filter. Although 34% of this year’s graduating class at Harvard Business School were international, for example, only 13% of the class took jobs overseas and that percentage includes some U.S. citizens. At INSEAD, in contrast, nearly 70% of the MBA students from Asia Pacific (67%), Africa and the Middle East (57%), and Latin America (63%) returned home to regions where a PPP adjustment would inflate their actual compensation.


What’s more, even though the FT is putting a 40% weight on these pay numbers, they fail to account for total compensation — just salary. In the U.S., a good many MBAs from elite schools often get stock options (at Stanford, 32% of the newly minted graduates last year reported stock compensation) and significant annual bonuses that would put their schools well ahead of many of the institutions that are routinely ranked higher by the Financial Times.

Unlike U.S. News, moreover, the FT pays no attention at all to incoming student quality in its ranking — another reason why U.S. schools do less well on this list. GMAT and GRE scores and undergraduate grade point averages, all key components of a business school admission decisions — are ignored. So are acceptance rates, which also tend to be lower at many of the best U.S. schools. At Stanford, for example, only 5% of the candidates who apply for admission get into its MBA program. At INSEAD, which does not report this number, the acceptance rate is routinely above 30%, according to insiders.

Another issue with the FT ranking is that the newspaper fails to reveal the underlying index scores that allow it to crank out the numerical rankings. Those scores show whether a school’s rank is statistically different among other schools ranked nearby. In most rankings, these index scores tend to cluster in close bands and often show that there is no meaningful statistical difference between a school ranked 45th and one ranked 50th. The FT concedes that clustering is a reality and that there are four different groups of schools on its list of the top 100.


In a footnote, the newspaper points out that “the pattern of clustering among the schools” significant. “Some 200 points separate Stanford’s Graduate School of Business from the College of William & Mary’s Mason School, the MBA program ranked number 100. The top 14 players, down to Northwestern University: Kellogg, form the top group of MBA providers, explains the FT. “The second group, headed by Dartmouth College: Tuck, spans schools ranked 15 to 38. Differences between schools are relatively small within this group. The 51 schools within the third group headed by Imperial College Business School, rank joint 39th, are similarly close together. The remaining 11 schools headed by George Washington University make up the fourth group.” Just how close is unknown because the FT won’t publish the index numbers for each school.

Stanford came in first by posting the highest weighted alumni salaries of any business school — $228,074 to Harvard’s $205,486 — and the number one rank for career progress as well as the number two rank for alumni recommendations (Harvard was first on this measure). MBA alumni who recorded the biggest salary increases, however, were those from the Indian School of Business, whose MBAs reported an average jump over pre-MBA pay of 187%. By way of contrast, Stanford alums averaged a 129% increase, while HBS grads averaged a 112% jump.

But no schools score well across all of the FT’s metrics. Some 59 MBA programs, for example, were ahead of Stanford on the newspaper’s “value for money rank” and Stanford was just 23rd on the “career service rank” even though its alumni have the highest reported salaries. The top five schools for “value for money” are the University of Florida, Durham University, Cambridge, Melbourne Business School, and Oxford. The top five for career progress are Stanford, Babson College, Fudan University, Harvard and IIM-Ahmedabad.


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