What Happened To The London Business School?

Anniversaries are great benchmarks to measure how far you’ve come…or how far you’ve fallen behind. Case in point: The London Business School. A decade ago, LBS ranked as the top MBA program according to The Financial Times. In fact, the school held the top spot for three years from 2009-2011. 

Back then, LBS ranked among the top MBA programs for post-graduation pay increase. It was a top-five program for Aims Achieved, Alumni Recommendation, and international mobility. Since its glory days, LBA has begun to slip. After plunging to 4th in 2013, it climbed back to 3rd and 2nd in 2014 and 2015, respectively. It fell back to 3rd in 2016, still staying ahead of Wharton and Stanford.  A year later, it slipped to 6th. While LBS managed a comeback to 4th in 2018, it has since descended to 6th and 7th over the past two years respectively…with an ascendant HEC Paris nipping at its heels, no less. 

What happened? By the numbers, LBS lags behind its peers in starting pay. Last year, graduates pulled in $171,492 in weighted starting pay (i.e. 20% of the ranking’s weight). That’s enviable compensation for most MBAs, but it ranks behind 15 other schools. Still, LBS pay has traditionally trailed its peer schools. In 2011, for example, 11 business schools scored higher weighted pay than LBS. In fact, LBS pay has risen by $25,716 over the past nine years. Problem is, its peer schools have generated greater pay increases. At the Wharton School, for example, the increase has been $39,992 over that period, almost a match to Harvard Business School’s $39,782. And INSEAD pay has risen by $33,344, too. 

This $171,492 start pay also represents a 105% increase over pre-MBA pay. That makes it a great investment, no doubt. Still, the increase falls far short of a program like CEIBS. Ranked 5th, CEIBS weighted pay is both higher in dollars ($185,103) and growth percentage against pre-MBA pay (187%). Together, weighted pay and pay increase each account for 20% of the ranking’s weight. In both categories, LBS doesn’t measure up to the MBA programs above it aside from INSEAD (which reported a 101% increase). What’s more, 65 programs produced post-graduation pay jumps higher than LBS. 

Beyond pay, LBS’ data is almost a picture of consistency over the past decade…with two caveats. In Career Progress – where a 3% weight that is based on the level of alumni seniority – LBS has fallen from 11th to 25th since 2011. More telling is Value for Money, a 3% weight concoction that contrasts salary against lost income and MBA costs. Here, LBS ranked 96th in 2020 – a full 39 spots lower than where it was in 2011 when it last reigned as the world’s top MBA program. 

The Australian Train Wreck

The Financial Times loves Asia. This year, seven Chinese MBA programs cracked the Top 50. India boasts three programs among this year’s 50-best. And Singapore counts for two more (or three if you count INSEAD). However, there is one Asian nation – Eurasian, technically – that trails behind its continental counterparts. This year, the gap only grew wider.

Like previous years, Australia featured three full-time MBA programs in FT’s ranking. In 2020, this trio suffered some of the worst drops of the year. The Macquarie Graduate School of Management tumbled 23 spots, falling from 74 to 97 – the worst loss of any business school this year. The Australian Graduate School of Business plunged 18 spots to 88th. How is this for an eye-opener? The University of Melbourne finished 80th with FT this year – 19 spots lower than the past. Even more strange: Melbourne ranked 28th in The Economist global ranking released just three months ago.

Mind you, Asian schools experienced the biggest ranking drops this year – 8 of the 11 biggest losses, to be exact. However, Australia stands out for sheer scale: a combined 60 spots lost. What went wrong? Think pay and placement. For Melbourne MBAs, weighted starting pay slipped from $118,959 to $115,674, which accounts for 20% of the ranking weight. To add insult to injury, Melbourne’s three-month post-graduation placement fell from 95% to 79% (another 2% of the weight). At the Australian Graduate School of Business (AGSB), the pay drop was even steeper, plunging from $119,671 to 106,393. In between, you’ll find Macquarie, slipping from $128,166 to $120,091. At the same time, AGSB placement slid from 82% to 78% (while Macquarie actually rose three points to 93%).

The FT ranking emphasizes the increase in pay from pre-MBA to post-graduation. In fact, FT gives this number a 20% weight. Considering the above-mentioned pay decreases, this measure also dinged Australian schools. Notably, AGSB lost 20 points as pay increased just 62%. Melbourne followed suit as pay increase fell from 87% to 74% against the previous year. Like before, Macquarie bucked the trend, going from a 81% to an 83% increase.

One reason? While Australia has traditionally managed to dodge recessions, it lacks the turbo-charged speed and scope of the American economy. According to the Australian Bureau of Statistics, unemployment stood at 5.3% in October 2019, a positive indicator undercut by an 8.5% underemployment number. What’s more, the government reported the smallest increase in fourth-quarter GDP since the 1991 recession, a further drag on demand and wages.

Beyond pay-related measures, Australian programs actually fared well in some measures. Melbourne’s career services center earned plaudits in FT’s alumni survey, rising from 54 to 29 (with AGSB’s center also climbing by 10 spots). Still, the measure that stands out is Recommendation – defined as alumni who’d recruit from their alma mater. Melbourne ranked 55th – up 10 points (with AGSB climbing six points to 61). The optimist would consider those improvements to be building blocks that can only help once pay gets back on track. The pessimist’s response? Macquarie ranked 99th in being recommended by alumni, down four points from the previous year.