Ten Biggest Surprises In The 2023-2024 U.S. News MBA Ranking

3) How U.S. News Is Encouraging Schools To Limit International MBA Students

Whenever U.S. News comes out with a new ranking, there are shocks and surprises aplenty. Our love-hate relationship with rankings ensures that lots of folks will vehemently disagree when they see a school ranked higher or lower than their own personal perception of a program’s reputation or actual quality. But this year the unexpected occurred. U.S. News re-engineered its rankings to increase the emphasis on outcome measures and to reduce the weight it places on reputation.

The changes–the most significant since the MBA ranking’s debut in 1989–are the result of a fair bit of soul searching by U.S. News editors after a major boycott of law and medical schools that began at Yale and Harvard and quicklly spread across the country. The organization’s editorial team sprang into action, speaking directly with more than 100 law school deans, including its loudest critics. The result of those conversations led to major changes in the way U.S. News ranks not only law and medical schools but business schools as well. Except, without any consultation with business school deans nor any advance notice.

The editors say they took the new ranking’s approach “based on knowledge that employment and earnings outcomes are the driving force behind why many individuals seek to further their education, especially in business. As in past years, changes in methodology, together with changes in individual schools’ data, can result in significant changes to schools’ rankings.” Yes, they can–and do.

A dean can just as easily agree or disagree with the changes, and in some cases, they make sense. For years, some of the most critical comments have been reserved for U.S. News‘ so-called peer assessment survey of deans and senior faculty members. The long-held suspicion is that most deans who fill out the survey do so by taking out the year-earlier results and merely confirming them while more favorably rating their own programs. Many deans and faculty, particularly from the more highly selective institutions, simply ignore the whole exercise. So U.S. News reduced by half the weight it applied to this survey to 12.5% from 25%. Some see this change as a good development because this metric, in the words of one critic, “simply reinforces the feedback loop that reflects the schools’ conventionally perceived pecking order.” An unintended consequence of the change, however, was to increase year-over-year variation because the peer assessment metric, however controversial, did provide an anchor of stability to the ranking.

U.S. News also diminished the weight it attaches to its survey of corporate recruiters, reducing its importance to 12.5% from 15%. This change is less substantial, though the response rate to this survey and the due diligence U.S. News employs in getting a credible result is highly suspect. Not surprisingly, U.S. News does not tell anyone how many recruiters it surveys or what it’s response rate is on those surveys, a likely consequence of a low response rate. Indeed, U.S. News says that for programs receiving fewer than 10 cumulative ratings over three years receive an assigned value matching the lowest average score achieved by any ranked program. That’s further evidence that the response rate on the survey is very low.

The bigger change is that now half of the new ranking is based on job placement and starting salaries with sign-on bonuses. Placement now accounts for 30% of the ranking, up from 21%, while the weight on starting pay was pushed up to 20% from 14%. In other words, it’s now 50% instead of 35%. The increased focus on career outcomes, no less, comes for the COVID Class, students who entered their MBA studies in 2020. COVID not only forced schools to go online; it also impacted summer internships which lead to full-time job offers. That is especially true for schools with higher percentages of international students who found it difficult to get into the U.S. to start their classes on time. Visa and travel restrictions all over the world meant that many non-U.S. students showed up a month or more late, making them far less likely to get the internship that would line them up for a full-time job.

Finally, U.S. News increased the importance it places on undergraduate GPAs and acceptance rates while putting slightly less emphasis on standardized test scores.  These adjustments were much less significant, with GMAT and GRE scores getting a 13.0% weight, down from 16.25%, for example. More influential in the ranking was its new rules for calculating average GPAs which now account for 10% of the ranking, up from 7.5%. U.S. News decided to only count GPAs reported on a 4.0 scale so most international students are not in the calculation. That change more severely impacts U.S. schools with larger international student bodies at a time when domestic applicants have been in decline in MBA programs for nearly a decade.

Put it this way: If Chicago Booth enrolled a class of 60% internationals whose GPAs were not on a 4.0 scale, the school’s adjusted GPA would fall to 2.83 from 3.54, even though it is highly likely that the international students who arrive on campus had equivalent or even better undergraduate grades. Booth would, of course, be highly unlikely to consider admitting many students with a 2.83 GPA, nor would their average GPA be anywhere near 2.83.  But the formula U.S. News uses would assign a 2.83 GPA to Booth if 60% of their students came from overseas.

U.S. News gives no explanation for the change which presumably was made to lessen the chance for a school to more favorably interpret a foreign GPA to increase its ranking. But this change alone is even more consequential given the additional weight U.S. News has now put on average class GPAs.

The message the methodology sends to business schools is to limit international acceptances to no more than 50% of their MBA population (because the adjustment occurs when a school reports less than 50% of their entering students with a GPA. The new rankings effectively discourage schools from admitting students from undergraduate institutions outside the United States. 

The methodology would have effectively penalized the academic bonafide of immigrants, MBA graduates, and industry titans such as Google CEO Sundar Pichai, Citigroup CEO Jane Fraser, former Coca-Cola Chairman Mukthar Kent, and Microsoft CEO Satya Nadella.  In fact, 44% of Fortune 500 companies were founded by immigrants or the children of immigrants. The CEOs of our top technology companies are also immigrants, most of whom did not do their undergraduate work in the U.S. 

Every MBA program in America would be over the moon for candidates like these.  Among schools that are seeing an increased share of interest among international students, U.S. News‘ penalties can grossly misrepresent and penalize the academic credentials of an incoming cohort. In effect, the new methodology would dissuade Booth or any other business school from admitting too many Sundars, Janes, Mukthars, or Satyas lest they enroll more than 50% international students and incur a penalty.

Put simply, it is antithetical to the mission of global serving business schools to arbitrarily limit the share of its international students to impress a rankings entity.  Business schools should be celebrated for attracting talented, diverse, and global student populations – not penalized.  And yet, that is exactly what the new methodology does.

4) The 2nd-Best MBA Program In The Commonwealth

There are no points for second place. 

Imagine what they must be saying about 5th place at Dillon House.

Technically, Harvard Business School held its ground in U.S. News’ 2024 ranking. The ‘West Point of Capitalism’ can take comfort that it is ranked higher than Stanford GSB, which suffered the indignity of tumbling to 6th – sharing that spot with Dartmouth Tuck, no less. HBS knows how that feels. Last year, the school split 5th place with MIT Sloan. Now, they claim it all for themselves. 

That’s because MIT Sloan climbed a spot to 4th.  

That’s right: Harvard Business School isn’t even the best full-time MBA program in Massachusetts – if you believe U.S. News. And there are lots of reasons to be skeptical. 

It wasn’t always this way. After all, Harvard Business School ranked 1st in the 2018 U.S. News Ranking (and 3rd the following year). In the following years, HBS fell into a lull, finishing 6th in 2020 – and 5th for four consecutive years. The school is enduring a similar slide with The Financial Times, ranking 4th this year (and previously finishing 3rd, 1st, and 2nd in that order). Still, HBS reached 2nd in last year’s Bloomberg Businessweek ranking – and even hit 1st with The Economist ranking last June…before it shut down.

Alas, Stanford finished 8th with The Economist and tied HBS For 4th with The Financial Times. In other words, neither school’s strengths can overcome the underlying logic of certain methodologies.

In the case of U.S. News, HBS gets clobbered in two measures: placement at graduation and placement within three months of graduation. Combined, they account for 30% of the U.S. News methodology weight (20% for three-month placement). At graduation, HBS reports a 79% placement rate – the second-lowest mark among Top 20 MBA programs. The only program with a lower placement rate? You guessed it: Stanford GSB at 61%. For three-month placement, you’ll find the same dynamic. HBS is second-worst at 89.5%, but still bests Stanford GSB at 83.8%.

To add insult to injury, the combined weight of placement rose from 21% to 30%. This change makes it harder for HBS (and Stanford GSB) to compete. In reality, this placement deficiency stems from the nature of HBS job hunts. Their students don’t have to scramble for jobs. They have networks and options. With the Harvard brand, they can patiently and confidently sit back for the best options. In addition, U.S. doesn’t factor in the types of jobs pursued by HBS students. Among the Class of 2022, 30% of graduates ultimately chose positions in venture capital, private equity, and hedge funds. Let’s just say these firms only hire a handful of MBAs each year. When they do, it is just-in-time hiring that doesn’t necessarily align with spring or summer intervals.

That said, HBS remains competitive in other measures. Pay-wise, Harvard MBAs earned more starting out ($198,180) than any of their counterparts, including Stanford GSB (just barely at $198,032). That’s 20% of the ranking weight. HBS tied for 1st for peer assessment scores (4.8 out of 5.0) and 2nd for recruiter assessment scores (4.7) – a combined 25% weight (that had previously made up 40% of the U.S. News ranking). At the same time, HBS tied for 2nd in both average GMAT (13% weight) and average GPA (10% weight).

Fact is, U.S. News’ approach contains some major gaps. It gives a 25% weight to academics and employer survey, but doesn’t bother to solicit feedback from alumni and students? What about the volume and variety of courses and clubs, let alone exchanges and excursions. And how about yield – the percentage of students who ultimately enroll after receiving an acceptance letter? Talk about a measure of a school’s brand strength. There, HBS scored an 82.7% for the Class of 2023 – 2nd only to Stanford GSB at 93.6%.

In other words, the U.S. News methodology works against HBS. It discounts what the school does well and over-indexes measures where it could never thrive. Even more, the methodology doesn’t include alternatives that could even the playing field. That means Harvard Business School will probably be lodged in the 5th spot for years to come…but that reflects more on the narrowness of the methodology and less on the quality of the school.