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With so many new things challenging the once firmly held belief that higher education is the sole prerequisite for a successful career, the question becomes: what determines successful education? The financial figures, the candidate expectations and alumni evaluations, or employers’ demand and satisfaction?
The easy answer would be none or all of the above. However, a deeper dive into the ways in which the MBA degree has endured over the years, and adapted to meet the test of time, reveals a rather complex web of interdependencies between these five pillars.
It also happens to explain why the MBA is as good a choice now as it was in the past.
MBA – true to its original premise
The MBA is first and foremost a postgraduate business and management degree. This means that it is tailored to people who have already received higher education and have worked long enough to decide that they want or need another degree. Secondly, MBA programmes aim at developing management-level skills and mindset and the potential for business leadership. In addition, many have already spent several years leading teams or managing core business processes. And while the MBA can fill the role of a postgraduate degree in place of the Master’s, its true potential becomes apparent only after several years of building a career, accumulating expertise, and developing leadership skills.
An appreciation of MBA studies is quite evident from the numerous studies conducted over the years. For example, although a 2018 survey by Gallup in the US registered a drop in the overall confidence in higher education of about 10% over a period of just three years, a poll conducted among 363 business schools around the world by the Graduate Management Admissions Council (GMAC) recorded only a marginal 0.02% drop in global MBA applications in 2018 versus 2017. Another study conducted by GMAC reveals the career advancement and education satisfaction of MBA alumni. Only 6% of MBA graduates were outside the labour force, while 5% were in the process of seeking employment or changing career lanes at the time of the poll. The 2018 Business School Alumni Employment Report also notes that “the majority of business school alumni feel their graduate management education advanced their careers at a faster rate compared with peers who do not have a graduate management education”. In addition, the report concludes that recent business school alumni are more likely to work in Products and Services (20%) or Tech (17%) as opposed to Finance (15%) and Consulting (9%) – a clear indication of an ongoing shift from traditional MBA-related sectors to modern-day industries with potential for growth and development.
The best possible explanation for these figures is that the age and experience of MBA students helps shape their true desires and brings down expectations to attainable levels of realism. The results are clear: the conscious choices that a mature MBA applicant makes when entering graduate business school lead to an increased feeling of satisfaction and confidence, compared to the typically less experienced Bachelor’s and Master’s degree student.
Moreover, since the MBA is tailor-made for the type of experienced professional seeking to be a better leader, manager or entrepreneur, the schools themselves strive to stay true to their original premise – to keep in touch with the business world, however volatile or viciously dynamic it might be. This driving force is essential to understanding the value of the MBA and its enduring allure a century after its inception.
In their own words
Zsuzsanna Ehl, a Hungarian MBA graduate, had this to say when she was finishing her studies at Amsterdam Business School (part of the University of Amsterdam) in 2012: “I decided to enrol in an MBA programme because of the nature of my work. As an ERP (Enterprise Resource Planning) consultant, I am responsible for implementing system solutions for diverse clients in different business areas. The MBA helps me to understand the strategic decisions of our clients and to find a solution that helps clients reach their objectives”. Seven years later, Zsuzsanna is still working with the same employer – a B2B Microsoft digital and cloud services consultancy – in a senior analyst position. In her testimony on the University of Amsterdam’s webpage, she clearly states that her goal was to continue working with her employer – a desire that Ms Ehl has apparently fulfilled rather successfully.
Returning to the original argument, one can clearly see why and how the MBA differs from other higher education programmes in order to secure a stable career progression with thousands of opportunities to choose from on a global scale. The need for these types of purposeful, tech-savvy, results-driven leaders is simply too big to ignore, and the MBA has established itself as the best “service provider” when it comes to attaining contemporary managerial skills and leadership mindset in a higher education environment.
While the return on investment (ROI) of the MBA is way broader than just income and career advancement, some consider these factors quite crucial, because they are tangible. PayScale’s MBA employment statistics data is unambiguous. Less than 2% of MBA graduates have less than a year of work experience – they represent the smallest part of the MBA cohort. The largest share of the sample size (32%), have between 10 and 19 years of work experience, followed by those with 5-9 years of experience (26%) and those with 1-4 years of experience (23%). At the lowest end of the pay scale, MBA graduates earn between USD 40,000 and 45,000 per year and at the highest the range becomes even wider – between USD 120,000 and 140,000. That is a ladder of around USD 100,000 to climb, which is a great prospect.
After all, not too many sectors employ professionals who can confidently claim that the “sky’s the limit” when it comes to remuneration. Currently employed MBA graduates earn a median salary of more than USD 125,000, although it varies by location (Bloomberg BusinessWeek Global MBA Rankings 2018). The GMAC Corporate Recruiters Survey Report 2019 reports that, overall, 56% of companies plan to increase MBA starting salaries this year.
The most common companies employing MBA graduates are also quite sought after. Some of the names include Boeing, Amazon, J.P. Morgan Chase and General Electric. They also tend to give out the higher-end salaries. But what do these companies actually say about the MBA, and why is it that they are so interested in MBA graduates?
In a livestreamed show, hosted by Poets and Quants, Peter Faricy, a 1995 Ross MBA graduate and vice president of Amazon Marketplace, states that the multibillion company does indeed hire a considerable amount of MBA graduates – around 1,000 every year. “At Amazon, I think what we’ve learned over time is that […] we’re really people constrained, and we’re leader constrained. And so in particular, we love to hire really talented MBAs because we want people to come in and take on really big roles within our company. As we look down the road, it’s essential for us to find a pipeline of really talented leaders”, Faricy says.
The Amazon executive highlights one of the most distinctive characteristics of the MBA, a keyword that should stick out every time anyone considers enrolling in an MBA programme: leadership. But what does leadership taught in the MBA environment mean to big companies, you might ask. Why is it any different to what life can teach me? Perhaps this thought from a McKinsey executive can shed some light: “The real core and the essence of it is around problem-solving. It’s the ability to look at a problem from 360 degrees and walk around it and take a lot of different perspectives. […] To really have that ability is something super unique about the MBA”.
And so, it would appear that on both sides of the bridge, there is an understanding that the MBA connects more than just people and organisations, but rather education and business as a whole.
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This article is original content produced by Advent Group and included in the 2019-2020 annual Access MBA, EMBA, and Masters Guide under the title “True to Your Calling”. The latest online version of the Guide is available here.