The MBA Sky is Falling: Cutting Through the Rhetoric

At the end of last week, when I saw the Wall Street Journal article, “For Newly Minted M.B.A.s, a Smaller Paycheck Awaits” and the ensuing bandwagon riding about the glut of MBA graduates, I shook my head and tried to gather my thoughts on this. The WSJ explained that while MBA students are paying higher tuition these days, they are having a harder time getting jobs and are being paid less. My simple response to that is from political strategist, James Carville…”it’s the economy, stupid”. While I believe it will be a long time before we see a really strong market for MBA graduates, the same can be said for job candidates overall so I think we should lose some of the dramatic rhetoric about the death of the MBA. MBA tuition is too damn high – we can all agree on that! But instead of skipping business school altogether, MBA candidates need to determine how they will maximize their return on the MBA investment. This is a long-term investment that will likely not pay off one to two years out of school, but in five to ten years.

On the MBA-bashing bandwagon that I mentioned was Jordan Weissman who penned an article in The Atlantic, “There Are Officially Too Many MBAs”, in response to the WSJ article. He cited “B-grade B-schools” as the source of the problem, with the “value of the degree eroding, especially as tuition rises”. He actually makes valid points in his article, but like so many who weigh in on the value of an MBA, or even a law degree for that matter, he oversimplifies the issues. My quick response here is that MBA programs are not created equally! Getting an MBA from NYU Stern cannot be compared, with a straight-face, with getting an online MBA from Strayer (no disrespect to people choosing the latter option, but that’s not even on the same planet; it’s barely the same universe).

Most people talk about the “Top 10” schools versus everyone else (i.e., many question the value of an MBA if it’s not from one of the 15 “Top 10” schools). The demarcation between schools is so much more nuanced than that. If we only look at 2-year, full-time MBA programs, there are at least 50 really top-notch elite MBA programs with highly-sought after graduates. We often limit ourselves to those very big name nationally and globally recognized brands, but most hiring is done regionally so an MBA program with a stellar reputation in their area is golden. Let me illustrate:

The University of Minnesota Carlson School is located in Minneapolis, MN, a lovely mid-size city (my brother lives just outside the city. A bit too much snow for me, but summer is great there). BusinessWeek Bloomberg ranks it as the 33^rd best business school, 58^th by The Economist, and 30^th by US News & World Report. I would guess that Carlson is not going to be a “Top 10” school any time soon. But for MBA candidates that are attending business school for better job prospects and greater compensation, you might want to consider Carlson! For the class of 2011, 97% of their graduates had jobs three months after graduation with an average base salary of $96,000 and average bonus of nearly $20,000. Well isn’t that curious that the University of Minnesota boasts the highest job placement rate? Well, not really when you consider that the state of Minnesota has 19 Fortune 500 companies, including UnitedHealth Group, Target, Best Buy, General Mills, Medtronic and 3M.

This is not a sales pitch for University of Minnesota, though I need more women and minorities to consider it as an option – the class of 2014 only has 25% women and an abysmally low number of under-represented minorities. With a 97% placement rate, we need to get in on that action! This is my plea to prospective MBA candidates to cut through the noise. Take in all of the advice, data and conjecture and determine for yourself what makes sense when considering whether and where to go to business school. I appreciate the dialogue about the value of the MBA, not because I think the pundits are correct, but because it may cause potential MBAs to do more research, ask more questions and actually enter business school more prepared.

Getting an MBA doesn’t entitle you to anything – even if you pay $100,000 to get it. Some MBAs in the past were lucky enough to graduate in a great economy and that led many to think of the MBA as the Holy Grail for a big payday. Getting your MBA is about opportunity. It’s an all-access pass to the relationships, knowledge and skills that can propel your career forward. Once inside you have to position yourself to seize the opportunity.