Going for the Big Move
Return on Investment and Time
April 1st, 2014
Getting an MBA is a big move for your career as well as your profession. You get a better qualification, your resume is highly strengthened, and your market value is boosted by the precious experience. The degree is also a financial investment that should not be taken lightly. Its real value lies in the guaranteed return on investment.
Return on investment (ROI)
The Internet provides a number of ROI calculators for b-school candidates to estimate their ROI over different periods of time. They are very handy and easy to use.
There are a number of ROI rankings available too, including one by Forbes magazine, where you can see programmes’ rankings in terms of alumni’s return on investment over a five-year period. The survey is conducted every five years and is probably the most relevant one in terms of return on investment.
ROI rankings take into consideration the sticker price of the programme (the price schools officially announce, also on their websites), five year net ROI and annual net ROI.
Forbes magazine’s 2012 and most recent MBA ranking in terms of ROI surveys the class of 2008, which is also the year when the global crisis began. So, it is understandable that the ranking reflects a certain slowdown in ROI in comparison with the previous survey period, and especially when compared to the 1990s. This is only natural, though, considering what a shift world economics has suffered during the past five years. The survey clearly shows that graduates are still very successful at achieving an excellent ROI, only with a slight delay. The average payback period for the class of 2008 among the top 70 b-schools in the U.S. as quoted by Forbes’ ranking was 3.7 years versus 2.7 years a decade before. In Forbes’ global ranking of business schools, the top 8 are in Europe, with an average ROI of 2.4 years of payback time, and with IMD in Switzerland taking the lead.
Job placement & salary increase
The Association of MBAs career survey shows an unequivocal increase in salary over time as a result of acquiring an MBA qualification. While MBA salaries often go up right upon graduation, the real benefit in terms of salary can be found during the next stages of a graduate’s career. MBA graduates experience salary increases of 46% immediately after graduation, 129% in the three to five years after that, and 208% in the six to ten years after the MBA. In addition, 27% of MBAs are employed at board level in organisations within 10 years of graduation.
Schools are usually readily available to provide career placement information collected from their alumni to help candidates make an informed decision. There also are rankings based on career placement information, available online.
The latest Corporate Recruiters Survey, conducted by GMAC at the end of the first trimester annually, shows that the hiring projections for MBA graduates were on the rise last year – up to 75% of the surveyed companies were planning to employ MBAs. This increase of 4% compared with the previous year signals positive prospects for 2014 MBA hiring trends as well.
Additionally, according to the same survey, the median base salary for MBA grads amounted to 95,000 USD in 2013, up from 90,000 USD in 2012. The hiring trends by industry in 2013 showed that the greatest growth in demand for MBAs compared with the previous year came from the energy/utilities and health care/ pharmaceuticals sectors—industries not traditionally sought by MBA talent.
Networking and hibernating
Joining an MBA programme will allow you to develop a solid, consistent and prolific network of high-value individuals who may end up being your clients, partners, employers or employees, lawyers, financial advisors or bankers.
When else in your life will you have the chance to tap into the thoughts, ideas, business approaches and points of view of other brilliant minds, 24/7 for two years? This is a unique opportunity, and it alone is worth the 50,000 USD/year splash.
Change your thinking
The benefits of joining an MBA programme far surpass pure ROI. You will receive education in more than just business skills and knowledge. You will learn to think in a way that will make you a valuable, precious member of any business team. You will unlock your potential for innovation and will tap into your creativity. You will enhance your management and team-working skills, and will learn how to strategise and analyse on an international level. All of these form priceless aspects of your MBA education. If you choose a two-year programme, the first year teaches you business strategy and management skills, but the second year lets you challenge your current models of approaching business and take a new view on business cases. That education will free your mind to think out of the box, and often one step ahead of many others.
Broaden your perspective
You’ve never thought of international markets before? Now you can. You’ve never considered an international career? Now you may need to. You’ve never thought you could be your own boss? Now you have got all it takes.
Make use of all the school has to offer
Lavishly stocked libraries of literature and case studies worth a fortune; great facilities; access to precious databases; access to some of the greatest minds in business and economics; travel; internships, etc. Education goes way beyond the classroom.
It’s just three letters, but they will without a doubt change the way people think of you after they see your business card. A business degree will give you credibility and ‘weight’ to help you be taken seriously by peers, competitors and clients. It gives you that little bit ‘extra’ that may make a client choose you from among a number of providers, or an employer choose you from among a number of candidates.