The MBA creates valuable opportunities for career enhancement and transformation by teaching general management skills and offering real-life, tailor-made business experience. Earning an MBA makes perfect sense for prospective students who want to differentiate themselves in a competitive marketplace where jobs are getting increasingly difficult to find and salary increases more tricky to negotiate. In the most recent study of MBA graduates by the Graduate Management Admission Council (GMAC), the overwhelming majority of MBA alumni were very positive about the value of the MBA, rating it outstanding or excellent.
Earning an MBA makes perfect sense for prospective students who want to differentiate themselves in a competitive marketplace where jobs are getting increasingly difficult to find and salary increases trickier to negotiate. The MBA skills acquired by professionals help them navigate the treacherous waters of the business world. In a study by the Graduate Management Admission Council (GMAC), the overwhelming majority of MBA alumni were very positive about the value of the MBA, rating it outstanding or excellent.
As more and more students realise that pursuing an MBA degree is a smart move, applications to business schools remain stable and are even rising. In 2015, 51% of full-time one-year MBAprogrammes and 57 % of full-time two-year MBAprogrammes received more applications. "At this point in my life, I realised that the economy was slowing down in Italy so I needed an MBA to help me make the jump up to a real management position," says Andrea Delfini, who was admitted to University of Virginia's Darden Graduate School of Business Administration. And he is not the only one. With salaries of graduates constantly growing, the MBA programme proved to be a great hedge against the crisis.
Return on Investment
So, against this mixed economic background, can MBA graduates expect a return on their investment? Needless to say, an MBA requires a major outlay, often involving long-term loans and withdrawals from personal savings accounts. Yet, the MBA remains the most desired graduate degree in the world. The MBA opens more doors than any other graduate degree — the magic three letters can make or break a career. MBA's return on investment is high by most standards. The Forbes MBA ranking is very useful in this respect as it focuses exclusively on ROI. According to the magazine, the average payback period for the class of 2010 among the top 25 b-schools in the US as quoted by Forbes’ ranking was four years versus 3.7 years for the class of 2008. Alumni of the non-US international two-year programmes needed 3.4 years to recoup their investment. The best results are of the one-year international MBA programme, whose graduates needed 2.4 years on average to reach the breakeven point.
With subsequent annual wage increases, the MBA becomes even more valuable with the passage of time. The sum of the median pay of alumni 20 years after their graduation is USD 2.5 million, according to GMAC’s survey.
Read: Measuring ROI
However, the increase in salary should never be the only measure of the value of the MBA, or otherwise why would a 50-year-old executive, for example, opt for an executive MBA. The MBA cannot, and should not, be reduced to the present value of salary calculations. It is also about talent, entrepreneurship, and added value.
Framing the larger MBA picture
An MBA degree from a top business school offers the potential for broad improvements in:
- Career advancement
- Long-term income
- Financial stability
- Ultimately a more challenging and interesting career
The MBA serves as a vehicle for developing career competencies, becoming the qualification of choice for those who are serious about climbing the ladder all the way to the boardroom. Specifically, among other things, graduates acquire the abilities to:
- Switch industries
- Change occupational areas
- Expand international employment opportunities
- Develop the right connections for future employment following graduation
For many MBAs, advancement within a chosen field that results in more challenging work is as satisfying as a salary increase. Likewise, beginning a new career by using new abilities learned on an MBA programme can be the primary goal for MBAs.
MBA alumni also realise that the notion of finding a job with a high starting salary is also changing. Bonuses and rewards are proving to be better tools for managing the hiring process. Rather than committing themselves to fixed salaries, companies are supplementing salary packages with signing-on packages and other types of incentives to attract MBA graduates who offer the most potential. These variable pay schemes deliver monetary rewards without the employers having to make a long-term commitment to a fixed salary. It also has the added value of pushing newly minted MBAs to perform from day one.
Succeeding within an international environment
An MBA programme prepares students for the global workplace. The rich international perspectives of fellow MBA classmates will only serve to highlight the structural, procedural, political, and cultural differences in business practice and management decision-making. Furthermore, close collaboration in study groups will encourage cross-cultural and cross-industry business contacts and friendships. "For me, an MBA must have an international environment in both theory and practice," says Mathieu Vaidis, who completed his MBA from École des Ponts Business School (France).
Moreover, an international MBA programme offers key management and leadership skills that prove to be strong assets in business. Those making hiring decisions often select individuals with strong professional portfolios that can be demonstrated by the MBA. While the MBA degree in itself does not guarantee success, it enables students to master analytical know-how, which is considered to be as vitally important as the personal, interactive and organisational skills needed to optimise strong business decision-making.
Without a doubt, the skills honed by MBA programmes respond to the needs of global organisations, which are demanding more international orientation from their recruits. Many American and European business schools are developing international MBA programmes in the form of partnerships or by establishing satellite schools on remote campuses. Depending on the programme, students can gain international experience by enrolling in exchange programmes with partner schools or by earning double MBA degrees in two different countries. For example, IE Business School (Spain) offers dual-degree programmes with MIT (US) and the Fletcher School (US), whereby students are able to complete both degrees in considerably less time than if they were to do them separately.
Networking on the global stage
An MBA programme offers valuable networking opportunities, which enable MBA students to engage more deeply with other MBA students and alumni who can expand their professional horizons. Because MBA students often have pre-MBA work experience, they are likely to have additional self-insight and a more realistic appraisal of their skills, values, and needs.
After earning an MBA, candidates come away with a strong skillset and an extensive network of professionals in a wide variety of industries and functions. This translates into a network of high-quality MBA classmates who can provide support to candidates during and following graduation.
The shift towards a high-quality student intake has become more pronounced, and contributes to enlarged social activities. Many MBA programmes now offer a wide range of networking opportunities through professional clubs, ethnic festivals, and sports activities. The social quality of life for MBAs has reached new dimensions, offering more diversity and greater room for the growth and development of the individual.
MBA internships lead to dream jobs
Internships are playing an increasingly important role in building a solid network and finding that dream job. Successful internships often come about as a result of a group of MBAs teaming together on a project aimed at a particular company.
Mathieu Vaidis found his dream job after doing a six-month internship with another student as part of his required coursework at ENPC. "I was offered a fantastic job by the very company that had accepted my ENPC internship proposal six months earlier," says Mathieu. He landed a senior position at Bristol-Myers Squibb in Paris as EMEA Marketing Manager.
Confidence in day-to-day advancement
According to the Forte Foundation, an MBA gives graduates the tools and confidence they need to launch their careers, from speaking to negotiating to performing any job in any industry. MBA students with Bachelor degrees in the liberal arts may be looking to acquire the relevant skills for a move into a management role, while MBAs with technically-oriented first degrees might want to broaden their international business understanding. (MBA students from non-business backgrounds are often advised to undertake quantitative and analytical preparation to polish up their hard skills by doing refresher courses in calculus, statistics, and economics). GMAC has found that all MBA graduates, no matter their background, acquire the necessary skills to integrate a wide variety of information:
- Thinking strategically and analytically
- Making decisions with imperfect information
- Solving quantitative problems
- Specialising in technological skills
- Communicating orally
- Becoming culturally sensitive
Return on leadership
By joining an MBA programme, students benefit from the interaction and group dynamics of their fellow classmates. A typical MBA class might include managers from consulting firms, the financial services industry, manufacturing companies, service industries, the medical and legal communities, and non-profit organisations. The entire class benefits from the experiences of accountants, attorneys, entrepreneurs, engineers, scientists, medical doctors, and marketing specialists.
Acquiring business ethics is one example where MBA students prepare themselves for their future leadership roles. The main objective of the 13-month IE International MBA programme, for example, is to cultivate directors and entrepreneurs capable of leading business organisations in competitive and dynamic global environments "without losing sight of professional ethics." The study of ethics, sustainability, and corporate social responsibility became even more important in the light of the crisis.
MBA students can take elective courses not only in ethics, but also in a wide range of areas. Having covered the foundation coursework, including the basic business disciplines such as accounting, finance, and marketing, together with soft-skills development and project work, MBA students are in a position to customise their MBA. As a result of the greater emphasis placed by business schools on the elective phase of their programmes, students are better able to focus their MBAs towards their career goals.
Overall, the MBA creates valuable opportunities for career enhancement and transformation by teaching general management skills and offering real-life, tailor-made business experience. The MBA is also open-ended. Students, who have a good idea about the direction their career paths will take can adjust and enhance their goals based on the new skills and experiences they acquire while earning their degrees. Likewise, students who want to change sectors and function completely are also enriched by the MBA experience.
By learning solid business skills in a real-life environment, students are building the foundation of their careers against the pitfalls of an uncertain economy where recruiters are becoming more selective in the selection process. The return on investment is high for those candidates who earn their MBA at the top business schools, where strong networks are in place to help pave the way for success in the future.