In 1943 the Executive MBA was introduced at Chicago Booth. Since then it has become the preferred way for managers, who don’t want to put their careers on hold, to acquire their MBA. The degree has many advantages and even though it does require a significant investment, the ROI is undeniable.
Unlike the MBA, which requires all applicants to sit the GMAT, the EMBA does not necessarily demand aspiring EMBA students to pass the often dreaded exam. This is a huge advantage as being out of the classroom for many years and swapping the study routine for a working one does shake a person’s ability to take tests. However, the entry requirements for the EMBA include longer work experience and previous academic excellence. Globally, the profile of an EMBA student could be a 29-30 year old professional with five years of work experience (including, but not always requiring, managerial experience).
As for the return on investment, if the school is good, it probably should be worth it. But that doesn’t mean that you shouldn’t do your own research and calculations, also accounting for the uncertainty factor.
Who should calculate ROI
There are different opinions on who should be more concerned about ROI. The executive director of EMBA programmes at the University of North Carolina’s Kenan-Flagler Business School explains that students may not be the right people to be asking. “Do employers reward and motivate their high potential after they finish the programme? Are they being challenged and given growth opportunities? If not, those new MBA grads may not stay for long — and that’s a real ROI issue for companies”, she commented for the Workforce Management.
When we talk about ROI, the question of financing one’s EMBA inevitably comes to mind. Unsurprisingly, despite the experience of the students, their most common problem is how to finance the studies. The percentage of EMBAs receiving sponsorship from companies has been steadily diminishing over the past years. Nowadays 41% rely on themselves for the tuition fee, which is a significant increase from 34% in 2009. This is why more than half of the programmes offer scholarships and fellowships. Only one quarter (24%) of EMBAs receive full sponsorship, usually from their employers. This is down from 33% in 2008, when the crisis started.
The price tag
Even though the ROI of the EMBA is undeniable, the degree does not come cheap. On average, its price is USD 73,401. The top programmes in the world are even more expensive. The joint programme of Kellogg and Hong Kong UST Business School, ranked number one by the Financial Times for the last years, costs USD 152,625. That total includes accommodation and also some meals. In the FT ranking, salaries account for 40% and the categories measured by the ranking are career progress, school diversity, and idea generation. The high price of the degree notwithstanding, the rewards can be stimulating. According to FT the alumni of this programme earn an average salary of USD 416,806 three years after graduation, and this impressive result is not even in the top 60 in terms of percentage increase. The boost in remuneration Kellogg and Hong Kong UST Business School students received three years following graduation is estimated at 47%, and for the IESE EMBA graduates at 49%. In the FT top 100, number one for salary growth with 110% is IE Business School in Spain. Its executive students receive USD 183,431 annually, while the fee they pay is EUR 55,200 for the 10-16 month period.
The ROI in context
To provide further context for the actual ROI, let’s compare the Executive MBA with other forms of MBA. Most executive students cannot count on a grandiose increase in their salaries after graduation, like the one achieved by one or two-year full-time MBA grads, for instance. The reason is that since EMBA students come from managerial positions, their remuneration was already high when they started their programme, hence the fact that the increase in their salaries post-graduation is high but not as high as for the MBA grads on average. The increase in pay for the EMBA Class of 2013 was 39%, in comparison to 79% and 70% for two-year and one-year full-time MBAs respectively, according to a GMAC survey.
Trends among EMBA students and grads
Another aspect of the value of the EMBA degree is the fact that Executive MBAs boast the highest entrepreneurial spirit in the whole MBA graduate pool. 12% of them were likely to be self-employed or entrepreneurs. The second place is taken by one-year full-time MBAs, 7% of whom took or were willing to follow that road. Needless to say, if business plans work out, it could have a major impact not only on incomes but also on the level of personal satisfaction.
Another common characteristic of the Executive MBA is that it is generally a less international degree than the other business programmes. Even though the degree contributes to a major career boost, some of the changes that MBA grads make in their careers are not valid for many EMBA grads. One career change that is less popular among EMBA graduates than it is among MBA grads is relocation after graduation. For 2013 just 18% of applications worldwide came from international candidates. For the one and two-year full-time MBA that number was 55% and 47%. This most likely confirms the old bias that the more professionally accomplished and settled people are, the smaller their desire for studying and relocation. Family obligations and age also play a role, and as Executive MBAs are the most mature amongst the MBA family, with an average age of over 36 years, they are much less likely to decide to restart their lives in another country.
Finding the right one
Whatever the most important ROI aspects are to you, none will be present if you don’t select the EMBA programme that best fits your professional profile and career goals. Paul S. Bodine writes in poetsandquants.com that only about 9% of the programmes have a specific industry focus, the most common being health care. “And while some EMBA programme curricula are as robust as their full-time counterparts, others are more generic general management degrees offering basically the same education to all-comers.” It could weigh on your pocket if the programme you pick is totally divorced from your professional profile. However, a career change always remains an option – about two-thirds of programmes have career services. According to a 2013 survey of the Executive MBA Council, leadership, innovation/ entrepreneurship and law were the top three new non-elective courses offered in the last five years.
The value of executive education depends not only on financial matters. It is also about compatibility with personal and professional life. The degree lasts for an average of 20 months. This is comparable to the two-year full-time MBA and considerably shorter than the part-time MBA, which could continue for as long as three to four years.
The recent advancement in technology and electronic forms of education has made it generally easier for students to deal with the issues of geographical relocation and presence in the classrooms. According to the Executive MBA Council, 26.7% of EMBAs met once a week in 2012 in comparison to 34% in 2008. At the same time, in 2008 only 10.3% of students gathered less than once a month and in 2012 that percentage was already14.3. Nowadays, they may meet less frequently but for longer periods. Even so, completing an EMBA is more than just showing up in a classroom, as there are also papers to be written, books to be read, projects to be developed and a lot of thinking to be done!
So, it shouldn’t come as a surprise if an EMBA turns out to be a challenging period if not well thought through – especially for your personal life.
Combining family and friends, work and education may not be as easy as expected.
Discuss with your loved ones the perspectives and the changes that are likely to come. See if they are happy with your choice. Their reaction will give you a clearer idea of whether the EMBA is really worth it for you.
The EMBA’s value in context
The EMBA is a degree that impacts a person’s career beyond just a boost in the remuneration package. Going for an Executive MBA degree is a decision people make at a point in their careers when they feel ready to make a significant step up in their professional lives, and this step is usually toward a top management position. The EMBA is often perceived as the degree that pushes you over the top – it is the step toward C-level positions. It is the degree that is ultimately associated with top-level leadership and ROI beyond monetary rewards. Even though career advancement and increased monetary rewards do tend to go hand in hand in a person’s professional life, the EMBA is often undertaken as a means to achieving the first goal, whereas the latter is usually a benefit that comes as a consequence of the degree.