Is the MBA Really Worth It?

In a fascinating cover story on the Class of 1992, Business Week answers the question with a resounding yes. My former employer surveyed nearly 1,500 alums of the Class of 1992 from the top 30 business schools to come up with the answer and a bevy of fascinating statistics.

Some of the highlights:

  • Some 89% of the respondents say they would go for the MBA again if they had it to do over.
  • Nearly 80% said they would go back to the same school, although Stanford, Harvard, Northwestern, and Wharton predictably scored best on this question.
  • Average salary of a top 30 alum after a decade at work is more than $155,200, up from the average $56,600 starting pay in their first post-MBA job.
  • Average bonus and compensation for the alums was $232,400 so the total compensation for these MBAs averaged a whopping $387,000 last year (where do I sign up?).
  • Some 75% of the alums say they give to charity, with contributions totallying $8.3 million in the past two years, or more than $7,300 each, on average.
  • Nearly a dozen alums gave $100,000 to non-profit causes, with a handful of gifts over the half-million mark.
  • MBA alums donated some 7,000 hours of volunteer time to causes last year, or about 9 hours per month on average.
  • These alums manage an average 93 employees each.

As the story notes: "What's more, the data depict a managerial class that's in a truly commanding position. Their salaries and bonuses are hefty, and they occupy, after only a decade, top posts in their companies. They are an enterprising lot, an entire cohort of ambitious men and women who have started hundreds of companies and created nearly 100,000 jobs — a surprising record from a group often derided as better at bean-counting and consulting than actually doing anything."

Before you rush off for the MBA, remember to take all these very favorable and upbeat results with a few grains of salt: This crop of grads left at the best possible time and took best possible advantage of the 1990s' boom. This crop also had the advantage of an MBA from a top 30 business school, not merely an MBA. And most importantly, the results are heavily skewed to be favorable because the largest graduating classes (and therefore survey respondents) tend to come from the very best schools (merely because the best of the top 30 tend to have the largest graduating classes). So Harvard, Northwestern, Columbia and other elite and prestigious MBA factories easily overwhelm the respondents from much smaller top 30 schools such as Carnegie Mellon, Cornell, University of North Carolina, and other public universities.

And finally, weigh in on the current Fast Company online poll: In these leaner times, is it necessary to have an MBA to get ahead? Let us know what you think.

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  • Rob

    My MBA is from the University of KY, and I don't think it has added much value to my career so far. But I think the degree is becoming cheapened, that is why there is a new Certified MBA exam - to help set yourself apart. I'd like to see the programs become more rigorous.

    I do have to wonder though, how many people that get MBAs from Harvard, Stanford, etc. would have been successful regardless of whether or not they got the MBA? I had a professor at KY tell me once that the brightest students in our MBA program were just as good as the brightest students at the top schools, the difference was in the average student. UofK faced a dilemma - should they increase their admission standards and make the program more elite, or keep standards lower to educate the average KYian who wanted an MBA?

  • Peter Pries

    I think the MBA is more a networking platform. The alummni club is everything. As far as we can tell from the consultants we worked with it did not really help for the daily business. In the end it only counts if you get your job done properly.

  • Dave Ahern

    I think everyone benefits from education, and motivated people will always work hard (at work or school) and do well. However, adding to the grain of salt... part of your professional pedigree is the education, how likely is it that these folks would speak negatively about there educational background after spending that kind of money to obtain it, then earn it, and finally use the background to strengthen their resume? Not likely.

  • Hunter

    I would suggest the international data is even further skewed to count only high performers due to the fact that the bar is even higher for international students to make the journey to a top US business school (cost, admissions bias, etc). Thus, the international students have been filtered even more strongly prior to admission.

    BTW as a relative recent grad from one of these "Top 30 schools," I've always found the question of MBA "worth" to be a strange one. Trying to arrive at the ROI of the degree is so fraught with disclaimers that it's almost impossible to calculate. However, the life experiences gained from two years with really spectacular peers in a social setting with a great focus on self-discovery and learning are well "worth" the price tag, even if for some it ends up being a luxury as opposed to an investment.

  • Roger Emmott

    As an international MBA (London Business School 1985) I am blown away by these statistics, too. If anyone would like my resume, please let me know!

  • John A. Byrne

    International alums fare even better than American MBAs, according to the data compiled by Business Week.

    As the story states, "While most Americans who get an MBA from a top school believe the experience was worthwhile, for overseas students -- who made up 22% of the class that year -- the payoff was even bigger. American students' salaries averaged $1,100 more than their foreign classmates' prior to B-school. A decade later, the international students earn more: Their salary plus bonus last year averaged $413,280, compared with $386,089 for their American classmates.

    "Money isn't the only difference. Compared with their classmates, non-U.S. grads received more job offers after graduation (an average of 2.56, vs. 2.2 for the Americans). They're more likely to believe that their MBA contributed to their career success than Americans are, and on average, the international grads surveyed have helped start 2.25 businesses since graduation, compared with the 1.94 founded by the Americans."

  • John A. Byrne

    Another thing to consider about the stats--which are very impressive--is that usually more successful people are likely to complete a survey like this. If you don't have a job and are unhappy about your education, you're more likely to just pass. And one more thing: Only the best schools do a very good job in tracking their alums. Most have pretty incomplete lists. So that also skews the data, making it more likely to pad the results in a favorable way. All this said, these are still impressive numbers. I am blown away by the average compensation reported by these alums. And while it's not "about the money," the money can reflect the influence and responsibility these MBAs have in the business world.

  • Ike Eslao

    I wonder how the statistics will look like if one factors in all the 'grain of salt' disclaimer at the end?

  • Paul Greatbatch

    I find it interesting that you list the money that is earned and not the true impact of the value of the MBA as an educational tool vs. management performance.

    My experience has been you are paying a lot for an MBA grad to screw up your business.

  • Marie-Louise Barry

    I would love to see the results if the survey is done with respondents from these "fly by night" MBA schools. They cost a fortune but what do they mean at the end of the day?