With more and more students getting an MBA, is the qualification worth the hard work?
With more than 250,000 students opting for an MBA in the US alone, this expensive qualification leaves many in hope they will manage to obtain a high-flying job in the business world.
An MBA graduate degree involves providing business graduates an education in standard business practices, from accounting to marketing, which in turn aims to increase their analytical and problem solving skills.
In a 2013 Alumni Perspectives Survey by the Graduate Management Admission Council, 92% of respondents claimed that this qualification increased their earning power. Enrolling yourself in a highly acclaimed business school such as Harvard could see your salary rise up to 163% more than your earning potential before the qualification.
Cost and salary expectations
An MBA degree does not come cheap, with schools such as Stanford offering a two year full time course for a whopping $185,054. So, does this investment in education result favourably for graduates moving into the world of work?
In a 2011 Admission Council Alumni Survey, the median salary for MBA holders was $94,542 with 7 out of 10 graduates reporting that their starting salaries was as much as, or more, than they had hoped.
Furthermore, The Graduate Management Admission Council (GMAC) has demonstrated that alumni from graduate management programmes recover 100% of the hefty financial investment in their degree after just four years. Dave Wilson, the CEO of GMAC further explains “these results demonstrate that a graduate management degree is, in fact, a solid investment in your future, both in good and bad economic times”.
Although the initial investment of an MBA can be financially challenging, a 100% ROI after 4 years is minimal compared to the likes of PhD graduates in scientific fields who, on average, only recoup their investment up to seven years later.
Recession-proof degrees?
Although the return on investment for MBAs is clear, are they really as recession-proof as they make out to be? The employment rate for MBA alumni slipped from 88 percent in 2010 to 86 percent in 2011 and represents an unemployment rate of 14 percent, an eye watering thought when you consider the amount a student may have paid to study an MBA.
Moreover, salary increases also highly depend on the institution where you study for the MBA, as according to the Financial Times Business Rankings, Melbourne Business School and Peking University: Guanghua provide graduates with a salary increase of 64% and 163% respectively.
The qualification, viewed as prestigious by recruiters and academics alike has become increasingly popular in the last decade and is now viewed rather as a commodity on a CV rather than a speciality. Having strong professional work experience in the business world as well as making contacts in the industry is vital in this day and age, where job competition is more ferocious than ever.
Some critics claim that this is more vital than an MBA degree itself, where although the starting salary may be less without one, by proving your abilities in a professional work environment without the need to apply academic theory to your business acumen, you can reach the salary expectations of those with the qualification.
(Image by KitAy)
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