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New Research Indicates Which MBA Programs Offer Greatest ROI

How much of a difference does the name of the business school on your resume really make?

Here at AdmissionsConsultants we asked ourselves that question as we were researching our book: Top MBA Programs: Finding the Best Business School for You. In order to answer the question we decided to ask those people who have the most influence over MBA graduates' post-business school careers: corporate recruiters.

We created over 2,800 composite resumes for second-year MBA students with backgrounds in accounting, biotech, consulting, engineering, financial analysis, information technology, investment banking, public sector, real estate, supply chain management, and underwriting. Then, we regionalized each composite, in other words, we changed each resume's undergraduate school and employer locations so they represented the 10 regions defined by the MBA Career Services Council's Standards for Reporting MBA Employment Statistics. These fictionalized graduating students had identical undergraduate schools, grades, extracurricular activities, foreign language skills, fictitious employers, and job accomplishments. The only thing which was truly different about our composites was the name of the business school they had attended.

We asked recruiters from all over the world to estimate how much each "candidate" could earn in his first job after business school. The results, from well over 300 recruiters, demonstrate to what extent a program's "name brand recognition" influences future career prospects and compensation. Indeed, we found, the school name made a great deal of difference – as demonstrated in this chart. The difference between a highly competitive school and a less competitive top-tier school was nearly $20,000 across the board.

In other words, even when controlling for factors such as undergraduate schooling and work experience, the resumes with the top schools' names commanded a significant premium in the workplace. We believe that this premium could increase in a stronger economy when employers have larger payroll budgets. To quote one recruiter from the United Kingdom, "12-18 months ago I would have expected that these candidates would have been able to add £10,000 - £15,000 to their starting salary and their background prior to the Masters would have been less important." Clearly, in any economy, the reputation of your MBA program has a significant impact on your future.

We had many other findings from this study.

  1. All of our graphs, including those for each of the 10 regions and various job functions, show similar nonsymmetrical skews, i.e. the very top school names are further above the mean and median than the very bottom school names are below the mean and median.

  2. All 31 schools profiled in Top MBA Programs are very highly regarded, representing the crème de la crème of graduate business educational programs. For comparison purposes the survey also included some composites of graduating MBAs from some less prestigious 2-year. Students from these less competitive business schools earned an average of 20% less than any of the 31 schools listed here. (See graph below.)

  3. Candidates who pursue a career in a highly competitive field such as strategy consulting, investment banking, private equity, or venture capital, will most certainly benefit from attending one of the very top business schools. We heard repeated comments about consulting and I banking composites who were attending the least selective of our 31 profiled b-schools.

  4. Recruiters give advantages to candidates who had already lived or worked in the same geographic region as the job they are applying for. Each composite resume reflected interest in a specific region by listing summer internships, undergraduate schools, and pre-MBA employment in the same geographic region. Most MBA students find it easiest to secure a summer internship in the same region as their MBA program. (Approximately half of second-year students find their positions through their career services office.) Hence, our composite resumes may not have been entirely accurate in portraying the chances of getting back to the region to actually compare the relative value of the b-school names.

  5. The saying goes: "You're only as good as your last position." The survey saw that truism come into play repeatedly, particularly for the "candidate" with a public sector background. However, this was also the candidate who received the biggest increase in salary with a Harvard MBA: a whopping 55% higher salary than with the least competitive school's degree. This difference suggests that highly competitive schools give their graduates the greatest "fresh start value" following a low-paying pre-MBA job.

  6. Although some regional differences remain, the rapid spread of information through the Internet and the increasing transiency of the workforce have lessened the importance of geographical differences among the top MBA programs.

  7. We believe that our average salaries are a bit lower than those reported by the schools for a few reasons: (1) our averages reflect an equal weight from each of the ten regions as defined by the MBA Career Services Council's Standards for Reporting MBA Employment Statistics, (2) we reached out to recruiters beyond the ones who come to these schools' campuses in full force each year. However, while these recruiters are going to place a lower value on these graduates, we steadfastly believe that the relative value on the b-school brand names remains constant.

  8. We don't believe for even a minute that this study quantifies the full difference between the educations offered at the top MBA programs. For starters, the differences in alumni networks and opportunities, particularly in highly competitive fields such as strategy consulting and private equity were not captured in our study.

Oh and two more factoids that shouldn't surprise anyone: There is no one perfect resume format and the recruiters did rather consistently comment that they liked the composites with the most job continuity.

Our book, Top MBA Programs: Finding the Best Business School for You, gives business school applicants advice about the admission process and choosing their best fit MBA program. It also provides in-depth descriptions on 31 top schools. Finally, Top MBA Programs contains an interactive school selection tool on an accompanying CD-ROM that allows users to build their own customizable rankings. The CD-ROM offers over 80 selection criteria to its users. Information gleaned from this study on recruitability by region and industry is also included in this school selection tool. Such a resource is doubly valuable to MBA applicants since the corporate recruiter study demonstrates how much a business school's name matters.

We hope you find our research helpful in your b-school selection and admission process. If you have any questions about our study, our book, or if you just want to discuss your profile or bounce a question off us, please don't hesitate to call us at 1.800.809.0800 (+1 703.242.5885 outside the US and Canada). We're here to help and we look forward to speaking with you soon!

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