Kriti Sharma
MBA Consultant
In a post-pandemic world, observing the tectonic shifts that have altered the corporate landscape, ambitious professionals are grappling with a burning question: Is an MBA worth it?
No, if one were to ask Twitter CEO Elon Musk, Facebook ex-COO Sheryl Sandberg, and American ‘shark’ Mark Cuban. While it is best to take their strong views with a grain of salt, for Musk and Sandberg's comments address the highly volatile tech industry, and Cuban’s zeal for rewarding the genius of business ideas over the credentials of individuals betrays his more specific interest, apprehensions about the value of an MBA today are well-grounded.
Things were different in the decade running up to the COVID-19 years. Be it for a young or a mid-management professional, an MBA was the panacea that promised to reinvigorate future career prospects. Employers too were enthusiastic, and warmly welcomed these cohorts–newly trained in a formal business curriculum and emblazoned with the trappings of big brand B-Schools. It worked out as a win-win for all.
“I think there might be too many M.B.A.s running companies,” Musk told an online audience at The Wall Street Journal’s CEO Council summit. “There’s the M.B.A.-ization of America, which I think is maybe not that great. There should be more focus on the product or service itself, less time on board meetings, less time on financials.” (Byrne, 2020) “While I got great value from my experience, MBAs are not necessary at Facebook, and I don't believe they are important for working in the tech industry,” she writes. (Kitroeff, 2015) "There are so many online ways to learn and I think you can get far more experience in the workforce and learn more and be in a better position to succeed. Because realize, look, there are so many online MBA equivalents that if you are disciplined enough, you can do it for a lot less money and still get a quality education," says Cuban. "Now, that said, I am a big believer in going to college, right, I am just not a big fan of MBAs." (Clifford, 2018)
However, the ROI equation has undergone substantial changes since then. When the global economy was thrown into a swivet during the pandemic, a diverse range of sectors resorted to automation, outsourcing, pay cuts, and employee attrition to cope with the crisis. For the corporate professional, staying afloat in these turbulent waters implied holding on to their current job.
An MBA threatened to rock the raft in two ways: (1) amassing a 6-figure debt, while simultaneously (2) experiencing a loss of earnings owing to a voluntary exit from the workforce. Caught in this double whammy, MBA applicants plummeted into paralysis even more than before when confronted with the infamous “Why MBA?” essay question, a perennial feature of the B-School application. Yes, existentialism had never known such epic proportions. The will to cop out of the rat race felt natural.
Yet, given the onset of a relative sense of normalcy in 2022, it has become imperative to revisit the question with a fresh perspective. In the remainder of the article, an attempt has been made to rescue the answer to the question “Is an MBA worth it?” from becoming an old wives' tale by examining: (1) crucial data points, and (2) recent preponderant economic events.
The Proof is in the Pudding: GMAC data
The Graduate Management Admission Council (GMAC) conducts the annual Enrolled Students Survey to illustrate trends in student and recent graduates' evaluations and outcomes of their graduate management education (GME). It also conducts the annual Corporate Recruiters Survey to furnish insights on trends in current hiring, compensation, skill demand, and perceptions of GME programs, such as the full-time MBA.
An MBA in the USA will set you back over $217k in terms of total estimated cost, compared with $130k in Europe, and $108k in Asia (Novellis, 2021).
Key findings from the 2022 surveys debunk some of the myths around the MBA that have been widely floating around masquerading as fact:
MYTH #1: Employment prospects are unpromising after an MBA.
There was a year-on-year increase of 6% in graduating respondents who were employed at the time of graduation, from 80% in 2021 to 86% in 2022.
Enrolled Students Survey 2022 Summary Report (Matt Hazenbush, 2022) and Corporate Recruiters Survey 2022 Summary Report (Matt Hazenbush, 2022).
MYTH #2: Salaries remain static after an MBA.
Among school graduates from North America (one of the most popular destinations globally for the MBA), those who attended full-time MBA programs reported a pre-GME total compensation median of US$80,000, and a post-GME total compensation median of US$120,000—a 50 percent increase.
Furthermore, 71% of the respondents among the corporate recruiters agree that employees with a graduate business school education tend to earn more.
MYTH #3: An MBA does not facilitate career change and progression.
Among 2022 graduates of participating schools, a majority who set out to make a career change or get promoted report that they were successful in achieving that goal.
Specifically, among those who say making a career change was one of their top three motivations for pursuing GME, 57% said they were successful. Similarly, 56% of graduates who had the goal to gain a promotion were successful.
Among corporate recruiters, 74% of the respondents agree that employees with a graduate business school education tend to have a fast-track to upper-level positions. MYTH #4: An MBA lacks holistic experience and exposure beyond classroom learning vis-a-vis a professional environment.
Outside the classroom (faculty, curriculum, classmates), MBA students engage with business school professionals from the admissions, program management, student services, and career services offices.
The survey findings demonstrate that most students give all the elements of their experience a favorable review.
MYTH #5: Recruiters are no longer hiring for MBA candidates.
Overall, 92% of corporate recruiters say they expect to hire newly minted MBAs in 2022, representing very strong hiring intentions for corporate recruiters.
Looking to the near future, most corporate recruiters agree that demand for new business school talent will increase in the next five years (63%), while 35% expect it will remain stable, and 3% believe it will decrease.
Consistent with past years, corporate recruiters express high levels of confidence in graduate business schools as sources of talent. Overall, 87% of corporate recruiters said they are either highly confident (36%) or confident (52%) in the ability of business schools to prepare students to be successful in their organizations.
By industry, corporate recruiters in the Consulting and Technology industries were the most likely to report that they are highly confident in business schools.
MYTH #6: AI is a threat to MBA candidates. Why do corporate recruiters have confidence in MBA graduates? Corporate recruiters overall cite the following reasons: Strong communication skills (cited by 73% of respondents), versatile skillset (68%), and strategic thinking (66%). It is noteworthy that these are the very skills that give MBA graduates a competitive advantage over AI.
Furthermore, it is improbable that humankind will relinquish organizational leadership to AI. About 7 in 10 recruiters agree that leaders in the organization tend to have a graduate business school education (71%).
MYTH #7: Variants of the MBA are equally acceptable.
A majority (61%) of corporate recruiters see job candidates with a graduate business degree as more competitive than those with only micro-credentials. In addition, 56% of corporate recruiters overall agree that those with a degree are more likely to be successful in their organizations, and 54% agree that those with a degree outperform those with only micro-credentials.
Heeding Caution: Unprecedented Developments in 2022-2023 Very interestingly, hiring trends in the Corporate Recruiters Survey 2022 indicated a favorable hiring market in industries such as Technology (92%), among others like Consulting (91%), Finance/Accounting (96%), and Manufacturing (94%). Arguably, these projections were built on data from the pandemic years, when the shift to a virtual world opened up immense opportunities for tech companies and led to hiring hysteria to meet increasing demand.
But the dynamism of the tech industry never ceases to amaze. November 2022 witnessed a mass layoff by Twitter, which set in motion the ‘Winter Wave of Tech Layoffs’, where approximately 106,950 tech employees lost their jobs in January 2023. Big tech companies, such as Google, Microsoft, Amazon, Meta, Twitter, Salesforce, Cisco, and Snap are culpable of administering collective layoffs surging over 1,00,000 employees in the past few months, and there is trepidation that more layoffs are yet to come.
As reported on Layoffs.fyi (Layoffs.fyi, 2023). As reported by Personnel Search Services Group on LinkedIn (Personnel Search Services Group, 2023).
This watershed has presented both opportunities and threats for tech professionals. On the one hand, for laid-off tech workers, there is a silver lining: top MBA programs (e.g. Dartmouth, Duke, Cornell, Georgia Tech, Kellogg, and Rice) promise respite in the form of extended deadlines, test waivers, and scholarships. On the other hand, for MBA students at the cusp of graduation, there is some cause for concern as it is highly probable that the industry's contraction will result in fewer placement offers at B-Schools.
On Pins and Needles: Conclusion As reported on Layoffs.fyi (Layoffs.fyi, 2023).
As reported by Personnel Search Services Group on LinkedIn (Personnel Search Services Group, 2023).
As reported in Fortune Education (Lake, 2023).
As reported in Bloomberg (Mandelbaum, 2023).
If there is one thing the dissonance between data projections and actual trends in
2022—2023 tells us, it is this: The response to "Is an MBA worth it?" requires far more nuanced insight than what mere statistics can provide. Evolving at breakneck speed, the corporate world today is a complex cosmos of endless possibilities, but also unforeseen limitations, the scope of which transcends predictive analysis.
There is some merit in keeping one’s eyes peeled to see the kind of fun facts surveys based on the 2023 cohort throw up. But for those weighing their options for the 2024 intake right now, “To be or not to be (a B-School applicant)” presents an urgent conundrum.
Amidst this haze, the only definitive response is: It depends.
In the recent past, B-Schools have been criticized for failing on their promise of rendering quality education and job opportunities. In the context of the altered social reality brought forth in the aftermath of the pandemic, the unchanged case study curriculum looks more classical than relevant. Then there is frozen hiring, with companies that were earlier interested in MBA students turning tight-lipped about current and future recruitments[1].
But arguably, the one B-School offering that continues to lure the crème de la crème is the access to an elite social network, consisting of contemporaries and alumni who boast a track record of inspiring career success. To share this much-sought-after niche is a great motivation to throw in the towel at work and sign up for 2 years of immersive engagement with like-minded individuals, building strategic partnerships in business and also life.
Human skills, such as leadership, communication, and emotional intelligence, are presently outside the domain of AI. This is where B-School graduates get a decisive upshot, because their experiential training ensures they necessarily develop these skills, without which navigating the rigors of the MBA program would be next to impossible.
Finally, for the jaded corporate employee who wishes to air the staleness racked up from being a cog in the office machinery for too long, the MBA offers an ideal escape into a bubble where work and play exist in a harmonious balance, and at the finish line awaits the chance to bounce back into the workforce, not just working for companies, but making decisions for them in an executive capacity.
In summary, an MBA is worth it if there is a genuine appetite for gaining exposure to a global market, enhancing communication skills, accessing a vast professional network, and augmenting earning ability. All considered, an MBA is akin to making an investment in yourself. So, give a positive vote of confidence to the potential bubbling within and take the plunge!
As reported in Fast Company (Karpis, 2019).
References
(2023, March 2). From Layoffs.fyi: layoffs.fyi
Byrne, J. A. (2020, December 9). Elon Musk Trashes The MBA — And Faces An Immediate Backlash. From Poets&Quants: https://poetsandquants.com/2020/12/09/elon-musk-trashes-the-mba-and-faces-an-immediate-backlash/
Clifford, C. (2018, July 27). Billionaire businessman Mark Cuban: ‘I am not a fan of getting MBAs at all’. From CNBC: https://www.cnbc.com/2018/07/27/mark-cuban-on-whether-getting-an-mba-is-worth-it.html
Karpis, P. (2019, November 22). If an MBA is no longer worth it, what is? From Fast Company: https://www.fastcompany.com/90434543/if-an-m-b-a-is-no-longer-worth-it-what-is
Kitroeff, N. (2015, December 17). Sheryl Sandberg Says an MBA Doesn't Matter in Tech. From Bloomberg: https://www.bloomberg.com/news/articles/2015-12-16/sheryl-sandberg-says-business-school-doesn-t-matter-in-tech#xj4y7vzkg
Lake, S. (2023, March 28). Laid-off tech workers: These top business schools are still offering extended MBA deadlines, scholarships. From Fortune Education: https://fortune.com/education/articles/laid-off-tech-workers-these-top-business-schools-are-still-offering-extended-mba-deadlines-scholarships/
Mandelbaum, R. (2023, March 7). Tech Layoffs Are Bad News for MBA Grads Seeking Jobs. From Bloomberg: https://www.bloomberg.com/news/articles/2023-03-07/tech-layoffs-are-bad-news-for-mba-grads-seeking-jobs#xj4y7vzkg
Matt Hazenbush. (2022). Corporate Recruiters Survey 2022 Summary Report. Reston, Virginia: GMAC.
Matt Hazenbush,. (2022). Enrolled Students Survey 2022 Summary Report. Reston, Virginia: GMAC.
Novellis, M. D. (2021, July 20). Cost Of MBA Increases In 2021 Despite Covid. From Business Because : https://www.businessbecause.com/news/mba-cost/7705/mba-cost-increases-covid#:~:text=The%20cost%20of%20MBA%20tuition,Business%20School%20and%20HEC%20Paris.
Personnel Search Services Group. (2023, March 28). 4 Reasons Why Big Tech Companies Are Laying Off Employees. From LinkedIn: https://www.linkedin.com/pulse/4-reasons-why-big-tech-companies-laying-off/
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