Entering an MBA program is not for the faint-hearted. A full-time MBA course can cost between $10,000 and $110,000 a year and take between nine months to 2 years of your life to complete. To succeed you need to be totally committed and very focused.
Yet MBAs have never been more popular. Each year over 100,000 students sign up for MBA programs. But are MBAs good value?
According to a study by the Graduate Management Admission Council (GMAC), most graduating MBAs are "very positive" about the value of their degree compared with the monetary cost of earning it. Fifty-eight percent of MBA graduates rate the overall value of their degree as "outstanding or excellent", and another 30% rate it as "good".
MBA students specific motives for taking their business degree vary considerably. A recent survey published by the Association of MBAs found; 65% of MBA students take an MBA to improve their prospects with their current employer, 54% to move in to a different industry sector, 22% to launch a business, 15% to become self- employed.
After completing their MBA graduates believed their degree had not only helped their career objectives but had positively enhanced their self-esteem (90%) and made them more self confident and assertive (82%).
Deans of business schools and directors of program admit that better salaries and enhanced career opportunities are tangible proof of the value of MBAs. However, there is more to an MBA programs than that, says Prof Michael Nimier, President of the American University of London. He says the MBA degree is "the most popular business qualification in the world" partly because it has become "a prerequisite for most management decisions".
Views tend to differ as to how students should select their school. "Tuition really shouldn’t be the primary factor when considering a school program" says Kelly L. Oto, Associate Director, English & Certificate Programs for Internationals University of California, Irvine. "The academic content, reputation of the institution, and the social and cultural environment are the differentiating factors that should be important to a student."
You should not be too swayed by the published rankings of schools, says UBI’s François d'Anethan, as these can be misleading and unhelpful. "Earning an MBA from a 'big name' business school isn't any longer a guarantee that you will ultimately do better in your career." Mr d'Anethan recommends that when looking at a business school you should consider; the average age of students (He says it should be around 30), the average working experience of students (He reckons the optimum is 4 to 8 years pre-MBA experience), the international intake of a school (The more nationalities, the better), the male/female ratio? (70/30 is a minimum), the academic qualifications of the professors and their real experience of the world of business.
Evaluating the success of an MBA is not simple. Ali Hijazi, an MBA student at the European London Business School, suggests you need to ask yourself three questions. "First, is my program assisting my career goals (e.g. will it result in a salary rise or stepadvance in my career)? Second, is my program stretching me as a person (e.g. extending my network of business and social contacts)? And third, is my program demanding and challenging intellectually? If it fails on any of these points, then you have either selected the wrong program or the school has failed you"
What type of students then get the most out of their MBAs? Yoram M Kalman, Senior Vice President, Academics at OHE says it is "those who use their time on the MBA program to upgrade their social and intellectual capital." This means "networking with colleagues from diverse professions, diverse industries, and, most importantly in today’s global economy, from diverse countries" It also means "learning the most up to date theories, and successfully applying these theories to real-world situations."
If a top priority is to gain international experience or exposure to foreign cultures you may find programs located on one campus too limiting. A specialist school like the World Mediterranean MBA, based in Marseille, may be the answer. It runs a nine month course that rotates students every six weeks from one city to another along the Mediterranean. Students take classes in seven countries in cities as varied as Beirut, Milan and Casablanca.
Ronald S. J. Tuninga, The Director Dean of the Maastricht School of Management suggests, "Possible participants should focus on learning and network opportunities and not on salary." He goes on to imply that, "Salary increases are important for younger MBA participants but are not the primary reasons for more senior participants to take an MBA program. In most cases, however, the return on investment is less than three years."
Where a business school specialises in nurturing entrepreneurs, evaluating the benefit of a degree solely by salary uplift is not helpful, says Patrick Molle, President of EM Lyon Business School. "While salary increases are important, it is not the only benefit of an MBA". He suggests that students who become entrepreneurs generally find and can expect their incomes to decrease initially. "Clearly the success of a personal professional project cannot be reduced to measuring just salary", he maintains. Mr Molle adds that you need to "consider how one's salary progresses post-MBA as against how one's salary would have progressed if an MBA was not undertaken".
When judging the likely impact of taking an MBA it ought to be remembered that "many - probably the majority - of people studying their MBA do so while they are in full-time employment", according to Sharlene Tilley, Director of Pearson Education's distributed learning division, which markets Edinburgh Business School's highly successful MBA into Canada, Europe and Africa. She adds "it's likely they have the support of their current employer, who recognises that an MBA is potentially as valuable an asset to the organisation as it is to the student. So any 'rate of return' has to be assessed from both the perspective of the student who's doing the MBA, and the organisation in which that student works. The goals and aspirations of the organisation are as relevant as the student's personal objectives."
Companies are just as keen to see tangible, positive results from the MBA program as are the students themselves. "Where a company contributes to - or pays in full - the cost of an MBA", says Ms Tilley, "it will be keen to see its' employee succeed personally as well as make meaningful contributions to the organisation. The expectations are often high, with companies wanting measurable results quickly."
Ronald S. J. Tuninga, The Director Dean of the Maastricht School of Management implies, "Most middle and upper level managers either in a profit or in non-profit organisation are aware that the business environment is changing at a rapid pace and good knowledge and understanding is needed for practitioners." He goes on to say, "In today’s global economy MBA is a great investment. The MBA degree is one of the few programs with global recognition. Such important points are to consider the learning and network opportunities offered by the Maastricht School of Management."
So is an MBA a good investment?
The answer depends on a candidate’s ultimate objectives. Choosing the right school and the right program is critical. When weighing up different schools it is important to recognize that in the MBA market you tend to get what you pay for. Frequently, the more expensive a school, the better the quality of its program and the better the return will be on your investment. A school with lower tuition fees may suggest a quicker return on investment. But the evidence suggests that the best returns can come from the top schools where the fees are among the highest. Why? Because in the eyes of employers, there is no substitute for the top quality MBA programs in the top schools. That’s why many employers are ready to pay a premium for the graduates of top business schools.