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Entering an MBA program is not for the faint-hearted.

By Jeremy Bradshaw

A full-time MBA course can cost between $10,000 and $60,000 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".

Perhaps this explains why business schools are booming and able to attract students from a wide range of backgrounds, professional experiences and ages. A recent survey on 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 programs, most 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%). However, if students are asked their Number One motivation, what do they say? "Money, without doubt", says Professor Ricardo A. Lim, Associate Dean, W. SyCip Graduate School of Business, Asian Institute of Management. "To a lesser extent people are motivated by a desire to switch job or geography," he adds. "But money is critical."

Deans of business schools and directors of programs admit that better salaries and enhanced career opportunities are tangible proof of the value of MBAs. However, there is more to an MBA program than that, says Associate Professor Peter Reed, MBA Director of Monash University. The MBA degree has "no rival or substitute in providing a holistic educational background to complement an individual's management experience and personal capabilities", he says. Laurent Bibard, Dean for the ESSEC MBA Programs adds that a good MBA should "broaden your personal and professional views, enhance your professional mobility and your ability to face new responsibilities". An added benefit should be a good alumni network. "At ESSEC there are currently 27,000 alumni worldwide" he says.

To get the most value out of an MBA you need to choose the right school and the right program. Given the number and variety of business schools, selecting a school can be a formidable task. " First, you need to determine whether you even need an MBA in the first place" says William W. Kooser, the Associate Dean for Executive MBA programs at the University of Chicago Graduate School of Business. Too many prospective MBA students neglect to answer this very basic question. The assumption is that more educational credentials are always better. That's not necessarily true" says Mr Kooser.

Second, you need to decide what you want from your MBA. "Do I need more skills? Do I need greater credibility? Will I stay with my company throughout my career? What's the educational background of the top executives in my company?," says Mr Kooser.

Third, you need to find a business school and program that can meet your needs. This means taking time out to go and look at the faculty, the curriculum, the careers service and program management of a school. "The program should offer cutting edge and industry-focused curriculum that matches your career aspiration" says Ooi Lee Lee, Director of the MBA, Program at Nanyang Business School, Nanyang Technological University. He recommends "a faculty that consists of both local and international experts who use a case-based approach able to provide broader perspectives and equip you with business analytical skills."

Certain MBA programs are tailored to specific sectors or professional niches, says Essec's Dean, Laurent Bibard. He points to Essec's MBA in International Luxury Brand Management or its MBA in International Hospitality Management. He says "your choice of MBA program should fit with your professional goals."

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 Dr. Gioia Pescetto, Associate Dean, Postgraduate Studies, Durham Business School. "Whilst rankings have a role to play, the key factor in choice is the match between the candidate and the school. Potential students need to be clear about the factors that are most important to them and to evaluate their choice of School accordingly."

Recently, top business schools, Harvard and Wharton, refused to cooperate in the compilation of certain tables ranking MBAs. "External rating agencies are important measures of quality", says Associate Professor Ashley Lye of Griffiths Business School. " However, there are too many external bodies that use the wrong measures to rate programs, distorting reality."

Evaluating the success of an MBA is not simple. Ali Hijazi, an MBA student at the 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 step-advance 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."

For many a simple test of the value of an MBA is the salary uplift. Here the figures vary according to the geographical basis of the survey. According to GMAC's research typical (American) MBA graduates in the class of 2004 made around U.S. $56,500 before earning the MBA degree and expect a post-MBA salary of over U.S. $77,000 - that's a 35% increase, and an immediate return on the MBA investment.

Outside the United States, the average returns on MBAs are lower. For example, in Japan "most MBA graduates report a 20% or so salary increase," according to Dr Yoshitaka Yamazaki, Associate Dean at the International University of Japan. However, she points out that "many [students] come to us from developing countries and go on to enter the work-force of the world's second leading economy and so their salary jump is basically immeasurable."

In the UK, the immediate salary boost after graduation has declined from 39% in 2002 to 18% in 2004, according to the Association of MBAs. Carl Tams, Manager of the Association's Intelligence Unit, says that the average base salary has stabilised following the late 1990s peak associated with the dot-com era. "This could partly reflect the greater emphasis on bonuses and other variable cash earnings rather than higher base salaries." These figures are, however, just averages of averages. Salary uplifts will inevitably be influenced post-MBA by:

• the type of job you take after the MBA
• the industry you enter
• the country or region you chose to work in
• your pre-MBA degree and professional experience

Do MBAs pay for themselves?

"Yes" says Prof Ricardo Lim of the Asian Institute of Management. "Truly, even though MBAs are more common nowadays, the entry-level salaries are so much better than if you progressed up the ranks. You immediately get that increment. Plus, in the long-run, a good MBA training reflects in explicitly different skills: good MBAs are savvier and exhibit more leadership traits."

However, Dr Yamazaki of the IUJ sounds a note of caution. "In the short term, the MBA may or may not pay-off for the expenses and opportunity cost attached of the two-year period in the form of  increased compensation." But she adds that "the MBA degree often allows MBA students to take on jobs they would not have had access to without the degree and/or may get on the so called fasttrack to take on management positions in the future."

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."

Roman Martin, a successful Boston-based financier, who unusually holds two MBA degrees, one American, the other European says "Making an MBA a success depends critically on your drive and motivation. At business school you get what you give. The more you give your school, the more you'll get out of it. Remember that and you'll never fail.'

And this is the point, says Professor Ashley Lye of Griffiths Business School. "Good students can derive benefit from any accredited program. Demotivated students will not derive value from even the ‘best' program." The test of the success of an MBA program, he suggests, is whether it has changed your life. "Do those who have gone through the program have a new perspective on business and on how they can effectively compete?" he asks.

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 graduates of the top business schools.