About the ranking
Ranking business schools can be a contentious issue. But with even a cheap MBA costing upwards of $100,000, once all of those tuition fees, living expenses and foregone earnings are accounted for, students will continue to demand an independent assessment of business schools.
Oct 13th 2009 | From The Economist online
This year we publish our eighth annual ranking of full-time MBA programmes. In the past, schools including Northwestern (Kellogg), Chicago (Booth)and IMD in Switzerland have held the top spot. This year Spanish school iese has prevailed. It, too, has form, having previously come first in both 2005 and 2006.
Business school rankings are not perfect. What makes a good MBA programme will vary for each individual. Our ethos is to look at business schools from the students’ perspective. Indeed, over the past 21 years we have asked close to 150,000 of them why they decided to sign up for an MBA. It is their responses that inform the criteria we measure and the weightings we apply.
Over that time, four factors have consistently emerged:
•to open new career opportunities and/or further current career;
•personal development and educational experience;
•to increase salary;
•the potential to network.
The Economist ranks full-time programmes on their ability to deliver to students the things that they themselves cite as most important. It weights each element according to the average importance given to it by students surveyed over the past five years (see full methodology).
Other rankings have different standpoints. They may give a higher weighting to the research output of faculty, the salaries of graduates or the perception of a school among employers. All are valid, and it is up to each prospective student to understand the various methodologies and decide which are most relevant. What’s more, the rankings should form only part of a student’s selection process. It is equally important to look at issues such as school culture, employment prospects and areas of speciality.
With the job market for MBA graduates at its most competitive for many years, now, more than ever, schools which can demonstrate the effectiveness of their careers services will be highly sought after. At IESE, our top-placed school, 98% of graduates found employment within three months of graduation, with an average basic salary of $125,000. It is a similar story of success throughout our top-ranked schools. Harvard, fifth in our ranking, attracted recruiters from 11 different sectors, paying graduates an average $124,000. Graduates at second-placed IMD earned even more, which is perhaps one reason why they rated its careers service the best in the world.
A hard-working and effective careers office at a school undoubtedly makes a huge difference to MBA Mstudents. But in many ways, the employment credentials of schools’ graduates is just a product of the quality of students accepted on the programme in the first place, and the ability of schools to give those students the best education. Two of the most important measures are the average GMAT score of those admitted to the programme—the de facto MBA entrance exam—and how much previous work experience they bring to the classroom.
As a rule of thumb, students at North American schools have the higher test scores and Europeans the greater work experience. All six of the American schools in our top ten have average gmat scores of over 710 (out of 800). In contrast, students at London average 693, at iese 685 and at imd just 675. But IMD students will have nearly double the work experience of those at Stanford, for example.
This also helps explain why European students, on average, will earn more than their North American counterparts immediately after they graduate. Tenth-placed Vlerick Leuven may not have the cachet of Wharton, but that probably doesn’t concern its graduates, who will typically out-earn their prestigious American counterparts by $26,000 a year.
European schools also do well in the networking category, often because their alumni are more international. HEC Paris, for example, has 63 overseas alumni associations in 49 countries. Even in Asia and Australasia, where schools are often younger and haven’t had the time to build up extensive links, it is not unusual to find an international alumni network. The National University of Singapore’s business school has an impressive 37 overseas alumni associations.
Many American schools, however, have yet to open a single overseas branch. However, they undoubtedly have the edge when it comes to keeping their alumni active once they have left the programme. In this they are helped to some extent by having graduated more mbas each year for a longer time, meaning they have a bigger alumni base. But they also expend a lot of time and effort keeping their alumni engaged. Northwestern (Kellogg), for example, has 40,000 active mba alumni; Chicago (Booth) has even more.
Regional rankings
North America
These are difficult times for North American business schools. They have been widely pilloried for supplying the chief executives who were at the helm as some of the world’s most prestigious companies sank—for example, Richard Fuld of Lehman Brothers is a New York (Stern) alumnus, and Andy Hornby of hbos and Rick Wagoner of General Motors are both Harvard alumni. The financial crisis has hit mba students particularly hard. Not only are jobs harder to come by, but as banks started to feel the pinch, they pulled out of a scheme to supply loans to foreign mba students. Added to that was President Obama’s edict that firms receiving government bail-out money should hire Americans where possible. The result has been a drop in the number of foreign business students choosing American schools—hitting both revenue and class diversity. As if that wasn’t enough, schools have found that the generous donors on whom they had relied for years had stopped returning deans’ phone calls as endowment funds withered.
But all of these problems are relative. With the exception of just a handful of European schools, America remains the standard bearer for business education. With endowments still in billions of dollars, schools such as Harvard and Stanford are hardly on their uppers—and no other business schools in the world come close to competing.
Europe
Europe boasts some of the world’s most prestigious schools. London, IMD, INSEAD and IESE are names that sit easily alongside America’s finest institutions. And although they may not be able to match the resources available to their cousins across the pond, they do have some undeniable advantages. Foremost is an unparalleled internationalism—in the student body, the faculty and the curriculum. This can make the European MBA an exciting cultural experience. At London Business School, only 35% of students are European, with 25% from Asia, 20% from North America and the remainder from Africa, the Middle East and South America.
Furthermore, European programmes are often shorter and the students older and with more work experience. If the mantra is that you should learn as much from your cohort as your professors, then this can make many European schools highly appealing. Ashridge students have an average of 13 years’ work experience; Durham’s have 10.
Asia and Australasia
The MBA market in Asia and Australasia is growing in terms of both size and, among the top schools at least, quality. Heavy investment in programmes is bringing the levels up to western standards—something that could not have been claimed a few years ago. At the region’s top-ranked school, Melbourne, for example, there are 49 full-time faculty teaching on the MBA programme, 98% of whom have a PhD. Students rate the facilities at the Hong Kong University of Science and Technology as the best in the world. Furthermore, with easy access to markets such as China, employment prospects for students from the top schools are burgeoning.
However, the increasing interest in Asian business education is both a boon and a potential stumbling block. The sheer number of programmes that are setting up, particularly in China but also in India, could see resources stretched in the coming years. In particular there is a concern over whether there are enough top-quality faculty to service such a high number of schools.
Questions will also be asked about the academic rigour of such programmes. Here the international accrediting bodies, such as AACSB, AMBA and EQUIS will have a huge part to play. (The China Europe International Business School, for example, has equis accreditation.) It may also encourage more western schools to set up campuses in the region, as insead has done in Singapore and Northwestern in Hong Kong.
