They were once considered the fail-safe ticket to the top. But with an average outlay of £50,000, embarking on an MBA in the current economic climate is a bold move
Gaining a master’s degree in business administration (MBA) is regarded as a way to unlock higher earnings potential and a wealth of career opportunities. But, with a UK MBA course costing upwards of £50,000, it’s not an investment you make lightly.
Exactly how large the investment is depends on where you study. While it’s possible to find MBA courses with fees of less than £20,000, study at one of the top business schools and you’ll pay significantly more.
As an example, the fee for the London Business School’s MBA is £53,900. Factor in your living expenses and, if you’re taking time out to study, your lost income, and the investment could be several times the fee.
Given the size of the investment, it’s important to be certain that it will deliver a decent return. According to the Financial Times Global MBA Ranking 2011, an MBA graduate can see their salary increase substantially. Average increases vary but if you pick up an MBA from one of the top schools, you could expect to see an uplift of more than 100% in your pre-MBA salary between three and four years after graduation.
The MBA graduate view
For Cathy Taylor, Managing Director of Ansvar Insurance, a business division of Ecclesiastical Insurance, her MBA was well worth the investment. She graduated in 2002 with an MBA from the Open University Business School after gaining sponsorship from a former employer.
“It was worth doing on so many levels,” Taylor says. “It’s given me a good framework to approach people and processes, which has been invaluable in my career. In addition, and especially through the network of people I know as a result of doing my MBA, it’s given me opportunities I wouldn’t have had otherwise.”
Francisco Jose Egana Barrios graduated with an MBA from London Business School in 2010 and has already seen his career progress significantly. Before taking the MBA he worked for one of the audit firms but wanted to switch to investment banking. “I had not anticipated the doors the London Business School MBA would open for me,” he says. “As a result of meeting with the School’s alumni bankers I was interviewed for and offered the position of associate in the strategic transactions group at HSBC.”
Another London Business School MBA alumnus, Jessica Lu, also found her career benefitted from taking the qualification. Before starting her MBA, she knew she wanted a career in the financial services industry but wasn’t sure what she wanted to do. “London Business School exposed me to different career paths within finance, both for the near term and the long term,” she says. “Even the classroom education reflects what happens in the real world. It’s practical.”
As a result, she’s decided she wants to focus on investment banking in the short-term, landing a role as an associate at an investment bank.
Harpreet Batra also has an MBA. He graduated from Warwick Business School in 1994 and now runs his own consultancy. “It’s given me a much better understanding of how a business works. I used to be a technologist but I can now talk to a business in its own language,” he says. “It was definitely worth it.”
The employer perspective
But, while many have benefitted from gaining an MBA, Jonathan Nicholson, Managing Director of Astbury Marsden, says there’s much less focus on MBAs in the current job market.
“MBAs were in vogue for a number of years and while they’re still highly regarded in some sectors such as strategic consulting, their importance has fallen since the downturn,” he says. “Employers are much more interested in seeing experience and aptitude than theory.”
Nicholson has also noted that candidates are much less likely to talk about wanting to study for an MBA. “The cost, both financially and in terms of time, is prohibitive. MBAs are seen much more as a luxury than a necessity when it comes to career advancement,” he adds.
As well as being less highly regarded in the tough economic climate, there are also suggestions that the value of an MBA has been diluted. Batra agrees. He says that when he studied for his MBA there were strict application criteria, with most business schools stipulating that candidates needed a minimum of three or four years’ work experience. “You see more and more people doing MBAs straight after gaining their bachelor’s degree. They don’t have any real world experience. This is devaluing the MBA.”
Nicholson says this, coupled with the cost of gaining an MBA, is leading to something of a counter culture, with entrepreneurism becoming a much more valued characteristic.
“There will always be business leaders who take the MBA route to the top, but there’s also a place for the entrepreneur who takes risks and makes things happen,” he says. “There’s still room for the structured approach but business is becoming more entrepreneurial.”
Top business schools around the world
1. London Business School, UK
1. University of Pennsylvania, Wharton, USA
3. Harvard Business School, USA
4. Insead, France/Singapore
4. Stanford University GSB, USA
6. Hong Kong UST Business School, China
7. Columbia Business School, USA
8. IE Business School, Spain
9. MIT Sloan School of Management, USA
9. Iese Business School, Spain
Source: Financial Times Global MBA Rankings 2011