Value of a Top MBA

Benefits of an MBA generally

If you’re considering getting an MBA, you’re probably already convinced that the degree will advance your career. Whether it’s to accelerate ladder-climbing in your current profession, or to ensure you land on your feet while engineering a career change, you expect an MBA to pay dividends — both in the short- and long-term. Beyond the immediate post-MBA recruitment and salary increase benefit, a significant element of an MBA’s longer term value is the diverse peer network within which you can cultivate relationships (with both your classmates and the broader alumni network).

And it can certainly do all that — it’s one of the most versatile and profitable educational investments one can make. By not only submitting yourself in the first place to the comprehensive selection process, but also passing all the required coursework, you signal a seriousness about your career that helps place you at the top of the minds of company recruiters and headhunters. At many companies, an MBA is already considered a minimum requirement for advancing beyond middle management.

But while most business school graduates will achieve an acceptable return on their MBA investment, it is the graduates of the top 20 MBAs who achieve — by far — the greatest return.

The difference a top 20 MBA makes

With average starting salaries of top MBA graduates typically over US$100,000, and 5-year before/after salary improvements easily exceeding 100%, it is not hard to imagine why demand for a top management education keeps increasing. Given their stringent entry requirements, top 20 business schools also offer lifelong access to a network of successful alumni who can help you throughout your post-MBA career.

If you gain entrance to a top tier school in Europe or the US, the effect on your career prospects can be particularly transformative (see the analysis provided by a US-based GMAT tutor – who incidentally scored an 800 and charges US$10,000 for private tuition – of the potential effect of an MBA on lifetime earnings potential).

In fact, most annual media rankings of business schools explicitly include average post-MBA salary increases as a major input in their ranking calculations (see the Financial Times’ latest ranking here).

Yet, a top tier MBA doesn’t cost much more than a less well-regarded one. This is the fact that makes the return-on-investment from a top MBA so compellingly superior.

By definition though, top tier business schools — the ones that can claim a truly transformative effect on your career and lifetime earnings — are few, with consequently low acceptance rates:

In Europe: there are arguably 3-4 “top tier” schools — INSEAD, LBS, and IMD among them
In the US and elsewhere in the world there are roughly 10-15 (the MBA degree has been established longer in the US).

One could certainly argue about the exact number of top tier schools, but the point is the pool of places available at such schools limited — far smaller than the pool of qualified applicants.

The inevitable consequence of:

Much higher relative return-on-investment,
Too many qualified applicants chasing too few places

…at top tier business schools is that getting admitted to them is very competitive indeed.

So what does it take to get into a top MBA?

Read more about the competition you should expect.