The MBA has long been regarded as a passport to career advancement and financial success. However, as economic uncertainties loom large and hiring markets experience turbulence worldwide, the question of the MBA’s return on investment (ROI) has gained renewed significance.
Prospective students are understandably scrutinizing the value proposition of an MBA more closely than ever before. How can prospective students navigate this crucial decision?
“In light of the changing economic landscape, we’ve seen an increase in the number and depth of queries from prospective students about their expected return on investment from an MBA degree,” says MBA program director Shameen Prashantham, at China Europe International Business School, based in Shanghai.
“More and more attention is being drawn by the applicants to the need for providing more information on detailed employment outcomes, alumni network strength, and the tangible skills they will be able to master during the course of studies,” he adds.
Economic uncertainties spark scrutiny
Historically, the ROI of an MBA has been measured in terms of salary increase, career progression, networking opportunities, and intangible benefits such as leadership skills and professional credibility. While these factors continue to hold relevance, the current economic slowdown has added layers of complexity to the equation.
With key hiring sectors for MBA graduates such as consultancy, finance and technology experiencing a recruitment slowdown, prospective students are rightfully seeking assurance that the investment of time, money, and effort in an MBA program will yield tangible rewards.
Some business schools say that this is nothing new. “I’ve worked in MBA admissions for 14 years now, seeing both the economic downturns in 2008 and 2020 and now a bit slower economy today. No matter how the economy and job outlook fairs, prospective students have always considered the ROI of graduate business school,” notes Shelly Heinrich, the associate dean of MBA programs at Georgetown University McDonough School of Business, in Washington, D.C.
Measuring ROI beyond salary
It’s crucial to acknowledge that calculating the ROI of an MBA is not a one-size-fits-all endeavor. The outcome depends on various factors; the reputation of the business school, the quality of the program, the individual’s career goals, and prevailing economic conditions.
However, there are several strategies that students can employ to assess and maximize the ROI of their MBA journey. Schools encourage applicants to take a long-term view of their career trajectory and consider the enduring value of an MBA over the course of their professional journey.
While immediate post-MBA outcomes are important, the true impact of an MBA often manifests over the long term through accelerated career progression, leadership opportunities, and higher earning potential. “Prospective MBA students should go beyond the cash ROI, and look more at the emotional ROI, the skills, ability to lead in tough contexts and more,” says Sara Vanos, executive director of marketing and admissions for MBA programs at HEC Paris, the French business school.
On average, she says, the graduates of the HEC Paris MBA double their salary. “However, you should not join an MBA just for a salary increase – this is not a good reason to choose an MBA,” she adds. “I would look more at the possibilities that such a versatile degree provides – opens doors, allows change of sector or function, and the ability to deal with ambiguity.”
Navigating scholarships and financial aid
The face value of an MBA degree is easily more than $100,000, making the question of ROI a vital one. But Stacy Blackman, who runs an admissions consulting agency in Los Angeles, recommends looking at adjusted costs after financial aid or scholarship. For instance, about half of the MBA students at Harvard Business School in Boston are granted need-based scholarships, which can vary from $2,500 to $76,000 per year. Last year, the typical yearly scholarship amount was $46,000, totaling $92,000 over two years on average.
Blackman adds that most high-performing MBA applicants she works with are aspirational and focus on the qualitative upsides of the MBA experience. “I think the conventional reasons for getting an MBA are definitely beneficial,” says an MBA student at Stanford Graduate School of Business, in California, who worked with Blackman. “But I think I am just most drawn to the personal development I’ll get out of the degree.
“As with many type-A students and high-achievers, we never stop to evaluate the reason why we work so hard,” the student adds. “The MBA program will be a great time to reflect on my sense of purpose and motivation for why I do things. Hopefully, that will also help me refine longer-term career goals.”
Ultimately, the ROI of an MBA extends beyond monetary gains to encompass personal growth and professional development. While the economic slowdown may introduce uncertainties, the ROI of an MBA remains attractive for many aspiring business leaders.
