An MBA is a fast ticket to the top: according to the latest corporate recruiter survey from the Graduate Management Admission Council, the average salary is $105,000, which is in some cases twice that of bachelor degree holders.
While there are no guarantees, school-level data paint a promising picture for pay prospects. At Cambridge Judge Business School in the UK, the average salary uplift after three years has been 99 percent for the past five years. Even after just three months, the salary increase for the most recent graduating class was 65 percent, to £99,753.
The payoff can vary a lot between sectors. At Cambridge, the highest paid graduates are in the finance industry (with a cool £107,452 average salary), closely followed by the consulting sector (where MBAs make £100,401), but there are variations across functions and geographies. The biggest bucks are made in North America, (£97,850) followed by East Asia (£76,191), the UK (£75,209) and Europe (£74,193).
“There are so many varying factors, such as company, location, previous experience and often an individual’s ability to then negotiate their salary,” says Margaret O’Neill, head of MBA marketing at Cambridge.
The companies employing the most Cambridge MBAs include Amazon, Deloitte, Google and McKinsey & Company — all renowned for generous renumeration — but there are no salary guarantees. “Some students will come into the MBA wanting to make a significant switch in their career,” says O’Neill. “They are prepared to potentially take a short-term sacrifice in pay to do so, given the differences in salaries in their desired sector or preferred geography.”
How will the coronavirus pandemic affect MBA salaries?
It is too early to speculate on this year’s graduating class, but they entered the worst job market in a generation, and data from GMAC indicate that pay will likely be somewhat lower in 2021 compared with 2020.
However, the return on investment (ROI) should remain strong. “This is not just an investment of money, but of time, energy and commitment — students choose to do an MBA for many reasons,” says O’Neill.
“Three years out, 90 percent of our MBAs say their aims have been achieved, and a recent review of MBAs 10 years post-graduation highlighted the continued transformational effect of that one year in Cambridge. It is a slow-acting pill as well as an adrenaline shot.”
Ultimately, an MBA is about an education that students will draw on for the rest of their working life — an investment in their long-term future.
That said, not all students will take an MBA purely for salary purposes. Generally speaking, students now place greater emphasis on values-driven career choices, rather than remuneration, according to Christian Dummett, head of the career center at London Business School.
But the pay is good. At LBS, the median salary three years out is $171,518, according to Financial Times data. And there are other sources of pay too, including sign-on bonuses, annual bonuses, equity stakes for young businesses in particular, and carried interest in private equity as well as pension plans.
Where to find the best post-MBA salaries
It will depend on the seniority and experience of the student, but broadly speaking, the top-tier consulting, investment banking and most private equity roles will offer the highest overall packages, says Dummett.
“The [Covid] crisis has had no effect that we’ve seen on the level of our graduates’ starting salaries or sign-on bonuses,” he says. “Over the past few months, however, we have seen a willingness amongst our students to take on unpaid projects to gain valuable experience, build networks and enhance their employment opportunities.”
He says the return on investment from an MBA is a combination of enhanced salary over time and career agility and longevity, or the ability to re-invent oneself and move seamlessly across sectors, thus extending a career. “Students also benefit greatly from the social capital that comes from doing an MBA, which research shows can lead to higher pay raises, better promotions and more retention,” says Dummett.
At Spain’s Esade Business School, graduates, every year, report a considerable increase in salary. The pay has been increasing for the past three years to $140,686 today (three years from graduation), which is a 117 percent increase on pre-MBA pay.
“In the MBA class of 2020, graduates who secured full-time positions in Europe and North America were offered top salaries,” says Maria Obiols, career service director at Esade.
“Consulting services and TMT (technology media and telecoms) are the two main sectors which offered higher pay, the latter with growing demand for MBA talent. For functional areas: consulting, sales and marketing as well as general management roles stand out for the highest salaries.”
Regardless of the outcome of coronavirus, employers are always willing to pay a premium for MBA graduates from the top schools. “They are part of a selected pool of talented, curious, individuals drawn from many countries across the globe,” says Dummett at LBS.
“They are culturally and experientially diverse, and have had the opportunity to broaden their mindsets through classroom and extra-curricular interaction with individuals they might otherwise never have the opportunity to meet.”