M.B.A. is it Worth the Cost?
By Melissa Slager
M.B.A.s are in demand
But that doesn’t mean the degree is a one-way ticket to the top. And as the price to obtain one goes up — more than half a dozen U.S. graduate programs, including the Wharton School, top $100,000 — is it really worth the cost?
If visions of Fortune 500 suits and a salary to match dance through your head — and you possess the drive to pursue the plan — then a master’s in business administration is a powerful boost up the corporate ladder.
But for the more casual business mind, the degree has the potential to be more résumé padding than a guarantee of a six-figure salary.
"If you want to work as an executive consultant at [management consulting firm] McKinsey … then that’s what you’ve got to do," says Josh Kaufman, a 26-year-old entrepreneur in New York City. "But for pretty much everybody else, in my opinion, that time and energy is much better spent gaining experience and doing it on your own. And it’s very easy to do that."
Kaufman himself has taken that philosophy and turned it into profit.
The digital media manager for Procter & Gamble is making a modest side income off of his Personal M.B.A. project.
The project started in 2005 as a manifesto for the anti-classroom set. Instead of a formal M.B.A. program and the debt that comes with it, Kaufman offered up a self-study list of 69 books about everything from business history to management and strategy. Total cost of the books: about $1,300.
Since then, the Personal M.B.A. has expanded to include a message-board community with 3,500 members and independent study circles. Kaufman, an Ohio native, also works one-on-one as a consultant with clients from San Diego to Abu Dhabi.
"You don’t need the paper to start your own business," Kaufman says.
Of course, the piece of paper doesn’t hurt — especially these days.
M.B.A. still popular
Demand for M.B.A. graduates continues to grow, despite recent speed bumps in the U.S. economy. The number of management analyst jobs, for example, is expected to increase by 22 percent from 2006 to 2016, according to projections by the U.S. Department of Labor’s Bureau of Labor Statistics.
Job opportunities are expected to increase among large firms as well as smaller, more specialized organizations. Plus, as millions of older workers cash in on retirement, those retiring baby boomers are leaving plenty of gaps to fill.
Big companies are bumping up their recruiting efforts — as well as starting salaries — in response. At the same time, new players have entered the field, including the nonprofit, real estate and health care sectors.
The demand will last, predicts Greg Ruf, chief executive officer of M.B.A. Focus, a recruiting firm based in Dublin, Ohio. "It’s really good right now for M.B.A.s."
Companies are looking for "the best and brightest minds in business," and they continue to largely go to business schools, not the sidewalk, to find them, Ruf says.
A good M.B.A. candidate is smart, motivated and competitive. A quality M.B.A. program takes care of the rest, fostering a solid business sense as well as interpersonal and analytical skills.
"Those are things you can do by trial and error and practice," says Gary Sundem, accounting professor at the University of Washington’s Michael G. Foster School of Business. "But the M.B.A. is certainly more efficient."
Statistics also show that the degree continues to pay off, particularly for those who devote to the full-time programs.
In 2007, for example, the typical M.B.A. candidate could expect to walk into a job paying $85,000 per year, according to a survey by the Graduate Management Admission Council, purveyors of the GMAT. That’s nearly double the average starting salary of undergraduate school students.
On top of that, more than half of employers surveyed say they expect to increase the annual base salary for business graduates by an average of 6 percent.
"Despite the proliferation of M.B.A. degree-granting schools and the different kinds of degrees that are out there … it still is a good investment for the people who choose to do it," says Valerie Suslow, an associate dean at the University of Michigan-Ann Arbor’s Stephen M. Ross School of Business.
"Even for the smaller schools that are not nationally ranked but are regionally ranked, their students still end up better off in terms of salary and such. So it’s still a degree that pays off."
Filed under: MBA
