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MBA Salaries Soar Once Again
Based on the TopMBA.com Recruiter Survey (QS Research)
MBA salaries are on the increase in almost every country in the world. As demand for MBAs surges in consulting and financial services, recruiters must compete on salary to secure their preferred candidates.
André Sieger, MBA Recruiter at Hilti, has found this year, that the “highly competitive market has driven compensation insane.” In 2006,average MBA salaries have increased by a massive 7.5% (a full 5% ahead of the average OECD inflation rate), compared to a total increase in MBA salaries of 39% in the previous ten years. MBA salaries are now well in excess of the pre-downturn levels of 2001 with a US-European average of US$90,250 (US$ 84,500). This increase reflects a high level of optimism amongst MBA recruiters and increased competition for the top talent.
Global employers pay the most
Global recruiters (those MBA employers which have adopted a global approach to MBA recruiting) reported a higher than average salary of US$95,900. Many multinational companies co-ordinate recruitment on a global level, and do not want to drive top candidates away from key geographies because of a salary differential. As international companies set up operations in emerging markets,they are increasingly willing to pay more for MBAs, who they see as critical for building a foothold in each region.
These companies represent an elite cadre of employers who seek MBAs worldwide and are willing to pay a premium to attract the best candidates. They are made up not just of banks and consulting firms, but also of healthcare and some manufacturing, technology and service companies.
Regional Salaries
Regional and local North American recruiters reported an average of US$89,700, Western European recruiters reported an average of US$91,400 (this is the first time European MBA salaries have exceeded North American salaries, though the figure has been boosted slightly in dollar terms by the weakening dollar exchange rate). Eastern European recruiters reported an average of US$63,200, Latin American recruiters reported an average of US$62,500 and Asia-Pacific recruiters reported an average of US$67,600.
The levels of global MBA salaries tend to be cyclical, reflecting economic trends. The 1990s was a decade of uninterrupted economic growth resulting in ever-increasing salary and bonus packages. A growing pool of MBA graduates was eagerly recruited by businesses worldwide. Despite the dot.com disruptions in the US market in 2000, the momentum behind this trend fuelled increasing salaries until 2001. This trend reversed in 2002, however, and salaries fell almost to the 1998, pre-dot.com, boom level.
Many multinational companies co-ordinate recruitment on a global level
Mike Holmes of www.global-workplace.com observes. “We have seen that salaries in the industrial (non-service) sector have remained robust throughout the last five years. However, with so many service companies re-entering the market and hiring more aggressively, there is now strong upward pressure on salaries in all sectors.” In 2006, average consulting base salaries in North America and Europe at US$94,000 have, once again, overtaken those in financial services at US$93,800. After many years of the base salaries in consulting surpassing those in financial services, financial services edged ahead in 2003, again in 2004, but have fallen behind again since 2005. This reinforces the view that both sectors are vying for the same talent are setting salaries relative to each other.
Banking salaries for fresh MBAs reached as high as US$155,000, amongst this year’s respondents and as low as US$20,000 in some emerging markets. Consulting salaries for fresh MBA hires reached a high of US$145,000 and a low of US$32,000 in emerging markets. These salaries look unlikely to slacken off, given the forecast increases in demand for MBAs by consultants and banks over the next few years.
