MBA Applications Rise in Recession

Despite recession, MBA applications are on the rise.

Even as the world looks on worriedly at the recession, MBA applications seem to be on the rise. 

Jay Barratt was working as a trader in credit markets at JP Morgan, when his team was made redundant: “In the last six months it has been difficult to get back into banking, so on the recommendation of several HR managers at investment banks I have chosen to take an MBA at Manchester Business School."

I can extend my financial knowledge in areas like accountancy and corporate finance, whilst broadening my knowledge of other industries; a kind of insurance policy.”

Barratt is one of many young professionals from the banking sector and related industries who are looking to an MBA to escape the credit crunch, resulting in record levels of demand for MBA places in cities like New York and London. The QS World MBA Tour reported a 10 per cent annual increase in attendance at its London fairs in October 2008 and March 2009.

“It is normal to witness an uplift in MBA applications at the onset of a recession,” confirms Rose Martinelli, associate dean of admissions and marketing at Chicago Graduate School of Business, which also has an Executive MBA in London. She reports excellent growth in applications which she “confidently expects to continue.”

One indicator of this surge in demand for places is the number of candidates taking the GMAT test, required by many business schools for entry. According to Betsy MacIntyre of the Graduate Management Admissions Council, “GMAT testing volume in 2008 finished at a record high of more than 260,000, which represented an 11 per cent increase from 2007 (5% US growth, 22% non-US growth).” Ed Buckingham is an INSEAD MBA who previously worked for BCG and Schlumberger and now is Marketing Manager for INSEADs Executive MBA. He observes that “in a difficult economy, people with strong qualifications are much better off than those without. They have more transferable skills and therefore have more options open to them, which is why MBA application numbers rise strongly in a recession.” He expects EMBA application numbers to remain strong throughout 2009.

According to the QS TopMBA.com Applicant Survey 2009 of over 3,900 would-be MBAs, when asked why they were considering taking an MBA, six of the top seven factors are career related; improving career prospects (66% of respondents) and learning new skills (60%) are consistently the two primary reasons for taking an MBA amongst applicants. Increasing salary (31%) is rarely the prime motivator for someone to take an MBA.

Facilitating a career change (41%) and building a professional network (53%, up from 45% in 2008 and 34% in 2007) have risen sharply in popularity, reflecting increasing awareness of the value of networks amongst the new generation and the potential for career change brought about by an MBA.

For many MBA candidates an MBA qualification is seen as a route to diversify risk away from their country, industry or function in times of recession, partly through the alumni network of the school. Graham Hastie, strategy manager at London Business School observes that “with an MBA, it becomes easier for someone to make up to two out of the three big career changes, either in geography, function or industry, but rarely can someone change all three."

However some words of caution are required, because in a recession, big career changes become harder and the MBA qualification is more likely to be simply a route to career progression. Barratt says: “I see students with no prior banking experience seeking internships in banking and I just don’t see it happening next year.”

When selecting a school, career placement results are the primary selection criteria for applicants worldwide, though European applicants place greater emphasis on the quality of academics, ahead of the reputation of the school or its performance in rankings. Rankings have fallen in relevance and importance to candidates in recent years; having been the second most important criteria as recently as 2000, it is only the seventh most important criteria in 2009.

This table shows the rank order of business school selection criteria amongst applicants from various regions of the world (2008 figures in brackets, 2007 figures in double brackets):

Return on Investment

(2) ((5))

11 (4) ((5))

(4) ((4))

(4) (6))

Quality of Research / Academic Staff

(3) ((6))

15 (3) ((2))

15 (1) ((2))

15 (3) ((2))

Career Placement Record

(1) ((1))

14 (2) ((3))

14 (2) ((3))

 

School Reputation

(3) ((3))

 

Jay Barratt says “the exorbitant MBA salaries of 2007/8 many not be sustainable, but I have spoken to many of the big banks and am confident my MBA will still ensure a strong salary uplift compared to what I was earning at JP Morgan pre-MBA.”

Written by QS Blogger
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