MBA Holders Outrun Non-MBAs in Salary Race

<p>The salary difference between those with MBAs and those without is growing as employers battle to bring in the best talent.&nbsp;The <a href="/why-mba/publications">QS <em>TopMBA.com</em> International Recruitment Survey and Salary Report 2007</a>, which surveyed 489 international MBA employers, reveals that <a href="https://www.topmba.com/why-mba/publications/jobs-salary-trends-report-2018"><strong>MBA salaries</strong></a> across most major industry sectors and geographies have increased more rapidly than salaries for non-MBAs with four years of work experience.&nbsp;</p><p>The report confirms that the MBA is the highest paid postgraduate qualification worldwide. The highest average MBA salary of any sector (EU and North America) is US$99,154, in consulting/professional services, whereas a candidate with four years of consulting experience, without an MBA earns an average salary of US$72,129, or US$77,415 with a PhD. These salaries look unlikely to slacken off, given the forecast increases in demand for MBAs by consultants over the next few years.</p><p>MBA salaries in media and entertainment are the second highest in the survey at US$97,295 compared to just US$53,637 for a candidate with four years relevant experience. Only PhDs joining the aerospace/defense industries match these MBA salaries. On average, an MBA joining a bank will earn US$93,515, compared to US$66,231 for a candidate with four years of banking experience, but no MBA. Many banks and consulting firms are indeed competing for the same talent. Consulting firms are competing by offering higher salaries.</p><p>However, banks are currently successfully recruiting many MBAs, perhaps because of the larger bonuses they pay, (investment banks in particular) which provide the greatest overall compensation for the first year out of business school. According to the survey, banking bonuses averaged US$46,000 in 2007, down slightly on the US$55,000 in 2006. Such bonuses do fluctuate, however. In 2001-2004, banking bonuses for MBAs fell to less than US$15,000 per annum.</p><p>Overall, the research reveals that in many sectors the gap between salaries for new hires with MBAs and new hires without MBAs is widening year-on-year.</p><p>&nbsp;</p><p>% salary premium: new MBA graduate vs.</p><p>4 years experience/no MBA</p><p>&nbsp;</p><p>2007&nbsp;&nbsp;&nbsp;(2006)</p><p>Consulting</p><p>137&nbsp;&nbsp;&nbsp;(132)</p><p>Financial services/ Banking</p><p>141&nbsp;&nbsp;&nbsp;(129)</p><p>Media/Entertainment</p><p>181&nbsp;&nbsp;&nbsp;(155)</p><p>Manufacturing/Automotive</p><p>135&nbsp;&nbsp;&nbsp;(132)</p><p>Public sector/Non-profit</p><p>124&nbsp;&nbsp;&nbsp;(118)</p><p>The downside of such high MBA salaries and the growing salary differential to non-MBAs, is that some employers become disaffected with MBA hiring, creating a ceiling beyond which they will start to target non-MBAs. Andre Sieger of Hilti finds that this "highly competitive market for MBAs drives compensation insane." Even the "big hitters" have concerns. Janet Raiffa, a recruitment manager at Goldman Sachs is concerned with the current "high level of expectation versus undergraduates".</p><p>Mesha Mott, a recruiter at Mead Westvaco USA confirms that "depending upon the school/reputation and the skills sets required, salary requirements may be misaligned with what the candidates actually bring to the table."&nbsp; Such recruiters have reported greater success looking beyond the traditional pool of top-tier schools, by targeting second-tier schools. These schools are increasingly attracting the high quality MBA candidates who, for reasons of budget, specialization, environment or disdain for rankings, have chosen to spurn the top-tier.</p>

<p>The weak dollar and very strong growth in salary levels in Western European cities have resulted in the latter average MBA salary reaching US$97,358, compared to US$89,540 in North America. North American and Western Europen MBA salaries range between US$80,000 and US$100,000 in all sectors, apart from retail. Salaries in other regions seem to be converging on those in North America. Asian salaries today are only 20% lower than those in the US compared to 25% lower in 1996. Latin American salaries are only 23% lower than the US, compared to 60% lower in 1996. Only the Eastern European markets seem to be lagging behind and even these are likely to catch up rapidly as more Western European companies expand into markets like Romania, Bulgaria and other new EU states. </p>