MBA ROI: Is an MBA degree worth it?

While you might already be discarding business school due to its disadvantages, it’s important to consider the return on investment, also known as MBA ROI. While the real value of the MBA investment is difficult to determine due to its tangible and intangible benefits, candidates usually break down the benefits into three categories:

MBA salary increase

The single most compelling statistics when measuring the MBA ROI is the typical salary increase graduates experience upon programme completion. According to an article by Bloomberg Businessweek, the median salary increase from students’ jobs pre-MBA to post-MBA in 2022 was US$85,000.

This increase is not just a short-term benefit, but it tends to have a compounding effect over the course of a career. According to the Tippie College of Business at the University of Iowa, the average salary for MBA graduates grows overtime, anywhere between 9 and 35 percent. This salary boost reflects the high value employers place on the skills and knowledge gained through an MBA programme.

MBA career advancement

The MBA ROI is also evident in career advancement opportunities. According to the Graduate Management Admission Council (GMAC), MBA grads report expedited career progression by being promoted into leadership and strategic roles where they can exercise more responsibility and autonomy.

Another popular use of the MBA degree is to switch careers and pivot into a new industry or role, perhaps even to a new country. GMAC shared that 30 percent of their registrants apply to business school with the idea of getting a job outside of their country of origin, and some students make what they refer to as the ‘Triple Jump,’ meaning switching industry, role, and location all at once.

Do you need an MBA degree to start your own business? Not necessarily, but it can help. According to an article by Inc. Magazine from 2021, 85 percent of MBA students consider entrepreneurship after graduation. Specialising in entrepreneurship and partaking in business accelerators and incubators during an MBA equips students with the tools they need to start their own company.

MBA networking

One of the main selling points of business school is the access to a vast and diverse network during an MBA programme. Every year, business schools bring together a class of ambitious professionals from diverse backgrounds, creating a rich environment for networking.

Professional networks can have a significant impact throughout a student’s career, opening doors for collaboration, mentorship, and new career opportunities. According to data collected by LinkedIn, around 85 percent of all jobs are filled through networking connections. The relationships built during an MBA programme often extend well beyond graduation, providing a long-lasting resource for professional growth and development.

There are a number of factors that can influence the MBA ROI, including the industry, job location, and the school one graduates from.

Industry

An article by Bloomberg Magazine details post-MBA compensation by the top industries for new MBA grads. “Two-thirds of new hires ended up in either consulting, tech or finance, which are among the highest-paid industries.”

Consulting takes the lead as the highest paying post-MBA industry with a median salary of US$195,000, followed by legal (US$192,500 median salary), technology (US$190,000 median salary), and finance (US$175,000 median salary). Conversely, the least paying industries included the non-profit sector (US$68,500 median salary), engineering (US$84,500 median salary), and advertising/marketing/PR (US$76,000 median salary).

Job location

The location where you study and work after graduating can significantly impact your MBA ROI. For instance, MBAs from schools in major financial hubs like New York or London may have higher initial salaries and more opportunities compared to other regions. Additionally, the cost of living in various cities can affect your net income, which is also an important consideration when calculating ROI.

Some of the highest paying countries for MBA salaries in 2019 included Switzerland (US$123,500), United States (US$102,100), Canada (US$99,800), and France ($98,500).

Business school prestige

The prestige and reputation of the business school you attend can have a substantial impact on the MBA ROI. Graduates from top-tier schools often have access to a wider network of alumni, higher starting salaries, and more opportunities in sought-after companies. The school's brand can open doors and provide a level of credibility that enhances career prospects.

MBA programmes with the highest graduate salaries globally are the Stanford Graduate School of Business (US$152,503 average salary), The Wharton School (US$150,000 average salary), and Columbia Business School ($150,000 average salary).

Deciding whether an MBA is worth the investment involves a careful consideration of personal goals and circumstances. It's not just about the financial and career benefits but also about aligning the MBA with your long-term professional aspirations and life balance.

While an MBA ROI may include significant advantages in terms of salary increase, career advancement, and network expansion, it also requires a substantial investment in terms of

money, time, and effort. Besides the MBA cost, one must also think about the opportunity cost – the potential benefits and earnings you give up while enrolled in business school. This is particularly true if you're considering a full-time MBA, which typically means taking a break from the workforce for one to two years.

For those who see it as a stepping stone to greater heights in their career, the investment can be immensely rewarding. Ultimately, the value of an MBA is as much about personal fulfilment and achieving career objectives as it is about financial gains, making it a decision that should be tailored to individual career paths and life goals.