How Useful Are MBA Rankings?

With questionable statistical foundations and dwindling participation from business schools, how useful are MBA rankings?

MBAs are now seen as a golden ticket for the top jobs in consulting and finance. This is hardly surprising, with most top business schools reporting that ~60% of their graduates go into consulting and finance roles with a median salary 75% higher than that of those in similar roles with bachelors degrees.

They’re no small investment though; most coming with a price-tag of at least $130k. It's therefore highly important that prospective students understand what's behind the rankings that help guide their MBA choices.

Menlo Coaching, an MBA admissions consultancy, explains that may not be the case and that the rankings we rely on, aren’t as helpful as they might first appear.

In their battle for the best rankings, colleges manipulate the statistics:

• They admit students with poor experience but exceptional grades to unjustly increase the average GPA and GMAT scores of the cohort. This is a key data point that leads to better rankings.
• Preferential treatment is given to students who have higher post-MBA earning potential. A case in point being the Adam Allcock scandal - Stanford gave individuals with high pre-MBA salaries financial incentives to study at Stanford GSB, predicting that they would boost the post-MBA earning statistics.

The rankers’ business model also plays a role - their primary revenue stream being advertisements:

They need clicks to generate revenue, and changes in the rankings tend to garner more traffic. This means that changes year-on-year, especially controversial ones, are advantageous and preferential. In reality though, the real changes that make a tangible difference to students, take far longer.

Covid - the final nail in the coffin?

Interestingly, 2021 marks a further blow to the validity of rankings as Covid-19 pushes more schools to refuse participation. Kaplan’s 2021 Survey found that 10% of US business schools say they don’t plan to participate in any, and 62% said they only plan on participating in only some. Why? Firstly, the pandemic has disrupted applicants’ lives, so entry requirements have become more flexible. This means that cohorts’ average GMAT scores will be lower. Secondly, the poor economic outlook is expected to negatively impact post-MBA employment/salary statistics. Both will negatively affect schools’ rankings.

It’s clear that as the rankings continue to use untrustworthy statistics and fewer top schools choose to participate in them, the utility of the MBA rankings for prospective students will also dwindle.

Read the full Menlo Coaching article here.

Sam Wright

Sam graduated from the University of Bath in 2019, where he read Politics with Economics. He has experience working and studying in countries across Europe and Asia. He joined Arbolus' Barcelona office in 2020, as an Associate.

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