For Women, Doubts About The MBA As Economic Mobility Engine - Poets&Quants

The pay gap is a persistent reality for women post-MBA. In fact, according to a new report by the Forte Foundation, the gap is widening.

The MBA has always been styled as a ticket to a better income, and by extension, a better life. New data released today (January 17) by a non-profit consortium of leading corporations and business schools strongly suggest that that pathway currently exists for men to a much greater degree than for women.

The Forte Foundation’s report, Outcomes and Perspectives of MBA Graduates, shows that the pay gap that women and men take into their MBA experience follows them when they re-enter the workplace — when it actually becomes worse than before. Yes: the pay gap widens from pre-MBA to first post-MBA job to current role, as women on average earned 97% of what their male counterparts earned pre-MBA, but just 90% in their first post-MBA job — and a shocking 72% in current compensation, adjusted for years of experience.

Moreover, the study found, women with an MBA don’t advance to the same level as men, have fewer direct reports, and have less job satisfaction. The report also looked at minority MBA graduates, finding that even as the degree helps them narrow the pay gap with non-minorities, overall they have lower career satisfaction than non-minorities in both salary and career progression.

“It’s encouraging to see that an MBA provides greater economic mobility for women and minorities and narrows the pay gap for minorities in their first job post-MBA, but the whopping gender pay gap and income disparity for women and minorities needs to be addressed, and soon,” says Elissa Sangster, Forte Foundation CEO.

THE GOOD AND THE NOT-SO-GOOD

Elissa Sangster. File photo

The Forte Foundation’s online survey of 900 male and female MBA alumni who graduated between 2005 and 2017 is the first part of a new research series, and the results are decidedly mixed. On the one hand is the persistent and widening pay gap between the genders post-MBA, most strikingly seen in the areas of finance and operations; on the other is the undeniable financial benefit all MBA holders derive from having earned the degree, in the form of a massive income boost. 

While on average women earned 3% less than their male counterparts pre-MBA, the gap widens to 10% for first post-MBA position, and 28% for current compensation, adjusted for years of experience. And while women do, indeed, get a positive ROI from the MBA, seeing a 63% salary bump from their last pre-MBA job to the first post-MBA role — that is dwarfed by the 76% increase for men in the same circumstances.

Forte looked at the minority experience as well, and there the results were … also mixed. On the one hand is a narrowing pay gap for minorities versus non-minorities overall in their first post-MBA job — but on the other is the fact that in their present position, minority women still make 52% less than non-minority men, a difference of $76,589. Overall, minority MBA graduates had lower career satisfaction than non-minorities in two areas: their current salary and their career progression since obtaining an MBA.

“We’ve been working on that minority problem a bit longer, even though women in the workforce have been the focus on gender imbalance the last 10, 15 years,” Sangster tells Poets&Quants. “So many minority issues were beginning in the ‘60s and ‘70s in terms of equity in the workplace — so it’s good that that’s playing out in some of these numbers. But obviously, on the gender side, there’s still a ways to go.”

‘WORK TO BE DONE UP FRONT’

The Forte survey was conducted between March and April 2018, and the research was led by Michelle Wieser, interim dean of the St. Catherine University School of Business & Professional Studies in St. Paul, Minnesota. It was distributed through the Consortium for Graduate Study in Management, Forté Foundation sponsors schools (which include most of the elite U.S. and international B-schools), and the Forté Foundation database of alumni. Participants were asked to provide their current job function, to allow researchers to take a deeper dive into what might be driving the gender pay gap with current compensation. 

They found that the job functions shown to contribute the most to the gender pay gap are finance (60% gap) and operations (48% gap), while marketing is the only function where women were shown to earn more than men (2%). Around 40% of respondents — primarily women — say they’ve experienced a gender pay gap. 

Overall 55% of respondents believe that a gender pay gap “probably or definitely” exists — but it’s a view that only one in three men share with two in three women (men 34%, women 65%). A greater percentage of minorities believes that a gender pay gap “probably” or “definitely” exists (women: 68% minority, 63% non-minority; men: 44% minority, 33% non-minority). Survey respondents also under-estimate the gap, guessing it to be around 24%, with men earning 24% more than women — but the actual gender pay gap reported in the Forte study was 28% (adjusted for years of experience), representing over $58,994 in annual compensation.

“I think that there’s still room for improvement and work to be done up front,” Sangster says. “I think from a corporate perspective, they need to really pay attention to the inequities that are out there in the workforces, especially in this really important leadership pipeline that we know MBAs are for these companies, to make sure that they’re giving women the opportunities that they need to advance in their careers — and not to marginalize those opportunities even after they’ve invested in this MBA path to leadership.”

Business schools have been getting closer to the parity threshold for years, with one major school — USC Marshall — achieving it last fall. But a new report from the Forte Foundation shows that women should be concerned with what happens after their MBA experience when they rejoin the workplace. File photo

How do women combat the pay gap when they realize they are on the wrong side of it? The top survey responses were: “I have not taken action and do not intend to,” and “I left the company.” It’s a recipe for inaction, Sangster tells P&Q. 

“I think women need to take action and call attention to these inequities and not walk away from an organization without being clear about why you’re leaving,” she says. “And I think as they’re exiting we saw that they weren’t addressing that necessarily with their employer and I think it’s on the onus of the company as well though to ask those questions and to have a good understanding of why they’re losing talent and not just assume that it’s about something that’s work/life balance or stepping out of the workforce or whatever assumption they might be making but that those employees are choosing a different path because they didn’t see that path open to them at their company. 

“When we asked women MBAs how they intend to address the gender pay gap they’ve experienced, it’s more common for them to leave the company rather than speak about it with their manager, human resources or company leadership. This is a wake-up call — companies need to take proactive steps to lessen the pay gap, or risk losing highly skilled women employees.”

MORE BREAKS FOR MEN, CHALLENGES FOR WOMEN 

Additional research insights and data include:

• For minority women and men, the return on investment for an MBA is even greater than non-minorities in their first post-MBA job in terms of a salary bump: women (minority 70%, non-minority 63%); men (minority 84%, non-minority 70%). Meanwhile, the pay gap narrows post-MBA between minorities and non-minorities: (24% pre-MBA, 16% first post-MBA job, 12% current role).

• In addition to compensation, the Forte study examined other typical measures of career progression, including a number of promotions and direct reports, plus level-title, since the first post-MBA position. The outcomes revealed that, on average, men have received 2.3 promotions since completing their MBA program, while women have only received 1.8. Men have an average of 3.3 individuals reporting to them; women only have an average of 1.8. And men have achieved, on average, the equivalent of the Director level within their organizations, while women trail behind one rung on the career ladder with an average level of Senior Manager. However, the study found no statistically significant differences in these areas for minorities versus non-minorities.

• The research also examined six elements of career satisfaction: current role, company, level within the organization, the number of direct reports, current compensation, and career progression to date. It found that men have achieved higher levels of career satisfaction than women across all six elements. The number of direct reports women have, and their current compensation, are the biggest sources of career dissatisfaction for women.

“I really always thought that the MBA kind of leveled the playing field, and I think it still does in some respects because I think the opportunities that are out there are different post-MBA,” Sangster says. “But it doesn’t necessarily level the playing field in terms of the salary and I think that gap persists and it’s kind of related to the women making choices to go to other places. Maybe they’re not asking to address the issue within their own organization and see that pay gap go away or their pay increase. And I think that ultimately, in their post-MBA careers, they are still they’re faced with a lack of flexibility. Many of them are entering into a time in their career when they are thinking about work/life balance, and so if a company has not structured opportunities so that it’s flexible and it allows them to do both of those things, and you’re in a two-MBA household perhaps and you’re both out pursuing your careers and then you’re confronted with how to balance work and life, somebody usually steps back and I think often that is the female in the relationship.

“And so I think that’s part of what’s playing out, especially knowing where MBAs are going in their career path into these financial firms, the consulting firms that require some sacrifice that potentially women are not able to make because of other reasons, family reasons, or they’re just not willing to make because that’s not the most important thing to them. These firms haven’t really figured out how to structure a professional career leadership pathway that accommodates these kinds of choices.” 

Source: Forte Foundation

Source: Forte Foundation

DON’T MISS MBA PROGRAMS WITH THE MOST WOMEN or HOW USC MARSHALL ACHIEVED GENDER PARITY

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New M7 Data, Familiar Magnificence - Poets&Quants

Rain or shine, it’s never a bad time to graduate from Harvard Business School. Just ask these 2018 MBAs, who earned a median salary of $140K after graduation. HBS photo

“It’s good to be king” is more than a wry quip from a legendary comedian. In all walks of life, including graduate business education, it’s better to be on top and in charge. These days, amid what many consider troubled waters for MBA programs, the M7 — the “Magnificent,” or “Magic,” 7 schools long considered the elite of the elite — have had mostly smooth sailing.

Mostly — but not entirely, as the data show once again this year.

Yes, the M7 — Harvard Business School, the Wharton School at the University of Pennsylvania, Columbia Business School, Northwestern University’s Kellogg School of Management, the University of Chicago’s Booth School of Business, Stanford University Graduate School of Business, and MIT’s Sloan School of Management — are ranked in the top 10 in just about every ranking that matters of U.S. schools, and in the top 20 globally. And even as forces beyond the control of the masters of the biz ed universe buffet mid- and lower-tier schools’ MBA programs, the M7 continue to be bastions of strength, in admissions as well as academics. They are talent magnets, and probably always will be.

But even kings have their problems. Looking at the bundle of 2018 school data, amid the usual mountain of superlatives is at least one glaring soft spot that the M7’s deans must puzzle over: a weakening of international interest in attending a U.S. school, which has contributed to a widespread slump in application volume that even the top schools have not escaped. It’s no longer a mystery why it’s happening; but even in the rarefied air of the best of the best, the reality of a long-term downturn in the MBA landscape can’t be ignored.

LEADERS OF THE PACK

It’s been said that Poets&Quants and others write too much about the M7, but there ‘s a simple reason: People care. Haters are gonna hate, but they also love to read about what they hate. And alumni of the M7 love to read about their alma maters.

It’s easy to love to read about the M7. In most ways, they’re what all other business schools aspire to be. They have among the highest selectivity rates; they have some of the highest GMAT averages and undergraduate GPA averages; they produce the most satisfied graduates who become the happiest — and most generous — alumni. And as the sands continue to shift in the MBA world, with specialized master’s programs and online degrees growing in favor and the MBA becoming the subject of frequent forecasts of doom, the M7 are innovation leaders. Whatever may come, they are likely to be at the forefront of it. No wonder they also have the highest yield rates and consistently dominate the upper reaches of the various rankings.

No wonder, too, that they are also among the most expensive schools in the land: Of the nine U.S. schools with a total estimated cost of more than $200,000 for two years of a MBA program, all of the M7 schools are on the list (joined by NYU Stern School of Business and Dartmouth College’s Tuck School of Business). Those price tags never come down — they only go up. Then again, as expensive as they are, the M7 also have the highest ROI: In a comparison of 2018 starting salaries versus debt burden, all seven schools were in the top 10 for a positive pay-to-expense ratio.

BREAKING DOWN THE DATA

As good as the M7 schools consistently are, they seem to get better every year. Median salaries are up at each of the seven schools, led by Stanford’s $142,000; while job offers at three months are up at five of the seven schools, led by Wharton’s 98.4%, and only down marginally at MIT Sloan (97.0% from 97.1%) and Chicago Booth (96.3% from 97.1%). According to The Financial Times, six of the seven schools saw an increase from last year in the average difference in alumni salary before the MBA to now, led by Booth’s 118%. Only Columbia, at 103%, remained flat from 2017 to 2018.

Meanwhile, even as median salaries rose at most of the M7, as we mentioned above, bonuses are up at four of the seven schools, reaching a median $30,000 at Wharton, Columbia, Kellogg, and MIT.

In other metrics, the schools got a little less selective, with only Booth becoming harder to get into (23.5% acceptance rate for the Class of 2019 to 22.9% for the Class of 2020); but GMAT scores went up at six of the seven schools (and returned from the stratosphere at Stanford), and GPAs stayed flat or ticked upward at six of seven schools. Yield rates fluctuated a bit but basically stayed the same.

The fact is, the stats don’t fluctuate much when you get into the upper echelons of graduate business education — nor do the standings (see next page for a summary of those). What does fluctuate is student interest in certain industries, and therefore what each school becomes best known for. Kellogg is a marketing school? Sure, but did you know 28% of the school’s graduating Class of 2018 went into tech, a 3% increase from last year? Stanford leads the way in entrepreneurship, with 16% of grads starting their own business or going to work for startups — but MIT is close behind, with 10% of its most recent cohort of MBAs going that route. So did 9% of 2018 Harvard MBAs.

(See the next pages for more data on the M7 schools.)

Surprise, surprise: Harvard remains the elite of the elite, sharing No. 1 in both the Poets&Quants 2018 ranking and the U.S. News 2019 ranking. File photo

How The M7 Rank Against Each Other

One fact of business school life can be counted on year to year: The M7 schools will be at or near the top in every ranking. Here at Poets&Quants, all seven schools are in the top eight in our 2018 ranking, just as they were last year, with Wharton sharing the top spot this year with Harvard; it’s a similar case for the most recent rankings by U.S. News, Forbes, and Bloomberg Businessweek, in which none of the seven schools drops below ninth place. That’s not the case for the Financial Times, which does a global ranking that includes schools outside the U.S., nor the Economist, which has a puzzling and questionable methodology. In the newest FT ranking, Kellogg is 12th (as it was last year) and MIT is ninth, up from 13th; but in the latest Economist ranking, Kellogg is second (having been unseated from its perch at No. 1 by Booth), and MIT is 16th, having dropped from 12th two years ago to 19th last year before rebounding somewhat on the latest list.

Below, to provide a better picture of a school’s strengths and weaknesses, we’ve also compiled the U.S. News ranking of programs by discipline. These numbers are nearly a year old and will be refreshed in March when U.S. News releases its new ranking. The final table on this page parses some more data from the U.S. News and Financial Times rankings: U.S. News‘ scores from corporate recruiters and academics and The Financial Times‘ alumni recommendation and academic research rankings, as well as FT‘s salary increase figures cited on page 1.

HBS photo

What You Can Expect To Pay At An M7 School

An MBA degree from an M7 school is pretty much a sure thing. No one is going to question your decision to go to any of these schools, and very few of the graduates from these institutions regret their choice to attend. But none of this comes cheap.

The highest estimated cost of the MBA degree among these elite schools is at Stanford, where the price tag, including living expenses, is now $231,672. Of course, that’s the price for a single person — it’s much more costly for married students at one school, at least: Stanford, where the two-year cost of a MBA balloons to $278,352 if you have a spouse.

Then again, all these gaudy tuition and total cost numbers are pre-scholarship grants — and it turns out that even though all of the M7 schools now cost more than $200,000 to attend, all offer financial help at fairly high levels, with both Harvard and Stanford MBA students receiving an average of more than $35,000 annually (according to the most recent data available), and Wharton and Booth students close behind at $32,000 and $30,000, respectively. This data is more than two years old, however, and schools don’t make overall figures like this readily available; check the schools’ websites for more information on fellowships and scholarships. There are many. The money is out there. We know, for example, that Harvard leads the way in aid packages among most schools.

That’s an important part of the financial puzzle to keep in mind when you apply to these schools. Don’t let the sky-high tuition scare you off. In effect, every school has a two-tier pricing structure for the MBA: the full sticker price and the discounted price. Stanford and Harvard claim to only give out money based on need, but all the other schools are using the cash to lure the best qualified applicants to their programs.

The payoff of an M7 education is indisputable. There are few educational degrees that pay off as quickly as an MBA from one of these top schools and, more importantly, builds on its value over the course of a career. The first-year compensation package for M7 grads tends to be well above $150,000, once you include a sign-on bonus, other year-end compensation, and possible stock options and perks that schools don’t even bother to tally.

Just a marketing school? Not anymore: Kellogg School of Management sent 28% of its latest graduating class into tech. Kellogg photo

Industry Choices Of M7 Grads

What industries are M7 grads choosing? The answers may not surprise you, but the snapshot gives an idea of each school’s culture.

How satisfied are graduates of online MBA programs with their experiences? You can tell by how much they give back. Or you can read about the results of our most recent alumni survey.

DON’T MISS M7 SCHOOLS: THE DATA IS IN & THEY REMAIN MAGNIFICENT or HOW MUCH DOES A TOP MBA NOW COST? NINE SCHOOLS ARE IN THE $200K CLUB

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The ABCs Of Recruiting At Harvard Business School - Poets&Quants

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News from Harvard Business School

“C? RC? Aldrich? What’s an Aldrich?

“Every organization has their own acronyms and jargon and HBS is no exception. If you are new to recruiting at HBS let us provide an HBS to English dictionary to get you acclimated to terms you’ll see on our website and on campus.

“Before we kick off the ABCs, let us introduce ourselves. We are HBS CPD – Harvard Business School Career & Professional Development.

“A – Aldrich. Aldrich Hall is one of our main academic buildings where most MBA classes are held. If you are participating in an on-campus presentation it will likely be held in Aldrich Hall.

“B – Bidding. Bidding is an opportunity for first year students interviewing for internships to get onto your On-Campus Interview schedule if they have not been invited to interview. This concept may seem odd at first, but 80% of our students are career switchers. You may find that a student who isn’t an exact fit on paper is the ideal candidate for the job when you meet them in person. Each year companies hire students who were on their interview schedule through bidding.

“C – Company Conversations. You might know Company Conversations as Coffee Chats at other MBA schools. These 1:1 or small group meetings are a great way to connect with students and get to know them on a personal level. Company Conversations can be invite-only or open for any student to sign up.”

Read more …

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Seated, left to right: Swati Patel WG18, founder and former president; Sorina Codrea WG18, former vice president. Standing: Anuj Khandelwal WG19, president; Johnny Hammond WG19, vice president; Brian Bunyard WG18, former VP of operations; Amy Lee WG18, former VP of marketing. Photo: Colin Lenton

On A Mission To Make Finance Personal

News from The Wharton School at the University of Pennsylvania 

“Financial literacy remains a key challenge for both developing and developed economies. Ten years after the 2008 crisis, many people continue to grapple with an array of personal finance matters amid a fragmented educational landscape. While the lack of mandatory, standardized curriculum within the traditional schooling system contributes to the chaos, there is a growing consensus on the need to improve financial knowledge.

“In the fall of 2016, I pitched an idea to Michael Roberts, William H. Lawrence professor of finance, and Howard Kaufold W75, vice dean of the MBA program and adjunct professor of finance. With their support, Common Cents was founded as a Wharton initiative to empower and educate MBA students on personal finance. By gauging students’ interests each year, Common Cents ensures that programming addresses relevant knowledge gaps and remains topical. Workshops and discussions are conversational rather than academic, to increase engagement and participation. For example, as a service to students who were thinking of buying a home, Common Cents invited classmates who were homeowners or rental property owners to share their knowledge about and experiences with the residential real estate market.

Read more …

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The Countries Getting The Highest Return On Education

News from INSEAD

“In measuring performance in education or healthcare, societies often mistakenly focus on inputs rather than outcomes. That is, it is common to erroneously measure success by counting the resources devoted to it. But expenditures do not equal success. Indeed, societies would like to spend – for an equivalent outcome – as little as possible.

“The United States is the global leader in dollars spent per student in tertiary education, yet its students rank 42^nd globally on the GMAT, a standardised test used primarily for admission to post-graduate schooling. There is a similar disconnect between inputs and outputs for the PISA, a test administered by the OECD to a broad sample of 15-year-old students. Luxembourg spends the most in absolute terms per student in the primary and secondary stages of education, yet ranks 32^nd on the PISA. If expenditures were calibrated against the size of the economy, the global leader in education would be Botswana.”

Read more …

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Check Out Some Of The Most Popular Michigan Ross MBA Courses

News from University of Michigan Ross School of Business

“From product development to advanced skills with data analytics, the courses Michigan Ross MBA students are lining up to take this year cover a broad range of interdisciplinary topics and skills.

“Here are some of the courses that have the most Ross MBA student interest this academic year, and the ones they’ll be talking about long after they graduate.”

Read more …

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Keep An Eye On The Road Ahead When Estimating Cost Of Equity Capital

News from Notre Dame University Mendoza College of Business

“Estimating investment returns is tricky — especially, to paraphrase an old Danish saying, when dealing with the future.

“Still, it comes with the territory when you’re a financial manager tasked with evaluating the capital investment opportunities that will drive your firm’s strategies and determining which ones will maximize returns. One of the standard tools of the trade is cost of equity capital estimation (COEC). While this estimate strongly influences corporate capital budgeting decisions, exactly how it’s calculated and what assumptions drive the estimate can vary.”

Read more …

IU Kelley alumnus Douglas Hamilton, right, and his partner, Donald Vossburg, are making a major gift to Kelley to establish a new scholarship program for LGBTQ+ students. Photo by Josh Anderson

Alumnus, Partner Create LGBTQ+ Scholarship for IU Kelley With $2.2M Gift

News from Indiana University Kelley School of Business

“A new transformative scholarship program for LGBTQ+ students at the Indiana University Kelley School of Business is being made possible through a $2.2 million gift from alumnus Doug Hamilton and his partner of 35 years, Don Vossburg, of Noblesville, Indiana.

“The annual Out in INformation Technology Scholarship will support a student who is actively involved with the lesbian, gay, bisexual, transgender and queer community. Preference will be given to students from Indiana and those who also are studying operations, decision technologies or business analytics.”

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Why We Can’t All Get Away With Wearing Designer Clothes

News from Northwestern University Kellogg School of Management 

“Imagine yourself at a meeting with an accountant. You spot a Rolex watch on her wrist, and a Louis Vuitton handbag on her desk. Seeing those luxury goods might inspire confidence—after all, the accountant must be good at her job if she can afford them.

“Now imagine yourself confessing your innermost hopes and fears to a therapist who is sporting the same flashy items. Would you view her as favorably?

“Maybe not, according to a new paper by Derek Rucker, a professor of marketing at the Kellogg School, on the surprising (and potentially unfair) downsides of luxury consumption.”

Read more …

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Are data from massive open online courses a crystal ball into the future of online education? Data from Science Magazine/Chart by Lydia S.C. Rosenberg

Can MOOCs Predict The Future Of Online Education?

News from HBS

“The best use of massive open online courses (MOOCs) may be in providing instruction that leads to online professional degrees—not the extension of basic college education to U.S. and international learners who do not have access to existing higher-education institutions. That conclusion is spelled out in a forum titled ‘The MOOC Pivot’ published in the January 11 issue of Science. Co-authors Justin Reich and José Ruipérez-Valiente argue that low student retention and enrollment declines in MOOCs mean that their applications and effects differ significantly from the enthusiasm that accompanied the launch of the edX platform in the spring of 2012. The researchers use data provided by HarvardX and MITx — edX’s founding partners — from their courses offered from 2012 to May 2018; they argue that MOOCs ‘will not transform higher education and probably will not disappear entirely either.’ Instead, they predict that the field will coalesce ‘around a different, much older business model: helping universities outsource their online masters degrees for professionals.’ Their prediction seems to strike a blow at the heart of edX’s mission: to ensure access to quality education for learners around the world.

“But critics of the study fault it for extrapolating from the data on MOOCs — typically offered free online as individual courses in a broad range of subjects already being taught to residential students — to paint a generally bleak picture of the potential for online learning in general.”

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Tuck Students Travel To Puerto Rico To Research Energy Crisis

News from Dartmouth College Tuck School of Business

“When Hurricane Maria struck in September 2017, Puerto Rico plunged into a blackout — one that would last for almost an entire year. Last November, staff from the Revers Center for Energy at the Tuck School of Business and ten of its MBA fellows traveled to Puerto Rico to research the factors that contributed to the prolonged energy crisis.

“’The main objective was to gain exposure to how an island adjusts to certain situations compared to a big country like the U.S.,’ Vengatesh Muralidharan Tu’19 said.

“In preparation for the trip, many of the MBA fellows took courses in energy economics and interned for companies in the field, according to Aygul Sanzyapova Tu’19. He said that before the fellows left for Puerto Rico, they compiled online articles about Puerto Rico’s recent challenges to discuss as a group.”

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Q&A: How To Practice ‘Everyday Courage’

News from University of Virginia Darden School of Business

“University of Virginia professor Jim Detert studies courage.

“More specifically, the Darden School of Business professor studies courage in the workplace – the kind of courage it takes to disagree with your boss, put forth a new plan, confront a negligent coworker or hold a difficult client to account.

“’Generally, people speak up if they feel it is safe, or stay quiet if they don’t,’ said Detert, a professor of business administration and associate dean for executive degree programs and leadership initiatives. ‘However, as we began studying workplace relationships, we realized there is a third category: those who realize it is not safe to speak out, but still do so.

“’That is clearly a type of courage – whether it is speaking truth to power or speaking up in your relationships with peers, subordinates, clients or customers.’”

Read more …

LAST WEEK: $3M GIFT TO ASU’S CAREY SCHOOL ESTABLISHES NEW BIZ CHAIR

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GMAC Buys The MBA Tour - Poets&Quants

Prospects gather to talk to North American and European business schools at an MBA Tour event in Lagos, Nigeria last year. Marc Ethier photo

GMAC is going on tour.

The Graduate Management Admission Council, the organization that administers the GMAT, has bought The MBA Tour, a company that hosts forums in which representatives from admissions teams meet prospective MBA students. The MBA Tour, conducts more than 60 such events per year in over 30 countries, is one of several players in the admissions space, including the QS World MBA Tour, Access MBA Tour, and the CentreCourt MBA Festival, the latter co-sponsored by Poets&Quants.

GMAC will look to grow its core offering and expand into additional markets, says Sangeet Chowfla, president and CEO of GMAC. The MBA Tour is the third acquisition made by Chowfla since the former Hewlett-Packard executive became CEO in 2014. He also acquired the NMAT test in India in 2015 (see GMAC Acquires An Indian Entrance Exam) and BusinessBecause, a business school website in the U.K., last year (see GMAC Buys A Business School Website). All the acquisitions were made for undisclosed sums.

A STRATEGY TO REVERSE THE DECLINE IN GMAT TEST VOLUME

GMAC CEO Sangeet Chowfla

Faced with growing competition from the Educational Testing Service’s GRE exam, GMAC has seen test volume for the GMAT decline in recent years. More business schools, moreover, are waiving standardized tests for specialty master’s programs, online MBAs, and Executive MBA programs. A strong U.S. economy also has provided job opportunities to keep more potential applicants in the workforce. The novel strategy that Chowfla is pursuing is intended to reverse the decline in test takers. In 2016, the last year for which GMAC’s financials were made public, the organization’s test revenue came to $85,015,655, barely up from $84,730,531  a year earlier, despite the addition of the Indian test and a newly launched Executive Assessment exam for EMBA programs.

Chowfla says he expects The MBA Tour to add value by “integrating its market intelligence and digital assets to create an even richer event experience and attract prospective students through comprehensive recruiting solutions that align its data, reach, and presence along multiple candidate touchpoints.” Among the planned changes: expansion into under-served markets.

“The acquisition of The MBA Tour is part of an ongoing effort to develop smarter, more innovative ways to help business schools grow their candidate pipeline while providing programs with more intuitive, data-driven solutions to meet their recruiting needs,” Chowfla says. “Building a robust and diverse pipeline is a critical issue facing business schools around the world, and GMAC recognizes the important role it plays in connecting schools and candidates.”

‘THE MBA TOUR HAS BEEN A VALUED PARTNER’

Leigh Gauthier, standing right, listens at an MBA Tour event in Lagos, Nigeria as Alexia Jablonski of the Deputy High Commission of Canada tells attendees how they can secure permission to study and work in Canada. Marc Ethier photo

The MBA Tour was founded in 1993. Currently listed as its schedule for 2019 are six events in North America in January-February, three events in India next month, and four events in Latin America in February-March. Geoffrey Basye, a GMAC spokesperson, says there will be no significant changes to either the itinerary or the organization of the tour this year. “The MBA Tour schedule will go as planned in 2019 as GMAC and MBA Tour leadership begin to lay the groundwork for future enhancements,” Basye tells Poets&Quants. “While it’s too early in the process to talk substantively about these developments, there are a lot of exciting opportunities that we’ll be pursuing that will have an impact across our organization. This includes looking at how we can extend events in areas that have been under-served.”

Last year, P&Q joined The MBA Tour during its annual visit to Africa, meeting with B-school prospects in Lagos, Nigeria to offer readers a snapshot of the talent pool in the country known as “Africa’s economic engine.” We talked with Leigh Gauthier, assistant director of MBA admissions at University of Toronto’s Rotman School of Management, about the value the tour provides a program like hers: last fall, Rotman enrolled 12 Nigerian students in its MBA program, up from zero the year before.

“The MBA Tour has been a valued partner of Rotman for many years with deep knowledge of numerous markets,” Gauthier tells P&Q in response to the news of the tour’s acquisition by GMAC. “As the administrator of the GMAT test, GMAC’s depth of research and statistical knowledge of market trends provides a significant strategic advantage in attracting students to recruitment events. This, plus GMAC’s worldwide presence with global offices, will enhance their combined capabilities.

“Like most universities, we have multiple tour partners and find an advantage in doing so. We hope this acquisition will lead other fair companies to continue to strengthen some of their differentiators such that business schools can use multiple organizations with advanced strategies to connect with top talent around the world. We’ll look forward to seeing how nimble and responsive a large organization such as GMAC will be in partnering closely with schools to develop their recruitment strategies, and how they might develop their international on-the-ground knowledge quickly.”

A MARRIAGE INTENDED TO GROW SCHOOLS’ OPPORTUNITIES TO MEET TALENT

Gauthier says one thing that will make the transition go more smoothly — and provide “peace of mind” — is knowing that Peter von Loesecke, MBA Tour CEO and managing director, is staying on until the end of 2019. After the sale, in an email to schools that participate in the tour, Loesecke offered hints about the direction of the tour and shared his excitement about the “operating synergies” that will result from GMAC taking the reins.

“As you know, we operate a well-recognized brand within the industry and support business schools’ global recruiting efforts by organizing MBA-focused events each year around the world,” Loesecke wrote. “We support these events with lead-generation and marketing services that GMAC will be able to scale up by using their digital assets and the tremendous amount of data they receive each year from more than 6 million visitors to mba.com and other sources. We are also hoping to expand the reach of events to traditionally under-served markets. Broadly, our intention is to help you better attract prospective students through comprehensive recruiting solutions that marry GMAC’s market intelligence, data, reach, and candidate touchpoints with our renowned face-to-face events. By doing so, GMAC and The MBA Tour will provide schools with more opportunities to build stronger, more informed, and meaningful in-person connections.”

Loesecke noted that the tour already has been working with GMAC’s social media subsidiary and says more details about the direction of the tour under GMAC’s ownership will be made clear in coming months. “I believe,” Loesecke wrote in the email to school partners, “that together with GMAC, The MBA Tour will be able to provide uniquely powerful events by integrating GMAC’s assets in a way that better prepares candidates and schools for more meaningful discourse and provides greater insight into how candidates choose business schools.”

DON’T MISS NIGERIA ON THE RISE: AFRICA’S ENGINE DRAWS B-SCHOOLS’ ATTENTION

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Employer Demand For MBAs Will Stay High In 2019 - Poets&Quants

There’s good news and not-so-good news in the latest report from the Graduate Management Admission Council: MBA demand in 2019 is expected to continue to be high, according to findings released this month in GMAC’s Year-End Employer Poll Report, but for international students seeking employment in the United States, the picture is much grimmer — even more than it was in a very grim 2018.

About that good news: In the poll of 350 employers, of which 289 were U.S.-based, GMAC found that 78% plan to hire recent MBA graduates in 2019, keeping pace with the share that made MBA hires in 2018 (77%). Meanwhile, showing the value of graduate business education in general, a greater share of employers plan to make 2019 hires among Master of Data Analytics (41%) and Master in Management (37%) graduates compared with 2018 hiring (36% and 32%, respectively). And how about pay? It will largely be on the rise, too: GMAC also found that most employers plan to increase the starting base salaries of new B-school hires in 2019 at or above the rate of inflation compared with the base salaries offered to new hires last year. Nearly half of companies planning to hire data analytics grads say they will do so.

“Companies are always looking for talent to assist them in meeting their organizational goals, and with a tight labor market in the United States, it is not surprising that salaries are keeping up with and surpassing the rate of inflation,” Gregg Schoenfeld, GMAC senior director of research and author of the report, tells Poets&Quants. “This is especially true among companies seeking out data analytics talent.”

Source: GMAC

UNCERTAINTY CONTINUES IN U.S. OVER IMMIGRATION, VISA POLICIES

GMAC’s poll was conducted between November 9 and December 3, 2018. Companies in 26 countries were polled. The findings show that international hiring will continue to be a problem area for employers in 2019 — particularly in the U.S., where 33% of employers report hiring international business school graduates requiring legal documentation in 2018, down from 42% in 2017. Among U.S. employers that made international hires in 2018, only 55% plan to make such hires in 2019.

While overall most U.S. employers do not plan to hire international candidates in 2019 (56%), a recent proposal from the U.S. Department of Homeland Security to increase the number of H-1B visa recipients who have master’s degrees may impact employers’ plans.

“With the uncertainty in the United States concerning immigration and visa policies, it is understandable that U.S. companies are hesitant to make plans to hire new employees that require additional legal documentation,” Schoenfeld says. “However, with the proposed changes to the H1-B visa program, opportunities for graduate business program graduates may increase in the United States. We will have to wait and see how these policies play out.”

‘FEWER INTERNATIONAL HIRES COULD RESULT IN A WEAKER ECONOMY’

Bill Boulding, dean of Duke University’s Fuqua School of Business and chair of the board of GMAC. File photo

Bill Boulding, dean of the Duke University Fuqua School of Business and chair of GMAC’s board, has been a vocal proponent of easing restrictions on international business students seeking to study and work in the U.S.  He says most of the new report is welcome news — and the need for talent will, hopefully, in time reverse the trend of international students losing ground with employers.

“I’m pleased, but not surprised, to see that even more employers plan to hire business school graduates this year,” Boulding tells P&Q. “Our quarterly survey of chief financial officers shows difficulty hiring and retaining qualified employees remains a top concern among CFOs. It’s clear from our data that more talent from business schools is needed to fuel company growth — which then leads to economic growth in any given region. In terms of trends, I expect the hiring of business school graduates to continue to increase in the tech sector this year.

“Because talent is so critical to the success of a company and an economic region, my hope is that business education programs that have secured STEM (science, technology, engineering, and math) designation will be able to help provide a path to allow U.S. companies access to the international talent needed to grow both firms and the U.S. economy. STEM designation means the student visa itself allows for three years of employment opportunity in the U.S. for STEM-related jobs — without the need to obtain a work visa. Of course, during the three-year window, students have the opportunity to apply repeatedly for an H1B visa if they desire a longer work stint in the U.S.

“We are pleased at Duke that both our Master of Quantitative Management program (MQM:BA) and the Management Science and Technology Management (MSTeM) certificate in our full-time (Daytime) MBA program have this designation. We hope Duke and other schools with STEM designation will help reverse the data GMAC has noted in this report of employers indicating they will hire fewer international students. Beyond opportunity for business school students, access to international talent is also an economic development issue and fewer international hires could result in a weaker economy.”

NEARLY HALF OF COMPANIES HIRING DATA ANALYTICS GRADS TO PAY AT OR ABOVE INFLATION RATE

Other key findings of the GMAC poll:

• Among the employers planning to increase the starting base salaries of new business school hires in 2019 at or above the rate of inflation compared with the base salaries offered to 2018 new hires, nearly half of employers (47%) of new hires from Master of Data Analytics programs say they will do so, more than any business school graduate type. Twenty-four percent of employers plan to increase above the rate of inflation the starting base salaries of new MBA hires.

• While a greater share of large companies plan to make MBA hires in 2019 compared with small companies (94% versus 50%), a greater share of small companies plan to increase the magnitude of their 2019 MBA hiring compared with last year (34% versus 44%).

• Employers continue to regard the value of a graduate business education highly. Overall, nearly 9 in 10 responding employers say the value is very high or above average (86%). Large employers and companies based in the United States tend to rate the value the most highly. By industry, companies in the healthcare, manufacturing, and technology sectors are the most likely to rate the value as very high.

(See next pages for more data from GMAC’s report.)

Source: GMAC

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More than 50% of employers in three industries rated the value of graduate business education very high: healthcare, manufacturing, and tech. File photo

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DON’T MISS GMAC: 70% OF U.S. SCHOOLS SEE DROP IN APPS and FROM GMAC, A NOTE OF CAUTION ON MBA JOB MARKET

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