Plenty of surprises in Bloomberg Businessweek’s 2017 MBA ranking. Here are our top ten
Every business school ranking produces results that are often counter-intuitive, if not completely screwy. This week’s 2017 MBA ranking by Bloomberg Businessweek is no exception. Is Chicago Booth really better than Stanford’s Graduate School of Business? Are UC-Berkeley and Yale School of Management no longer Top Ten business schools? Has the famed Trojan Network at the University of Southern California lost its mojo? The business school’s 58th place ranking by alumni would make you think that.
Even at schools where there is cause for celebration, deans know that this year’s gift could be next year’s public relations disaster. Last year, Indiana University’s Kelley School of Business was ranked first by MBA students in Businessweek‘s survey of the latest graduating class. This year, Kelley is unexplainably 32nd. Is Rutgers Business School really the second best MBA program in the U.S. for job placement? Which business schools were overvalued by this new ranking and which ones were undervalued? The answer to these questions will surprise you–and there are many more surprises buried in the data crunched by Businessweek to produce its ranking of the top 85 U.S. full-time MBA programs.
Here are our top ten of the biggest surprises:
Stanford University Graduate School of Business – Ethan Baron photo
1) The Mystery Of Stanford Graduate School of Business
If you want to find just one reason not to take the 2017 Bloomberg Businessweek MBA ranking too seriously look at what you might call this year’s Stanford Slump. The West Coast rival to Harvard Business School slipped out of second place to rank fifth, behind Chicago Booth, MIT Sloan, and Wharton.
Forget for a moment that precious few people admitted to Stanford would choose to endure a pair of winters in Chicago, Cambridge or Philadelphia, with the exception of some hearty souls that would say ‘yes’ to HBS in Boston. Instead, let’s go to Businessweek’s own data to make the argument that something is absolutely screwy with this ranking.
Fact One: How is it even remotely possible that employers routinely pay Stanford MBAs more than the graduates of any other business school in the world yet Businessweek’s survey of corporate recruiters ranks the GSB 20th behind Texas A&M, Syracuse, Purdue, Penn State, Rice and 14 other schools? Last year, Stanford grads pulled down record starting compensation of $163,827, even higher than the $158,080 totals for Harvard MBAs.
Fact Two: How can a school that is ranked first in Businessweek’s alumni survey also place 16th in the magazine’s survey of students who graduated this year? Is it possible that it takes a few years away from the Silicon Valley campus to fully appreciate one’s stay there? The 16th place finish puts Stanford behind No. 2 William & Mary, No. 6, University of Southern California, No. 7 Southern Methodist, and No. 8 Carnegie Mellon.
The first issue reveals the deep flaws in the way Businessweek surveys recruiters. It essentially tossed a survey to anyone who visits a campus to recruit students. Most business school recruiters are alumni of the schools from which they recruit. If you’re from an underdog MBA program, you’re probably far more inclined to respond to the survey. The inherent bias in the sample explains why the results have little to no credibility. It also doesn’t help Stanford that many of its MBAs do one-off searches with startups, VC firms and mid-stage companies that don’t come to campus to recruit and are not captured in Businessweek’s recruiter sample.
What about that disparity between students and alumni on the school? Chaulk it up to two problematic challenges that exist in every ranking survey that goes to students and alumni. First, they know their answers will be used to rank their alma maters. So there is a tendency to be less than truthful in their responses. Unless you’ve had a truly disappointing experience with your school, you are highly unlikely to ding it. Secondly, the likelihood of cheerleading means that the scores for each school’s stakeholders are so close together as to be statistically meaningless. There just isn’t enough variation between and among the schools to get a credible result. So even Stanford’s No. 1 alumni rank doesn’t mean all that much. Neither does the school’s 16th place finish in the student survey.
Outside the Wharton School on the University of Pennsylvania campus – Ethan Baron photo
2) Wharton’s Resurgence
Sweep aside the quirky and unusual findings in this ranking and go to the biggest news: Wharton’s four-place improvement to finish second, just behind Harvard Business School. To gain its second place finish, Wharton had to zoom past Stanford, Duke, Chicago and Dartmouth. That’s a pretty big move in a single year at the top of the rankings where it is typically harder for a school to score either a major improvement or a big disappointment.
How Wharton climbed into second place tells you more about the Businessweek ranking than it does about anything else. Wharton’s improvements largely came in the rankings’ student surveys, where Wharton went from 30th place last year to 17th this year, and in post-graduation placement data, where Wharton went from 21st place to sixth. The school had the same recruiter rank of fourth and did slightly less well with alumni, ranking 11th this year versus 10th a year ago. It also had a one place improvement in salary, moving to third from fourth.
Only last year, at a town hall meeting with students in October, Dean Geoffrey Garrett and Vice Dean of the MBA program Howie Kaufold found themselves addressing student concerns over the school’s ranking declines in recent years. “The process of rankings is pretty arbitrary,” conceded Kaufold at the session, “but no apologies about it –- our goal is to be at the top of all those rankings if we can.”
Ever since Dean Garrett’s arrival in July of 2014, the school has lost ground in every major ranking with only one exception: the Financial Times where it eked out a one-place gain. Even more disturbing for Whartonites, Chicago Booth has consistently outranked the school, giving rise to conversations that a new Big Three has emerged with Harvard, Stanford and Booth in that category. Last year, the Poets&Quants‘ composite ranking saw Wharton tied for fourth place with Kellogg after what some observers considered the new Big Three.
Well, this year is a very different story. Besides tying Harvard Business School in the U.S. News survey for number one, climbing three places from a fourth place finish a year earlier, the school also topped the Forbes ranking this year, moving up six places from seventh. The school also soared eight places on The Economist list to rank fourth from 12th. And Wharton improved its standing on the Financial Times list, edging up one place to rank third this year. All told, the school has moved up 21 places in all five of the most influential rankings, the biggest gainer this year.
DON’T MISS: THE 2017 BLOOMBERG BUSINESSWEEK MBA RANKING
Wisconsin School of Business
3) The Most Undervalued Top 50 MBA Programs By Businessweek
At first glance, many of the numerical rankings assigned to schools by Businessweek can appear to be reasonable. What you really need to do is compare how these programs rank on this list with others. To do that, we took the top 50 schools according to Businessweek and juxtaposed them against Poets&Quants’ composite ranking which brings together all five of the most influential rankings weighted by our own view of each system’s credibility. We looked for the biggest gaps to identify the most undervalued programs by Businessweek.
The gaps expose ranks placed on schools by Businessweek that are clearly outliers. Their ranks are a misrepresentation of the true intrinsic quality of the MBA program at a business school. We consider a five-point gap to be significant enough to state unequivocally that the rank is without merit. Discard or at the very least discount what Businessweek appears to be telling you about the quality of the school and its MBA experience.
The most undervalued schools include publics and privates, some that might be on your target list of where to go. They range from such elite private players as Yale University’s School of Management and Georgetown University’s McDonough School to such stellar publics as the University of Minnesota’s Carlson School of Management and Indiana University’s Kelley School of Business. The biggest gap among the top 50 schools? It’s Wisconsin’s School of Business which nearly shut down its full-time MBA program this year but reversed its decision after protests from students and alumni.
UT-Dallas Naveen Jindal School of Management
4) The Most Overvalued Top 50 MBA Programs By Businessweek
At the risk of offending a very good group of business schools who are basking in their Bloomberg Businessweek ranking, we have to do the flip side of the undervalued analysis. Naturally, you can look at this in two very different ways. On the positive side, you can argue that Businessweek discovered some hidden value in these programs. On the other hand, because Businessweek’s more upbeat view of these programs runs counter to most rankings you can say that the magazine is just plain wrong.
Adopt whatever perspective you wish to have on this. We believe these business schools are overvalued by Businessweek’s ranking (but also want to remind you that we are still talking about the top 1% of all MBA programs).
We applied the same analysis we used for the undervalued list, looking for the biggest gaps between our composite ranking and Businessweek. Interestingly enough, the two Top 50 schools with the biggest gaps both reside in the Lone Star State. Businessweek generously ranks the University of Texas Jindal School in Dallas 31st best in the U.S. Poets&Quant’s composite ranking puts it at 53rd, a sizable gap of 22 places. Then, Businessweek places Texas A&M’s MBA program 22nd in the nation, versus our 40th place finish for the school, a gap of 18 places.
DON’T MISS: THE 2017 BLOOMBERG BUSINESSWEEK MBA RANKING
5) Where Did The Roller-Coaster Ranking Go?
One of the biggest surprises in this year’s Bloomberg Businessweek was how little many of the ranks changed. Sure, 18 of the top 20 MBA programs experienced a change in rank but in most cases they were minor adjustments, up or down. That is a big change from the magazine’s list a year ago when one school North Carolina State’s Jenkins School, actually plunged 40 places to rank 69th from 29th and another, the University of Iowa’s Tippie School, jumped by 20 places to finish at a rank of 35.
Not including the newcomers on the list or schools that fell off entirely, there were only six schools that had double-digit changes this year, with the largest shifts being a 12-place gain by Penn State’s Smeal College of Business and a 14-position drop by George Washington University’s business school. That is a big improvement on last year’s list when 18 of the ranked schools experienced double-digit increases or decreases.
The more volatile a ranking, the less credible it is. MBA programs don’t change all that much in a single year so rankings with wild, often unexplainable swings are highly suspect. How did Bloomberg Businessweek smooth out the roller-coaster ride many schools have felt in recent years? For one thing, the magazine didn’t change its methodology for ranking MBA programs. In the previous four years, the editors tweaked their approach three different times. That led to more dramatic year-over-year changes.
Secondly, there is a curious and mysterious line in the magazine’s explanation of its methodology that would help to limit the bigger jumps and dives: “Data from the 2016 ranking were added to the survey components to diversify feedback.” By adding in data from last year’s ranking, you would naturally be doing a lot more than diversifying “feedback.” You are dampening whatever changes occurred in the crunch on your new data. The result: Both the employer and alumni portions of this ranking are remarkably similar to the previous year’s results. In fact, all top ten schools in the employer survey last year are exactly in the same order this year. The same is true for the top nine programs in the alumni survey.
Whatever the case, the lessened volatility in the ranking is a real positive.
The new $60 million Connie & Kevin Chou Hall on UC-Berkeley’s Haas School of Business
6) The MBAs Who Quit The Highest Paying Jobs To Go Back To School
Guess which school’s students left the highest paying jobs to return to a campus for an MBA?
If you guessed Harvard Business School, Stanford GSB or Wharton, that’s understandable. Many already successful young professionals who go to an elite school are bringing in some impressive cash in their mid-to-late twenties and a disproportionate share of them tend to go to HSW.
According to Businessweek data, however, the students who left the most lucrative jobs to pursue an MBA are those at UC-Berkeley’s Haas School of Business. The median pre-MBA compensation for a Haas student was $86,250, just a bit more than the $85,000 median at Harvard, Stanford and Wharton (see table below).
And this brings us to another point about this and any other ranking: One of the advantages of a ranking is the wealth of revealing data it unleashes. Schools do not disclose pre-MBA pay nor do they have a handle on how much money their alums make. Businessweek collects this data in its surveys of students and alumni and it makes for some fascinating reading.
For MBAs who are six to eight years removed from their schools, the reported compensation is pretty impressive, including highs of $280,000 for Harvard MBAs and $262,500 for graduates of Wharton. While those sums are partly a reflection of the brand value of an MBA, they also reflect industry choices and location. In any case, 14 schools have alums from 2008 to 2010 earning more than $200K a year.
DON’T MISS: THE 2017 BLOOMBERG BUSINESSWEEK MBA RANKING
Kelley School of Business at Indiana University/Photo by Josh Anderson
7) Indiana’s Kelley School Goes From 1st To 32nd
Any double-digit fall in a ranking has to be immediately suspect. Afterall, very little changes from one year to the next in an MBA program. The only explanation for a big drop is some sort of crisis that strikes a business school, especially when it comes to student opinion. It could be the eruption of a controversy, the failure of an administration to swiftly react to major student concerns, a screwup in the career management office that results in fewer job offers.
So how to explain the free fall in Businessweek’s student survey experienced by Indiana University’s Kelley School of Business this year? Kelley, which has one of the more innovative MBA curriculums and one of the most attentive and responsive deans of any business school, plunged from first place last year to 32nd this year. And, of course, there was no crisis at the school that could even remotely justify the drop which pushed Kelley out of the Top 25 overall to a rank of 27.
The 31-place drop in the student survey is even more striking because Businessweek tosses in the previous year’s results in an attempt to diminish such wild year-over-year swings. “We also included data from our 2016 Student Survey to diversify the student feedback that contributes to this portion of the rankings.” Yet, 18 of the Top 50 schools experienced double-digit gains or drops in the student ranking this year.
As we explained earlier in the item on Stanford’s fall, scores on student surveys are ridiculously clustered close together. So minute fractions of a change can create major swings in rankings, even though those swings are not statistically significant. That is why Kelley fell from first to 32nd, and why Cornell’s Johnson School climbed 34 positions to rank third this year from 37th in 2016. It’s also why the University of Texas McCombs School soared 29 places to rank 26th and Houston’s Bauer School rushed ahead 26 spots to place 24th or the University of Maryland’s plunged 30 places to rank 39th after finishing ninth last year.
Remember that these unpredictable outcomes are occuring even AFTER Businessweek adds in the year-earlier results not to “diversify” student feedback but to dampen down embarassing changes that make the ranking less credible. We’ll borrow and paraphrase an accounting term to describe what all this means: Garbage in, garbage out.
Students’ Bridge at USC Marshall
8) No Respect For The Famed Trojan Network?
Among the nation’s strongest and most loyal alumni networks has long belonged to the University of Southern California. People speak of the Trojan Network with a mixture of envy and pride, envy if you’re not part of it and pride if you are a part of the Trojan Family.
Indeed, many argue that it is the school’s greatest asset, an incredible networking and mentorship resource. Alums help each other out in every possible way. They return phone calls and emails. They offer advice and counsel to each other. They open doors for career opportunities.
Yet, Businessweek accords the network no respect. Out of 85 schools, the alumni rank for USC’s Marshall School of Business is a lowly 58 this year, just two positions above last year’s 60th ranking. The alumni grade trails Maryland, Michigan State, Iowa, William & Mary, UC-Irvine, and the University of Connecticut
We’re not sure why this is so, but it doesn’t compute. Oddly, however, it is the lowest rank USC’s Marshall gets in any one of the five components measured by Businessweek in its ranking. Marshall is sixth in the student survey, 30th in the employer survey, 23rd in salary and 30th in placement. How the school gets a 58th rank from alumni is beyond comprehension.
USC Marshall School of Business alone has more than 75,000 alumni over 85 countries around the globe. As the school notes, “being a Trojan does not end after graduation, the Trojan Network is always there to support you throughout your future endeavors.” Except when it comes to Businessweek’s alumni survey.
DON’T MISS: THE 2017 BLOOMBERG BUSINESSWEEK MBA RANKING
9) Yale Suffers Its Third Straight Drop, Falling To 16th From 6th In 2014?
In the past five years, no elite business school has seen a greater increase in full-time MBA applications than Yale University’s School of Management. This past year, 4,098 candidates applied for one of the school’s 348 seats, up a remarkable 60.5% from 2,554 in 2014. When many full-time MBA programs have witnessed declining applications, it was a record year for Yale SOM.
Those increases, more importantly, have allow the school to substantially increase its average GMAT and GRE scores, grade point averages, and the caliber of undergraduate institutions on the resumes of its incoming classes. This year’s incoming class, for example, boasts the highest average GMAT and GPA ever recorded at Yale, 727, up two points over last year, and 3.67, vs. 3.63, respectively.
Yale’s median GMAT score of 730 is now equal to Harvard Business School. The average grade point average for SOM’s Class of 2019 now slightly exceeds Harvard’s 3.67 and is second only to Stanford’s 3.73. And with this latest application jump, Yale has more candidates per available seat in the classroom than even Harvard Business School, 11.8 vs. HBS’ 11.0. At Wharton and Kellogg this year, applications were essentially flat. At Harvard, they were up by 6%.
So how did the hottest elite MBA program fare in the latest Businessweek MBA ranking? You know the answer. SOM fell two places to rank 16th, well out of the Top Ten, and just behind the University of Washington. And that is after a three-position drop in the previous year from a rank of 11th in 2015 and a five-point decline the year before that when SOM finished sixth.
Yale’s performance in this ranking reminds us of what Businessweek fails to measure, something that is more important than many of the metrics it uses: the quality of the incoming students and the demand for an MBA program from the market. Unlike U.S. News, there is no effort to capture the test scores and undergraduate GPAs of incoming students nor is there any attempt to capture how highly selective a school’s MBA program has become.
Yet student quality may well be the ultimate measure of the actual quality of an MBA program. Most of the learning in and out of the classroom occurs through students and the brainpower and experience they bring to school truly matters. Just another reason to think of this ranking as entertainment–not an informative tool to help smart people decide where to go to graduate school.
Rice Business Students
10) Is Rice University’s Jones Graduate School of Business A Top Ten MBA?
Let’s just say this out loud: We think Dean Peter Rodriguez of Rice University’s Jones Graduate School of Management is among a small group of the very best leaders in business education—and thanks to generous scholarship support, the school has been able to attract an exceptional group of MBA students.
During the 2016-2017 admissions cycle, Jones drew an all-time high 813 applications – 11% better than the previous year — for its small intake of under 120 students. Impressive, no doubt, but it was the quality of candidates who stood out. This year’s class boasts an average GMAT of 711 – eight points higher than Texas’ flagship program at McCombs. What’s more, the score represents a 21-point improvement over the 2018 Class – and 35 points better than the most recent graduating class.
Some 80% of the MBA class receives financial aid – one of the highest rates in the country. This generosity is rooted in Rice’s mission, which is to draw the top minds and pair them with untapped talent that may lack the finances to continue their education. This has created a virtuous cycle – both inside the business school and within the university at large – where talent draws even bigger talent over time.
But is Rice a top ten business school? Businessweek certainly thinks so. Last year, the school ranked eighth. This year, it’s in tenth place. That puts Rice ahead of Virginia Darden, where Jones Dean Rodriguez spent a good portion of his career, as well as Berkeley, Yale, Cornell, Michigan, UT-Austin, UNC-Chapel Hill, and UCLA. Pretty heady company. Anyway you cut it, Rice’s ability to hang tough in the top ten has to be one of the biggest surprises in this year’s ranking.
DON’T MISS: THE 2017 BLOOMBERG BUSINESSWEEK MBA RANKING
The post Ten Biggest Surprises In Bloomberg Businessweek’s 2017 MBA Ranking appeared first on Poets&Quants.
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