Thursday, April 9, 2009

Business school rankings

Business school rankings carry a lot of weight. Both students and schools compete for the prestige. However, few people agree on different rankings, and more importantly, many wisely see beyond them. However, rankings do serve a purpose. You just have to filter through them with some common sense and context. Here are some interesting statistics that go beyond the basic US News rankings. For the purposes of this blog, I will try to put things in historical perspective.

1. Average US News Rankings since 1990

The following is a list of the top schools as represented by their average US News rankings from 1990-2008. I can't confirm these numbers with 100% certainty, but they are based off historical US News rankings which continue to appear on the internet from time to time. Note that these rankings look very close to the 2008 rankings; most schools, especially towards the top, do not change very much. The fact that these rankings represent 18 years is a great starting point.

Rank School Average (USN)
1 Stanford University 1.42
2 Harvard University 1.84
3 University of Pennsylvania (Wharton) 2.95
4 Massachusetts Institute of Technology (Sloan) 4.00
5 Northwestern University (Kellogg) 4.37
6 University of Chicago (Booth) 6.47
7 Columbia University 7.79
8 Dartmouth College (Tuck) 8.63
9 Duke University (Fuqua) 8.95
10 University of Michigan--Ann Arbor (Ross) 9.79
11 University of California--Berkeley (Haas) 10.28
12 University of Virginia (Darden) 11.50
13 University of California--Los Angeles (Anderson) 12.72
14 New York University (Stern) 14.39
15 Cornell University (Johnson) 14.94
16 Yale University 15.07
17 Carnegie Mellon University (Tepper) 15.38
18 University of North Carolina--Chapel Hill (Kenan-Flagler) 17.63
19 University of Texas--Austin (McCombs) 18.44
20 Indiana University--Bloomington (Kelley) 20.31
21 Emory University (Goizueta) 21.42
22 University of Southern California (Marshall) 22.64
23 Purdue University--West Lafayette (Krannert) 23.06

2. Business Week "MBA Pay Through the Year"

In early 2009 Business Week published an estimated "lifetime" median compensation that graduates of top business schools reported. They also published starting pay, pay at 5, 10, 15, and 20 years. The full report can be found here. Most school rankings use starting salary out of school in their calculations, and many refer to that number as a benchmark to compare rate of return for your business school investment. This indeed is a great benchmark, because how successful you are after 20 years is much more a function of your personal will, skill, and luck than it is what school you attended. Additionally, these numbers may reflect the quality of the schools as they were 20 years ago, not as they are today, since they evaluate the career compensation of graduates from relatively long ago. Yet, I found these numbers to be rather telling, and definitely worth sharing, as career salary should be a metric for consideration. A lot of factors can go into this... for example, why do some schools with lower initial salaries achieve greater lifetime compensation? As you narrow down what schools are you applying to, this is something for you to answer.

1 Harvard3,889,880
2 Pennsylvania (Wharton)3,541,110
3 Columbia3,368,440
4 Stanford3,315,940
5 Dartmouth (Tuck)3,181,610
6 Northwestern (Kellogg)3,078,850
7 MIT (Sloan)3,049,280
8 UC-Berkeley (Haas)2,958,750
9 Chicago (Booth)2,939,060
10 NYU (Stern)2,920,840
11 Virginia (Darden)2,905,130
12 Duke (Fuqua)2,868,020
13 Cornell (Johnson)2,865,130
14 UCLA (Anderson)2,827,160
15 Yale2,788,300
16 Carnegie Mellon (Tepper)2,637,720
17 North Carolina (Kenan-Flagler)2,626,050
18 Texas-Austin (McCombs)2,577,870
19 Emory (Goizueta)2,564,980
20 Georgetown (McDonough)2,558,950
21 Vanderbilt (Owen)2,543,490
22 Michigan (Ross)2,525,280
23 Notre Dame (Mendoza)2,501,550
24 Babson (Olin)2,453,170
25 USC (Marshall)2,451,060

3. Business Week post-MBA starting salary

So you may think that one's career salary is too heavily weighted by variables not directly connected to the school itself. For this reason, a very important measure is the immediate post-MBA salary, which has significantly more direct relevance to the brand of your school. Yet, some may wonder why so much focus on salary at all. Isn't the quality of education the most important? To this I would say: 1) Yes, the quality of education is extremely important, 2) It is not easy to quantify such numbers and 3) If you are going to accept $100,000 or more in debt for a two year degree, you do want to make sure you are making a sound investment in your future. The list below shows average starting salary for schools based on Business Week reporting. I would note though that if you look up individual schools, these numbers can be slightly off. I believe this is because some schools report bonuses and other compensation differently from each other, and maybe differently over the years. So always consult the individual school's employment and career reports (normally available on their web site) for the most accurate information.

Pennsylvania (Wharton)145,000
Dartmouth (Tuck)134,000
MIT (Sloan)123,000
Northwestern (Kellogg)117,000
Virginia (Darden)113,000
UC-Berkeley (Haas)112,000
Chicago (Booth)110,000
Michigan (Ross)109,000
Duke (Fuqua)108,000
NYU (Stern)107,000
Carnegie Mellon (Tepper)106,000
Cornell (Johnson)104,000
UCLA (Anderson)102,000
Texas-Austin (McCombs)95,800
North Carolina (Kenan-Flagler)93,600
Emory (Goizueta)89,500
Georgetown (McDonough)88,700
USC (Marshall)88,200
Minnestoa (Carlson)86,700
Babson (Olin)85,300

4. Business school yields

Yield measures the percentage of students matriculating from the pool of students who were accepted by the school. For example, Harvard's yield is around 90%. They accept around 1000 students a year and 900 choose to attend. The other 100 go to other schools or decide that attending school was not in their best interest after all. In addition to rankings (i.e. reputation) and compensation, I believe a school's yield is a very telling figure. It's the "how much do people want to go to this school" factor. While I'm not advocating following the herd and just going to schools that others want to attend, a school's yield reflects how much desire it carries, which you can interpret as you choose. Yields don't change significantly through the years, and the following represents 2007 figures. It is borrowed from Adam Markus, which is another blog full of application knowledge. Conveniently listed are also the acceptance rates. Note that this is the first list on this blog which takes non-American schools into consideration.

5. In conclusion...

There are many metrics that people can use to measure the quality of a business school. Several commonly cited criteria are the reputation, compensation, and selectivity/yield. I hope the figures above will help in your school selections.

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