The business of business schools

The Financial Times MBA ranking 2009 was published on Monday and made for interesting reading. The students, alumni and marketing department at the London Business School will no doubt be celebrating that this marks the first time that a UK (or indeed a European) business school has headed the ranking. I don’t know which school came 989th this year, but I feel sorry for its class of 2009 already.

The Wharton School at the University of Pennsylvania (jointly ranked number one this year with the London Business School) was founded in 1881 making it the oldest collegiate business school in the world. But the market boom in business schools did not take hold until after the 1950s and now there are well over 2,000 business schools in the world. This dramatic market growth means that business education is now big business and is a welcome additional revenue stream to the traditional universities as well as a booming new segment for private education providers. MBAs don’t come cheap. An MBA can cost anything from $8,000 to $60,000 a year in fees. But the costs are often considerably more as you need to include the living expenses if you study abroad as well as the opportunity cost of not earning an income whilst you are studying. The business school market has become a great market case study all in itself.

I would add a note of caution to all MBA graduates and potential students. Like any market, there is a wide distribution in the quality of business education that you can buy in to. The Financial Times’ MBA ranking lists only the top 100 schools. According to UK based Association of MBAs, there are some 1,500 ‘credible business schools worldwide’. That may well be the case, but if you were to talk to most of the top recruiters in the world argue, they would probably say there are only about twenty business schools which they actively recruit from. Why? Well, because the standard of the graduates is assured and this in turn makes their recruitment process for high achievers more efficient. An MBA used to be a stamp of quality but with more business schools opening every year I am not convinced that this level of mass-excellence really exists. It is important to use your commercial judgment in what business school you choose. Wasting a year at a potentially third rate business school may not instill a great deal of comfort in your prospective employers.

More than that, at FreshMinds Talent we receive applications from hundreds of recent (and soon to be) MBA graduates. While we always applaud and encourage the idea of business education, it is important that students remember that an MBA is not an end in itself (despite what the glossy brochures may suggest) and that employers – especially in the UK – are looking for practical experience of business and not purely a syllabus list of what you achieved on your MBA. We recommend that you are always thinking of ways to build your business profile and your CV with real life business experience. So demonstrating hands on experience of management, marketing, finance or operations as well as evidence of sound commercial acumen and success will get you a lot further than a year at the 989th best business school in the world.

Read more here

• The Association of MBAs
• The top 100 business schools
• Robert Salomon’s blog