Quitting a job, taking more than a year off to go back to school, and dishing out $40,000 in tuition are undeniable signs of someone who desires and expects the significant life changes promised by MBA programs. But is it worth the sacrifice and cost?
Whether the master of business administration degree is meant to increase job satisfaction, broaden career opportunities, or bring the windfall of higher salaries and tantalizing benefits, the evidence indicates there is an impressive return on investment to be gained by taking the plunge, according to educators, business people and MBA students themselves.
Kate Dilworth is a prime example of how earning an MBA can dramatically change a career. Ms. Dilworth, now 45, had been a mental health-care professional for many years in Vancouver when she entered the MBA program at University of British Columbia's Sauder School of Business in 2002.
After working with people with schizophrenia and addictions, and in public health education, Ms. Dilworth wanted to broaden her involvement in health care and move in a different direction with her work.
The emotional, intellectual and social rewards of an MBA are at least as important as the financial ones, says Ashwin Joshi, director of the MBA program at York University’s Schulich School. (Jim Ross for The Globe and Mail)
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At the time, she could see that B.C.'s recently elected Liberal government was moving the health care system in a different direction and felt she could play a positive role.
"I anticipated there would be changes coming. I wanted to go into a graduate degree and it was important for those of us interested in the provision of health care to understand the coming system better," she recalls. "I thought an MBA would be a very broadening degree. It certainly was that."
Five years after leaving Sauder's 14-month program, she now works as a consultant in leadership development for health professionals and on service-delivery issues, and has doubled her pre-MBA salary. But those improvements don't begin to compare with what Ms. Dilworth calls "the other gifts of the program."
"I'm making over double the money I used to make, but that is not why I chose to do it. Absolutely not," she emphasizes. "It is simple job satisfaction. Every professional engagement I've had since graduating I could never have done without taking that MBA. However, I also couldn't be doing it without my nursing degree and my professional life from before I went in. It's the combination. My passion remains solidly with health care, but the MBA opened doors."
Thousands of kilometres and a completely different sector away, Mona Mann is nearing completion of her MBA at the Schulich School of Business at York University in Toronto. She already has a promising job to go to next summer.
Having worked on Bay Street for several years as compliance officer at ABN AMRO Asset Management, the 30-year-old calls the MBA "a segue" to her next career move, in a rotational program with RBC Capital Markets. There, she will be able to try out different roles in the firm that will get her out meeting clients, something she greatly looks forward to.
"I was seasoned in my field, but I wanted to do something that was a bit different. I wanted a front-line role as opposed to a back-office role, and I honestly did the MBA to expand my business knowledge; from that process I realized there were so many skills that I could pick up still," she says.
Ms. Mann says her sacrifice to go the MBA route was to quit her job and relinquish parenting of her three-year-old son to her husband.
"It was a huge adjustment, but I had a great deal of support from my family," she says. "It's a different world when you're going to school and I had no take-home pay, nothing. I paid $40,000 in tuition and got $7,000 in bursaries."
The return on investment for her, she says, meant her previous salary of $63,000 a year will be replaced post-MBA by an RBC salary of $80,000 combined with a bonus that almost doubles that base rate.
"Schulich has given me the platform that I needed — it has been a trampoline I jumped on, and I just flew off. It was enlightening to learn that there was so much out there that I didn't know," Ms. Mann says.
Tracy Redies, executive vice-president of personal financial services for HSBC Canada, said her company looks favourably on MBA graduates because the costs and other sacrifices involved show the kind of drive HSBC likes in its employees.
"The MBA gives people general business background and discipline, and the students have an idea of how to attack a business challenge," says Ms. Redies, who has an MSc in Business.
"One of the things people have to be careful with, though, is that many can have too narrow a focus within the business disciplines themselves. Today, we talk about a much more globalized economy; students need to be outward looking and creative because the business world is changing very quickly," she says.
"Four out of five of our CEOs have MBA degrees, so I guess on that basis it would seem to have a very successful return on investment for them," Ms. Redies adds. "Of course, we take BAs as well, but those MBAs who have taken on board an international and creative approach will do well with us."
Ashwin Joshi, director of the MBA program at the Schulich School, says the benefits of an MBA are both tangible and intangible. He cites Forbes magazine's biennial study on return on investment for MBA graduates, which he says compared solid data from dozens of schools.
"In terms of the tangible, it shows that in doing the MBA you outperformed the Nasdaq between the years 1993 and 2001. That's pretty dramatic. The average rate of return is around 18 per cent," Dr. Joshi notes. "This is a pretty powerful statement, quantitatively, as to why one should take the MBA. Financially, in my mind, there is no debate."
But financial rewards alone should not be the reason for entering an MBA program, he adds. "What is it that happens to these students that allows them to command this premium? The emotional capital, intellectual capital and social capital are, for me, at least as important a draw," he says.
Dr. Joshi disagrees with the notion that the value of an MBA to employers and students will lessen as the popularity of such programs grows and the numbers of students taking MBA programs increases.
"It's about the development of high-performance skills, intellectual content, creativity, an analytical mindset and so much more, and this helps them to become superior performers," he says.
"This can only be attractive to our students and to employers."
Show me the money
Forbes magazine prepares a biennial ranking of global business schools based on students' return on investment — that is, their compensation five years after graduation from the MBA program, minus the costs of tuition and forgone salary while in the program.
The September 2007 report surveyed students who graduated in 2002. Here's a sampling of the findings:
- Among non-U.S. two-year programs, York University's Schulich School of Business ranked fourth, with a five-year "MBA gain" of $65,000 (U.S.). The pre-MBA salary was measured at $32,000; the 2006 salary at $116,000.
- Among non-U.S. one-year programs, Queen's University School of Business ranked 10th, with a five-year MBA gain of $47,000. The pre-MBA salary was $44,000; the 2006 salary was $117,000.
Source: www.forbes.com
Special to The Globe and Mail
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