Is an MBA Really Worth It? Three Things You Need to Know

As the popularity of the Masters in Business Administration has grown, so has the debate about whether getting an MBA is a good investment of anyone's time and money. After all, many MBA courses can require two years of full time study, taking the student away from a paid job and the chance to focus on climbing up the corporate ladder. Some of the best business schools charge $100,000 or more for the privilege. And the sort of long corporate career for which the MBA was designed is supposedly becoming an endangered species. Yet more people than ever are getting an MBA: over 100,000 last year in America alone, and tens of thousands more in the rest of the world.

To shed some light on this important question, from today until Thursday (May 14th), The Economist is hosting an online MBA fair. Anyone exploring whether to do an MBA will be able to get answers to their questions from business schools and other experts. More than a dozen schools from around the world will be represented. You can register to visit the fair here.

During the fair, this Wednesday morning (13th), I will be interviewing two people with first hand experience of the pros and cons of doing an MBA. At 10 am EST I will speak with Casey Gerald, a recent graduate of Harvard Business School, who instead of a summer internship on Wall Street or in consulting co-founded MBAs Across America. This is an organisation focused on finding small entrepreneurs in some of the toughest corners of the US economy and to help them grow their businesses by using insights from MBA students. Casey is a man on a mission, who has plenty to say about the MBA experience.

At 11am EST I will talk with Lynda Gratton, a professor at London Business School and author of a terrific book, "The Shift: The Future of Work Is Already Here". She is currently writing another book about how we ought all to prepare to live to be 100, and to carry on working well into our 90s. One of her big themes is that we will all change jobs and indeed careers frequently, and to succeed will constantly need to be updating our education and mastering new disciplines. So what role does she see for the MBA in this?

For me, scanning the debate about the value of an MBA, three things seem fairly clear.

First, there are lots of satisfied customers of MBA programs. Some 95% of MBA alumni say that their graduate education was "good to outstanding value" and 93% would recommend it to a friend. That is according to the 2015 Alumni Perspectives Survey, carried out by the Graduate Management Admission Council. (As this is the organisation that administers the GMAT test for getting into business school, you would probably expect it to say something along these lines, yet this is generally reckoned to be an honest survey.) Over four out of every five of the alumni surveyed said that their graduate management education has contributed to improvements in their competitiveness, proactiveness, innovativeness, and creativity.

Second, choose carefully. There is plenty of evidence that which business school a student attends matters a lot. Nor is choosing wisely simply a matter of finding out how high a school appears in the various business school rankings (including Which MBA?, published by The Economist). Given the different fees, and length of time needed to graduate, even the highest ranking business schools do not necessarily give the best bang for the buck. For instance, one article on the "ROI on an MBA", whilst noting that the average MBA nowadays is worth less than $400,000 spread over a 30 year career, noted that in some cases (such as an MBA from CalTech) the number soared to $1.8m, whilst IESE in Barcelona added an average of $96,000 a year to its graduates' salaries. Sorting out the wheat from the chaff as business school and MBA programs proliferate is crucial.

Third, a good MBA is so much more than what is taught in class. There are the extra-curricular clubs (social entrepreneurship is especially popular nowadays) and internships, and, as most MBA alumni will tell you, there is the network of fellow students who, if managed well, will help advance your career for the rest of your working life.

The anecdotal evidence I have heard also suggests that doing an MBA is particularly helpful for people going through a time of transition, where they are, say, trying to beef up a nascent entrepreneurial idea or move out of a narrow silo into the mainstream of business. Doing an MBA is not right for everyone. But at the right time, for the right reason, at the right school, it can be a terrific investment.

What do you think?