It's important to note that the Financial Times Rankings has a bias that requires consideration as one reviews the rankings. Financial Times poll measures career progression of alumni, program diversity and a school's track record in producing new ideas in management. Data for this ranking was compiled from two main sources—the business schools and the schools' alumni who graduated three years ago. A school's rank is determined by a combination of three main factors: alumni career progression and salary purchasing power; the diversity (gender and internationalization) of the school and its program; and perceptions of the school's research capabilities. -Dave
It is more than a decade since the MBA business has seen such buoyancy, with aspiring students fighting for places at top schools while recruiters scrabble to attract the most accomplished graduates. Not since the early 1990s has an increase in MBA applications coincided with a healthy job market for graduating students.
Those in charge of programmes at the top schools believe this signifies a growing international recognition of the degree. Julia Tyler, associate dean of the MBA programme at London Business School, points out that in the few years following September 2001, when banks and management consultancies did not hire, industrial recruiters discovered the value of taking on MBAs. Now these recruiters have stuck with the idea in the good times too, fuelling the job market. In the US, Rose Martinelli, associate dean of student recruitment and admissions at the University of Chicago graduate school of business, believes applicants, too, are placing greater emphasis on the long-term value of an MBA, in spite of short-term hiccups caused by fluctuations in the economy. “There’s a good sense of assurance in the degree ... that’s become more recognised by the applicant pool.” Data collected for the Financial Times ranking of global MBA programme bears out these beliefs. Three years after graduation, alumni from the classes of 2001, 2002 and 2003 (the information supplied by these alumni three years after their graduation is used to compile the FT 2007 rankings) report substantial salaries and salary increases. Though salaries reported by alumni from the class of 2002 showed a slight dip overall at top schools such as Harvard, Stanford, London Business School and Insead, this year salaries have rebounded. Examining just the top 10 schools, the average salary three years after graduation reported by these alumni is $148,609, and the average increase from starting the MBA to three years after graduation is 127 per cent. But this gloss could hide seismic changes. Increasingly, a gulf is emerging between the top business schools and the also-rans, between schools in different regions of the world, and between different types of programmes. To begin with, the increase in applications may not be all it seems. Though the Graduate Management Admissions Council (GMAC) reports that two-thirds of business schools saw an increase in applications during the past year, they report only the number of applications, not the number of applicants. “There is not a lot of statistical data to show that there are more applicants,” says Ms Martinelli. “The competition for the top schools is increasing, so applicants are applying to four or 4.5 schools. Last year it was three.” On the other hand the GMAC statistics may underestimate the true growth in the number of applicants, with the real boom happening in geographical areas where the Graduate Management Admission Test (GMAT) – regarded in the US and much of Europe as the entry test for business school – is neither recognised nor required. In the US, the number of business schools grew 10 per cent between 1999 and 2006, according to the GMAC global database, from 846 schools to 927. But these figures are dwarfed by India, where there are now more business schools than in the US: between 1999 and 2006, the number of business schools grew from 639 to 953. In China too, growth continues. Dezsö Horváth, dean of the Schulich school of business at York University in Canada, says this can only continue. “I don’t see any decline [in demand] in Asia for the next two decades.” However, perhaps the most startling figure is the growth in the number of MBA programmes in Europe: from 181 in 1999 to 658 in 2006. In Germany alone there are now 150 MBA programmes, most of them tiny. So while the top schools can take their pick of the brightest, there is increasing competition between lesser schools. “There is so much new provision,” says Kai Peters, chief executive at Ashridge in the UK. “There is a real concern about what is critical mass in a programme. I really don’t know where this is heading. It’s becoming a much messier market.” Even top schools are keeping watch. “One unknown is where the competition will come from,” reports London Business School’s Ms Tyler. What is clear is that the majority of new programmes are usually shorter than the two-year gold standard MBA taught in the US, with many offering one-year programmes. These shorter programmes are increasingly proving their worth. In the FT rankings this year five of the top 15 schools have programmes shorter than the 20 to 24-month model. These range from Insead, with its 10-month programme, to Ceibs in Shanghai, which runs an 18-month programme. In Canada, the Ivey school at the University of Western Ontario re-launched its degree as a one-year programme in May 2006. As a result, female enrolment has increased from 25 to 34 per cent, says dean Carol Stephenson. There have been other changes in the student profile. “With the one year programme we get fewer of the students who hate their jobs,” she says. “We get more of the students who are focused, who know what they want. The class dynamic is different.” Another variable is the increasing number of student nationalities. Instituto de Empresa in Madrid, for example, has enrolled students this year from countries as far afield as Iran, Iraq, Kazakhstan, Nepal and Sierra Leone. What is undoubtedly true is that the full-time MBA is an increasingly global product. According to GMAC, business schools have seen a rise in international applications. A small but growing trend is the increase in the number of US applicants to non-US schools. “They [American students] realise they have to be world-aware,” says Ms Tyler. But while students are increasingly prepared to travel, there is a new realism among business schools about what it takes to be a global business school. The ever-increasing cost of an internationally-recognised faculty, plus the cost of maintaining overseas facilities, means that an endowment base is critical. A scan of the top 10 schools in the 2007 FT rankings shows that the eight US schools on the list have an endowment of at least $200m – Harvard Business School has more than $2bn. Meanwhile, Insead has an endowment of just €78m and London Business School just £6.4m. Not surprisingly, then, the past year has seen both Insead and LBS appoint business people rather than academics as deans. Frank Brown, dean at Insead, says increasing the size of the endowment is critical. “The issue that I see is that we are trying to be the business school for the world. That means diversity of nationality, profession and socio-economic diversity. If Insead tries to attract a student from, say, Nigeria, in competition with a top US school, the US school is able to offer a full scholarship. Insead is not.” In the long term he would like to be able to offer 100 full scholarships and to set up research centres in leadership, corporate responsibility and blue ocean strategy. For these, he concludes, Insead needs to raise between €75m and €100m. Many US deans will not envy him the task.
American business schools continue to dominate the Financial Times league table published today. Top of the table for global MBA programmes for the third year running is the University of Pennsylvania's Wharton school, followed by Columbia, Harvard and Stanford. The London Business School maintains its ranking as fifth, but the French school Insead, which now has an offshoot in Singapore, is the only other European school to make it into the top 10. The University of Cambridge's Judge school has shown a spectacular rise to 15th after lying 42nd two years ago, overtaking the Said school at the University of Oxford, which this year is at 19 after being ranked 25th in 2005. A sign of things to come may be the arrival of the China Europe International business school (Ceibs) in the top tier of the FT table at number 11. The Shanghai-based school benefited from the country's mushrooming economic growth to improve its scores for salary percentage increases for students three years after graduation and employment rate after three months. Two Spanish schools, Instituto di Empresa and the Iese business school, the IMD in Switzerland and HEC Paris are also ranked in the top 20 by the FT.