In addition to programme quality, methodology, duration and admissions criteria, we can’t discuss the worthiness of a Master in Business Administration degree without addressing a few other crucial aspects – finances, professional opportunities and overall return on investment. The MBA impacts a person’s life dramatically and in order to make the best decision where to pursue it, which will determine the way your career progresses, you need to see the whole picture.
The numbers here are quite conclusive and don’t require any interpretation. According to the latest GMAC Corporate Recruiters Survey released in 2014, the median base salary for recent MBA graduates in Europe in 2014 is USD 69,000. The projected median starting salary for MBA graduates in the United States in 2014 is USD 95,000, similar to 2013 projections, and it is greater than the projected median salary of USD 83,000 for direct-industry hires.
The majority (55%) of American companies plan to maintain MBA salaries for this year’s hires at 2013 levels. Of the remaining US respondents, 27% declare an intention to increase salaries in 2014 at the rate of inflation and 18% intend to increase them above it.
If we objectively crunch all the numbers, American post-MBA experience reveals lower short-term ROI. One of the reasons is that the programmes in the US are twice as long and often more expensive than European ones, which means that full-time students forego two years of salaries by giving up their jobs and studying in the programme. Additionally, due to the fact that a good number of students who pursue their MBA degrees in American schools are already pretty well-paid by the time they get admitted in the programme, their immediate post-MBA salaries, albeit higher, do not appear to skyrocket.
However, the more appropriate ROI calculation in the MBA world is the one that’s done in due time, which for the purpose of objective evaluation means at least several years after graduation. That is what the Financial Times annual global MBA ranking shows – the data used to rank the schools in 2014, for instance, was collected from graduates who got their diplomas back in 2010. That is why the numbers in the FT rankings illustrate better why the American Business schools give better long-term ROI. For instance, there are 12 American schools in the top 20 global MBA programmes in that ranking. The salary percentage increase for those schools ranges from 99 to 116%!
When it comes to analysing the alumni network opportunities, it all boils down to the following simple fact: American business schools are traditionally several times bigger than European ones, which means students are exposed to hundreds and even thousands more classmates and alumni, who may very well become future employers, business partners, colleagues, customers and so on. An article the Economist, discussing various business schools’ networking potential, jokingly opens with the statement “It’s not what you know, it’s who you know”. Even though this is clearly exaggerated, the reality is that the MBA degree originated in the United States and thus the US has much longer and better-established traditions and connections in every single industry and post-graduate aspect of students’ lives.
In a student rating of the extent/helpfulness of the alumni network drawn up by the Economist in late 2013, nine of the top ten schools are located in the United States. Additionally, another ranking of the Economist, about a school’s potential to network, reveals that six out of the top ten schools on the list are American – the facts here speak for themselves.
The Economist reports that American schools boast the best careers services which contribute greatly to the quality of the post-MBA experience . According to GMAC as quoted in a Bloomberg Businessweek article, 95% of the 2013 US business school graduates are currently employed full time. In contrast, the situation across the Atlantic does not look as promising – only about 82% of European MBA degree holders have full-time jobs.
Furthermore, according to GMAC’s Corporate Recruiters Survey of 2014, the US hiring outlook for business school graduates in 2014 shows signs of modest growth. Recent MBA talent remains the dominant source of graduate business school hires for US companies – 86% of US employers plan to hire MBA graduates in 2014, up from 81% in 2013.
Great demand for US MBA students
Comparing the level of school recruiting activities by regions, US companies recruit from more schools than do European companies—both in terms of on-campus activities and other school-related recruiting efforts. US companies target an average of five universities for on-campus recruitment, and two universities using off-campus efforts. While the majority of US companies will not adjust their target numbers, 21% of companies will increase the number of schools they work with for on-campus visits, and 23% will increase the number of schools they recruit from using other means.
American employers rank on-campus recruitment as the most effective method for recruiting graduate business school candidates, followed by intern recruitment and employee referrals. US employers also rated university partnership programmes as a highly effective method for finding potential new hires. That is one of the greatest advantages of studying in an American Business School – employers come right on campus and snitch top-notch professionals before they have even graduated.
All in all, the American business schools have established themselves as educating the business leaders of tomorrow ensuring their prosperous post-MBA experience. The same is true of prestigious European institutions, of course. However, even though the big picture is what matters at the end of the day, embarking upon the MBA mission is an extremely important step in your career and you should carefully consider every single aspect before choosing which programme to apply for. In this sense, when you evaluate how the quality, value, duration, long-term ROI, career prospects and alumni networking opportunities of American MBAs stack up against those of European schools, deciding which continent offers the better programmes is pretty easy—and North America wins hands down.
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