By Thomas Graf
Rankings are one way of determining the quality of MBA programs. If a school is ranked highly over a long period of time, it is very likely that the program provides exceptional career opportunities. The most important internationally recognized MBA rankings are provided by the Financial Times, Business Week, The Economist, U.S. News and Forbes. In the following, we want to have a closer look at these rankings and their methodology and identify some important differences.
1. The Financial Times Global MBA Ranking
The FT Master of Business Administration fulltime Ranking covers 100 fulltime programs worldwide. You can filter the ranking according to several criteria such as aims achieved, careers, employment, placements, recommendations, salary today, and value.
- Where does the data come from? The ranking is based on two surveys - one sent to alumni about three years after graduation and the other one sent to the schools' program managers. Overall, questions are asked along 20 criteria. The alumni contribute to 8 of these 20 criteria and the schools to 11. The final criterion is based on publicly available information (research score).
- Who contributes most to the ranking? At first glance, it appears that the alumni have less influence on the ranking than the schools because they only contribute to 8 out of 20 criteria. Having a closer look at the weightings, however, reveals a different picture. The alumni answers are weighted by 59 percent of the full survey and the schools' answers only by 31 percent. Hence, the alumni have a greater impact on this ranking than the schools. The research rank accounts for 10 percent of the final score.
- Content of the ranking: The ranking is based on 20 criteria that can be categorized in four groups:
Salary: An important criterion for many readers of MBA rankings is the impact of an MBA on students' future salaries. The Financial Times Ranking asks the MBA alumni about this but excludes answers that come from people in non-profit or education-related fulltime jobs - probably because these people earn less than normal business people and would therefore decrease the average salary that an MBA could potentially generate.
Also, the salary numbers are transformed by the Financial Times according to the Purchasing Power Parity Rates (PPP Rates). As a result, MBA alumni from a specific school may state average earnings of EUR 50,000 - let's assume this is around USD 65,000 - but the Financial Times Ranking shows USD 81,000 because of the PPP Rates.
Together, the criteria "weighted salary" and "salary increase" account for 40 percent of the total ranking. Again: This information comes from alumni - not from schools - reflecting the strong impact former students have.
- Further information from alumni: The alumni also provide their feedback on six other criteria, weighted by 19 percent of the total score. These other criteria are not revealed, unfortunately.
- Information from the schools: A third group of criteria is answered by the schools and their program managers respectively. Altogether, they account for 31 percent of the final position and include questions on gender and natinality diversity as well as on the international orientation of the program.
- Research Rank: The Financial Times also takes into account how well a school publishes in top journals (measured by the FT Top-45 list). The underlying rationale is: The more a faculty publishes in top management journals the better its knowledge base and research capacity and potentially the higher the learning impact of the MBA students.
2. The Bloomberg Businessweek MBA Ranking
The Bloomberg Businessweek Master of Business Administration fulltime Ranking covers 85 US programs and 27 non-US programs (2014 Ranking).
Where does the data come from? The Bloomberg Businessweek Ranking is based on three data sources: a student survey, a survey among corporate recruiters, and a research score ("intellectual capital score") reflecting the research quality of a faculty.
Who contributes most to the ranking? Both, the students' score and the corporate recruiters' score account for 45 percent each. The intellectual capital score, which is based on publicly available information, accounts for 10 percent. The schools do not have any direct influence on the ranking score.
Content of the ranking: The ranking can be categorized in the students' survey, the corporate recruiters' survey, and the intellectual capital score.
- The students' survey seems to be more detailed than the Financial Times alumni survey, as it includes a total of 45 questions. Students rate the teaching experience and the alumni network, for example, as well as career services and recruiting efforts. Since the Businessweek does not survey MBA alumni criteria such as salary increase, these are not included.
- The corporate recruiters' survey includes the experience of companies that are actively recruiting on campuses and asks them for the number of MBA students hired or tracks how often a recruiter mentioned a school over the last three rankings.
- The intellectual capital score is similar to the Financial Times Research score. The rationale here is that a faculty's research ability - measured by publications in top academic journals - influences the quality of an MBA program. In contrast to the Financial Times, however, Bloomberg Businessweek does not take into account publications in the FT Top-45 list of academic journals but in their own selection of 20 top journals. It also takes into account reviews in The New York Times, the Wall Street Journal, and Bloomberg Businessweek.
3. The Economist MBA Ranking
The Economist Master of Business Administration fulltime Ranking covers 100 programs worldwide. It is possible to filter the ranking by geographic area or country.
- Where does the data come from? The Economist Ranking is similar to the Financial Times Ranking, as it includes data from schools in the ranking. Like the Businessweek Ranking, it uses the responses of current MBA students and recent graduates for the ranking.
- Who contributes most to the ranking? The answers from students and recent graduates are weighted by 20 percent of the total ranking score whereas the data provided by the schools accounts for 80 percent. Hence, schools have by far the most influence on this ranking.
- Content of the ranking: The ranking is based on questions around 13 criteria from four categories:
- The category "Open for new career opportunities" is weighted by 35 percent of the full ranking score and includes criteria such as "Diversity of the recruiters" or "Jobs found through the career service".
- The category "Personal development/education experience" is also weighted by 35 percent and includes criteria such as "Faculty quality" or "Student quality".
- The category "Increase salary" is weighted by 20 percent and includes "How much did your salary increase after graduating?" as well as "Leaving salary".
- Finally, the category "Potential to network" counts for 10 percent of the ranking score and includes "Breadth of the alumni network", "Internationalism of alumni" and "Alumni effectiveness".
4. The U.S. News Graduate School Ranking
U.S. News invites all AACSB-accredited business schools to participate in the fulltime ranking. For the "Best Business Schools ranked in 2013" ranking, 140 provided the data necessary to become fully included in the ranking.
Where does the data come from?
The data comes from business school deans and directors, corporate recruiters, graduates, and schools. The deans and directors rated all schools or programs of the panel - not only their own school. So did the corporate recruiters. In addition, graduates and school representatives provided information on their own school or program only.
- Who contributes most to the ranking?
- The quality assessment of programs provided by deans and directors accounts for 25 percent of the ranking score.
- The quality assessment provided by corporate recruiters accounts for 15 percent. Hence, the quality assessment of programs provided by external people accounts for 40 percent of the overall score.
- Data on employment rates, starting salary and bonus provided by graduates accounts for 35 percent of the total score.
- Finally, the student selectivity data provided by business schools accounts for 25 percent. Students therefore have the highest impact (35 percent), followed by deans and directors as well as schools (25 percent respectively). Corporate recruiters have the lowest impact (15 percent).
- Content of the ranking: The U.S. News rates schools along three categories.
- The category "Quality assessment" includes the quality assessment from business school deans and directors as well as corporate recruiters.
- The category "Placement success" was provided by graduates and includes the criteria "Mean starting salary and bonus" as well as "Employment rates". Starting salary and bonus only account for 14 percent - as compared to 40 percent in the Financial Times Ranking or 100 percent in the Forbes ranking (salary after 5 years).
- The category "Student selectivity" was provided by the schools and includes GMAT or GRE scores, undergraduate GPA, and acceptance rates. Hence, the US News is the only ranking - among these five rankings - that includes the GMAT or GRE scores.
5. The Forbes Ranking
The Forbes Business School Ranking differs from the others by solely focusing on the return on investment five years after graduation.
The 2013 US ranking includes 70 two-year MBA programs. Forbes also ranks non-U.S. MBA programs with a program length of 1 year separately. The 2013 non-U.S. program ranking includes 24 schools.
- Where does the data come from? The data comes only from alumni five years after graduation. Hence, for the 2011 ranking people who graduated in 2006 were asked.
- Who contributes most to the ranking? In the Forbes ranking the data stems only from alumni. Hence, neither the schools nor corporate recruiters can influence the data.
- Content of the ranking: Forbes sees the MBA program as an investment and calculates the overall return on that investment. For this, they subtract the costs - including forgone compensation, tuition fees, and the fees required, for example, to apply for the program - from alumni earnings to end up with a final "5-year MBA gain".
What does it mean if a Master of Business Administration is not ranked? Is it a poor quality program?
A program that is not in the ranking is not automatically a poor quality program. Rankings usually have strict eligibility conditions that programs need to fulfill before they can be included in a ranking process. The Financial Times, for example, requires international accreditation and a minimum of four consecutive years in which the programs have been run. Hence, new MBA programs cannot immediately make it into the rankings, even if the school has a great reputation and the program will likely achieve top positions in the coming years.