Choosing the Right Program
INTRODUCTION
Preparing to take the GMAT is an important—no, a critical—step toward the pursuit of the MBA, but it is only the start of the battle. In the next several chapters, we’ll help you determine where to apply, how to get in, what to do once you’re there, and how to go about looking for a job.
CHOOSING A SCHOOL: CONSIDERING YOUR OBJECTIVES
Your first requirement in picking a school is to know your objective. Why are you applying?
Why do you want to study for the MBA? All told, there are probably four main reasons for enduring two years of study for the MBA:
$ You want to know how business works.There are perfectly good reasons aside from wanting to earn money for seeking advanced education in management. Charles Handy of London’s Open University has described the MBA as virtually a prerequisite to being an effective manager of a commercial enterprise. This is an overstatement, but there’s a kernel of truth in it. There aren’t too many places where one can learn the finer points of queueing theory, the details of financial statement analysis, the importance of the F-test in statistics, and the ins and outs of the Buy-One-Get-One (BOGO) marketing ploy in just two short years. How’s that for a sales pitch?
$ You want to advance your career. The MBA is hardly a prerequisite for success, but it certainly helps, and it has been getting more important in recent years. Most MBA programs equip their graduates to understand how to deal with many of the important questions that their organizations will need to tackle over time, and that they will face in their careers. So, if you find yourself in a meeting with a crowd of people 10 years your senior, you may find that you’re the only one who actually knows how to unlever the discount rate, who understands what is really meant by supplier qualification, or who can make attractive PowerPoint slides in his sleep.
$ You want to make an obscene amount of money. You’ve looked at what you’re making now, and at the starting salaries of those MBA graduates, and you’ve decided that you’re in. Remember, though, that this is not a lottery: MBA programs spend a lot of time and money screening potential business managers, and those with the potential then spend a lot of time and money getting up to the high level of competence that is
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expected of them. So, they’re generally worth what people pay for them. As a side note, you are also getting paid that much for a reason—you’ll work hard for the money you earn.
$ You want to teach business administration. This is a less common, but still obvious reason for attending graduate business school. The leading Ph.D. programs, however, are not necessarily the leading MBA programs—there is a big difference between teaching Master’s candidates and grooming those who will teach them in the future. The Tuck School at Dartmouth, for example, does not even offer a Ph.D. in business. So, if you’re interested in something a bit more advanced than the MBA, you’ll need to reach beyond the rankings; it’s best to look at who is getting hired where. Finally, remember that the teaching of business is the most lucrative academic job one can get these days. Not many other university professors can earn in the low six figures as relatively junior faculty.
A BRIEF TAXONOMY OF MBA PROGRAM TYPES
The next question is, what sort of program to attend. Broadly speaking, there are two options.
The Full-Time Option
The pursuit of the traditional two-year, full-time program is probably why most people would buy a book like this. A full-time MBA program is like none other. While leading part-time MBA programs (discussed next) offer many of the academic attributes of their full-time equivalents, the full-time program is, for most ranked programs, the flagship program for the school and the focus of the school’s administration and budget. What full-time MBA programs offer through this total immersion process is unparalleled access to a wide range of faculty, speakers, contacts, recruiters, and alumni on a weekly, and even daily, basis. If you can afford to quit your day job (more on that later in this chapter), the experience, both academic and social, is worth it.
Part-Time, Evening, and Weekend Programs
For those who have jobs that they either can’t or don’t want to surrender, there are other excellent options. Part-time programs generally allow students three to five years to complete the course work that a full-time program expects to cover in just two. Some schools, however, insist that their evening or weekend programs are not part-time at all; while they may stretch out the length of schooling, they may also allow less flexibility in what courses are taken when. For details, you simply must check with every school in which you are interested. Also check access to key faculty for both core courses and your intended electives. The best professors do not always pull double duty for day and evening programs.
The perceived detractor in this case is quality. There is a widespread perception that degrees attained in evening and weekend programs are somehow not the equal of those attained during the conventional full-time programs. This is hard to assert convincingly. At many schools, the faculty that teaches core courses and popular electives teaches for both full-time and part-time programs. What is often true, however, is that the evening, weekend, and part-time programs have slightly lower admission standards, at least in the quantitative aspects of an application. Excellent job experience in
That can help if you find yourself in that category, but many recruiters know the difference, and some shy away from relying too heavily on the résumé books of the evening classes.
Executive programs are a further twist on the MBA concept. These are usually shortened versions of the standard MBA courses that gloss over some of the more quantitatively challenging course work and focus instead on high-level case work. The objective is not just to suck in senior managers with money to spend but rusty calculators. At a certain point, most business managers shift from being producers of analysis to being consumers of analysis, so the focus of their graduate education should shift as well.
On the other hand, career services assistance is often less impressive for part-timers. At one time, many executive and part-time students were sponsored by large corporations, and many universities did not want to irritate these corporations by offering their employees avenues of escape. This, however, is changing as well. Check the school’s policy on this matter. You will specifically want to know what level of access to campus recruiting and career services assistance is available relative to that for full-time students.
A BRIEF BIBLIOGRAPHY OF SCHOOL RATINGS LISTS
At this point, we need to start narrowing things down to an actual school. If you’re interested in a high-powered MBA education, you’ve assuredly by now heard about the Top 10, Top 20, or whatever
“top list” is being published by the business media this week. Don’t get too worked up about that concept. One of us remembers a brief first meeting with a consultant who was a graduate of the Richard Ivey School of Business at the University of Western Ontario. When the question of schools came up, she launched a verbal preemptive strike: “Western Ontario—it’s one of the top 10 schools in the world, you know.” The real question, though, is, “Can you estimate that discount rate?” After that, where you went to school is a secondary question. Actually, Ivey (or Western, as only someone from Ontario could claim) is a great school.
There’s an old adage that there are about 30 schools in the Top 20. That is, ask any three people which are the leading schools in the world, and you’ll get varying answers. Not that plenty of serious people don’t try to be authoritative about it.
$ BusinessWeekissues its survey every other autumn, in even years, and a great deal of work goes into it. It also publishes rankings of the best schools in finance, marketing, management, and entrepreneurship. Some weeks after the edition hits the newsstands, BusinessWeek’s parent company (and our esteemed publisher), McGraw-Hill, publishes a book-length review of all the MBA programs that the magazine rates. BusinessWeekdoesn’t stop there: the magazine’s MBA Web site (http://www.businessweek.com/bschools/) is expansive, constantly updated, and worth reading. This ranking includes both qualitative and quantitative factors and is the only one that surveys the students themselves (as well as recruiters). It’s easy to understand whyBusinessWeek’s rankings are the most closely watched in the business.
$ US News & World Reporthas the most quantitative of all the surveys. An annual survey that arrives each spring, this ranking provides a brisk snapshot of the top schools by quantifying peer reviews, recruiter reviews, placement success, and selectivity (which includes average GMAT and GPA). If you like to quantify results, this is a good quick look, but recognize that many factors in selecting a school cannot be quantified. Our advice is to visit the schools in person to form your own opinion.
$ The Financial Times (FT)issues its survey annually, in January. If you’ve not read London’s FT, you should know that it’s probably the second most important English-language business newspaper in the world (after, of course, the Wall Street Journal). The FTsurvey pays rather more attention to schools outside the United States, which is a nice feature for those considering shipping out to overseas destinations for school.
$ The Economist ranks schools according to more or less the same criteria as the FT. The Economist Intelligence Unit, the magazine’s affiliated research group, also publishes Which MBA?, an annual book-length expansion of the survey. As a publication based in London, it too pays rather more attention to schools outside of North America. The Economist’s editorial staff is particularly well regarded by the schools that it surveys, so its opinions might be given some weight.
$ The Wall Street Journal(WSJ) has a narrow but deep approach, surveying corporate recruiters for their opinions about, and satisfaction with, recruiting at various schools. The downside of this approach is that it focuses on a single attribute of the schools: the recent experience of the companies that have recruited there. The upside is that this is one of the most important attributes to measure—graduate business schools are professional schools, so you probably wouldn’t be going except for the job. Besides, if you want data on other aspects of the schools, there are plenty of other publications that rate those. The WSJalso divides schools by their regional and national recruiting strength. If you have a geographic focus to your full-time employment aspirations, you should pay attention to which schools place their graduates where. The WSJ’s survey is released annually, and it is absolutely worth picking up.
By now, you may have caught one of the major flaws in all these approaches, except for that of the Wall Street Journal. Current students may have important opinions about individual schools, but they are the last group whom one should survey systematically. MBA students have a financial incentive to overstate how much they like their school: if its rank rises in the next survey released, each student stands a better chance of prizing higher compensation out of his next employer or client.
SELECTING A PORTFOLIO OF SCHOOLS
So, we’ve demonstrated that you should be interested in what journalists think are the world’s best schools, but that you also shouldn’t get too hung up on their lists.
MBAs among new Fortune 1000 CEOs in 2004 and early 2005, and the 2004 BusinessWeek rankings of the schools attended.
MBA Program CEOs Rank
The University of Chicago 3 2
Northwestern University (Kellogg) 2 1
The University of Pennsylvania (Wharton) 2 3
Harvard University 2 5
Dartmouth College (Tuck) 1 10
The University of California-Berkeley (Haas) 1 17
University of Texas (McCombs) 1 19
Washington University (Olin) 1 23
MBA Program CEOs Rank American Graduate School of International Management (Thunderbird) 1 —
Michigan State University (Broad) 1 —
Lake Forest Graduate School of Management 1 —
Northwestern State University of Louisiana 1 —
Drexel University (LeBow) 1 —
La Salle University 1 —
Georgia State University (Robinson) 1 —
Lehigh University 1 —
No MBA at all 70 —
Total 91
Source:USA Today, April 7, 2005.
Specifically, does this mean that you should pay close attention to who is number 23 or higher on a rankings list? Far from it. When you look more closely at the list and dig below the surface, some interesting patterns start to emerge:
$ The American Graduate School of International Management (AGSIM), better known as Thunderbird (after the former Air Force base on which the campus sits), resolutely focuses on preparing its students for careers in international business. This year, one of its graduates, William Perez, took over as CEO of Nike. There aren’t too many U.S. companies with more international concerns, and it’s likely that Mr. Perez picked up a few things about those concerns at AGSIM.
$ Michigan State University’s standout CEO placement this year was Michael Johnston, the new head honcho of Visteon, one of the largest automobile manufacturers in the United States (and the former parts division of Ford Motor Company). Michigan State’s Broad School of Management drifts on and off the Top 25 lists from year to year, but it’s an excellent school.
It’s arguably one of the best schools in the world for studying the automotive industry and supply chain management.
$ Why only two Harvard hires? In 1998, according to headhunting firm Stuart Spencer, the fraction of large-company CEOs with Harvard MBAs stood at 28 percent. That was an outstandingly large number that speaks directly to the influence that Harvard Business School (HBS) once had in U.S. business. By 2005, however, that figure was down to 23 percent, and, as the chart notes, it was dropping quickly. That drop may actually create some value in the economy. In a 2003 study, hedge fund managers Victor Niederhoffer and Laurel Kenner analyzed the share price performance of the nine Nasdaq 100 firms then run by HBS alumni. Over the preceding five years, they had significantly underperformed firms run by the MBA alumni of the other Ivy League programs, Stanford, MIT, and the state universities as well.
It should be evident from all this that the number one school (whatever that really means) on anyone’s list is usually a fine program, but it’s not the right program for everyone. So how to choose?
By considering a range of factors within the context of your own educational needs:
Geography Matters
First, consider where the school is located. The preceding example of Michigan State illustrates this point perfectly. If you are primarily interested in the automotive industry, then Michigan State, the
University of Michigan, and Carnegie Mellon should absolutely be on your list. They all have excellent reputations in that business, and they are all close to Detroit, the undeniable center of the industry in North America. If running an index fund is your next desired gig, MIT ought to be on your list: you’ll be raked over the statistical coals in the classroom, and Boston is pretty much the North American center of fund management.
You should also be thinking about where you want to live when you graduate. Columbia University has an excellent school, particularly if you want to work on Wall Street, but looking for a job in southern California while studying in New York City is a difficult task. UCLA’s Anderson School is probably worth a long look at that point. Most schools do place people worldwide, but nearly all have regional strength. In the world of recruiting, proximity and convenience matter—for both the employer and the employee. It just isn’t cost efficient to recruit remotely if you can find great talent in your own backyard. Despite its national and international reputation, Stanford places almost two-thirds of its graduates in northern California. After two years in Palo Alto, leaving can be a hard thing. So, before placing a school high on your list, you may want to consider just how geographically flexible you can be.
Size Matters
Size matters, but we can’t say exactly how it matters for you, since it matters in both directions.
The intimate environment of a small school like Emory’s Goizueta Business School or the University of North Carolina’s Kenan-Flagler School can make for a rewarding and collegial experience. If you crave personal attention and small class sizes, and you don’t need five electives in options pricing from which to choose, then you won’t need a class of over 700 peers. On the other hand, recruiters have a slight tendency to gravitate disproportionately toward larger programs. Recruiting takes time (and therefore money), and small schools offer fewer choices of potential hires for them. Thus, if you are picking a small school, consider the location. Emory has a built-in advantage over UNC: Atlanta is a much larger city than even the metropolitan Raleigh–Durham–Chapel Hill area. On the other hand, it’s easy to patrol the Research Triangle from UNC, and there’s a good possibility that someone you will know on the faculty or get to know through an alumnus will have the right contact to get you in the door. (See how this gets back to location?)
Academics Matter
Every school has a particular focus and relative academic strengths—even those that tout general management. That’s easy to see in the finance departments of places like the University of Chicago and the University of Pennsylvania’s Wharton School. But while case-intensive programs like the University of Virginia’s Darden School aim to train general managers who can tackle a wide range of problems, this is also a focus. Many of the surveying organizations release not just Top 10 lists, but Top 10 lists for individual disciplines—say, the best schools for finance, marketing, or entrepreneurship.
All the same, you will need to dig down a layer below what the lists reveal. The McCombs School at the University of Texas has an excellent finance department, but it is arguably the leadingplace in the world to study energy finance. If you’re looking to work in Houston for BP or want a finance job with
More specifically, have a look at who teaches what. At many institutions your first year will mostly be consumed by core classes. (There are exceptions; the University of Chicago is particularly renowned for its laissez-faire, sink yourself if you so choose approach.) If those core classes are typically handed off to the junior faculty on the “least impressive instructor” list, think twice. Use your on-site visits to sit in on multiple core class lectures so that you can evaluate teaching methods, instructions, and the classroom exchanges among students to see if these classes match your expectations and your needs.
Recruiters Matter
Before applying anywhere, scrutinize the list of companies that have hired students in the past few years, and especially the last year. (Many recruiting lists are a composite over several years, so it’s better to investigate who really hired recently.) Check to see which companies hired more than one student (several surveys list top hiring firms). It’s fine to want to work for Goldman Sachs, but if the bank does not recruit formally at the school you’re thinking of attending, then working for that outfit will be considerably less likely. It can be done, but it may also require a great deal of work on your part.
Next, consider whether you are laser-focused on a single industry, or whether you’d like the opportunity to explore more than one thing in school. The breadth of the recruiting population is then important. If you’re convinced that you want to work in banking in New York City, then the Stern School of Business at New York University is an excellent choice. Wall Street is not the first destination for graduates of the W. P. Carey School at Arizona State University, but the school has a widely regarded reputation for producing logistics managers. Generally speaking, however, the better ranked the school is on more lists, the better will be your access to the wider pool of recruiters.
Then again, this is an easy matter to test by querying the school in question as well as the current students.
Alumni Matter
You should absolutely investigate who the school has placed into what sorts of jobs, and where they have gone since then. The rankings lists of prominent alumni are not necessarily the place to start.
Jon Corzine, the governor of New Jersey (and formerly U.S. senator and managing director of Goldman Sachs), is arguably one of the most visible alumni of the University of Chicago’s Graduate School of Business, but you’re not likely to get much time on his calendar. More important would be the names of the recent mid-career and less exalted senior alumni who have important positions in the industries you are considering. Every school tracks this information for recruiting and development purposes, so you should feel free to ask how deep the alumni pool is for the companies you are targeting.
Career Management Matters
Finally, built into that hefty tuition fee you’ll be paying will be the services of a professional career services staff. Ask how many people are on the staff, what their respective roles are, and how long they have