[转帖]What's an MBA Really Worth?

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(From Businessweek Sept. 22,2003) The class of '92 gives the degree high marks in our exclusive survey of B-school alums Once the holy grail of business education, the MBA has become increasingly tarnished over the past two years. B-schools lack the academic depth of other graduate programs, some say. The MBA-wielding manager has little more to offer a company than those who rise up the ranks on merit, charge others. Another claim: A bunch of MBAs cooked up all those corporate shenanigans. The credential that came of age in the late 1980s and early 1990s as business became the "it" profession has been taking its lumps right along with Corporate America. Then, last year, Stanford University Graduate School of Business Professor Jeffrey Pfeffer turned up the volume. Pfeffer took a shot at B-schools from inside the ivory tower with his controversial paper, "The End of Business Schools? Less Success Than Meets the Eye," published in the Academy of Management, Learning & Education journal. He argued that since there had never been a measure of the long-term value of the degree, there was no way to really know if a pricey B-school education -- tuition and lost salary often top $175,000 -- was worthwhile. And he posited that MBA holders seemed no more successful than persistent business leaders without the degree. "What matters over time is not where you come from or who you once knew. What matters is what you can do," says Pfeffer. The paper sent shivers down every dean's back and caused doomsayers to proclaim the MBA's ignominious end. Well, hold on to your hat, Professor Pfeffer: The Class of 1992 gives B-school a big thumbs-up. In BusinessWeek's exclusive survey of MBA alumni, nearly 1,500 alums of the Class of 1992 from our Top 30 B-schools report high levels of satisfaction with their careers and say they owe much of that success to their MBA experience. This spring, BusinessWeek set out to assess the impact of an MBA on grads who have had more than 10 years to test-drive their skills. The survey, developed by BusinessWeek and Boston-based Cambria Consulting Inc. (which has assisted the magazine with MBA, executive education, and executive MBA rankings since 1999), quantifies a mosaic of information, including averages, anecdotes, and interviews with dozens of survey respondents, B-school deans, corporate recruiters, and other experts. Rather than a ranking, the effort yields a portrait of the MBA's value as seen through the eyes of a group that graduated at a time when a business degree had become highly desirable. So what does that group have to say? That the MBA is worth a lot. Sure, it's not a perfect degree. It's not always good for all the things it sets out to teach. But in an increasingly credential-crazed society, it definitely opens doors -- and graduates walk through them with a high level of confidence.

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What's more, the data depict a managerial class that's in a truly commanding position. Their salaries and bonuses are hefty, and they occupy, after only a decade, top posts in their companies. They are an enterprising lot, an entire cohort of ambitious men and women who have started hundreds of companies and created nearly 100,000 jobs -- a surprising record from a group often derided as better at bean-counting and consulting than actually doing anything. Today among the class are chief executive officers, vice-presidents, regional managers, and directors in nearly every corner of Corporate America. They're loaded with management responsibilities, overseeing an average of 93 people. And many have the wealth and desire to give generously of their riches and time.

Overwhelmingly, they say earning the degree was worth it. Some 89% say they would go for the MBA again if they had it to do over. And nearly 80% said they would attend the same school. Those who said they wish they had gone elsewhere often cited schools like Stanford, Harvard, Kellogg, and Wharton as their dream choices -- pointing to the enduring strength of those well-known brands. Alums largely gave the level of instruction and knowledge they gained from their own school high marks. "I look at what the B-school experience did for me, and I would have paid multiple times what I paid for the education," says 38-year-old Sallie L. Krawcheck, 1992 Columbia Business School grad and recently appointed chairman and CEO of Citigroup Inc.'s Smith Barney.

For Krawcheck and many others, the skills and knowledge kicked in not so much in the first job, but in the second or third. Krawcheck first thought she would be in the media biz, but that was before she realized research analysis was her natural talent. She took a research job at Sanford C. Bernstein & Co., where she quickly rose up the ranks to run the firm. In fact, some 22% of her '92 counterparts now work in banking, while 16% work in technology, 15% in consumer goods or manufacturing, and 12% in consulting. Many others are climbing the ladder in fields as diverse as education, health care, retail, banking, and biotech. About one-third occupy one of the top three slots in their company. Still others are running their own ship.

There's no question the MBA catapulted most of the class into the upper reaches of American society. Today, the members of the Class of 1992 earn an average salary of more than $155,200 -- up from the average $56,600 they earned in their first post-MBA job. Add in the $232,400 in average bonus and other compensation -- buoyed partly by windfalls earned by alums working in banking and finance -- and compensation for the class last year was $387,600 on average. Compare that to today's average salary for a person with only a college degree -- about $43,400 -- and the MBA premium comes into focus. It's not surprising that women earn less, on average, or that some are out of the workforce entirely -- if only temporarily -- to tend to family. It's true that the MBA premium for women falls short of that for men, but most women say the degree was worth it.

The Class of '92 may have been amply rewarded, but the group has spread the wealth, too. About 75% of respondents say they gave to charity, with contributions totaling an impressive $8.25 million in the past two years, or more than $7,300 each, on average. Nearly a dozen alums gave $100,000 to charity, with a handful of gifts over $500,000. Still others donate their time -- some 7,000 total hours last year, or about 9 hours per month, among the 56% who volunteer. A few, like Gerald Chertavian, do both. The 38-year-old Harvard Business School grad 13 years ago wrote in an application essay about his desire to start a school to train inner-city young adults for the work world. In 2000, he did just that, founding nonprofit YearUp in Boston with $500,000 of his earnings from the sale of a software company he co-founded. He didn't just write a check, though -- Chertavian signed up to run the school for 10 years. "If you had good fortune at a time when the market was going sky-high, you have some responsibility along with that," he says.

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Of course, it's impossible to know what the members of the Class of 1992 might have become without their graduate degrees. But the majority of respondents believe that while they probably would have found some success without the MBA, they would not be where they are today. When James M. Berger enrolled in the University of Virginia's Darden Graduate School of Business Administration, he was leaving a career in computer sales, hoping an MBA would open doors to a rewarding, big-bucks career in product management or marketing. Unemployment then was rising steadily, so riding out the bad times in B-school seemed like a good bet.

It took a while to pan out. Berger bounced around, starting as an assistant product manager at Dunkin' Donuts Inc. in Randolph, Mass., for $55,000 per year. Then, at Walt Disney Co., he marketed the company's video games. Just this June, the 38-year-old Berger landed his dream job as vice-president of consumer products and marketing with Irvine (Calif.)-based GameSpy Industries Inc., a software company for online games. In little more than a decade, he has quadrupled his salary, risen through the ranks, and ultimately found work that back in 1992 he didn't know he even wanted. "I value [the degree] even more now that I have more perspective," he says. "Those two years of rigor don't just wash away."

That's not to say the Class of 1992 walked off with all of the advertised benefits of B-school. Alumni networks are often marketed as B-schools' great secret weapon, but even some of the most revered schools haven't delivered on the promise. And looking back, many alums saw their training as too grandiose -- overly focused on being a CEO, rather than on the more likely middle-manager role -- and not practical enough to prepare them for tackling everyday problems. Some areas, like international business and entrepreneurship, were just "average," many noted.

Still, for many in the Class of 1992, the MBA experience was a life-altering two years. That's as it should be, says Stanford University Graduate School of Business Dean Robert L. Joss. "We want them to be different people when they leave. We want to cause them to think differently, not just learn a particular piece of knowledge," says Joss, dean since 1999. "If it works, students leave and build a career that maybe they never thought possible." And even as the sluggish economy at the time offered little opportunity, the group showed drive. Many say the MBA allowed them to move freely from one industry to another. Indeed, the average 1992 alum has had three different post-MBA employers, along with four promotions since graduation. About 25% havetched fields since their first post-MBA job. Though 2.5% were unemployed at the time of the survey, fewer than 15% of respondents have spent time unemployed since graduation -- this despite recent rounds of white-collar downsizing.

Most '92 grads agree on at least one thing: Their MBAs gave them new levels of self-confidence. "B-school removes the blind spots about business at a high level," says Richard Wong, a Massachusetts Institute of Technology's Sloan School of Management grad who is now senior vice-president for marketing at Openwave Systems Inc. Many of the respondents, like Wong, saw B-school as a place where they were immersed in the business world and felt like they were suddenly "in the know."

Particularly at top-flight schools like Harvard and Stanford, alums gave more credit to their school's brand name than they gave to any body of knowledge gained in class. Of course, that points to Pfeffer's criticism that the schools are often little more than credential mills. As things stand now, "you get further toward the top of the queue" if you go to certain schools, says Pfeffer. Admits Boston Consulting Group Inc.'s Kermit King, head of MBA recruiting: "Frankly, it's a useful placement service for us."

Moreover, alums across the board said they had counted on fabled alumni networks but had been largely disappointed. When it came to advice, job leads, and lifelong connections, alums gave their schools low marks -- a mere 5 (out of 10) overall. Even schools like Harvard and Stanford, tight-knit Dartmouth and Kellogg, and techno-giant MIT scored only slightly above the average. And alums at Washington University in St. Louis, University of Texas, Indiana University, and Emory University gave their alma maters a 4 or lower. Says a University of Rochester's Simon School of Business alum: "It's even difficult to find information on other alums." Top B-schools are aware that their alumni networks are undernourished. In the past two years, some, including Harvard, Kellogg, and University of Pennsylvania's Wharton School have launched initiatives to strengthen alumni connections -- with the school and with each other.

But if alums haven't always been there for each other professionally, that wasn't the case while school was in session. "The topics of a class I might forget, but not the discussions, not the way people challenged me to think in ways I hadn't before," recalls Darden grad Berger. And some alums formed lasting personal friendships. Kevin Sidders (Kellogg '92), now a partner at banker Thomas Weisel Partners LLC, says he's in weekly contact with a handful of classmates-turned-friends, sees another dozen about once a year, and attends quarterly cocktail parties.

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It wasn't always that way. B-schools were long dominated by a mostly white, male, and hypercompetitive culture -- most students hailed from finance and engineering backgrounds. Disdain for the sharp-elbowed types led many employers in the 1980s to complain loudly about MBAs who didn't know how to cooperate. By the early 1990s, top B-schools had responded by diversifying student bodies, drawing from more far-flung fields like marketing, consumer-product management, and manufacturing, and encouraging women and minorities to apply. The new cadre of students and the push to more team-oriented programs led to a transformation in B-schools that was nearly complete by the time the Class of 1992 arrived on campus.

Even as they were learning about teamwork, they also would have benefited from more extensive preparation in entrepreneurship, international business, and information technology, say alums. Granted, in 1992 the Internet was still in its infancy, globalization was not the buzzword it is today, and the highest computer processor speed was a mere 25 megahertz. B-schools have long claimed to be thought leaders, with their faculties producing cutting-edge research. But few schools in 1992 anticipated the technological revolution that came a few years later -- and alums feel they missed out.

And though they said their preparation to face entrepreneurial issues was merely so-so -- and at some schools, poor -- that didn't squash their creative spirit. More than 85% of the Class of 1992 helped launch at least one business in the past decade.

Perhaps the loudest complaint was about just how ill-prepared alums felt when faced with the politics and challenges of managing in the middle. Many say they should have been forced to take more organizational behavior classes, though "it's like trying to get someone to eat their spinach," concedes 40-year-old Charles W. Breer, a University of Michigan B-school grad who has spent most of his post-MBA career working for Northwest Airlines Corp. Still, actual office politics -- the tricky mix of sociology, personality, and corporate culture that exists in every workplace -- can make a mockery of B-school theory. Breer says his hardest times were managing a 12-person staff. "At a minimum, I wish someone had told me this would be one of the biggest challenges, and then given me some tips," says Breer.

Another issue still facing B-schools today came through loud and clear from the Class of 1992: Women MBAs inhabit something of a world apart -- starting with pay. They reported making an average of $50,000 less in salary than their male counterparts (counting only women who are working). They alsotched employers more often and took twice as many breaks from full-time work. A full 13% of female respondents are out of the job market voluntarily; 8% work only part time. By contrast, only 2.4% of the men who answered fall into either category.

Cornell University's S.C. Johnson Graduate School of Management alum Patricia Friar is typical. She left her high-powered, travel-heavy job as vice-president of marketing for a Texas-based company to stay at home with her three young children. After she quit, she first worked part-time, helping to launch DrKoop.com, a health-related Web site founded by the former Surgeon General, C. Everett Koop. But then Friar unplugged -- literally. She got rid of her pager and cell phone and did not read e-mail for a year. Last fall, the 46-year-old went back to work, choosing a lower-paying job with less responsibility. But Friar and many other female MBAs say the degree gives professional women more freedom and marketability to move in and out of the full-time cubicle set.

Most alums -- men and women alike -- have found their way to the upper echelons of management, but not without some painful comeuppances along the way. Marching into jobs as smug know-it-alls, they soon found out that "you don't just step into a CEO role after two years of business school," says MIT alum Wong. "What some people don't realize [when they graduate] is that being a top manager is an earned right."

Surely Wong and his fellow classmates have come a long way since their youthful, arrogant days. Over the past decade, most have lived the MBA dream. They have climbed the corporate ladder, struck out on their own, and made themselves a place in the global economy. And while it's not an insurance policy against layoffs, the degree has helped unemployed grads find their way back into the workforce more quickly than many white-collar workers. The success of the Class of 1992 also helped solidify the growing MBA culture in Corporate America. These MBAs offer a glimpse of the potentially powerful and productive business talent that spills forth from U.S. B-schools every spring. If those "mills" continue to adapt to the ever-changing economy and challenges of doing business, the value of the degree won't long be a subject for debate.


By Jennifer Merritt
With Kate Hazelwood in New York