Returns from MBA positive, says GMAC survey

Return on investment fluctuates with economic conditions, but has remained positive 3 years after graduation, GMAC report says

Doing a master's in business administration still pays, according to the Graduate Management Admission Council (GMAC)'s 2016 Alumni Perspectives Survey Report.

The return on investment of a full-time, two-year MBA fluctuates with the prevailing economic conditions, but it has remained positive three years after graduation. This was true in 19 of the past 20 years, the report said.

According to the report, MBA alumni, on an average, recoup their business school investments within four years of graduation, depending on the type of programme they attended. Of the 14,000-odd alumni surveyed, a vast majority said their education was rewarding personally (93 per cent of respondents), professionally (89 per cent), and financially (75 per cent).

Roughly, four in five alumni expressed satisfaction with their education. "People make the decision to invest in a graduate management education to meet a variety of different aspirations and needs, and the vast majority are enthusiastic about their investment and inspired by their experience," said Bob Alig, GMAC's executive vice-president for school products. "Business schools enable students to develop the knowledge, skills and abilities needed for career success and to achieve personal and financial fulfilment."

The survey showed that business school alumni earned a median $2.5 million in cumulative base salary over 20 years following graduation. This is half-a-million dollars more than what they would have earned in median cumulative base salary without a business school degree.

The respondents to the survey had consistently earned a five per cent increase in annual salary.

The survey said women valued their graduate management education highly, with 96 per cent rating their degree as good to outstanding. Their initial boost in salary after the degree was similar to that of men - $20,000 on an average.

But, gender pay gap persisted among business school alumni; most likely a continuation of the trend of lower salaries women earned prior to entering a business school. Professional rewards graduate business degrees unlocked employment opportunities in a variety of industries and job functions. These also helped many alumni move up in their organisations.

Seventy-three per cent of alumni surveyed said their degree resulted in faster career advancement. A majority of alumni said their graduate management education helped develop leadership potential (80 per cent) and grow professional network (70 per cent). Nine in 10 (93 per cent) said they would pursue their graduate management education again. In addition, alumni were extremely likely to recommend their programme to peers.

The net promoter score - a widely used customer loyalty metric - was strong among graduates of all types of business programmes.

GMAC conducted the Alumni Perspectives Survey in October and November 2015. The 14,279 alumni who participated in this survey represented 275 graduate business programmes at 70 universities in 20 locations worldwide.