Has The MBA Become A Worthless Degree?

Harvard Business School MBABy John A. Byrne

If you asked Dale Stephens, the 21-year-old author of Hacking Your Education, he would undoubtedly agree. In a highly provocative excerpt from the book recently published by The Wall Street Journal, Stephens forcefully declares that even if you were accepted into Harvard Business School, you should decline the offer.

Why? Stephens, a college dropout, says that you should take the $174,400 that it would cost to attend Harvard Business School and invest it in yourself. "Consider what you could do instead with that $174,400," he writes. "The first step should be to move to a part of the country that supports your interests. If that's film, move to Los Angeles. Technology, San Francisco. Oil, Houston. You could live decently in these cities for $3,000 per month. Over the course of two years, that still leaves you $100,000 to invest in yourself."

Frankly, he is full of crap.

For one thing, a Harvard MBA does not cost $174,400. The annual tuition is $51,200 and it is severely discounted for at least half the students. In fact, Harvard's average fellowship support per MBA student was $29,843 last year, essentially a 58.3 percent discount on that annual tuition. And the rest of the money that one would need to get a degree can easily be borrowed at relatively low interest rates. It's a similar story elsewhere.

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After a degree in law, the MBA has become the degree that cynics and publicity seekers love to bash. Yet, those three initials on a diploma are one of the most powerful and tried-and-true investments you could ever make in yourself. The vast majority of MBA graduates from the top 50 to 100 schools in the world double or triple their total pay thanks to the education they receive.

And you don't have to go to Harvard, Stanford or Wharton. At Notre Dame's Mendoza School, last year's MBA graduates landed average salaries that exceeded their pre-MBA pay by 149 percent. At the University of Minnesota's Carlson School, the increase was 132.2 percent, and at the University of North Carolina's Kenan-Flagler Business School, it was 122.2 percent, And these numbers exclude starting bonuses and other bennies that are often handed out to MBAs when hired.

At Harvard Business School, 3 of every 4 graduates last year reported getting a median signing bonus of $20,000 and 1 in 5 (21 percent) had median "other guaranteed compensation" of $25,230. Harvard MBAs lucky enough to collect all three (base, sign-on bonus and guaranteed comp) earned first-year median pay of $170,230. Not bad for a "worthless degree."

Interested in film? Go to UCLA's Anderson School where the MBA recruiters include Fox Entertainment, NBCUniversal, Paramount Pictures, Sony and Walt Disney. Those entertainment companies were among 148 firms that held recruitment events on UCLA's campus last year, not to mention the 1,105 job opportunities on the school's job boards.

What about technology? Among the biggest employers of MBAs are Apple, Google, Microsoft, Intel, Cisco, and Amazon.com. Each of those firms and many more in technology recruit at more than a dozen business schools each year.

What about oil? You should be thinking of going to the University of Texas at Austin where Chevron, ConocoPhillips, ExxonMobil, and Hess are among the top employers of MBAs for both internships and full-time jobs.

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And the truth is that for many of the very best companies, from McKinsey, Bain, Boston Consulting Group or Goldman Sachs, Morgan Stanley or JPMorgan Chase, you would be hard pressed to get even a chance to interview without an MBA degree. MBA jobs at those prestige employers, moreover, set young professionals up for the best and most compelling jobs later in one's career.

The immediate benefits of the degree are obvious. But then there is the enduring value of the network you inherit once you graduate. The very best schools boast powerful alumni networks that open all kinds of closed doors, from tip offs to plum jobs that are not advertised, to seed capital for a startup idea, to potential customers for your business. That certainly beats a cold call to someone on LinkedIn.

The data shows that the full cost of an MBA degree from a top 25 U.S. school -- including the lost of income from being in school for two years -- can be completely recouped within 3.1 (at schools such as the University of Iowa and Michigan State) to 3.8 years (Carnegie Mellon University).

Finally, education also provides something of a safety net in good times and bad. The research shows that the more education you have, the more likely you are to earn more money in a career and the less likely you are to be unemployed.

Stephens may not need an MBA to get a book contract and put up a website, but he won't be working at McKinsey, J.P. Morgan, Apple or Google anytime soon. A quality MBA program is a life-changing experience that builds self-confidence, communication skills, and a successful future. A worthless degree? I don't think so.

John A. Byrne is the editor-in-chief of PoetsandQuants.com and PoetsandQuantsforExecs.com. He created the first regularly published business school rankings for BusinessWeek in 1988.
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Normie Baby

I'm guessing the author is an educator himself. I have had experience with numerous MBAs while working in Aerospace. I cannot recall a single instance where one them made a contribution worthy of the degree. Most only wanted to increase their salary. Also, when submitting an RFP to the Government, the more the advanced degrees on staff, the better the odds you would win the contract. Didn't matter what kind of MBA or Doctorate.

March 14 2013 at 5:41 PM Report abuse rate up rate down Reply
bkdev2

I have seen it both ways in my family. A distant cousin is a billionaire from his thinking even before he did an MBA.Education. A nephew, smart to begin with has no such ambitions of listing his company. A nephew doubled his salary from an MBA degree when the economy was good, now he is an entrapraneur and doing well. I have also seen MBAs as dime a dozen,nothing more than glorified salesmen. But overall I agree that education is a lifelong investment in oneself or the society.For myself I was a dedicated educated professional that took pride in education and training I got.

March 14 2013 at 2:24 PM Report abuse +1 rate up rate down Reply
Charles

Journalism has, just look at the crap HUFF/POST puts out.

March 14 2013 at 11:30 AM Report abuse rate up rate down Reply
lcandell

MBA now wothless? Sweet Jesus, let's hope so!

March 14 2013 at 11:02 AM Report abuse rate up rate down Reply
Jim

School, yes. MBA, no. The worst employee I have ever hired was an MBA. The stupidest management move I have ever seen, opening his company up to a civil suit from my company, was an MBA. I'd rather hire or work with an entrepreneur who actually has the experience of having to make a payroll.

March 14 2013 at 9:04 AM Report abuse +2 rate up rate down Reply
NB

http://www.bls.gov/news.release/empsit.t04.htm

Don't be a fool; stay in school. The idea that investing in education is not investing in one's self is flawed.

March 14 2013 at 5:35 AM Report abuse rate up rate down Reply
M man

Some of the worst managers I ever met came out of Harvard or Dartmouth with mbas. Arrogant, didn't know squat, pissed employees off, ran roughshod over people who were actually doing the real work of the business, passed blame repeatedly, and took credit for others work.

Only a few people with mbas at GE were worth a damn, and that's only because they got their asses kicked a number of times by real leaders who actually knew how to run a business. The real leaders were actually engineers by degree and could truly think critically, to solve a business or people problem, rather than spew some bs from a book like an MBA will typically do. I will give them some credit though. They are great at powerpoints and charts and graphs. I mean they could do a PowerPoint on how to pick your nose, and make it show a hockey stick like performance growth, and anyone would believe it.

March 14 2013 at 2:26 AM Report abuse +1 rate up rate down Reply
1 reply to M man's comment
Critical Thinker

I have both an engineering degree and an MBA. The vast majority of engineers just don't have the knowledge or know-how to actually run a business. Thinking like an engineer is great when you're actually doing engineering work. But knowing business is what really matters when you're leading a company. In my company, engineers who are put into leadership roles often fail because they aren't leaders and they really don't have a clue about leading a company.

September 28 2013 at 10:38 AM Report abuse rate up rate down Reply
M man

Become ?????

It always has been a worthless degree. People are just now waking up to this fact ? You can thank the vast majority of mbas for truly screwing up most businesses. They never gave a crap about employees, always always only look at financials an rarely ever take the time to understand what it actually takes to run a business. They think that all the theory they read in books actually applies in the real world.

March 14 2013 at 2:15 AM Report abuse +2 rate up rate down Reply
1 reply to M man's comment
Critical Thinker

LOL....it certainly wasn't useless to me. My current employer is paying me six figures partly because of my education. Without an MBA, I wouldn't have been able to command that kind of salary. That's a fact.

September 28 2013 at 10:39 AM Report abuse rate up rate down Reply
Dean S. Bird

Nothing like a Harvard MBA or lawyer fer expertise. Why ya could earn millions and even get to be President!
Lotta good that's done us......

March 14 2013 at 12:37 AM Report abuse +1 rate up rate down Reply
dquandle

instead, learn to think

March 14 2013 at 12:25 AM Report abuse rate up rate down Reply

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