iscover
Though MBA graduates tend to earn more on average, there might be reason to believe they have lost their value.
More than 20,000 Australians across over 30 universities are currently completing a master of business administration (MBA) degree.
The average MBA in Australia costs $57,353, and a full-time course load demands 40 hours per week.
While MBAs are a well-regarded way to get ahead in business, do the benefits really outweigh the costs?
To quote The Sydney Morning Herald: “I don’t know too many business owners who can invest $30,000, let alone $100,000, in their education, or are prepared to take a huge student loan that takes years to pay off. That’s assuming they have enough time for such study in the first place.”
Considering that the article is now 10 years old, and the average cost of an MBA has nearly doubled, the question is only more pressing.
A changing workforce
Many have pointed to the COVID-19 pandemic and the associated economic and social transitions as a time of revaluation.
According to Paulina Karpis, writing in Forbes: “The constant industry disruption we’ve faced over our lifetime – now accelerated by COVID-19 – means [students] must continually learn about the latest trends, broaden their networks, and keep up with the ever-changing skills required for success.”
Simply put, the pandemic caused employers to reconsider working arrangements in ways that have cast doubts on the value of traditional approaches to business administration. Many believe that the modern workplace won’t prize a “one and done” business education in the same sense as earlier generations.
Others believe that management is not something that can be adequately taught in a classroom since it requires “a high level of interpersonal skills, emotional intelligence and experience”.
“MBA programs have historically promised a few things: an education on core business topics, a higher calibre of job opportunities, and a prestigious network. But in the foreseeable future, they can’t guarantee any of those outcomes,” Ms Karpis said.
Even still, the data suggests that employers continue to look upon MBAs favourably.
According to a 2020 survey, employers generally found MBAs to be “extremely valuable” despite the doubts cast by a changing work landscape.
Another survey found 87 per cent of recruiters looked either fairly or very favourably towards business school graduates.
Salary benefits
While calculating the precise value of an MBA is an impossible task, studies have shown a clear increase in post-graduation salaries.
On average, graduates earn 28 per cent more as compared with their pre-MBA earnings.
A 2016 study by The Financial Times estimated a 58 to 72 per cent increase in salaries within three years of graduation, while a 2019 study by The Australian Financial Review found that MBA graduates earn “significantly more” following completion of their qualifications, and a US study found a nearly 50 per cent increase in compensation.
That said, these generalisations can be misleading. Not only do salaries vary significantly between universities, but certain industries appear to value MBAs much more than others.
According to MBA Discovery, the greatest increases in salary post-qualification in the US were found in the following industries:
- Food, beverage and tobacco (65.4 per cent)
- Printing and publishing (60 per cent)
- Consulting (53.9 per cent)
- Agriculture and forestry (49.7 per cent)
- Insurance (49.2 per cent)
While the salary benefits can be difficult to calculate, many point to the non-salary benefits of taking an MBA. For instance, many point to the networking outcomes.
“Alumni are really keen to refer other MBAs to their company and suggest positions they think are a good fit for you,” a graduate told BusinessBecause.
Further, some suggest that an MBA is the key to cracking the “C-suite”.
A graduate of the University of Queensland’s MBA said that the degree helped him to “speak the C-suite language with other executives”.
While the rapidly changing economy might be calling the value of MBAs into question, it’s clear that, for some, there are still benefits to be had.
There is no one-size-fits-all approach to MBAs; however, prospective students should consider whether:
- Your interests match available specialisations.
- Your schedule will be flexible enough to match the course requirements.
- The cost is justifiable.
- Your industry/employer will value an MBA.
To learn more about educating to get ahead in the workplace, click here.
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A company's assistance to an individual's professional development, particularly when the employee moves to a new role or project within the business, is known as career development. The organization's HR business partners or managers, as well as HR services like learning and development, talent management, or recruiting, frequently support this through coaching, mentorship, skill development, networking, and career planning.
Nick Wilson
Nick Wilson is a journalist with HR Leader. With a background in environmental law and communications consultancy, Nick has a passion for language and fact-driven storytelling.
