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January 28, 2008 6:00 am

Methodology: How the FT compiles its MBA league tables

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Compiling the Financial Times 2008 ranking of full-time MBA programmes began in July 2007. A total of 156 business schools that met the criteria for participation have been included.

To be eligible to participate, a business school must be internationally accredited by a body such as the AACSB, Amba or Equis; it must have a full-time MBA programme that has been running for at least five years; and it must have graduated its first class at least three years ago.

Furthermore, a school must have graduated at least 30 students from the class three years ago and in each subsequent year.

This year an online questionnaire was sent to 23,657 members of the graduating class of 2004 from the 156 business schools.

The FT always surveys graduates three years after they have completed the degree, to assess the effect of the MBA on their subsequent career progression and salary growth.

Forty-eight per cent of them replied. Last year the response rate was 44 per cent.

Of the 156 schools, 39 were excluded because of insufficient alumni data. The response threshold that the FT sets is 20 per cent of the entire class with an absolute minimum of 20 responses.

The remaining 117 were ranked and the final ranking shows the top 100 of these.

The rankings are based on data collected from two main sources: alumni and business schools. These data are collected using two different sets of questionnaires.

The criteria used in the rankings are grouped into three main areas: alumni salaries and career development, the diversity and international reach of the business school and its MBA programme, and the research capabilities of each school.

Of the 20 criteria used to determine the rankings, eight are based on data from alumni questionnaires, from “Weighted salary (US$)” to “Placement success rank”, “Alumni recommend rank” and “International mobility rank”.

The figures for seven of these eight criteria are based on data collected by the FT over three years. The data gathered for the MBA 2008 survey carry 50 per cent of the total weight. Data from the 2007 and 2006 rankings each carry 25 per cent. If only two years’ worth of data are available, the weighting is split 60:40 or 70:30 depending on whether the information is from 2008-2007 or 2008-2006. “Value for money rank” is based on the MBA 2008 figures only.

The first three criteria in the table examine alumni salaries and include the two most heavily weighted components of the ranking: “Weighted salary (US$)” and “Salary percentage increase”. Together these contribute 40 per cent of the rank for each school.

The following process is applied to all salary data before they are used in the ranking:

To begin with, salary data of alumni in the non-profit and public service sectors, or who are full-time students, are removed.

Purchasing Power Parity (PPP) rates supplied by the World Bank are then used to convert the remaining salary data to US$ PPP equivalent figures.

After the PPP conversion, the very highest and lowest salaries are excluded before the average salary is calculated for each school.

For larger schools, the average salary is weighted to reflect variations in salaries between different sectors. The weights are derived by calculating the percentage of all respondents working in each sector. This percentage breakdown is then used in the calculation of an overall average school salary which includes average salaries for each sector.

The salary data shown on the table are all US$ PPP equivalent figures.

The salary percentage increase is calculated according to the increase in average US$ PPP salary for each school from before alumni started the MBA until 2007. This is a period of four or five years.

Eleven of the ranking criteria are based on data from a questionnaire completed by each business school. These include the figures for “Employed at three months (%)”, all criteria from “Women faculty (%)” to “International board (%)” and from “International experience rank” to “FT doctoral rank”.

The final column in the table, “FT research rank”, is based on a database compiled by the FT. This database counts papers written by the faculty of each school in 40 academic and practitioner journals during the past three years. Each school is awarded points per number of papers, the mark is also weighted for faculty size so that schools with small faculties are not penalised for publishing a small numbers of papers.

The research rank contributes 10 per cent of the final score.

After the data have been compiled, the results for each field are converted to Z-scores on a column-by-column basis. That is, for each column, a separate set of Z-scores is calculated. Z-scores take into account the differences in score between each school in that column and the spread of scores between the top and bottom school.

Additional research by Shilpa Viswanath. Database Consultant: Judith Pizer of Jeff Head Associates, Amersham, UK

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The Financial Times MBA 2008 rankings -TABLE KEY (weights are in brackets)

Audit year Indicates the most recent year that KPMG audited a business school, applying specified audit procedures relating to selected data provided for the Financial Times MBA ranking.

Salary today The average alumni salary three years after graduation. (The 2008 ranking surveyed the MBA class that graduated in 2004). This figure includes alumni salary data for the current year and the one or two preceding years, where available. The figure is NOT used in the ranking.

Weighted salary (20) The average alumni salary today with adjustment for salary variations between industry sectors. This figure includes data for the current year and the one or two preceding years where available.

Salary percentage increase (20) The percentage increase in average alumni salary from before the MBA to today as a percentage of the pre-MBA salary. This figure includes data for the current year and the one or two preceding years where available.

Value for money (3) This is calculated using the salary earned by alumni today, course length, fees and other costs, including the opportunity cost of not working for the duration of the course.

Career progress (3) This is calculated according to changes in the level of seniority and the size of the company alumni are working in now versus before their MBA. Data for the current year and the one or two preceding years are included where available.

Aims achieved (3) The extent to which alumni fulfilled their goals or reasons for doing an MBA.

Placement success (2) Alumni who used the careers service at their business school were asked to rank its effectiveness in their job search. This figure includes data for the current year and the one or two preceding years where available.

Employed at three months (2) The percentage of the most recent graduating class that had found employment or accepted a job offer within three months of graduation. The figure in brackets is the percentage of the class for which the school was able to provide employment data.

Alumni recommend (2) Alumni were asked to name three business schools from which they would recruit MBA graduates. The ranking is calculated according to the votes for each school. Data for the current year and the one or two preceding years are included where available.

Women faculty (2) Percentage of female faculty.

Women students (2) Percentage of female students.

Women board (1) Percentage of female members of the advisory board.

International faculty (4) Percentage of faculty whose citizenship differs from their country of employment.

International students (4) Percentage of students whose citizenship differs from the country in which they are studying.

International board (2) Percentage of the board whose citizenship differs from the country in which the business school is based.

International mobility (6) This is calculated according to whether alumni worked in different countries before the MBA, on graduation and also where they are employed today.

International experience (2) Weighted average of four criteria that measure international exposure during the MBA programme.

Languages (2) Number of extra languages required on completion of the MBA. Where a proportion of students requires a further language due to an additional diploma, that figure is included in the calculations but not presented in the final table.

Faculty with doctorates (5) Percentage of faculty with a doctoral degree.

FT doctoral rank (5) This is calculated according to the number of doctoral graduates from each business school during the past three years. Additional points are given if these doctoral graduates took up faculty positions at one of the top 50 full-time MBA schools of 2007.

FT research rank (10) This is calculated according to the number of faculty publications in 40 international academic and practitioner journals. Points are awarded to the business school at which the author is currently employed. The total is weighted for faculty size.

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