If any prospective student seriously doubted that the MBA degree from a reputable business school was worth the money, they need only look at the data collected for this year’s Financial Times MBA rankings. The ranking surveys those MBAs who graduated in 2001, the “lost” year, when the economic downturn, compounded by the uncertainty following the terrorist attacks in the US in September, meant many MBA graduates found it difficult, if not impossible, to get an appropriate job. This was the year when job offers were rescinded and starting dates postponed.

Today the careers of the class of 2001 have clearly taken off. On average an MBA who graduated from one of the top 10 US schools in 2001 now earns $144,492 a year and anyone who went to one of the top 30 US schools earns an average of $122,732. For almost every school, the salaries reported this year are significantly higher than those reported last year by the graduating class of 2000, reversing the trend of the past two years, which saw an overall drop in salaries reported by alumni from the top 100 global business schools.

There is yet more good news for graduating students this year in that the job market has clearly picked up significantly, though it may not be back to the peak years at the end of the 1990s. Where hard statistics are not available, anecdote is rife.

Ted Snyder, dean of the University of Chicago graduate school of business, notes that more senior executives are coming to campus to recruit.

At London Business School, Julia Tyler, MBA director, says her “informed litmus test” is the number of people who go to see her because they cannot make a choice between the number of offers they hold.

And at the Darden school at the University of Virginia, associate dean for MBA education, Bob Conroy, says his staff have noted the increased amount of documentation recruiters bring to campus.

At management consultancy Bain & Co, David Sanderson, partner and head of global recruitment, reports his firm is facing increasing competition this year as recruiting has increased from the traditional recruiters – management consultancies and investment banks – and the global 1,000 companies. Bain has continued to recruit MBAs through the economic downturn and its enthusiasm for business school recruits remains strong. “We find great people off of MBA programmes,” says Mr Sanderson.

He believes today’s MBAs are more thoughtful about their careers than those who graduated in the heyday of the degree. “The difference is that most people are now taking a longer-term view,” he says. “They are looking at the next 10 to 20 years, not the next five years.”

Long-term career planning is now on the books at every respectable business school. On both sides of the Atlantic schools such as Boston University and London Business School now require all students to take courses in career planning in order to graduate.

It may be good news for students, but this does not translate into good news for the schools themselves. This year applications have been down by between 5 and 20 per cent at most schools, in the US, Europe and in China.

What is taxing business schools in the US and Europe is whether the changes are just part of the economic cycle or whether there is a structural change in the market. Most believe that both are to blame. What is clear is that there is huge growth in pockets of the market, both regional and by programme type.

In Germany, for example, until recently a black hole for MBA degrees, there are now more than 100 MBAs of varying quality on the market.

The University of St Gallen in Switzerland one of the most prestigious business schools in the German speaking market, launched its full-time MBA this month. The 30 students in the programme had an average Graduate Management Admission Test score of 694 – worthy of many of the top US business schools.

The flood of Chinese students to the US and Europe has dried up significantly, with many opting to study at home.

The extraordinarily ongoing changes in the business climate in China mean many of them have spurned the full-time MBA programme to study part-time, so they do not have to give up their jobs.

Fear of being unable to get a visa, as much as the actual inability to get a visa, has also deterred some non-US students from applying to US schools.

Prof Snyder at Chicago believes many business schools will see the size of their MBA programmes cut. “It’s got the feel of a shakeout, but schools don’t have to compete on all the dimensions in the same way.”

The big question for US schools is how they can differentiate themselves in order to survive, says Yash Gupta, dean of the Marshall school at the University of Southern California.

He believes the top tier schools – the Harvards and the Whartons – will continue to thrive on the quality of the product they offer, their brand name and their endowment base. But things will be much tougher for second and third tier schools.

One thing that has been good news for the schools over the past year is that the strengthening US economy has flushed out a number of wealthy individuals who are happy to give back to their alma mater. Carnegie Mellon, Thunderbird and Michigan were big beneficiaries this year and Insead and Marshall are hoping they will be as lucky in 2005, with fundraising campaigns launched at both schools.

The school to show them how to do it is Harvard. Just over two years ago it held out the begging bowl for $500m.

The campaign will close in December this year, and there is every expectation the target will be met.

Over the past year, in a bid to distance itself from media rankings, Harvard has spearheaded a campaign to set up a centralised repository of business school data under the auspices of GMAT. So far it has persuaded most of the top schools to participate.

However, Columbia business school, one of the self-appointed group of the top seven US business schools, has yet to participate.

As well as topping the FT rankings this year, Harvard has also been ranked number one by the UK Treasury in its inaugural ranking of business schools, which is based on data collected by the FT.

The aim of the exercise is to find the world’s top 50 business schools and so enable their alumni to work in the UK for one year after graduation by waiving the usual visa requirements.

One school that makes it into the top 50 list is Darden. “What is important is being in the list, not where you come,” says Prof Conroy.

“There will be some US schools that will be upset they are not on that list.”

So, if Harvard hoped that the proliferation of business school rankings would stop, it may well be disappointed.

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