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What do you think?
This is the second of three posts about the choice to do an MBA. As I wrote previously, I think there are two useful ways to consider the value of an MBA. The first is to consider an MBA as an investment – buying something that will generate future returns. The second is to think of an MBA as an act of consumption – the purchase of an experience.
In this post, I will consider the ‘investment’ component of the MBA and in my next post, the consumable.
There are many ways that an MBA may generate future returns for an individual. I’ll consider two big ones: a higher salary and a more satisfying job. If you are thinking about an investment in an MBA, the first step is to be realistic about exactly what your goals are. The second is to consider whether an MBA is the best way to realise these and what alternatives are available.
One of the primary value propositions offered by the MBA industry nowadays is that an MBA improves people’s salaries. It’s the primary way that programmes are ranked and it’s a common motivation for MBA aspirants.
Most of the literature on this topic attempts to answer the question of whether, on average, individuals who undertake an MBA get enough of a salary bump to justify the cost of the programme and the opportunity cost of a year or two out of the workforce.
The problem is that averages can obscure complexity and belie the truth. Your particular outcome will be more important than an industry average. Therefore, it’s important to consider your own situation to understand whether the investment will pay off.
Several questions can help with this:
- What are the signals you have received from your employer? Have they indicated to you that you would be paid more with an MBA in hand?
- What signals have you had from the market? Are there jobs that pay well, that you would like and for which you think an MBA would be of benefit?
- And, importantly, is not having an MBA the only thing holding you back from these jobs?
These same questions can also be applied to what I think is a more important category of return on the MBA: having a more satisfying job.
Many people assume that getting an MBA is a ticket to management roles. This assumption can lead to a rude awakening when one is then competing with thousands of other newly minted MBAs for these same jobs. Many other signalling mechanisms can be far more powerful differentiators in the labour market: a track record of achievement, demonstrated application of specific skills, industry and functional area experience and support from influential and respected individuals.
Thus, it’s important to recognise that an MBA by itself is actually of limited value. However, the opportunity to take a year or two, step back from your career, reflect on where you want to go and engage in a considered, thoughtful and strategic job search process can have enormous benefits. And, an MBA can demonstrate seriousness, diligence, and provide a great additional source of validation for a broad range of skills.
But, MBAs are costly. So, before signing up, it’s important to consider alternative routes to your goals. These include job-training programmes, switching jobs, taking time off work to pursue a different graduate degree or a professional credential, or undertaking an internship or volunteer work that will help you move to a job in which you are interested.
There are four big lessons I would draw when considering an MBA investment:
- Be realistic about the costs of an MBA, including the price tag and the opportunity cost of time away from the workforce
- Be realistic about your goals
- Know that an MBA by itself is not enough to achieve all career goals; however, an MBA coupled with a considered, focused and strategic job search can
- Consider alternative routes to your goals.
Finally, don’t ignore the fact that the investment is just one part of the MBA. You only get the future returns once you’re done. In the meantime, you will be a consumer of an MBA programme. In the next blog, I will consider the MBA as a consumable.