January 2005

MBAs: Show them the money

Help wanted: MBAs. Help wanted even more: Graduates of top business schools such as Harvard Business School, the Northwestern Kellogg Graduate School of Management, and the Wharton School of the University of Pennsylvania.

"You'll likely make more money on your first job with a degree from one of the top schools -- but it's not just about the money. It's about making contacts that will help in your entire career," says Kent Harrill of AdmissionsConsultants.

What are the schools that offer the best bang for the buck? Forbes.com answered that question by conducting a survey of 85 business schools. It found that Harvard graduates came out at the head of the pack, with a five-year gain of $149,000 over their investment in tuition and foregone salary.

While an MBA from a state school doesn't offer the same dollar gain, the percentage return on investment it could bring was still excellent, the report concluded.

Harrill is candid in saying that some MBA candidates are just as well off going to schools that are not top ranked.

"If, say, you want to go to a state school and want to stay in that area, that is sometimes a better choice," he says.

Harrill, who has an MBA from Cornell and who worked as a junior partner at PA Consulting, says that starting salaries for MBAs from the top schools are up this year, varying according to areas of specialization.

"Investment banking and management consulting have started rebounding," he says.

But, he adds, salaries are up overall for all MBA graduates. Recent media accounts back him up.

Cox News Service recently reported that MBA holders are now looking at multiple job offers with starting salaries of $90,000.

That salary figure doesn't include signing bonuses, which are no longer restricted to professional athletes. "That may be 10% of the base salary, and performance bonuses may be another 15%," Harrill says.

"Companies are courting MBAs as though they were colleges recruiting athletic prospects," according to the Cox article.

The MBA market three years ago was slow, but investment banking firms and consulting firms are again appearing on campus to recruit MBAs.

"Officials at top business schools report that during the fall’s recruiting season, salary offers and signing bonuses for MBAs jumped significantly, especially for those seeking jobs as investment bankers and consultants," according to the Wall Street Journal.

The Journal reported that MBA salaries are particularly escalating for finance and management consultant firms.

"Average salaries in finance increased 21% to $98,477 in 2004 from $81,144 in 2003, while average salaries for management consultants jumped 16% to $86,233 during the same period," the newspaper said. Signing bonuses were an average of $25,000 to $30,000.

To put this into perspective: the newspaper reported that the bonus alone would cover almost a year's tuition.

"Sounds like the class of 2005 is looking at a pretty fast payback on their MBA investment," it concluded.

"The consulting firms have led the charge," with base salaries rising about 10%, says Al Cotrone, director of career development at the University of Michigan's Ross School of Business.

The Journal says after remaining stagnant since 2001, total compensation for MBAs was matching the record levels of pay hit during the peak of the dot-com boom.

"For the first time since the dot-com bust, business school graduates are being offered stellar pay packages," said the report.

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