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A career changer

ASK Silvia McCallister-Castillo, associate dean for the executive MBA (EMBA) at Yale, which came first in The Economist’s latest ranking of the best EMBA programmes, what makes her school’s course so strong and she’ll tell you it’s the quality of its teaching staff and its alumni network. Both allow working professionals to accelerate their careers through a rigorous core curriculum followed by a specialisation such as healthcare, asset management, or sustainability.

Those sort of specialisations are a world away from the first EMBA programme, which began 75 years ago at Chicago Booth for local managers and veterans during World War 2. Then, 52 students (mostly men), met on evenings over the course of two years. They were in their late 40s or early 50s, and looking to re-energise their careers. 

But business, and businesspeople, have different requirements today. Schools offer electives that may not seem familiar to those who took an executive programme even just a few years back. At Booth, for example (which climbed from ninth to fifth in our ranking), the most popular electives are on fintech and machine learning, with a quarter of students taking them last year. The school also offers lifelong support for its alumni in the form of short versions of its electives, plus personal career coaching. Both are an important part of the toolkits for EMBAs who are increasingly keen on life-long learning. Yale takes the same approach. Students are effusive about its career-management service, and alumni can access career coaching and show an interest in coming back to study new electives. It is these “added extras” that can often be the fine line that distinguishes the top EMBA programmes from the rest.

This is important for prospective students contemplating the eye-watering cost of an executive MBA—around $133,000 for a top-ten programme. It’s especially vital when the cost of tuition, more often than not, comes out of students’ own pockets. A decade ago, three-quarters of Yale’s EMBA students were sponsored through their programme by their employer. Today, only a quarter get financial backing. That is borne out across the 65 programmes in The Economist’s 2018 ranking—just 30% of students said they get some cash from their company. As a result, students expect more for their money, and they don’t expect their engagement with a business school to end when they leave.

At ESMT Berlin (which came 14th in our 2018 EMBA ranking), the executive programme focuses more on career coaching and personal development during the course of the EMBA than it did in the past. Students receive feedback from their peers during the course. In part this is because an increasing number of self-funded students attend ESMT Berlin for its EMBA, echoes Nick Barniville, the school’s associate dean. That is a sentiment that Kathy Harvey, associate dean and EMBA programme director at the University of Oxford’s Saïd Business School (which came seventh in 2018) also agrees with. “One of the trends we have seen is a much broader range of candidates applying,” she says, including some under the age of 33. “They don’t wait for their own companies to propose they take an EMBA.”

However, while the electives and the method of teaching may have evolved from the traditional classroom to online courses, students are still choosing EMBAs for the same reasons. They also want to improve their salaries, and do: students graduating from the ten best EMBA programmes boosted their income by an average of 51% on graduating last year, pocketing an average salary of $210,000, excluding bonuses.

They also want to improve their employability. And while taking an EMBA is still a tool for career acceleration, observes Mr Barniville, it is now used more frequently for career change. “EMBA programmes in general have moved toward providing much more support to students looking to change jobs or careers or who are looking to start their own company,” explains Ms McCallister-Castillo.

Executive MBA ranking 2018: Methodology

THIS is The Economist’s third ranking of executive MBA programmes. We invited all the schools that are included in our annual full-time ranking to take part. Joint degrees that are separate from schools’ standalone EMBAs are ranked individually. Schools that operate a single EMBA across several of their own campuses (such as Chicago’s EMBA, which is taken in Chicago, London and Hong Kong) are treated as a single programme.

There is some difficulty in defining exactly what constitutes an EMBA. We therefore allowed the schools themselves to classify their programmes. As long as the programme was part-time and enrolled students with significantly more work experience than those on their full-time MBAs, they could declare it an EMBA and take part in the ranking.

The Economist collected data using two web-based questionnaires between March and May 2018. One questionnaire was filled out by business schools and included more quantitative measures, such as details of students and faculty, the number of overseas assignments required and statistics on alumni. The second questionnaire was circulated to current students and alumni from schools’ last three graduating classes. Around 8,000 of these questionnaires were completed, and from them we gleaned the more quantitative measures, such as a rating of classmates, faculty, facilities and the like. Alumni also reported their pre-EMBA and current salaries, from which average increases could be calculated.

Programmes are ranked on two broad measures: personal development/educational experience and career development. Both categories are equally weighted. Within each category are several subcategories, which are detailed in the table below. Additionally, we weight schools' data from our last ranking in 2015 at 30%, with 70% given to 2018 data. 

Rankings are calculated using z-scores, a statistical technique that measures the number of standard deviations from the mean. This method gives each school an individual rank (it does not allow for equally placed schools). Nonetheless, it means that the difference between schools can sometimes be slight. Hence, we have also placed schools into bands of those whose z-scores are statistically quite close. 

Adapt or die

BUSINESS at CarringtonCrisp is brisk, says its owner, Andrew Crisp. The British management-education consultancy produces a range of ‘state of the business school market’ reports, but its core work is advising business schools on how to remain relevant. A large number of schools worldwide are calling on its expertise. “We do more MBA work than anything else at the moment,” says its owner Andrew Crisp. “Schools come to us and say: ‘Numbers are getting a bit low; we’re not going to have enough people on programmes. Can you come and help us revitalise our MBA?’”

Increasingly, that means moving the teaching on an MBA away from its strong finance-based history to more specialised industries. As financial firms, traditionally a major employer of new MBAs, cut down on their hiring, students are seeking more specific knowledge from an MBA programme. Mr Crisp helped the University of Exeter draw up specialisations in purpose-driven leadership to appeal to applicants increasingly looking at charity, non-governmental or entrepreneurial jobs after graduation.

Full-time MBAs: America second

HARVARD BUSINESS SCHOOL welcomed its first MBA students in 1908. For the century or more since, the full-time MBA, taken over two academic years, has remained the flagship qualification for budding senior executives and employers. But that popularity has been waning. For the third year running, the Graduate Management Admission Council (GMAC), which administers an entrance exam used by many business schools to rank new entrants, has reported a fall in the number of applications to programmes in the United States. Overall, two-thirds of American business schools reported a drop in the number of applications to study on the traditional MBA in 2017. Globally, more schools this year reported a decline in applications than an increase.

There are two main reasons for this, reckons Gregg Schoenfeld of GMAC. Firstly, America’s economy is in good health—and it is during lean times that professionals tend to take the time out to improve their CV with specialist MBA training. Secondly, as we have previously outlined, President Trump’s immigration policies are dissuading international applicants, who tend to prefer two-year programmes, from chancing their luck at American business schools. Half of America’s schools reported a rise in international applications in 2016. Just a third did so this year.

A helping hand

EDUCATION is costly, particularly for MBAs. Though the rewards are potentially enormous for those who pass through high-ranking business school programmes (graduates at The Economist’s highest-ranking school for improving return on investment, HEC Paris, can expect a salary on average that is 153% the amount they earned before embarking on an MBA) the cost of schooling is high. We have previously reported on the plight of some students who are accepted into business schools but are unable to fund their education in full.

Many schools are quick to offer financial aid to students. A survey by the Graduate Management Admissions Council (GMAC), the body which administers the GMAT business-school entry exam, shows that 47% students on two-year full-time MBA courses receive some sort of financial assistance for their education, whether through scholarships on merit, needs, or fellowships or stipends. However, regardless of the amount of funding available, there remains a section of society that doesn’t even bother looking at the possibility of joining an MBA programme because of the costs involved.

Schools are beginning to recognise this concern, and addressing it. Harvard Business School already doles out upwards of $30m every year to students needing financial aid, based on need. Harvard’s tuition support is distributed based on an assessment of students’ previous earnings and assets, and is funded by its alumni network. It is a model that many other schools take—but one that can miss an entire strata of society.

Students from low-income backgrounds have financial commitments in the grey economy that cannot easily be tabulated from bank statements and payslips. It may be the costs of a weekly grocery shop for an ailing, elderly relative they are caring for, or medical bills for a parent or sibling going through an illness.

Harvard’s Forward Fellowship will fund up to ten students a year who may otherwise feel a business-school education is unattainable or unaffordable, says Chad Losee, managing director of MBA admissions and financial aid at Harvard Business School.

The students, who will be given between $10,000 and $20,000 a year for the duration of the two-year MBA programme, will have their financial needs assessed by the school on the basis of an essay outlining their family situation and financial worries. The funding, by design, does not pay for the full cost of tuition at Harvard. Mr Losee believes, to borrow a term from Warren Buffett, that every student should have “skin in the game”. But what the fellowship will do is allow students to graduate with less burdensome debts than they otherwise would.

For an overwhelmingly large number of business schools’ cohorts, Harvard’s Forward Fellowship initiative will make no difference to them, and be of no interest. They are the core group of MBA students—at all schools—who because of their family connections, social standing, or prior employment have always intended on taking an MBA, and have expected to boost their already large income as a result.

But for a few on the margins of society, for whom an MBA is simply too costly, too long, and too risky an undertaking, no matter its potential rewards, the financial support will tip the balance, allowing them to chance their arm on starting a course. It will also diversify the MBA cohort, and give new opportunities to those who otherwise would do their sums, and decide the risk is simply too great.

Diplomacy and business-school applications: Welcome to Canada

WHEN Justin Trudeau, Canada’s prime minister, was pictured welcoming refugees to the country with open arms in January, it made for a stark contrast with the policy of his counterpart south of the border. It also struck a chord with the wider world. It was a good moment for brand Canada on the international stage. Mr Trudeau’s warm welcome may also have benefited business schools; foreign MBA students are another demographic feeling unwelcome in the United States.

In April this blog pondered the immediate impact of Donald Trump becoming president, and found that American business schools were concerned about the effect a closed-door immigration policy would have on their student intake. Data from Canadian business schools are now shedding a little more light on the Trump-effect.

Immigration and business schools: The Trump effect

UNLIKE many of America’s prominent business executives, Donald Trump gained his acumen on the streets of New York rather than in an MBA classroom (though he did attend an undergraduate programme at Wharton). But two recent surveys suggest that Mr Trump is having an effect on America’s business schools nonetheless.

Applicants from abroad, it seems, are being dissuaded from applying to the United States because of uncertainty around their immigration status. The MBA Career Services and Employer Alliance (MBACSEA), an association of international business schools, says that half of American schools are recruiting fewer international students than in previous years. That is having a knock-on effect, with a smaller number of employers reporting buoyant recruiting to their firms from MBA programmes.

MBA admissions bias: Objectively subjective

PROSPECTIVE business school students sweat the small stuff—for good reason. MBA programmes are costly, competitive, and have a massive impact on graduates’ potential future earnings. Getting onto a well-respected MBA course can be difficult, and hinges on the minutiae, whether that is a small edge in a GMAT score, an innovative essay answer, or a winning interview technique. Businesses are formulated and fortunes made by selling expertise on how to game the system and improve students’ chances of earning a place on an MBA course.

Perhaps unnecessarily, if recent research by Kira Talent, an admissions consultancy, is to be believed. The company audited 145 business schools’ admissions process, and found almost all lacking. Kira graded schools in a number of areas, from the number of people reviewing each MBA application to the number of applications reviewed daily. Most scores scored a C+ or worse: a poor score card for a well-respected and high-stakes industry. Business schools’ poor showing wasn’t a surprise to Andrew Hastings of Kira. Though schools can rank candidates on some quantifiable scales—a 720 out of 800 score on the GMAT is an objective measure—other aspects, such as soft skills, cannot be measured easily.

MBA fellowships: Get back

BUSINESS education is a global industry, and is increasingly outward-looking. Bright young things from around the globe cross oceans to attend the world’s best schools. When they graduate with an MBA, they travel to farther flung places to take up jobs in diverse industries. This is a good thing. But it can have an impact on smaller cities and less-developed regions, who lose their best brains to multinationals based around capital cities.

Business schools could try to remedy that  by offering perks to MBA candidates who come from certain underrepresented places, and who promise to return to them for a period of time after graduation. Stanford Graduate School of Business is doing just that. It has established an MBA fellowship, which will pay for three prospective students to take the $160,000 two-year MBA programme. The proviso is that students must be from a midwestern state, and must return to the area to work for two years after graduation.

Admissions: Screen test

PROSPECTIVE business school students can reel off the steps of the MBA admissions process by rote, listing the standardised tests, written exams and face-to-face interviews required as easily as the alphabet. The process has remained essentially the same for decades, in large part because it successfully winnows out the weaker candidates. But for a handful of schools, the standard admissions process has changed, bringing in new technology. Video essays are now another hoop MBA candidates have to jump through at some American schools, including Kellogg School of Management at Northwestern University, and Europe, where INSEAD has included a video component this summer.

The “video essay” is simply preparing students for their careers upon graduation, believes Melissa Rapp, director of admissions at Kellogg. Video conferences make up an increasing proportion of the average executive’s working week; prospective employers are as likely to interview MBA students via videolink as in person before offering them a job. Video is “an integral part of the business landscape,” she explains. It also makes it easier for stretched business school admissions teams to “meet” candidates from around the world and to assess their communications skills in a better way than a written, pre-prepared essay. Kellogg has introduced three rounds of video essays, encompassing business practice and personality, in an attempt better to differentiate highly-skilled candidates from one another.

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