Mittwoch, 04. Dezember 2013

What is the ROI of a MBA?

Is remuneration the only factor that counts when it comes to calculate the ROI of an MBA? Let's find out.

First of all I think that the value of a MBA is for every person different. No MBA comes free of cost, in contrary. Even if you haven’t paid the full tuition fee the opportunity cost are extremely high. Books, materials, living costs and especially the missing salary during the year add up to the high opportunity costs. Even if you do an executive MBA you will have to pay the opportunity costs because I do think that you won’t be able to work in one way or the other the same way as you did before and you will have to endure many evenings and weekends that you could do other things than being in school. I do remember when I did my master degree in an executive format and was suffering many weekends and had to keep myself somehow motivated to endure this period of my life. 

 

So why would somebody pay all these cost and do a full time MBA at all? One easy explanation is the salary increase you can expect with your degree. Depending on your salary before the MBA and whether you change you career towards a higher paying industry, country and position you can expect to increase your salary up to a double. As I said it depends on your pre-MBA conditions. Rankings often look at the totally compensation after the MBA or the salary increase after the MBA. However, some might earn the same after the MBA or even less. Are these all unlucky MBA graduates that failed to get a decent job? What was the incentive for them to accept even a lower paying job?

 

Many of those earning the same or less than before the MBA were willing to sacrifice a better salary for an intrinsically more rewarding position. Or they have decided to become an entrepreneur and are enduring the first phase of a start-up that besides a lot of passion and an idea has not much financial rewards to offer. So, is the remuneration the only factor that counts when it comes to calculate the ROI (Return on Investment) of an MBA? I doubt that.

 

Some students might say that the education itself and the learning experience is enough rewarding. They say that studying with some of the best professors and discussing with interesting fellow students is an enriching experience that goes far beyond compensation packages and fringe benefits. Might sound a bit cheesy, though. What do you think?

 

Other students might say that being able to live abroad for a period of time is also rewarding enough to endure the MBA program. Learning from another culture, learn an other language and simply embark to an enriching personal journey and maybe come back as a different person. 

 

Some other students might be attracted to leave their home country at least for a while or leave their parents’ home or social environment and live a way they feel more confortable with. Not naming any countries but having students from more than 70 countries means also that some countries students are originating from countries that are less safe, have lower quality of life or have other problems. 

 

Some others might find their future wife or husband in the MBA program and will therefore never regret the financial investment they made. Others see it as a way to break free from their daily routine and simply enjoy a different lifestyle during the MBA. Some simply change the acronym for an MBA by Married But Available and will enjoy their the best the can. Their ROI calculation will also be different from the one simply looking at the financial impact of the MBA. 

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So, there are many reasons to do an MBA and many factors that need to be considered and weighted according to your personal value to assess the real value and ROI of your MBA experience. Depending who you ask whether there MBA was worth it you would get a very different answer. I think that it is a combination of all those factors and that every by themselves has to calculate their own ROI. An outsider might never understand your reasoning why you invested that much in your program but what the most important is that you know what this year was worth for you. Pure financially the ROI might be much longer than many might have thought but is it really all that matters? At least for me I am convinced that I’ll never regret having embarked to this journey.

 

I think that it is up to the individual to define his personal criteria’s and to live up to his values the best way possible. These are factors that often can not be measured in an official ranking. There will be enough pressure from the school, employers, colleagues and other close people that might make you forget why you were really here and that might hamper you ROI. So remain aware of your values and follow your dreams. Sounds easier than it seems. As I am currently in the job search I will soon most probably have to decide what factors are more important for me. In my next blog I’ll let you know how things are in the job search during and after an MBA.