Is there any value in a Master of Business Administration degree?

May 31, 2013 Occasional Contributors Employee Relations, Human Resources, Payroll, Recruiting and Hiring, Wages and Compensation

There has been some discussion around the web lately as to what the real value of a Master of Business Administration is: one Wall Street Journal author told the story of a 36-year-old University of Louisville MBA grad Steve Vonderweidt who is still working as an administrator at a social services agency, almost a year after graduating. With over $75,000 in student-loan debt and facing stiff competition from the highest number of fellow grads ever, Vonderweidt questioned whether the Master’s program was really worth it.

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The crowded MBA landscape

The common conception is that an MBA is your ticket to a boost in salary, a more fulfilling career and more professional opportunities. According to the Graduate Management Admissions Council, recruiters’ expected median salary for newly hired MBAs was flat between 2008 and 2011. For grads with a year or less of experience, the average salary was $46,630 in 2012 (Payscale.com). From this standpoint, the value of an MBA is falling, and fast. The value drops even quicker when an MBA grad comes from a less prestigious school. According to the Department of Education, U.S. schools granted a record 126,214 Masters degrees in business and administration in 2010-11, a 74 percent hike from 2000-01.

MBA ≠ exclusivity

These statistics are a far cry from the 1980s, when, according to the Wall Street Journal, it was not uncommon for companies to recruit MBAs first and fill jobs later. Today, the nature of the MBA has done a 180. Historically, the MBA program was two years, full time. It is now possible to obtain an MBA part-time, from a growing number of academic institutions, and even online. As a result, the issuing of MBAs “has grown faster than the population” according to Brooks Holtom, management professor at Georgetown University’s McDonough School of Business. In other words, the MBA club is not exclusive, and the added benefits that once came with the granting of an MBA are no longer the norm.

You can’t buy experience

So is an MBA really worth it or is the $174, 400 price tag of a two-year Harvard MBA better spent elsewhere? Most argue that the value from an MBA comes from the content and the network. The content can be obtained online, often for free, but the network is where you’ll have to get your hands dirty. With over half of the world’s population under the age of 50, the competition is at an all-time high and it’ll take more than a certificate to differentiate. To those considering an MBA, it may be more valuable to get out there and gain as much experience as possible; change careers if it’s advancement you’re looking for, and identify the skills you need for the job you want and hone them. Most importantly, start building the network that comes with the MBA price tag.

Forbes estimates the return on an MBA investments comes in about 3.5 years, not considering any opportunity cost. As the Business Insider reports, an MBA could make you more risk averse, since taking on a job at say, a startup, might not align with your six figure debt. Moreover, an MBA could take away your uniqueness, and companies may see you as every other MBA grad, despite accomplishments that happened before the program. In any case, the true of value of an MBA is unique to each institution and each individual, just be sure to know what you’re getting out of it before going in.

About The Author
Meghan Tooley is a commerce student and active online blogger from Winnipeg, Manitoba. She often offers her views on employment trends in the recruitment industry. She writes on behalf of Metric Marketing, a Winnipeg SEO firm. To learn more about recruitment and careers visit People First HR Services.

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In addition to our regular guest bloggers, First Reference Talks blog published by First Reference, provides occasional guest post opportunities from various subject matter experts on the topics of payroll, employment and labour law, payroll, HR analytics, corporate immigration, accessibility related issues in Canada. If you are a subject matter expert and would like to become an occasional blogger, please contact Yosie Saint-Cyr at editor@firstreference.com. If you liked this post, subscribe to First Reference Talks blog to get regular updates.