MBA Grads Recoup Investment In Four Years

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The latest GMAC survey reveals that MBA graduates are getting the most out of their education and enjoying a definite return on investment (ROI)

The return on investment, or ROI, of a full-time two-year MBA fluctuates in accordance with prevailing economic conditions yet it has remained positive three years after graduation in 19 of the past 20 years, according to findings in the Graduate Management Admission Council’s (GMAC) 2016 Alumni Perspectives Survey Report published today.

Further illustrating the value of the MBA, alumni — on average — recoup their business school investment within four years after graduation depending on the type of program attended.

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Of the more than 14,000 alumni surveyed, a vast majority said their education was personally (93 percent of respondents), professionally (89 percent), and financially (75 percent) rewarding. More than 4 in 5 alumni expressed satisfaction with their education.

“People make the decision to invest in a graduate management education to meet a variety of different aspirations and needs, and the vast majority are enthusiastic about their investment and inspired by their experience,” said Bob Alig, GMAC’s executive vice president for school products.

“Business schools enable students to develop the knowledge, skills and abilities needed for career success and to achieve personal and financial fulfillment.”

Financial Rewards

GMAC’s survey shows the dollar value such a degree can bring. Business school alumni earn a median of US$2.5 million in cumulative base salary over 20 years following graduation. This is a half-million dollars more in median cumulative base salary than they would earn if they did not go to business school and had consistently earned 5 percent annual salary increases, and a million dollars more than if they did not go
to business school and had consistently earned 3 percent annual salary increases.

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Survey findings also reveal that women highly value their
graduate management education with 96 percent rating their
degree as a good to outstanding value. They tend to receive an
initial boost in salary post-degree that is similar to men — US$20,000 on average. Nevertheless, the gender pay gap persists among business school alumni; most likely a continuation of the trend of lower salaries women earned prior to entering business school.

Professional Rewards

Graduate business degrees unlock employment opportunities in a variety of industries and job functions. They also help elevate many alumni to higher job levels in their organisations. Approximately 3 in 4 alumni (73 per cent) say their degree resulted in faster career advancement. Two-thirds (68 per cent) of alumni are satisfied with their current job and employer. Satisfaction and total hours worked weekly both tend to increase as alumni
move up the corporate ladder. And, a majority of alumni say their graduate management education helped them to develop their leadership potential (80 per cent) and grow their professional networks (70 per cent).

Nine in 10 (93 per cent) alumni say they would pursue their graduate management education again. In addition, alumni are extremely likely to recommend their program to peers. Overall, the net promoter score, or NPS — a widely used metric of customer loyalty — is strong among graduates of all types of business programs. The NPS among all graduate business programs combined is plus 45 on the net promoter scale. (An NPS higher than 0 is considered good; an NPS of plus 50 is excellent.)

Personal Rewards

Business schools enable students to develop the knowledge, skills and abilities that in turn enhance their personal well-being. Two in 3 (65 per cent) survey respondents noted improved job satisfaction and 50 percent believed business school prepared them for managing work-life balance.

 

“The findings of this survey are further evidence that a graduate management education delivers strong personal, professional and financial value to alumni,” added Bob Alig. “The ROI numbers illustrate that a business degree is an efficient investment in terms of recouping costs and an effective asset for accelerating alumni careers.”

GMAC conducted the Alumni Perspectives Survey in October and November 2015. The 14,279 alumni who participated in this survey represent more than 275 graduate business programs at 70 universities in 20 locations worldwide that partnered with GMAC in this study.

To download GMAC’s 2016 Alumni Perspectives Survey Report, visit: GMAC Alumni Perspectives.

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Ben Ready founded MBA News in 2014 and is the Managing Editor. He is a former business and finance journalist with Australian Associated Press (AAP) and Dow Jones Newswires in London. Ben completed his MBA in 2012 and was awarded the QUT GMAA Entrepreneurship Prize. He is also the founder and Managing Director of RGC Media & Mktng (rgcmm.com.au).

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