With business, government and charities engaged in a daily battle to secure and retain the best talent every academic qualification, undergraduate or postgraduate, will make you a more valuable employee and help put upward pressure on your salary.
For most professional degrees the opportunity for salary uplift is just one of a multitude of benefits potential students will consider before embarking on any sort of vocational or tertiary education.
With the average MBA in Australia now costing more than $50,000, the return on investment of these degrees, measured as an increase in salary, is often the most important consideration when assessing the decision to enrol.
From the research it would appear most people thinking of doing an MBA are vastly underestimating the impact on their salary.
What is an MBA?
For the uninitiated a Master of Business Administration (MBA) is the pre-eminent management qualification. While the first school of business dates back to at least 1881, the first MBA was offered at Harvard Business School in 1908.
Over the last 110 years it has developed into an internationally recognised degree designed to develop the skills required for careers in business and management. The value of the MBA, however, is not limited strictly to the business world. An MBA can also be useful for those pursuing a managerial career in the public sector, government, private industry, and other areas.
Most MBA programs include a “core” curriculum of subjects, such as accounting, economics, strategy, and operations, as well as elective courses that allow participants to follow their own personal or professional interests. Popular modern electives or specialisations include entrepreneurship, finance and leadership. In recent times, high intensity Executive MBA programs have become increasingly popular.
The MBA is currently the most popular professional degree program in the world. Today there are over 2,500 MBA programs offered worldwide while in Australia nearly 40 different providers including universities and registered training organisations offer close to 100 different programs.
What Future MBAs Expect
MBA News recently undertook its first MBA Motivations and Aspirations Survey with more than 250 responses for students considering an MBA. The current (pre-MBA) median salary of respondents was $83,452 while nearly one-in-four respondents reported a salary of between $100,000 and $125,000.
When asked what they expect their salary to increase to within five years of graduating the vast majority (59%) anticipated an increase of 20-50%, with only 5% expecting an increase of less than 20%. Nearly 20% expected an increase of more than 100%.
Within five years of completing your MBA, how
much do you expect your salary to increase?
Studying Business Pays Dividends
There is little doubt that further study, particularly postgraduate coursework, leads to improved salary outcomes.
The 2017 Graduate Outcomes Survey by the Department of Education and Training found the median salary of undergraduates employed full-time was $60,000 in comparison with $81,000 earned by postgraduate coursework graduates.
Overall business and management postgraduate coursework graduates reported the highest median salary of $109,000, followed by Dentistry ($102,200), Computing and Information Systems ($88,700), Engineering ($87,000) and Health Services and Support ($85,100). As well as the highest median, business and management graduates also reported the highest growth over the previous year.
Postgraduate coursework median full-time salaries by study area, 2016 and 2017 ($)
|Business and management
|Computing & Information Systems
|Health Services & Support
SOURCE: 2017 Graduate Outcomes Survey (GOS)
MBA Salaries on Graduation
The most comprehensive global data on MBA graduate salaries is compiled by the Graduate Management Admissions Council (GMAC), the organisation that administers the Graduate Management Admissions Test (GMAT).
The latest Alumni Perspectives Survey found the median base salary among MBA alumni was US$115,000, with strong variation by job level and location.
The salary of b-school alumni working at mid-level positions in the US was US$105,000 compared with and US$55,000 in Asia-Pacific. At the executive level, b-school alumni working in the US earn US$185,000 compared with US$135,000 in Canada, US$145,000 in Europe, and US$130,000 in Asia-Pacific.
Post MBA Salaries Over Time
While graduate salaries for MBAs are relatively high, the real impact appears to be in the immediate aftermath of graduating where the combination of the MBA and job mobility (the ability to seek out new opportunities with new employers) means the average MBA graduate can expect to double their pre-MBA salary within three years.
The annual FT Global MBA Rankings analyses graduate salaries in the three years after completing a degree. The 2018 ranking, released earlier this year, found graduates from a full-time one-year MBA earn an average of $US139,000 within three years of graduating.
This is 101% more than their pre-MBA salary. Graduates of two-year MBA courses were making $US150,000, up 110% from their pre-MBA salary.
For prestigious schools the salary impact is even greater with alumni from the top ranked school – Stanford in the United States – reporting a significant salary boost, up nearly $20,000 to $214,000 three years after graduating. This is the highest average salary (not adjusted for inflation) since the inaugural ranking in 1999.
Of Australian schools, AGSM at UNSW Business School reported a weighted salary from graduates of $115,909, up 59% on their pre-MBA salary while Melbourne Business School graduates reported a weighted salary of $US108,000, up 78%.
With MBAs around the world reporting a 100% increase in salary three years after graduating, local pre-MBA students appear to be selling themselves short with the vast majority expecting to underperform the reality.
Strong Demand For Talent
There is an obvious correlation between demand for MBAs and salaries. The more employers want them the more likely they are to pay a premium to secure them.
This bodes well for local MBA graduates with the recent GMAC 2018 Corporate Recruiters Survey revealing that demand for MBA talent is strongest in Asia-Pacific, where 90 percent of responding employers plan to make MBA hires in 2018.
Conducted in February and March this year, the survey data was drawn from responses from 1,066 employers in 42 countries worldwide who work directly with participating business schools.
“Over the past several years we have tracked positive trends in hiring of MBA and business master’s graduates,” GMAC president and CEO Sangeet Chowfla said. “In the Asia Pacific region, hiring projections have remained strong. From the overall analysis, we see that MBA hiring overall is strong, but we are seeing the mix shift geographically.”
Overall, 81 percent of responding companies plan to hire MBA graduates in 2018. The survey revealed 85 percent of responding US companies and 64 percent of European companies planned to hire recent MBA graduates in 2018.