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Monday, May 4, 2009

Deciding between MBA programs

For those who have been accepted at multiple MBA programs, some are still deciding what program to attend. Some struggle bicoastally between Harvard and Stanford, some are stuck in the middle with Chicago and Northwestern, or some debate between extremes with small rural Dartmouth (Tuck) and large urban Wharton. A lot of the decisions are between schools with less prestige and a scholarship vs a more prestigious school.

My MBA decision process was truly a demonstration of the bliss of ignorance. Due to my pursuit of a pretty unique dual degree of a joint Masters in Social Work-MBA, my predetermined choices were Wash U in St Louis, Michigan, Chicago, and Wharton. I had never seen an MBA rankings list before applying. Nor was there a Masters in Social Work ranking system but that wouldn't have existed since most social work schools would reject such a hierarchical competitive exercise in favor of a strengths-based approach that provides positive affirmation for all. When the application dust settled, I was wait listed at Wash U and Michigan and accepted at Chicago and Wharton. Since Chicago never resonated with me, the choice of Wharton was pretty easy. If I had been accepted at Michigan, it would have been a very tough decision since I really enjoyed my visit and had a great conversation with a professor who taught at both the Social Work and MBA program. Rankings would have not factored in my decision since I knew that both schools were prestegious and I didn't need Wharton's additional prestige for my career plan.

However, through my work in admissions consulting and war of words on the Business Week Forums, I've come out of the woods and learned about the issues with deciding between MBA programs and whose advice is helpful. Outside advice is not necessarily helpful those who are deciding between a local, more affordable option and a more prestegious national option. Those are highly personal, case by base decisions, where it depends on the career game plan, and finances, attachment to the local area.

For decisions between schools within the national Top 50 programs, I have developed a framework and have gotten some experience with evaluating how much r squared of value you get with each additional ranking position. Well, if I went to Chicago, I would have gotten down to that r squared level, but I've just got bullet points:
  • No need to shed a tear, it's all about tiers: Alex Chu of MBA Apply (disclosure, I work with Alex) had a blog post which outlined the tiers nicely. For the top 50 programs, they can be divided into 4-5 tiers in addition to the top international schools of Insead and LBS. The only consensus that generally emerges about rankings is around the tier approach. Companies generally recruit by tiers and geography so this approach has practical applications.
  • What if I really like rankings?: MBA's like clean numbers that allow them to quantify subjective topics. For some it is hard to ignore the data that rankings provide. Ignoring rankings can be like telling yourself that you're not going to finish the whole cylinder of Pringles potato chips. Given that MBA's are drawn to numbers like Brittany Spears is drawn to questionable decision-making, rankings must matter to someone, right? In the end, the exact rankings really only have an impact on the East Coast or MBA-dominant industries like consulting or banking. That part of the US and those industries contain most of the ranked schools, its participants are actually aware these rankings exist, and they are filled with competitive people that actually might care.
  • How does this help me pick a school?: Focus on the tier and know what companies will recruit in what tier. Keep in mind that it should just be where you want to work after graduation but where you may want to work long-term. Going to the highest tier you can is a career safety net. If you are accepted to multiple schools within a tier, pick the one with your favorite curriculum, weather, or where you met that really hot woman or guy during Welcome Weekend. From a typical company stand-point, there is little difference between Columbia, Chicago, and Northwestern. If you're in the east coast at heavy MBA recruiter, they will be aware of the difference in rankings. However, if a recruiter wants to be take seriously, they are not going to make the case to select one candidate over another because their school is one point ahead in the rankings of Agricultural Economics and Farm Implements Magazine. It's hardly a compelling argument.
  • What happens when they offer scholarship money?: It is inevitable that when a student is accepted at schools in different tiers than the school in the lower tier will offer scholarship money. Admissions programs have been doing this for a long time, admissions standards don't change a great deal so schools are probably very good at identifying students that need to be incented with scholarship money. In general, I advise students to stay within the best tier that they can. An MBA has a lifespan of 20-30 years. The scholarship money fades in the long run. There have been some arguments that an MBA has a limited life cyle before it become strictly about your accomplishments. However, there have been lifetime earnings studies that show how tiers impact income over 20 years. 6 years out of Wharton, my MBA still follows me, especially when I change jobs. Senior managers have liked the fact that a Wharton MBA works for them since that makes them look smart. In general, my co-workers assume that I'm smart until I do something to prove them otherwise. Finally, a recruiter will not got criticized for hiring a fancy MBA so it makes you a safer hiring bet in the long-term.

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