Surely if the guy teaching the stuff (how to make money) knew how to apply it (make money) would he be standing in a lecture hall assigning homework to 60 arrogant future capitalists? Maybe, maybe not. But the point of the joke is to highlight one of the most common arguments made against attending business school: In business, if you need to learn it, you ain't got it.
Is this really true? Are B-School students merely real world castoffs looking for a soft seat in academia?
What do you really do in business school? What skills do people actually acquire in business school? Is the $100,000 investment really worth it? Do business schools create wealthy businessmen or do they breed future corporate bean counters?
Above all, in business, is it true that if you need to learn it, you ain't got it?
As with all things, the answers depends on several factors.
First off, business school is not graduate school. Graduate school is for people who want to learn more about something they already have an interest in. Business school is for people who want to earn more doing…well, anything that wil earn them more.
Sure, this is a generalization, but it is generally true. Here and there you'll find a few hippie do-gooders in business school but they're few and far between. For the most part, it's Gordon Gecko to your left and Sheryl Sandberg to your right. If that's not your bag, then neither is B-School.
Graduate school is a bit different. Nobody gets a Masters in Library Science or a Ph.D. in Biochemistry to get rich.
So that's one thing. Business school is its own beast. But is it worth it? Does it accomplish what it intends to–raise salaries?
Generally no; but in very specific cases, yes. Let's mine a little deeper…
The lion's share of folks that enter business school are going to schools that fall outside of the Top 25–let's call these schools the heavyweights. They're the usual suspects: Harvard, Stanford, Berkeley, Duke, Penn, UCLA and others.
Students that attend non-heavyweight programs experience only a marginal increase in salary upon graduation. Even at well-known schools such as UC San Diego and the University of Arizona, the post-graduation job placement statistics are unimpressive.
According to Payscale.com, the average starting salary for M.B.A. graduates was $46,630 in 2012. That's not very high. Are you making close to that now? Let's say you're at $35,000, an average salary for someone with less than five years of work experience and a college degree. Does it then make sense to plunk down $100,000 (or more) for essentially a $10,000 raise? Factor in taxes at the higher income bracket as well as two years of forfeited salary and it quickly becomes clear that the time required to recoup your investment is at least eight to ten years (assuming 10% yearly salary increases).
Is the story different at Top 25 schools? Absolutely. In 2012, Harvard's graduating class earned, on average, 121% more than their pre-business school salary. That's more than double. Statistics for other heavyweight Top 25 programs are similar. In this group, six-figure starting salaries out of B-School are the norm.
So, if it's money you're after, and your qualifications are in the Top 25 range (650+ GMAT, 3.5 GPA, 3-5 years work experience, strong letters of recommendation from employers not professors) the investment is likely a worthwhile one.
But what will you actually learn when you get there? Well, perhaps the better question is, what do you actually get when you leave there?
Four things, mainly:
- Lifelong network of future movers and shakers in whatever industry you may end up.
- A two-year intensive primer in how to win friends and influence people.
- Basic hard skills in accounting, finance, marketing and management.
- Industry jargon.
Let's look at each one a little closer:
The first one is self-explanatory. Graduate from Harvard, Stanford, Duke or USC Business School and you inherit a rolodex of industry winners as deep as The Donald's. It's that simple. This is the principal reason most people go–and it's a good one. Your network will include both alumni and classmates, some of whom will go on to grace magazine covers and offer their highly sought-after opinions on TV. If, as the saying goes, it's not what you know but who you know, then consider business school your personal access code that opens the wrought iron gates to the Who's Who in American Business.
Second only to network is culture creation. Business school is less about content than it is about socialization and culture. What do different personality types look like and how does their decision making differ? How do you adjust management styles to effectively manage different personality styles? How do you maximize team dynamics? How is leadership cultivated? All these questions and more are addressed through two years of group exercises and team projects designed to mimic workplace collaboration.
Third is actual school. Yes, you will end up getting all academic 'n shit: fundamentals in accounting and finance, economics and marketing theory–but all of that is secondary to the “soft skills” that B-Schools now make their focal point.
Last is industry jargon. If it's investment banking, you'll learn to talk like an investment banker; if it's private equity, you'll know all the insider lingo; and if it's sales and marketing, you'll throw around words like “verticals”, “bandwidth” and “net-net” like you coined them. This is all, of course, so that when you finally sit across from that big mahogany desk during your job interview, you sound like you know what the hell you're talking about. And, as we all know, nothing says competence like big fancy words.
So…is it worth it? The short answer is no, not if you can't get into a credible institution with an established network of industry heavies and up-and-coming go-getters. What you'll gain at a second-tier university for a hundred grand can easily be gleaned for free at a combination of Google U., Toastmasters and Chamber of Commerce mixers.
If, however, Stanford is beckoning with an admission offer, you'll likely make up that investment and then some within the first few years after graduation in increased salary alone. Add to that your broadened network and the formal knowledge gained by the most reknowned professors in the world, and it's a slam dunk decision.
It is worth noting, however, that there may very well be legitimately good reasons for some to attend business school even if it's not in the Top 25. Each individual case varies. There are so many factors that come into play–will your company bankoll you? Will an MBA rubber stamp your promotion? Family issues, etc.
For applicants facing those special circumstances, or if you just want to run your personal scenario by one of our consultants, you're invited to fill out the free consultation form on this website and one of our admissions consultants will contact you.
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