Before you pursue an MBA, think about whether it is what you really need
Getting a Master of Business Administration (MBA) degree is something some millennials feel they must do to move up in their career. It is expensive, though, often taking two years and costing more than S$100,000.
Getting a Master of Business Administration (MBA) degree is something some millennials feel they must do to move up in their career.
It is expensive, though, often taking two years and costing more than S$100,000.
Rather than just following the crowd, it is important to evaluate carefully the pros and cons of getting an MBA.
WHAT TO CONSIDER BEFORE SIGNING UP
Even before looking at the cost, there are plenty of factors to consider in deciding whether to obtain an MBA.
A key consideration for many people is whether they can gain the management skills that they lack.
An MBA can help you develop the soft skills and hard skills that can enable you to perform better in almost any organisation. The best schools enable students to learn essential skills to make it in the world of business, as US News describes it, including leadership, management, communications and specialised knowledge.
Another benefit that is perhaps even more important is the network that you will develop.
Taking part in an on-campus MBA programme enables you to network with future corporate leaders from around the world, which help with finding a new job or gaining access to people who can have a long-lasting influence on your career path.
On the other hand, getting an MBA takes a lot of time.
Full-time programmes at top-ranked schools in the United States often take two years, during which you will put off career advancement and not have a salary.
While executive MBA (EMBA) and online MBA programmes are structured so that you can continue your career while getting a degree, many students find that study takes most of their waking hours outside of work.
Moreover, the Financial Times noted that some leading employers are increasingly sceptical that MBA candidates will have the skills they need, as programmes have not pivoted quickly enough to deliver data analytics or other skills that are increasingly important.
It is important to realise, too, that you will not automatically parachute into a higher-level role when you graduate.
You will need to search for opportunities, whether at your present employer or a new one.
Moreover, as financial portal MoneySmart notes, anecdotal evidence indicates that having an MBA can sometimes backfire against a jobseeker if it is not from a top-tier school.
AN MBA’S RETURN OF INVESTMENT
While career considerations and time are important, so is the cost of an MBA.
The first-year cost at Stanford University in the US is about US$138,522 (about S$187,000), for example, and The Wharton School at the University of Pennsylvania costs US$114,896. MBA programmes at public universities in Singapore can cost more than S$60,000, while fees at private schools here can cost more than S$100,000.
The return on investment (ROI), though, can be high.
Education research firm QS Intelligence Unit calculated in its Return on Investment Report that the average global 10-year ROI of an MBA is US$390,751.
Stanford is the world’s best at US$1,023,150, while the Imperial College Business School in London is the best in Europe at US$870,200 and Hong Kong University is the best in Asia at US$845,350.
The average payback time globally is 51 months, with Europe the quickest at about 39 months due to the predominance of one-year MBA programmes there.
In Singapore, payback takes 33 months at the Nanyang Technological University and 36 months at the National University of Singapore.
Those figures do not mean that it is always better to get an MBA.
The average annual salary for an MBA graduate in Asia is US$63,948, so if you are already making about that amount, giving up two year’s salary may leave you worse off.
And if you do not get into a top school, salaries may be below that average and networks may not be well-connected.
CHOOSING THE RIGHT SCHOOL
If you do decide to pursue an MBA after taking financial, professional, time and lifestyle considerations into account, it is important to choose the right programme.
US News suggests that important factors include whether an MBA would facilitate career change or accelerate career advancement, whether you will gain the technical skills and professional connections you need, and whether you will develop capabilities that shape your professional identity. Alternatively, more people are looking at specialised master's programmes in areas such as finance, accounting, analytics, marketing or supply chain management rather than an MBA.
Whether you select a full-time or part-time MBA programme can depend on factors including your goals, finances, and your current career path.
Perhaps most important is which school you attend.
Where you receive your MBA is important, POSB bank notes, as school rankings shift values and expectations of the degree. While you can get a solid education at many schools, top-ranked schools can offer a higher ROI and better networks. Getting into the best school you can is essential.
Another consideration is whether the school will exist longer-term.
Forbes reported that the top 10 business schools in the US saw an average drop in applications of about 5.9 per cent last year. Andrew Ainslie, dean of the University of Rochester's business school, said that “the MBA market is in dire straits" and predicts that 10-to-20 per cent of the top 100 MBA programmes in the US may close in the next few years.
Rising costs, a strong economy keeping people in jobs, the difficulty foreign students have in obtaining a visa for the US and the rise of specialty programmes are among the reasons for the decline.
After looking at the cost-benefit and your likely career path, and which school you could likely be admitted to, you may decide that you are better staying in your current job.
Like many people, you can succeed without an MBA.
If you do decide that you want an MBA, make sure you consider all the relevant factors and motivations, so that you can make the right choice.