From the Classroom to the Boardroom (and vice versa)
Beta Gamma Sigma Examines Graduate Degrees in Business

To MBA or not to MBA? That’s the question many ask themselves after a few years in the professional world. The benefits of the MBA are well documented, but the costs – financial, free time, family life, etc. – can be difficult for some to overcome.

Most MBA programs require applicants to complete the Graduate Management Admission Test (GMAT), which is administered by the Graduate Management Admission Council (GMAC). The test was taken in 2003-04 by more than 205,000 individuals, down from the record of more than 240,000 who sat for the test in 2001-02. Although not yet available, initial estimates suggest that the number of test takers increased in 2004-05 for the first time in two years.

Potential students faced with the decision of whether to go back for an MBA must consider all the costs and benefits. If someone is considering a traditional, full-time program, it almost certainly means that she will have to give up her current full-time job. Enrolling in a part-time program may allow her to continue with her career, but it will also take considerably longer to complete (3-5 years) and will still cut into her family and free time. An executive MBA (eMBA) allows for the professional to continue with her career – and usually to finish quickly (18-24 months average) – but family and free time are often sacrificed for the duration of the program (see the related story).

Graduate school admissions professionals stress that potential students should decide what it is they do best and how they would like to enhance their marketable skills through graduate study. At that point, it is vital to do research on the programs available and find one with the best fit. Having a plan in place before beginning a program creates a higher level of satisfaction upon completion.
But how does someone find a program that is the “right fit?”

Well, a great place to start is with GMAC’s on-line tool designed specifically for potential MBA applicants: www.mba.com. With a wide variety of interactive features, applicants can find answers to questions they may not have even considered yet. Assess Careers and the MBA; MBA Pathfinder School Search; Take the GMAT; Apply Effectively; Make Your Decision. These are just a few of the options on the site, and there are many, many more.

GMAC’s www.mba.com can help get applicants started in the process, and enable them to be more efficient and successful while they consider how best to accomplish their graduate school goals.

Another important consideration when choosing an MBA program is the financial cost and the applicant’s ability to afford a given program. According to Bloomberg Businessweek Online, in 2004 the total cost of an MBA program (tuition, fees, books, etc.) at business schools accredited by AACSB International ranged from less than $10,000 to more than $75,000. While finances must be considered, experts agree that finding the right fit – a program that specializes in an applicant’s chosen area and delivers instruction in a manner that fits with the applicant’s lifestyle – is critical.

Although the high cost may be a hurdle to overcome, it shouldn’t be viewed as a permanent roadblock.
“You have to look at the value of the MBA beyond the immediate time of graduation,” said Randy Williams, Director of the MBA Career Center at the University of California, Irvine’s Paul Merage School of Business. “You have to look at the value that it brings to your career over your entire lifetime.

“I suspect if you go back and ask the people who earned their MBAs in the early 90s when we were in a recession, ‘Was it valuable to get your MBA over the length of your career?’ I’m sure the vast majority would say yes.

“You need to look at the MBA beyond its initial catapult. If you look at it in a longer term and say, ‘What I’m going to learn here is really going to benefit me and help position me throughout my career,’” then there is no question the MBA is worth the cost, Williams said.

Results from a survey of Beta Gamma Sigma members in 2004 – conducted with the help of Bloomberg Businessweek magazine – suggests that graduate study results in greater financial strength down the road (see the graphs below). For those with an undergraduate degree only, the average household income of BGS members was $110,517 annually, and the average household net worth was $553,305. By contrast, for those BGS members with a master’s degree, the average household income was $164,754 (+ 49 percent) annually, with an average household net worth of $917,527 (+ 66 percent).

In another part of the BGS Survey, 22 percent of respondents identified themselves as “Senior Executives” within their organizations. Of those, 70 percent had completed a master’s degree or higher. Only 30 percent of those identified as Senior Executives had completed an undergraduate degree only (see the related graph on this page).

There is a great deal of anecdotal evidence that MBA graduates from the last few years have had a rougher time finding positions than those from preceding years. Williams said that is all part of the business cycle, and that recently the cycle is showing many signs of a turnaround.

“In terms of the economy here in Southern California, it has probably improved at least 100 percent since two years ago,” he said. “A couple years ago, on our job board where employers post jobs specifically for MBAs, we had somewhere in the neighborhood of 400 to 500 jobs all year long. Already we’re well over 1,000 jobs that have been posted during this school year. Number of calls, number of visits to our website, just about everything you can mention – we’ve seen a dramatic improvement.”
That improvement is certainly not limited to California. According to the executive summary of GMAC’s “2005 Corporate Recruiters Survey,” recruiters are optimistic about the future of the economy and the job market.

“The job market for MBAs is strengthening rapidly after several sluggish years and is set for dramatic improvement during 2005,” the report states. The survey also found “that recruiting and hiring activity will increase sharply this year, reflecting a widespread sense among hiring managers and executives that the economy is in better shape than it has been in any year since the survey was first conducted during the 2001-02 hiring season.”

According to the MBA Career Services Council’s Spring 2005 Employment Survey, recruiters expect pay and signing bonuses to jump for this year’s crop of MBAs. Compared to 2004, 70 percent of recruiters expected an increase in average base salary, while 51 percent expected an increase in average signing bonus. Conversely only 4 percent and 6 percent, respectively, expected a decrease in these areas.
So what does all this mean?

In spite of all the costs, this may be a great time for BGS members to consider adding an MBA to their resumes. More recruiters are looking for MBAs. There are more choices when it comes to program delivery (part-time, full-time traditional, executive, professional, on-line, etc.) than ever before. Beta Gamma Sigma members who have earned an MBA tend to make more, and compile a higher net worth, than those who do not. Base pay levels and signing bonuses are expected to increase this year.
To MBA or not to MBA? For BGS members without one, it may not be much of a question at all.