MBA Rankings are seen as crucial for business schools, recruiters and prospective applicants. Research by QS Top MBA has found that the number-one reason students consider MBA programs is to improve career prospects, rather than learning new skills or networking.
66 per cent of students polled effectively said MBA Jobs were the most important reasons for attending b-school.
There has also been a global rise in demand for MBA programs, MBAs securing jobs, and a global rise in salaries. The Graduate Admissions Council (GMAC) reported that last year, 50 per cent of full-time, two-year MBA programs reported an increased application volume, up 7 per cent.
90 per cent of b-school alumni are employed within six months of graduating. And according to the Financial Times, MBA salaries world-wide have doubled over the past few years. Careers are clearly key.
And how do prospective applicants know which schools' offer them the best job prospects? MBA rankings.
Organizations collect data on thousands of alumni to chart the percentage of MBA grads who are hired - and in which functions. Business schools themselves often go further, compiling in-depth reports of which companies have snapped up their students.
It's little wonder that candidates spend vast amounts of time studying global MBA rankings, helping them make the best choice to land the best jobs after graduation. "They were extremely important to narrow down to the list of schools I wanted to apply to," says Rahul Sumant, a 2013 MBA graduate from The Fuqua School of Business.
"Not only are prospective students looking at it, but so are recruiters and other types of people, so many people will be 'judging' you based on your school's ranking range."
For some MBAs, rankings were the most important part of picking a business school, agrees IE Business School graduate Sharan Ramesh. "They were absolutely my number-one priority. Business education is quite commoditized and rankings help it to stand out," he says.
"They help prospective students sort through the hundreds of schools offering credible MBA programs. And they aslo add tremendous value when looking for future job opportunities."
So MBA rankings offer more than applicant info: recruiters may form perceptions of candidates based on how their school is rated. And when you delve into hiring trends, evidence can be seen to support this view.
At Northwestern University’s Kellogg School of Management, considered the 15th best MBA in the world by the FT, 54 MBAs were snapped up by blue-chip management consultancy Mckinsey & Company from one cohort alone.
On the list of top hiring companies at the Tuck School of Business, ranked 20th world-wide by the FT, are Bain & Company, Goldman Sachs and JPMorgan - all prestige and sought-after brands in the MBA community.
Jay Bhatti, a 2002 Wharton MBA graduate, agrees. "I tell candidates that if they want an MBA, then go to one of the top five schools... if they cannot get into one of these schools, then don’t even go to another school. The return on investment is just not there."
Yet, the top ranking schools' don't necessarily translate into the best jobs. Recent employment reports suggest that employers aren't as bothered about rankings anymore.
Of the 2013 US MBA cohorts, graduates from Emory University: Goizueta Business School, ranked 49th world-wide at the time, secured the highest amount of job offers after graduation.
For a school with a relatively low ranking, how is it that they came 17 places above top-ranking Harvard, with 98.1 per cent of their MBAs employed within three months of graduating? MBA employers will of course be at pains to express that they have a fair recruitment process open to candidates from all manor of b-schools.
But MBA candidates still see rankings as crucial in the decision making process. "I wouldn't even have looked at Lancaster if it wasn't in the top-50," says Tom Jones, who graduated from the schools' part-time MBA in 2012. "It was very important and part of my decision making process. And for international students, they essential choose where to go based on rankings and cost."
Andrew Lecocq, a 2012 MBA graduate from Fuqua, agrees that rankings were "important". "This was especially true as I started the process of narrowing down my choices," he says. "There are two or three rankings in particular that really matter."
No students that BusinessBecause spoke to claimed that rankings did not influence their decision. They are clearly important for not just application choices and recruiters, but b-schools too. It's easy to forget that they are a business as well as an education platform - and many will use high rankings are marketing tools.
When the FT released their 2014 rankings yesterday, they naturally received a lot of attention. It is a major feat breaking into the top-100 - representing just 1 per cent of b-schools world-wide.
But there are problems associated with rankings. Most take into account career progress and it has a big influence on the final result. These are weighed up by salary increases and percentage of students hired, among other factors.
Most rankings also take into account the cost of living when it comes to salary increase. But the exchange rate, purchasing power parity (PPP), is somewhat flawed.
It only looks at average salaries across whole countries, meaning differences in regions are ignored. It also doesn't take into account lifestyle costs - making comparisons between developing countries and the West difficult. And therefore comparisons between average MBA salaries in different regions equally so.
Using an unweighted exchange rate to calculate salaries, as The Economist points out, also comes with its own set of problems - most notably in the exchange rate, where reported salaries can swing.
QS Top MBA reported recently that Australian graduates are the highest paid - an average of $133,100. Not so long ago The Economist reported that the University of Queensland's MBAs had an average $150,000 basic salary.
But that could be put largely down to a booming economy, making the Australian dollar stronger, and skewing salary comparisons with other countries.
When it comes to the percentage of students who landed jobs after graduation - are they the jobs they really wanted? The careers they hoped to launch after graduation? Or just jobs of convenience? Rankings don't or can't take these questions into account.
Rajat Handa, an MBA graduate from Lancaster University, is a case in point. He hoped to land a consulting job after graduation, but instead settled for an immediate role as an economist before working his way into PwC sometime later. "It wasn't consulting but I missed working and I wanted to get some money back," he explained.
In hindsight, other MBA graduates might regret basing their decisions on b-school tables. "While rankings are a priority, in retrospect I was very lucky to end up with a school that offered an incredible experience – a diverse student base, highly energetic program and incredible faculty – and that is what I should have prioritized in the first place," says IE's Sharan.
For him, a diverse cohort, the chance to learn Spanish, job opportunities, a short course duration and European location were what made IE stand out.
Rankings are an important factor for many reasons. MBAs spend thousands on an education and it is one of the ways to assess the risk for reward. And b-schools rightly deserve the credit they get for making it into the elite lists.
But there are many more factors to consider when it comes to b-school programs and post-grad recruitment. MBA rankings are not always a reliable indicator.
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