RBC daily (St. Petersburg), February 28, 2008

THE FIRST STEP TOWARDS A SERIOUS RATING OF MBA IN ST. PETERSBURG, Yulia Vymyatnina

 

RATINGS OF BUSINESS SCHOOLS CAUSE MANY DISPUTES AND EVE CONFLICTS ALL OVER THE WORLD. ON THE ONE HAND, THEIR GOAL IS GIVING OF USEFUL INFORMATION ABOUT OFFERS ON THE MARKET TO THE CONSUMER. ON THE OTHER HAND, THE RATING ITSELF IS A PRODUCT QUALITY OF WHICH CAN BE OFTEN QUESTIONED.

RBC daily in cooperation with THI Selection tried to take the first step towards creation of a rating in St. Petersburg being interesting for the consumer and being simultaneously recognized by business schools as satisfying the minimal requirements of objectiveness.

The first and probably the most important parameter of success of the schools that we decided to study was growth in wages of graduates after graduation from a school. For obtaining of data we followed two paths: (1) polling of graduates on the website of RBC, (2) selection from the database of a recruiting company, namely THI Selection. As a result, the data turned out to be sufficient, for instance, for evaluation of an average effect of obtaining of an MBA certificate on the salary of a manager but insufficient for statistically correct separation of the effects of salaries growth according to schools. There is a hope that this task will e fulfilled in 2009. Out view at the ratings, description of the research and its results are presented in the present article.

ETYMOLOGY OF RATINGS

One of the interpretations of the word "rating" in the explanatory dictionary of the Russian language explains its meaning as "degree of popularity of something determined by sociological polls." This definition probably fits the explanation of the essence of majority of the ratings of the business schools best of all. As a rule, they are composed on the basis of the information obtained through polling of managers of business schools and their graduates, as well as employers and other experts. The main task during composition of a rating is choice of registrable parameters that allow the most complete and useful description of the studied objects for the consumer of this rating.

The most authoritative ratings of business schools in the world are the ratings composed by Financial Times, Forbes, Business Week, Wall Street Journal and US News. Because each publication uses different methods and criteria, polls different categories of respondents and can compose ratings of business schools in general or their separate programs (see table 1), the position occupied by a school can vary in various ratings. Thus, in the latest published rating of US News the first place is occupied by the business school of the Harvard University and in the rating of American business schools of Forbes it is on the third place, whereas the first place is occupied by the business school of the Dartmouth University that has only the seventh place in the rating of US News. This does not mean that ratings are useless and do not convey any information to the consumer. It is simply necessary to know how to use them correctly. First of all, it is necessary to determine which criteria are the most important for you exactly. Afterwards it is necessary to find out which ratings take these criteria into account and with which weight. After that it is possible to choose the rating that ranks the schools or the programs from your standpoint in the best way. Not a single rating can claim full objectiveness. Along with this, inclusion of a business school or an MBA program into the top ten of several ratings comparable with each other manifests a high level of its reputation. Even inclusion of a business school or an MBA program into the listing used for composition of a rating by the aforementioned business media is already a high evaluation of its quality on the international level. In this sense inclusion of the MBA programs of the Stockholm School of Economics in St. Petersburg into the ratings of Financial Times gives an additional competitive advantage to the school.

THERE IS CHAOS IN THE MOTHERLAND

In Russia ratings of business schools like business education itself appeared relatively recently. Nonetheless, so many of them were composed and their results were so different that members of the Board of the Russian Association of Business Education (RABO) decided not to take part in the ratings at all. Such actions are characteristic not only for Russian business schools: the European Council for Business Education Quality (EQUAL) does not recommend its members to take part in the ratings. The same decision has been made by the Harvard and Wharton business schools. This circumstance emphasizes the disputable nature of results of any rating. Along with this, ratings of Russian business schools receive especially many criticizing claims against quality from the rated objects. The rating of business schools of Moscow composed by RBC in June of 2004 was one of the first. The rating took into account a very big quantity of parameters including objective parameters (age of a school, costs of education, quantity of graduates, availability of various kinds of education) and quality of student and teaching. Nonetheless, President of RABO Leonid Evenko reproached this rating because it did not include several leading business schools of Moscow and called on potential enrollees not to allow making of choice for themselves. The next was "Rating of public reputation TOP-20 of the best Russian business schools" composed by the Association of Managers in October of 2004. The authors of this rating tried to take into account reputation of business schools on the market, quality of lecturers and the program, as well as satisfaction of the graduates. The rating was criticized for its non-transparency, for instance, for absence of the final points given to the schools. Thus the consumer of the rating was deprived of a possibility to understand how different were parameters of the schools occupying neighboring places in reality. The next more or less serious rating of business schools was composed in June of 2005 by Finans magazine. This rating evaluated quality of lecturers, quality of students, cooperation with foreign business schools and programs, accrediting in international associations AACSB, АМВА, EFMD and CEEMAN, experience of preparation of long-term corporate programs, availability and work of the career centers and associations of graduates, age of the institutions and some other criteria. On the basis of the three ratings – that of RBC, Finans magazine and Association of Managers – MBA community Russian MBA League composed an Integral Rating in January of 2006.

The latest and the only rating dedicated to MBA programs and not business schools was verity detailed rating "TOP-20 of the business schools in Russia" of Sekret Firmy magazine composed in September of 2007. The rating took into account criteria of quality of students (difficulty of tests during enrollment, managerial experience of students in the same group, usefulness of the established relations with students in the same group), quality of teaching (teaching of theoretical knowledge, acquired practical skills, absence of repetitions in programs of various years), as well as career expression of "usefulness" of the obtained education (dynamic of career growth after obtaining of МВА certificate, growth of salaries in three years after graduation). The data were obtained as a result of polling of graduates of Russian MBA programs – members of the Russian MBA League. However, even this rating was exposed to serious critique for non-representative nature of the selection, absence of an answer to the main of the declared (and most intriguing) questions: how the obtained knowledge helped in the career. Results of business schools of St. Petersburg in the aforementioned ratings and in some others are shown in table 2. It is easy to notice that results are very uneven: in the rating of Sekret Firmy magazine the IMISP shares the first place with the Higher School of Business of the MGU and the Integral Rating of the Russian MBA League and the rating of the Association of Managers put it on the tenth and eleventh places respectively. Majority of the business schools of St. Petersburg are not included into any ratings.

THE FIRST STEP

Against this background we do not try to compose another rating of business schools or MBA programs quickly and immediately because we understand that this is a serious research that requires accumulation of experience and reputation. To begin with, we decided to carry out a small pilot research of evaluation of labor of graduates of business schools of the city by the market. In the framework of this research we planned to answer the following questions: (1) does an MBA degree really give a gain in salary; (2) does the gain differ with regard to different business schools and types of programs and some other factors; (3) how quickly the gain pays back the money invested in obtaining of an MBA degree? In other words, we decided to start movement towards a research done during composition of ratings by Forbes magazine.

For obtaining of data we performed a week-long anonymous poll of graduates of business schools on the website of RBC. In this part of the research our partners were the leading business schools of St. Petersburg that turned to their graduates according to our request. The second part of the data was obtained from a partner of the project, recruiting company THI Selection. This company made two random selections in its database and polled 40 graduates of MBA programs and 40 people without an MBA degree but occupying similar positions.

After rejection of incomplete or incorrectly filled in questionnaires of the poll of graduates on the website of RBC 60 of the 100 observations were left being suitable for statistical analysis (see table 3). Bearing in mind a small size of the selection, we do not claim representative nature of the results. Nonetheless, it is possible to notice some interesting trends. We calculated average values of the parameters studied further ether in the entire selection or according to the relevant selection and afterwards we checked if the difference in averages was significant taking into account selective dispersion.

RESULTS

It is possible to answer the first question of the research, if an MBA degree gives a gain in salary, in the following way: there are people to whom this happens. According to the obtained data, salary of an MBA graduate grows by 40-50% a year on average at least for five years after graduation from a school (see table 4). Head of office of THI Selection Alexandra Yevseeva considers these data to be exaggerated. According to her, the actual growth does not exceed 25% although in some cases it really reaches 40%. It is possible that among those who have agreed to fill in the questionnaire majority are the most successful graduates who have nothing to "hide."

The obtained gain in the incomes is noticeably higher than the average market level. According to overall estimate of experts of THI Selection, between 2000 and 2005 there was no significant speed of salaries growth and between 2006 and 2007 average annual growth amounted to 15-30%. According to AVANTA Personnel, in the last few years salaries of top managers grow by 16-17% a year on average. Salaries grow the fastest of all for commercial directors (up to 24% a year).

Activeness of graduates of the MBA programs of Vlerick Leuven Gent Management School (LETI-Lovanium) (see the graph) allowed comparison of parameters of growth in their salaries to such parameters of other graduates. The difference turned out to be statistically insignificant. Along with this, differences in the gain of salaries between the graduates of the programs in the English and in the Russian language were statistically significant. The former receive bigger gain in salary a year after graduation from a school. The fact of gender discrimination registered in the selection was interesting: gain in salaries of women is smaller than gain in salaries of men and for the first year after graduation from the MBA program this difference is statistically significant. This circumstance makes studying in a business school less profitable for women and partially explains the fact that in all selections women constitute a minority (32% in the poll on the website of RBC and 34% in the selection of THI Selection). Alexandra Yevseeva confirms, "There are really less women among the MBA graduates, that is approximately one-third. There is nothing unexpected in this figure. It corresponds to the situation on the market: there are about 25% women on managerial posts." The fact of growth of salary in the first quarter after obtaining of MBA education is also confirmed during composition of a regression dependence of the average annual gain in salary on such factors as age, sex, language of teaching and type of program (education with distraction from the job and without distraction from the job). Selection for the year of graduation from an MBA program not later than 2000 was used for composition of this dependence. Results of composition of the regression show that growth of salary in the first year after graduation from an MBA program is statistically significant and equals almost 50%. The size of the selection did not allow obtaining of significant results for three and five years.

Comparison of the average salaries in the selections composed by THI Selection also enables us to state that MBA education leads to higher incomes: an average salary in the selection with MBA is approximately 50% bigger and the difference is statistically significant.

During calculation of an average period of pay back of an MBA program we proceeded from a presumption of an average growth in salary by 43% a year. We also used data on the paid costs of education indicated by graduates in the questionnaires. In the entire selection of the poll an average period of pay back of investments in MBA education amounted to 1.9 years The same parameters for the programs with distraction from the job amounted to 2.5 years and for programs with study without distraction from the job it amounted to 1.5 years, which was explained by cheaper costs of the latter in year-on-year terms. For women this parameter amounted to 1.8 years and for men it amounted to 1.9 years, which confirmed the previous presumption because among the women a bigger percentage of respondents studied in programs without distraction from the job. No differences were found in the average pay back period of programs depending on the language of teaching.

INSTEAD OF CONCLUSION

We would like to note that even such mini research allowed revealing of interesting trends in evaluation of specialists with MBA education of the schools of St. Petersburg by the labor market of the city. We hope to conduct a more representative research in the future taking into account the wishes and critique of business schools and other persons concerned. We also hope for participation and partnership of recruiting agencies and graduates of the MBA programs.