Whenever I am asked to do a presentation on rankings, I always start by showing a cartoon (origins unclear) which has, in its first panel, two senior deans in a business school agreeing that the rankings did not accurately measure the quality of their programme. In the second panel, they are poring over a rankings list and muttering, “So how did we do?”
On Monday, the Financial Times will release its annual MBA rankings and speculation about the results has already started. Unfortunately, most commentary on aspects of the business school world are abominably shallow and off the mark. Even a respected commentator such as John Byrne, who maintains a decent website on business school news, gets some of his analysis wrong. In his post on the FT rankings, he wonders if British business schools will suffer a significant decline, in light of drops in enrollment. He quotes a statistic from AMBA that 43 of its accredited schools in the UK had reported declines in enrollment totalling almost 1,000 students in the last two years. Byrne speculates that dropping enrollment will put pressures on GMAT, GPAs and subsequently post-MBA compensation. And he attributes the enrollment problem to the visa changes that the UK has introduced.
Reading this article brought back memories of the critical reasoning test on the GMAT because of the large number of logical flaws. Firstly, the visa changes were only introduced last year and would have no impact on enrollment of the cohorts that the FT were polling. The FT polls salary data of alumni who graduated three years ago. There is some data, such as the percentage of women students and the percentage of international students that pertain to students who were admitted after the visa changes were introduced. It is not entirely clear to me how the visa changes would have affected women students more than men (unless women are over-represented in the non-EU proportion) but I can see how it might affect the percentage of international students. However, given that most British schools already do very well on this measure (Cambridge had 94% in 2011 and 91% in this year), it is not a given that this data point would cause much fluctuations in the overall rankings, especially since EU citizens are not affected by the visa changes and are still counted as international.
I am also baffled by Byrne’s argument that falling enrollments will lead to a drop in GMAT and GPA. This would be the case if a school had reached a certain capacity, and in the face of a drop in application numbers, tried to maintain its class size by dropping its admission standards. I have already commented in an earlier post that I do see some of this happening already and I don’t believe it only applies to UK schools. However, at Cambridge, we decided to reduce the class size last year rather than take a hit on admission standards.
I am probably being overly harsh on Byrne, who has written some good analysis on rankings in previous posts. One point that he has made consistently and which I am in complete agreement with is that a major flaw of rankings is the large year-on-year fluctuations. Anyone who has ever attended an MBA would know that the programme or recruitment sides do not change so greatly over the course of a year that a school can catapult up or careen down more than five places in the course of a year. This applies to Cambridge as well. I was not working in the business school when we were ranked 10th and then dropped to 17th, but nobody that I spoke to could give a compelling argument to explain what had happened in the two years.
I suspect that a lot of this volatility is due to the role that exchange rates and PPP calculations play in the calculations. If I take Cambridge as an example, we have a very diverse international student body. While the majority of students work in the UK post-graduation, that percentage has been decreasing over the years as more students return to home countries where economic growth is strong. But if I look at the pound vs the dollar exchange rate over the last year, the £ lost almost 10% of its value with a big dip in September when the FT sends its surveys to alumni. So, if there is going to be a decline in the rankings of British schools, it might well be due to the currency fluctuations rather than the visa changes, unless a British school has a high percentage of students who work in the US, in which case they benefit from that currency movement. I suspect that the PPP calculations also work in the favour of schools with a high percentage of students working in India. However, this is a double-edged sword as one can see from the experience of CEIBS, who went from 8th to 22nd and then 17th in two years as result largely of changes in the PPP calculations.
The other issue is the response rate to the alumni survey. Given that the FT accords more than 50% of a school’s performance to data from alumni, I always wonder what impact the response rate has on the final salary reported. The FT only requires a minimum response rate of 20% so almost half a school’s ranking could be determinded by less than a quarter of the class. As a member of the industry, I am always concerned that candidates could be making their application decision on what could be faulty data.
The major philosophical issue that I have with the entire rankings industry is the move to homogenity that it has created. It does not take a rocket scientist to dissect the methodology and reverse-engineer how a school could do well in the rankings. One strategy would be to focus on recruitment into high-paying jobs such as finance or consulting. Another strategy would be to admit younger students who could fit into the graduate recruitment programs in these sectors and who have a higher salary increase potential. Any business school who chooses to focus on industry or other sectors would be under intense pressure every year when the rankings are released.
What I would like to see is that candidates take the rankings as guide, understand the methodology and shortcomings, drill down the details but also have a clear idea what they want from a business school. Ultimately, your decision will be based on a combination of factual data, but also what feels right to you.
Thanks Mr. Conrad for your views and blogpost. I respect your analysis. However, what would you have to say about JBS’s
Branding? For instance, Oxbridge is a phenomenal undergaduate brands, but Cambridge JBS is fairly new and has not been tested nor tried. It could be argued they are tier 2 at best and the candidates nowhere near as strong as INSEAD and LBS, let alone the U.S. With respect to faculty, no one has heard of them and they are not on the same platform as marquee professors, such as, Michael Porter among others at HBS, Wharton, Stanford, Kellogg among others. Perhaps, the one Yr Stamp is not a bad things to get and helps the bottom line in terms of a quick ROI. With respect to
jobs don’t believe JBS get you anything great. Actually delved into employment reports and scrutinized. The decent stuff was all abt firms who sponsored their employees and they could not get into the top one yr programs – Kellogg and INSEAD, and it Cambridge’s top brightest talent often cannot compete with the likes of HBS, Wharton, Stanford, LBS, INSEAD for coveted positions in Private Equity, Consulting and Banking at the marquee names. Also the JBS brand name and Cambridge JBS name in the U.S. is fairly unknown and weak — why so? What is the university doing to strengthen it’s brand name and equity in North America (I understand have read about the school’s moves/steps in Asia). As a Stanford alum, what is your take on JBS? I’m sure you recognize it is relatively weak and why is this the case? When does the situation improve so students are getting the top tier positions in the banking industry and financial services including PE/VC etc. as opposed to being sidelined by the ivy leagues, and other top programs, such as, Stanford, MIT, LBS, INSEAD, Kellogg, Chicago among others.
Luke
According to the FT, there is a top group of the top 10, then a clustering of schools from 11th to about 40th, and then another cluster from that to about 70th position. And there are many reasons for that. One main reason is that, as you have mentioned, we are a young school that has chosen for other reasons to keep our class sizes small. Hence it stands to reason that we will have a smaller business school alumni (although all our students are part of the larger university alumni network), and therefore no one expects us to do well on the alumni recommend rank. Similarly for a young school, it will take time for our faculty to gain the same level of recognition as faculty in schools with a longer history. A school with a higher percentage of young faculty will also mean that there is going to be comparatively less research in the journals that the FT polls, although our faculty do publish in other journals. I could go on but I am conscious that I will begin to sound defensive and it would detract from the main point that I want to make.
What I think many people need to understand is that the MBA market is not a one-dimensional competition. There will be some programmes that are better than others for those who want to move into certain industry sectors and there will be other programmes more suited for those who want a different kind of environment. I wrote about the pernicious move towards homogenity that a blind reading of the rankings engenders. What I would like to see is the entire MBA industry (and by that I mean schools, admission consultants, alumni etc) being more upfront about what we offer so that candidates, recruiters etc can make more informed choices. For example, McKinsey was our top employer last year but we make it clear to candidates that it does not naturally follow that they will be following in the footsteps of the five who are now working there. Each of the five had certain characteristics that made them stand out and they worked very hard to get their job offers. I always cringe when websites showcase the top salaries of a graduate from some of the schools that you mentioned because it just gives candidates the impression that all they need to do is waltz in and they will get those stratospheric salaries and bonuses.
Now, people might say that five seems a small number but that again is a result of our decision to have a diverse class, a class where not every individual wants to go into consulting or finance. We also choose to have students with more experience and who can contribute more in the classroom . This is reflected in our marketing and our brand position and every year, there are 150-160 students who meet our criteria and for whom, that diverse, small class experience is the right choice for them. And a good proportion of our class come from consulting and finance backgrounds, and these are students who want the unique learning environment that Cambridge offers. On the careers side, many do go onto careers in consulting or finance.
There are of course costs, from a rankings perspective, to this strategic position. For example, we have taken strong candidates who were rejected by some of the schools you mentioned for being “too old” and hence did not have the same salary uplift that a young student would have. But we accepted these students because we believed that they had something to offer and would be able to benefit from our programme.
What I, and admissions professionals in other schools, would really like to see is more candidates who engage us to understand our MBA programmes more deeply, not just from the facts and numbers of careers, but also the culture of the programme, the personalities of our students and then they can decide whether this is a good fit for them, based on their own personalities and careers.
Hi Conrad,
Maybe this is what makes you unique….
I haven’t read till now an Admission Director so honest about the weaknesses of the selection process. Most think that their process is “perfectly holistic” thus they can pick the right candidates as if they were optimizing their investment portfolio.
When people realize that there could be errors when making decisions, it is when things start getting better.
I imagine that applicant’s selection is a tough job, because the problem is how to efficiently assess the leadership potential of a candidate since it’s what any renowned business school wants to imbue in their students.
GMAT and GPA talks most of the time about hard skills (pretty useful indeed), but not much about soft ones where leaders specially must have by lots.
Being pragmatic, I think that admission boards should improve the individual psychological variable in the selection process, working with specialists in the field (I’m not psychologist by the way). The most simple way to do that is by improving the essay questions. This part should extract all the neccesary psychological information from the candidate with questions that have more unconscious answers than consciously manipulated, helped sometimes for application advisers that have developed a very well paid business.
Well Conrad congratulations and I expect that your team continue keeping this kind of optimization line.
Best regards
JBS should make the right move and get rid of the GMAT. It is a waste of time. Focus instead on the psychological and sociological variables. Work with sociology professors to come up with a methodological approach that will allow them to select students who will be efficient leaders and represent JBS on the world stage. Not the listless number crunchers who practice rote memorization to succeed in the program.
Apologize to all, it was a reply for “Searching for the Rare Find” post.
Cheers,
The problem with schools like Cambridge is that they place too much emphasis on the GMAT and GPA. Standardized exams are bias and students who have grown up with these sort of exams do well on the GMAT. This does not mean they will make good leaders. JBS should take a page out of the Canadain schools who places more emphasis on interpersonal and communication skills, leadership qualities and a proven track record of success away from academia in their admission criteria.
I shudder to think that JBS with all the “intellectuals” still put the GMAT at the top of the list (or near the top) in the admission process.
Business school need to change their admission criteria. There are too many MBAs who are good number crunchers, but does not no a thing about leadership.
Regards,
JC