League table winners and losers - By Michael Jacobs
Published: January 25 2010 00:01 | Last updated: January 25 2010 00:01 (Financial Times)
The Financial Times Global MBA rankings for 2010 see London Business School claim the coveted number one spot, having shared the prize with the Wharton School of the University of Pennsylvania in 2009.
Comments from alumni of the school's 2006 MBA class, surveyed in 2009 as part of the 2010 rankings process, point to a broad educational experience. "One of the best decisions of my life was to go to LBS for a full-time MBA," says one alumnus. "[It] has enriched my life, from education to career development, to making new friends and gaining new perspectives."
Another adds: "You not only learn from the school curriculum but from the deep cultural diversity of the student population. There is no place else that can offer this advantage to the extent that London Business School does."
LBS is ranked eighth in the world by the FT for faculty research, and it is ranked fifth for alumni recommendations in 2010. Compiled from data collected by the FT from the classes of 2004, 2005 and 2006, this indicator is based on the business schools from which the survey's participants would recruit MBA graduates.
LBS is almost top of the table for international mobility, too, second only to IMD. This not only reflects the international make-up of the student body, but also the world view of the programme. One alumnus explains: "I believe that this is one of the very few business schools that has really understood what a globalised world means, and one of the few in the world where one can have a real understanding of global business in the classroom."
The gradual rise of LBS in the FT MBA table over 12 years – it was ranked eighth in the inaugural MBA ranking in 1999 and had attained second position by 2008 – indicates a broader trend: the diminishing dominance of US-based schools over the past decade. Joining LBS in the top 25 in the 1999 rankings were 20 US-based schools and four other European institutions. The FT rankings introduced a top 100 in 2001 and, again, the top 25 contained 21 US schools. Since then, the number of US schools in the top 25 has decreased, reaching 11 in 2008, and this year. The remaining 14 schools in 2010 are made up of 11 from Europe and three from Asia.
One important factor helps explain this shift: from around 2005 onwards, the return on investment from studying an MBA, measured in terms of salary increase, fell considerably, especially in the US.
It was once commonplace for MBA graduates to triple their salary between starting their programme and three years after graduation. But such increases are now rare. Between the 2000 and 2003 FT MBA rankings, alumni from at least 20 of the top 25 schools enjoyed a salary increase in excess of 150 per cent. Given the US bias of schools in the top 25 during that period, almost all the big pay increases related to schools based in the US. In comparison, the 2010 table includes just two alumni groups out of the 100 with such levels of growth in income. Neither is based in the US.
Why has an MBA become less effective in boosting pay? First, while the calibre of students entering a programme has stayed more or less the same over the past decade in terms of age, experience and seniority, salary data relating to earnings before the degree have increased consistently year-on-year.
At the same time, salaries obtained three years after graduating from an MBA have not increased at the same rate. In fact, the average salary of the class of 2006 is more or less in line with that earned by the class of 1999, a decrease in real terms. Consequently, salary increases have been squeezed, reaching an average of just below 100 per cent in 2009.
In spite of the fall in the number of US schools in the top 25, the league of 100 still has a strong contingent of schools based in the US – 56 of those ranked in 2010 are located there. The UK is the second most represented country, with 17 programmes listed. Overall, the top 100 includes 20 different countries.