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MBA Pay - How Much $ MBA Can Generate Over Your Career

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MBA Pay - How Much $ MBA Can Generate Over Your Career [#permalink] New post 09 Feb 2009, 23:14
MBA Pay: A Crystal Ball
Exclusive new research shows how much graduates of top business schools earn over the course of their careers

http://www.businessweek.com/bschools/co ... =rss_daily
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Joined: 26 Nov 2008
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Schools: Chicago Booth, Class of 2011
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Re: MBA Pay - How Much $ MBA Can Generate Over Your Career [#permalink] New post 09 Feb 2009, 23:55
The survey is interesting, but in the end has major holes. It's interesting to compare these starting salary figures from this report to the starting salary figures from the BW rankings tables. Some schools like Stanford apparently only get $3K extra in total compensation relative to the ranking data, while schools like Wharton are >$20K/year more. I just don't get it...there's clearly some discrepencies between the data sets, which is discouraging, as the data is put out by the same source.

Moreover, this data is completely different than Forbes' 5 year data. Of course the data sets are generated via different means, but the point is that these types of surveys are quite innaccurate, or at a minimum, have a very high standard deviation. Here's a link to the recent Forbes data (well, kind of recent).

http://www.forbes.com/lists/2007/95/lea ... _Rank.html

Forbes claims that at the 5 year mark, graduates from Stanford and Harvard are at $200k in total compensation, whereas the stats from BW are wildly lower (H=150K, S=139K). The numbers from Forbes seem to make more sense to me, but perhaps I'm being optimistic.
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Re: MBA Pay - How Much $ MBA Can Generate Over Your Career [#permalink] New post 10 Feb 2009, 05:14
I think the reason for the discrepency might be this little snippet from the BW article: "The data suffer from some inherent limitations—it doesn't include stock or options". I'm sure a good portion of post-MBA pay comes from these, especially as graduates climb the corporate ladder over their careers. Seems almost silly to exlude those numbers from the figures. Lloyd Blankfein (Goldman CEO), had a $600k salary last year and got nearly $60mm combined in bonus/stock options (42mm from Stock options/awards alone). Kind of changes the figure doesn't it?
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Re: MBA Pay - How Much $ MBA Can Generate Over Your Career [#permalink] New post 10 Feb 2009, 12:32
Agreed - I caught that little snippet about no stock comp, etc. It's extraordinarily misleading, as for tech and at least public finance companies, the bulk of pay comes from options, etc. Oh well...good data nonetheless.
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Re: MBA Pay - How Much $ MBA Can Generate Over Your Career [#permalink] New post 10 Feb 2009, 15:22
The other potential major hole is the underlying assumption that there are no structural changes to adult working lives - that since the working lives of past generations were linear, it will continue to be linear for the current and future generations.

And in my opinion, the world has changed a lot even in the past 5-10 years.

I am willing to bet that at least half of you will change to a completely different career within 5-10 years after b-school, and that such a change will be discontinuous (i.e. your past experience won't help you at all, meaning you have to start over). And of that half of you that do make the switch, a good majority will be in a non-business career. Some of you will change by choice (you get sick of business, or you found another calling), and some won't be by choice (you plateau and get laid off, forcing you to change). Moreover, I am willing to bet that most of you won't stay in a business-related career on a continuous basis over you entire working life (i.e. you start off post-MBA in finance, then become a teacher, then take a few years off to focus on your kids because your spouse's career is really taking off, then maybe an elected official in your municipality, then back to business as an independent consultant, etc.).

The shelf life of a career especially in business is getting shorter and shorter. As such, you really can't use long-term compensation data if your working life is going to be a series of discontinuous changes. And that is going to apply to enough grads (dare I say the majority) that looking at long-term compensation data won't really tell you anything.
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Re: MBA Pay - How Much $ MBA Can Generate Over Your Career   [#permalink] 10 Feb 2009, 15:22
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