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# Critical Square | MBA Rankings And How They Work

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Critical Square | MBA Rankings And How They Work [#permalink]

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17 Jul 2014, 13:07
MBA rankings are a great way to identify potential programs and determine how they align with your goals! But, at the end of the day, rankings are just a part of the puzzle. There are a lot of programs out there and they’re all amazing in their own ways.

In this post, you’ll find, in once place, a collection of the major rankings and how they work. Some focus on the US, some are global. Some look to a variety of factors and some focus in on just a handful. Meaningfully using rankings is more an art than a science and we encourage you to really understand what’s important to you before you start getting “rank happy” as we call it.

Oh don’t even lie – you know you do it! We hear it every year, “well I’d like to apply to Harvard, Stanford, and Wharton”. Y’know what? Of all the MBA programs out there, there is probably no better set of 3 schools that share less in common with one another. They are so different, it’s almost ridiculous. Other than a strong brand, they share very few similarities. So how can schools so different come out tied for #1? Well, knowing how rankings work is a key first step. So read on you brave MBA warrior you!

US News & World Report

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US News & World Report is one of the more widely used programs out there and our ranking of choice at Critical Square. They take into account 3 main factors: School Reputation, Placement Success, and Admissions Selectivity.

School Reputation: This counts for 40% and is a factor of two polls – deans of other accredited programs and corporate recruiters.

Placement: Placement constitutes another 35% and looks at placement at graduation, 3 months after, and salaries/bonuses.

Student Selectivity: The final 25% goes to Student Selectivity and takes into consideration GPAs, GMATs, and acceptance selectivity.

Pros: US News considers more factors than most but doesn’t overdo it. Rankings also tend to be more stable from year to year.

Cons: The weights given various factors can provide certain schools with inherent advantages. Also, some data is provided by the schools themselves, introducing bias risks.

The complete rankings can be found [here].

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Businessweek ranks the top programs on what it judges are the two most important consumers of an MBA: students and recruiters. Businessweek was first to rank MBAs and is compiled every other year. Recently, it added intellectual property to its ranking methodology.

Student Survey: The survey, which accounts for 45% of the total score, asks current and former students to rate their experience across a variety of factors including academics, involvement, and culture.

Recruiter Survey: Responsible for another 45%, the recruiter survey asks recruiters to assess programs based on the talent they observe and those they hire.

Intellectual Capital: The final 10% goes to Intellectual Capital which is Businessweek’s way of determining the value of the softer, academic assets of a particular program. It looks to academic publications as a proxy.

Pros: The original ranking system, it has a simple approach and a long track record. It goes directly to the consumers of the MBA.

Cons: Given its emphasis on surveys, there is significant room for bias. It also only looks to US programs. Lastly, programs can fluctuate wildly between rankings.

The complete rankings can be found [here].

Financial Times

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Financial Times is one of the few publications that rank ~100 programs globally and it does a pretty good job putting all the programs on equal footing when it comes to evaluation. They began ranking programs in the late 1990s and have continued to develop their methodology, although develop does not always equal strengthen.

Career Progression: Accounting for ~55% of the score, career progression is by far the most important factor in the FT rankings. They use 8 factors but the factor most heavily weighted is the salary 3 years after graduation. A host of subjective factors and distributions, however, can skew results.

Diversity of Experience: Financial Times, because they rank globally, really care about diversity. This 25% of the score looks to the number of international students, women, languages spoken, etc.

Research: The final 20% comes from research. FT looks to the number of professors with doctorates, rating of faculty publications, and a variety of other metrics. This is a criteria off the beaten path and should be taken with a grain of salt!

Pros: This ranking is by far the best ranking on a global stage. Other rankings don’t come close. It also looks at a diverse set of factors.

Cons: However, FT’s rankings raise a few eyebrows and their data lacks credibility at times. For example, it ranks LBS above Wharton and states ISB alum make more than those from Kellogg.

The complete rankings can be found [here].

Forbes

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Forbes has one of the simplest ranking methodologies out there. They look at the ROI students receive 5 years after graduation. They not only include tuition and fees, but also look to opportunity cost.

If you’re interested in the ROI of your education (and very few students aren’t!) then this is a great ranking methodology. The last ranking came out in August 2009 and boasts a pretty strong survey response rate!

Pros: Data isn’t reported by schools, so there goes a pretty substantial source of bias.

Cons: ROI is great and all, but it isn’t the end all, be all factor. There’s more to an MBA!

The complete rankings can be found [here].

The Economist

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MBA rankings provided by the Economist are unique because they heavily factor in student responses that include a mixture of hard data and subjective ratings. Their methodology accounts for new career opportunities, personal development/educational experience, increasing salary, and potential to network. Because of these factors we observe schools ranked in orders that are dramatically different from what you might see on US News or Forbes. Another observation is that you typically see more dramatic rises and falls across the board with the Economist that is usually not seen in other MBA rankings. For example Stern and Columbia move down 4 and 5 spots respectively from last year’s rankings (moves are across the Economist’s total list of rankings which include international schools in additional to US schools). If you factor in international MBA programs into the rankings you see schools like Queensland (Australia) and Hong Kong University jump 13 and 17 spots respectively to crack the top 25.

Because of these observations, many like Fast Company and BusinessWeek former editor John Bryne question (here's the article) the credibility and validity of the Economist rankings. According to an article in Poets and Quants by Byrne, 80% of the ranking is based off of unaudited information from business schools and also include criteria such as percentages of international and female students, range of overseas exchange programs, and number of languages offered that does not influence the quality of education received by students.

While we respect the Economist and the great work that they do, their MBA rankings remind us to do our homework when evaluating schools and recommending the right schools to our clients.

PHEW! Was that confusing? Yeah, we know it is. That’s why so many people sign up to chat with us. It’s great to speak with someone who knows the process and schools inside and out! Not sure which programs are right for you? We can help. So reach out – sign up for a free consultation or drop us a line in the Critical Square subforum.

The obvious next questions is, now that you have all the rankings figured out, how do you decide which programs are right for you?! Well, you can rest easy tonight - we have an awesome page dedicated to just that! What are the odds? [You can find it here].

Good luck!
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Critical Square | MBA Rankings And How They Work   [#permalink] 17 Jul 2014, 13:07
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