Is low salary a problem for applying for a good MBA program?

Question

This is my situation:

Gmat Score: I have been preparing it for some time, pretty sure i will get into the 700-730 range.

Work experience: I have been working in a small company (retail business) for 6 years. my title went from IT consultant, to Assistant GM, lastly to General manager. When i was in the management position, the business grew from 2 stores to 6 stores. The business also improved a lot in many other areas.

Undergrad GPA: 2.95, graduated from state U of new york with BS in computer science.

Target school: I am targeting MBA program in the 10-20 ranking. I really like McCombs (Texas), Darden (Virginia) , and cornell (NY).

MY Question:
As the subject stated, my salary is low. I just find out that i have to provide my salary information with the application. This makes me worry.

My starting salary was $20,000, and my ending annual salary is only $26,000. This is because the company just get started, and couldn't afford paying a lot to its employee. The owner offered me shares of the business as he promoted me. i didn't leave the company because i think the experience i got will be useful for my future career.

My concern is that,when my application is being reviewed, would they think that "this guy only making $26,000 a year as a general manager? There must be something wrong."

Is the low salary gonna be a problem? Is there somewhere in my application i can put a explanation about that? or maybe it is not necessary at all?

please give me some advices, THANKS!

aalba005 · Answer

Salary I feel signals the school to the value you brought to your prior organization. Also quite a few rankings utilize the salary pre mba and salary post mba so some schools might be wary at the low income figure.

Most schools allow for an optional essay where you can explain the situation in more detail.

The schools you're targeting are quite competitive, especially Darden.

If you get a strong GMAT score, frame your salary situation the best you can and maybe work on an alternative resume (extra course work before business school) in 2-3 courses at a local CC and get good grades you could have a better shot.

I'm amazed you stuck it through 6 years you must really enjoy the work you do. Good luck.

novanative · Answer

Businessweek does disclose the salaries of incoming students but I don't think that low salary will hurt your chances at admission. It's what you do at your work that matters more at the end. Even if the salaries count, it's going to be minimal as compared to your GMAT, and other factors.

Most students in business school come from larger companies and thus they can afford to pay more to their employees. You are probably going to be the only guy applying to an MBA program from your company the year you apply.

corneytines · Answer

people working at start ups or non-profit may add a lot of value but not make as much $$$. people working in finance may make a lot but not really be helping the world. may even hurt the world. I think that increase in salary shows that your employer feels you are doing well. That increase may matter more than the actual number. Your increase is very low, even smaller than inflation. That could be an issue that you would want to explain. Or your manager could explain for you.

aalba005 · Answer

While I agree people at start ups usually make less at first, in my opinion I think the figure is quite low for the level of responsibility he has. Usually owners will be in the red for a while especially for a capital intensive venture but to attract quality employees the owner would have to offer a wage within 20% of the industry average at the very least.

I have quite a few friends leave the firm i work for to join start ups and they all matched the current salary that the consulting firm was paying on top of adding stock incentives. First time i have heard of startup offer <50% of going rate for the amount of responsibility he is taking on, he definitely should be making quite a bit more for the work he does, just my 2 cents.

novanative · Answer

I agree myself. The tough thing is that the OP wants to get into business school now and trying to get a new job sets up some tension.

To Kchen: Do you have another part time job to supplement your income? The salary either way is very low. But smaller companies definitely tend to pay smaller bucks.

leokoo · Answer

Guys, thanks for the reply. Just some additional information about why I am considering MBA.

The company I work for is growing, but is not growing as well as i thought. it is definitely not to the point where everyone get paid big bucks.

i devoted myself to this company even thought the paid is very low, because i thought it has great potential (especially the equity the owner offered). But starting these couple years, i start seeing more problems in this business which are not so easy to fix.

This is partially because the owner start pointing the business to a different direction, which i think hurts its growth. also, the fact that neither me or the owner has any academic background in business administration is also a factor that things are slowing down. this is actually one of the reasons that i start considering MBA.

I have experience in managing people, i made progress in my job through out the years, I got to see the big picture of running a company, and the owner will write me a good recommendation and even explain about the low salary and the equity he offered.

My goal is to learn more about business administration thru the MBA, and have a career change to the Information System field in a bigger company (i have a BS degree in computer science).

Do you guys think if I could present the above information properly in my essay, it is enough to explain the low salary, and to answer the question “Why MBA”?

Answering novanative's question:
I do have a part time job, which is more related to the IT field. That was actually my first job, i worked as a full time Networking Support Specialist. I was promoted to be the team leader after a year. but i step back to a part-time position (mostly night and weekend shifts) as i get started with my current full-time job at the retail company. my supervisor from the IT company will also write me a recommendation about my work performance and leadership skill while i worked as a team leader.

novanative · Answer

I debate on whether you should explicitly mention your salary yourself even in an optional essay, because I don't see it as a red flag, but I don't think you should.

Working at a smaller company is not supposed to hurt your chances even at the top 10 schools, otherwise everyone will only come from companies like Bank of America, Goldman Sachs, Wells Fargo, Google, Accenture, Apple (as long as it's not the retail store), McDonald's corporate offices in Chicago, facebook, and BCG. Not everyone who goes to b school is making over 70K/year each even though yes, people who make this much at these companies likely need the MBA if they want to keep their jobs in the long term assuming they want to stay.

Any issue on this should be left to the recommender in my opinion. Let him explain that explicitly so you don't have to say "I want to go to your school to increase my salary from my current job", even in nicer words.

GMATLA · Answer

I'd like to take a stance a little towards the other side here. In an open market (which the job market technically is) people get paid what they are "worth". I personally believe that regardless of who you are, you've been well underpaid for a long time, and I'm very surprised you stuck with it. $26,000 is tough to live on! Plus, only $6,000 raise in 6 years is less than a 5% raise/year. In fact, this salary is only about 50% more than minimum wage at $13/hr. Some of the people you will be applying against will make 3,4,5x that amount. You could make more serving tables.

That being said, unless your company is doing great things for the world, adcoms are really going to wonder why you havn't taken another job. Especially since you have no equity in the business. It's like you're getting paid start up salary, but no potential of the startup upside if they take off. Business schools like to see people that take some level of calculated risk, and don't settle. 6 years is a long time to figure out that the company isn't headed the direction you want it to head.

Although I don't think this will be a lead sinker on your application, I advise that you apply to a pretty big list of schools, with wide range of chances of admittence. Get into the best school you can, and get the heck out of that company. If it's a sinking ship, you don't want it to take you down with it. Don't let the owner continue to take advantage of your work. You're getting paid less then a manager at a Fastfood restaurant. I think you provide signficant value, so don't let someone under value you. Plus, don't let someone "offer you equity" and fog your vision, becuase your equity piece could be worth $0. If 6 years isn't enough for a slice of the company at a $26,000 salary, then I don't know what is!

On the other hand, if you REALLY LOVE what you do, and you are ok giving up the benefits of making more money, then maybe you're just a better person than I.

leokoo · Answer

novanative:
thanks for your fast reply!

so in your opinion, it is helpful that the owner can mention about the low salary is not because of poor performance, instead it is because the company still at its startup phase, and mentioned about the equity he offered to show my value to the company, right? 
if he can put something like that in the recommendation, i don't even need to make it a big deal in my essay, correct?

to answer your previous question about my part-time job: I do have a part time job, which is more related to the IT field. That was actually my first job, i worked as a full time Networking Support Specialist. I was promoted to be the team leader after a year. but i step back to a part-time position (mostly night and weekend shifts) as i get started with my current full-time job at the retail company. my supervisor from the IT company will also write me a recommendation about my work performance and leadership skill while i worked as a team leader.

leokoo · Answer

GMATLA:
thanks for your suggestion.
so i guess the getting into a MBA program is the right direction in order to make the career change, right? 
with a 700+ gmat score, i was hopping to get into a school that is around the 20th ranking like McCombs. i guess i will take ur advice by apply a bigger range of schools and see what happens.

novanative · Answer

I also work at a start up but the business this year is in a good position to take off fortunately. But yes, I'm paid considerably more than the OP and I'm not a big manager here. I'm not making even close to the 70K base that many of my friends who were business majors are making in our current age groups, but I certainly make a lot more in base salary than 26K after six years of WE.

I do agree with you that the OP should look for a new job somewhere else, but depending on what term he wants to apply for, it may not help his chances to do so because his supervisor there is going to be a BIG LOR writer.

Another issue in the job search for the OP is that another company that may like him in the application phase but may want to really low ball him salary-wise because of his previous salary if he's asked about it.

novanative · Answer

Yes, just that. I don't think you should make too much of a fuss yourself about your salary. The part time job and the rec there is also a plus.

whitie8lax · Answer

I would think with a good GMAT, essays and lower salary your chances could improve if you demonstate the school is the proper fit for you.

If you consider the opposite issue if you apply to a program with a current salary close to the average exit rate of the program it could potentially hurt you as programs care about yield and ROI due to some of the rankings taking this in to account.

imaProfessor · Answer

No. It shouldn't hurt your chances of getting into a good b-school. 
I know that there are many evil bosses out there who dump their staff with tons of responsbilities only to pay them peanuts in return. 
Focus on your job responsibilities and you'll be fine. Darden/Cornell/McCombs will look at you favorably if you have a good GMAT score of above 700, are less than 30 at age of application and have a strong career profile. I applied to all schools before so I know how they are like.

Jock4MBA · Answer

I heard from adcomms that salary is one data point as BSchools take a holistic view, low income is not a dealbreaker and a high income does not ensure your admission. Applicants from low income countries earn less in $ terms and the same apply to US applicants from non-profit, government and possibly SMEs. BSchools will put you in a peer group, so you can elaborate on your responsibilities, professional growth besides earnings and ECs. Go easy on titles and avoid 'I am a general manager, hence I am a strong candidate' mistake. If you wish, you can address your income in optional essay, don't be too defensive. I concur that you may need to cast a slightly wider net of target schools. Good luck

dzodzo85 · Answer

I never knew that salary could also be a factor for getting into a good MBA programme. But I still believe that schools will look more strongly on the GPA,GMAT score, recommendations, and essays. If that was the case, then I would be in big trouble. :shock:

cecilpaladin32 · Answer

Sorry to hear about your situation. The first job I worked at after finishing my undergrad paid me very little and I wound up quitting a few months ago. I am starting to regret that quite a bit, at the moment -_-. That being said, I think there is something to be said of loyalty, and I believe that working at the same place for a long time is certainly admirable. Assuming you get an excellent letter of recommendation from your employer, I would think that would reflect very well on your character and work ethic, regardless of the compensation level. Best of luck.

cheetarah1980 · Answer

I'm going to have to agree with GMATLA. I don't think the salary itself is what will hurt you. It's the fact that your salary has shown little increase over 6 years. Seeing someone who is a manager only making $26,000/year would make me question the caliber of the company. At top schools where you work is just as important as what you do, if not moreso.

May I ask what line of work you are in? Is it even an industry that b-schools favor in terms of experience. If it is, schools will wonder why you haven't moved on to bigger and better things. If it is not they may think that your experience doesn't fit with what they need. Either way, I think the low salary over 6 years of employment is definitely going to raise a red flag.

tctc33 · Answer

This is so very true. As much as business schools like to brag about their diverse classes, it's not really the case. Look at the series Poets and Quants did recently where they went through the Facebook class pages for several top schools and broke down the class by previous education and work experience. Maybe I shouldn't have been, but I was shocked at what a high percentage of each class came from just a few schools and companies. Of course, I didn't go to any of those schools or work for any of those companies, so I was probably just horribly naive about how that particular treadmill operates.

Is low salary a problem for applying for a good MBA program?

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