Employers Explain Why MBA Salaries Are So High

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Money may not be able to buy happiness, but a bigger paycheck wouldn’t exactly make you sad, would it? One of the top professional goals among prospective MBA students is to make more money, and survey responses from alumni show that their post-MBA salaries don’t disappoint. Overall, nearly 9 in 10 MBA alumni agree that their degree increased their earning power and just as many rate the overall value of their degree as good to outstanding.

Business school graduates tend to earn more than their peers

What’s more, in a recent survey of more than 700 global corporate recruiters, 3 in 4 recruiters reported that employees at their organization with a graduate business school education tend to earn more than those without. Recruiters from Fortune Global 500 companies were especially likely to agree (85%), as were recruiters from the health care (90%), products/services (80%), technology (78%), and consulting (77%) industries.

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Data from last year’s survey shows that adjusted for inflation, the median annual base starting salary that US companies planned to offer new MBA hires in 2019 was the highest on record (US$115,000)—notably higher than the median offered to direct-from-industry hires (US$75,000)—and more than double the median offered to new bachelor’s degree hires (US$55,000).

Use our interactive tool to estimate your post-MBA salary.

Though median starting salaries vary considerably by world region, MBA graduates who land opportunities with companies in the Asia Pacific and Europe also command a salary premium. European companies planned to offer new MBA hires a median starting salary of US$95,000 in 2019, compared to a median of US$35,000 for bachelor’s degree new hires, and US$45,000 for direct-from-industry hires. Asia Pacific companies planned to offer a median of US$45,000 to MBA new hires, compared to US$25,000 for bachelor’s new hires.

Past research has shown business school graduates have, on average, multiple times the purchasing power as the average worker in many different countries around the world. For example, business school graduates in India have 6.2 times the purchasing power of the average citizen, based on gross domestic product purchasing power parity. The analysis found business school graduates’ purchasing power to exceed that of that average person by 5.6 times in China, 6.8 in Nigeria, 3.6 in the United Kingdom, and 2.0 in the United States.

Why are MBA salaries so high?

What makes MBA graduates so valuable to companies? For one thing, MBAs can hit the ground running and make a positive impact in a short period of time. Overall, 9 in 10 global corporate recruiters say they are confident in graduate business schools’ ability to prepare students to be successful in their organizations.

Specifically, a majority of recruiters say the reasons for their high confidence in business school hires are that they have a versatile skill set (72%), they are strategic thinkers (71%), and have strong communication skills (69%).

MBA graduates’ versatile skillsets make them extremely attractive to employers

The broad-based, generalist curriculum of MBA programs span the spectrum of topics relevant to business leadership, providing students with a solid footing in the principal concepts that will underpin their career development for decades into the future.

“An MBA is a very effective way to broaden your skillset very fast,” says Zaneta Motkowicz, head of training and development for MBA and Master programmes at SDA Bocconi School of Management. “It’s the perfect opportunity to build up your strengths and expand and diversify your skills in new areas.”

The breadth of knowledge that MBA new hires bring to the table makes them a great match for leadership positions, especially in overseeing teams from different functional areas.

"Business school challenges students to juggle many responsibilities and still excel. You learn what to do, and what not to do, because in the real world you cannot do all things."—Recruiter from a Fortune Global 100 health care company in the United States.

Strategic thinking ability sets MBA hires apart in the hiring process

The number one subject that MBA candidates agree is a “must-have” in their ideal curriculum is strategy, and for good reason: strategic thinking is a major skill that sets MBAs apart from the pack in the hiring process. Overall, 59 percent of global corporate recruiters identify managing strategy and innovation as the number one most important skill for business school graduates to possess for current job openings.

See the other six subjects that a majority of MBA candidates say are a “must-have” in their ideal program.

“Many MBAs are being asked to come in at a level where they are managing people. They’re being asked to make strategic decisions (not just implement them), and they’re being asked to creatively solve problems, which is what innovation truly is,” says Abby Scott, assistant dean for MBA Career Management and Corporate Partnerships for the Haas School of Business, University of California Berkeley. “This skill perfectly suits what an MBA teaches, and employers can gain genuine value from it.”

Looking to the future, recruiters predict their demand for strategic thinking will only increase. Sixty-two percent say that managing strategy and innovation will experience growing demand in the next five years—more than any other skill in the survey. This is a strong indication that investing in your strategic thinking abilities now will have major career benefits in the future.

Read more about the business skills employers will want in the post-COVID world.

Communication skills and other soft skills are a key differentiator

Communication is one of those things that we all do every day, but many of us do it poorly. The good news is that effective communication is learnable, and business school is the place to master it. In a survey of full-time MBA alumni, 4 in 5 agreed that business school played a meaningful role in developing their communication skills.

“An MBA combines hard data and tech skills with soft skills like emotional intelligence and empathy—which are increasingly important in the digital world and will only grow in demand in the future,” explains Dr. Christine Menges, director of the MBA Career Center at WHU - Otto Beisheim School of Management.

Recruiters most commonly identified interpersonal skills as important to their current job openings, which include communication and soft skills like active listening, social perceptiveness, coordination, and, persuasion and negotiation. Particularly as the business world becomes increasingly digitally focused, the importance of human connection and understanding for managers will increase significantly. Overall, 57 percent of recruiters say interpersonal skills will grow in demand over the next five years.

Read why companies need managers with soft skills more than ever.

Now is the time to invest in yourself with an MBA

If making more money is an important part of your career goals, an MBA is a great way to get there. The skills you’ll develop through your program will set you apart in the hiring process and put you on an accelerated career path, taking you where you want to go more quickly. In fact, 7 in 10 recruiters from Global Fortune 500 companies agree that business school graduates tend to have a fast-track to upper level positions at their organizations.

Are you ready to earn an MBA salary? There are more than 3,000 MBA programs for you to explore in Program Finder! Start the search for your best fit program today!

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