Climbing up the career ladder: Why an MBA pays for itself
Many professionals who have reached a certain point in their careers feel compelled to enrol in a Masters in Business Administration (MBA programme), to equip themselves with the right knowledge and skills to take on higher management positions.
An MBA can add specific business skills to your toolkit that can all work in your favour. MBA programmes have been helpful in opening new and bigger career opportunities and promotions that lead to improved remuneration and compensation.
However, MBA programmes come with a financial and time cost factor – a good MBA programme from a reputable higher learning institution can set you back by about US$100,000, on top of the two-year investment.
MBA graduates who complete accredited programmes are also found to enjoy good prospects for employment in any industry. In fact, 84% of those who graduated from the 131 MBA programmes ranked by U.S. News found employment within three months, according to a survey of recent graduates.
MBAs offer different specialisations and many universities and business schools offer MBA programmes through various modes of study. Online MBA programmes are becoming increasingly popular, allowing students the opportunity to balance their careers while studying.
Whether earned full-time, part-time, or online, an MBA degree grants an opportunity to propel your career forward. Here’s why the initial investment cost of an MBA programme should deter you from earning this qualification.
An MBA programme can give you a salary boost
One of the most appealing elements of an MBA program is the substantial salary increase that you can expect post-graduation. According to the QS World University Rankings: Global MBA Rankings 2019, MBA graduates can expect an average salary increase of 77%.
This report is supported by findings by The Graduate Management Admission Council (GMAC), a global association of leading graduate business schools.
The council, in partnership with MBA Career Services and Employer Alliance and European Foundation for Management Development (EFMD) released its Business School Hiring Report based on findings from the annual Corporate Recruiters Survey.
The report shows trends in hiring and compensation for MBA and business master’s graduates based on responses received from over 1,200 employers in 45 countries worldwide who work directly with participating business schools.
In the US, the median annual base starting salary US employers offer new MBA hires in 2019 is US$115,000. This is more than double the median for new bachelor’s degree hires (US$55,000) and the highest ever recorded in the US.
In other words, a candidate with an MBA can expect to earn twice as much as a degree holder.
MBA starting salaries differ by field and by specialisation but the good news is, there are many specialisations to choose from.
For example, an MBA that specialises in consulting prepares experts ready to offer an outside opinion for challenges faced by companies and in the US, experts in these sectors and are very well paid.
MBAs hires in the consulting sector can expect to earn annual salaries of up to US$135,000 across industries.
According to Monster, a global online employment solution for job seekers and employers, MBAs specialising in strategic functions are best in terms of return of value. This specialisation equips graduates with the ability to carry out management-level decisions that influence a company’s success. Management consultants, senior product managers and finance managers, in charge of strategic direction can earn as much as US$127,000 a year.
MBA graduates who specialise in technology management and work as leaders in the technology sector can make up to US$113,000 a year, with information technology directors earning up to US$147,000 a year.
MBA graduates specialising in finance also have a lot to gain with finance managers making up to US$112,000 a year and chief financial officers making a whopping US$183,000 a year.
Commenting on employment opportunities and remuneration, President and CEO of GMAC Sangeet Chowfla said, “Employers clearly place a high value on acquiring an MBA.”
These positive trends are similar across the globe. The Business School Hiring Report states that in 2019, 56% of employers increased MBA starting salaries. These numbers include 63% of Asia-Pacific employers, 56% of US employers, and 49% of European employers.
Additionally, The Princeton Review cited even more positive findings on the return of investment of an MBA. The report which calculated the return of investment of an MBA degree as the difference between the average 10-year earnings of a bachelor’s degree-holder and an MBA graduate, and found that an MBA graduate earned up to 300% higher.
To relieve costs and avoid debt from loans, students can take advantage of financial aid programmes for graduate school like scholarships and grants, academic fellowships and tuition assistance programmes through their employers.
In fact, many major Fortune 100 corporations even assume partial or the entire cost of an MBA programme for their employees, which is a strong option for those who want to maintain their careers and upskill themselves at the same time.