Contemplation: Is An MBA Worth It?

(Addition: Just found an interesting article on "Is an MBA worth it" from the Globe and Mail in March 2008 and thought I would edit this post to include a link to this site.)

Is an MBA degree worth it? After lost wages and tuition does this opportunity payout? Would you be better off just sticking to your current position for the next decade?

The majority of us will work to earn a our living. In today's society you could be working a long time. Although I am attempting to quantify the monetary advantages of an MBA, I cannot even begin to assess the emotional, intellectual, and social rewards of an MBA. Can you really put a price on enjoying your employment? If you are like me then you had to suffer through countless student summer positions that redefined boredom and uselessness firsthand. Perhaps you had a position that tried your patience to the point of driving you to the brink of insanity? If you have, then I'm sure you can agree that finding enjoyable employment is PRICELESS. I believe an MBA will help me with this, but it may not do that for everyone.

With that stated, let's continue with the analysis of this opportunity.

To test the value of an MBA I assembled a few scenarios. All of these involve certain assumptions, which anyone can criticize, but as they were used in all cases I would argue much of the error caused by incorrect assumptions cancels out.

To provide a sufficient time scale I chose to look at 10 years. All of the scenarios started with 1 year of employment at my current position. After that they explore a variety of paths. I then compared them to the base case of staying at my current position. All cases assumed an 8% pay increase every year, but it doesn't matter as the affect is irrelevant as I explain further down.

• Scenario A: Base case. Do not return to school. Work at your current job with steady pay increases every year.
• Scenario B: Work in previous position for 1 year, return to school, enter new industry at a slightly lower salary, but receive a 50% one-time increase after 3 years in after gaining experience. (Note: This increase would either come from changing organizations or being recognized for your new expertise within your current organization)
• Scenario C: Work in previous position for 1 year, return to school, enter previous industry at same salary with potential to enter management position, but never get the chance.
• Scenario D: Work in previous position for 1 year, return to school, enter previous industry at a higher salary with potential to enter management position.
• Scenario E: Work in previous position for 1 year, return to school, enter previous industry at a higher salary with potential to enter management position and extra compensation
• Scenario F: Work in previous position for 1 year, return to school, enter previous industry with a much higher salary with potential to enter management position and extra compensation

The specifics of these scenarios are interesting, but the detail is too heavy for this venue.

Results:

• Scenario A: 1.00 times base case since this is the base case
• Scenario B: 1.09 times base case
• Scenario C: 0.87 times base case (the only case that was worse than not taking an MBA)
• Scenario D: 1.34 times base case
• Scenario E: 1.34 times base case
• Scenario F: 1.68 times base case

For specific values I looked at my current position and where I could reasonably be in 10 years if I didn't go back for an MBA. Fortunately for me I have my professional association's salary surveys to consult (APEGGA Salary Survey Page) (2006 Results). For post MBA positions I checked various Canadian business schools placement statistics. All the MBA information I found was similar to what is posted at Queen's. (Site with stats) (2007 Results)(2006 Results). All of the results were discounted to today's dollars. If possible, I would recommend all people contemplating an MBA to complete a similar exercise so you can really see the effect.

I ran sensitivities on the influence of discount rates and inflation rates of salary. The discount rate had no effect. The inflation rate of salary directly affected the magnitude of the difference between the cases, but the cases always ranked the same.

The only scenario that didn't workout for the better was the case where I returned to my previous employment position and nothing changed. Even taking a pay cut to switch industries was beneficial provided you are able to see a large, one-time increase in your salary after 3 years.

In other words, don't take an MBA and go back to doing the exact same thing you were doing before.

None of these scenarios considered the substantially rewarding situation of starting a business that becomes incredibly successful or catching that one-in-a-million opportunity that is out there if people are really willing to dig for it. Those opportunities would be much more rewarding. Perhaps a senior management position?

In conclusion, financially an MBA is worth it. You should easily be able to get the MBA to payout. The magnitude of financial benefit is a directly proportional to what you do afterwards. How much and when? Well, that lies squarely on your shoulders.

Other related links with in my blog:

• The Choice: Why go back for an MBA?
• Contemplation: Who Should Do An MBA?
• Plethora of Programs: Which one to choose?
• Decisions: US or Non-US MBA?
• Decisions: Which Canadian MBA Programs to Apply To?
• Contemplation: Is the MBA worth it?

Decisions: Which Canadian MBA Programs to Apply Too

I've pretty much decided to stick with a Canadian school since choosing a US program has all kinds of strings attached to it as I discussed in my previous posting.

This leads me to my next obvious decision...

Which Canadian MBA programs to apply too?


For several years I have been waiting to return to school to earn an MBA. During this time I have had plenty of opportunity to review rankings from one year to the next, read articles criticising various aspects of MBA programs, and track down and discuss the programs with MBA graduates. Hopefully this information will help me.


When I started, the study guide I was reading suggested a person apply to at least 3 schools. One "dream" school, one "above average" school, and one "for sure" school. Is this right for me? I don't think so.

Looking at my GMAT, work experience, and abilities I believe I could reasonably apply anywhere. Although I'm not the "dream" applicant I do have quite a bit to offer. Therefore, I have decided that my first two schools will be "dream" schools that have excellent reputations and programs. My final school will be something more reasonably obtainable.

Queen's is my first choice. Since I they are at the top of my list and they offer a May start date I will apply to them first. The program has ranked well in the past and present. I like the people I have met from there and I like the potential opportunities an MBA from Queen's offers. Also, there is no application fee to apply to Queen's.

Ivey is my second choice. Ivey has a good program historically, but they have been having issues with ranking in recent years. Although they have an extensive alumni network I don't think it is going to help me with where I want to go, so that isn't really important. Also, I haven't really like the people I've met from Ivey so far. Since Ivey's start date isn't unit September, I can apply to Queen's and see how that goes and then apply to Ivey. This will also save me money since Ivey has an application fee and there is no point in paying that if I get in at Queen's. I will also have to consider why I didn't make it into Queen's since the reason might also prevent me from getting into Ivey.

Haskayne is my final choice. I don't think I would have any issues getting onto Haskayne's program given my GMAT and work experience. Also, the program is local and I wouldn't have to move. Unlike my first two choices I would be stuck in the "bubble" that is Alberta. Alberta is very fortunate to have oil and gas, but it is so over powering that it penetrates ever aspect of society here. I would prefer to study business outside of Alberta since I have had plenty of exposure to the business of oil and gas already. Unlike the other two programs, if I chose this program I would probably do it part-time while working. That would take longer, but I would save money in the long run. At the end I would still get my MBA from a pretty good school, but not one of my "dream" schools. I'm only going to go this route if my first two application are unsuccessful.

I know there are many other schools I have ruled out, but they aren't right for me. Also, I really want to get an MBA from a school with a well respected name. All the MBA programs I looked at offered a lot, but only a few had the 12 month length I wanted. I'm not posting my choices here to slight any other programs, but I thought my decision process might help others.

Other related links with in my blog:

• The Choice: Why go back for an MBA?
• Contemplation: Who Should Do An MBA?
• Plethora of Programs: Which one to choose?
• Decisions: US or Non-US MBA?
• Decisions: Which Canadian MBA Programs to Apply To?
• Contemplation: Is the MBA worth it?

Aside:

Google within Queen's ( http://www.google.com/univ/queensu)

Meeting with Ivey: 1st Class On The Road

Today I attended the "1st Class on the Road" put on by Ivey. They have a professor travel to different cities and meet with perspective students. The professor discusses the MBA program, but also hands out a sample case study, which they work through with those in attendance to help give an idea of what the teaching style as Ivey is like. All you have to do is sign-up, which I did a few weeks ago.

I am very seriously considering Ivey since they did so well in the latest rankings. They also have a really good reputation. I was pretty set on Queen's, but after taking a closer look I'm back on the fence. I don't know who to pick now as both Queen's and Ivey are strong schools.

It was very interesting and definitely helped me get a better feel for the case-based teaching style of Ivey. There was a member of the recent alumni present who also answered questions. The event was held in a conference room of a hotel in downtown Calgary after work hours.

I won't get into the details, but I think if you are considering an MBA it is worth going to one of these just to get a feel for the case-based teaching style offered by many schools. It definitely isn't the same as visiting a school and sitting in on a class, but sometimes travelling to every school isn't feasible. This event comes to your town and you show up.

The extensive alumni network of Ivey was continuously pointed out. I know that is good thing, but there is more to a program than the number of people that went through in the past. I'm more concerned why Queen's beat these guys in the rankings. Also, being the oldest MBA program in Canada, as well as one of the older ones in North America, means you are going to have a larger alumni network.

I'm sure alumni are going to consider other alumni for positions that become available in certain organizations and in those cases you would be wise to select your school based on where everyone else has gone. The alumni that was there was from Deloitte and Touche. After looking at the ranks of management they had posted on their website I found one person who had taken their MBA at a school other than Ivey. If you want to work for these guys you have to go to Ivey.

I was a little concerned about the emphasis the professor made concerning how grades are awarded. He was very certain we knew that grades were heavily influenced by class participation and by that he meant time each student was able to occupy during group discussions of case studies. I think this approach could hurt the quality of a program since students are more likely to just say anything to get "airtime" for their grade as opposed to say only what needs to be said.

There was something about the personality of the Ivey staff and alumni present that I didn't quite like. Can't quite put my finger on it, but I didn't like it. That "gut feeling", my concerns about "airtime", and the fact that there are schools rank ahead of them may have moved them to my second choice. Going to have to do more research.

(Update: checkout what a Queen's 2010 candidate found when visiting Ivey)

Decisions: US or non-US MBA?

After reviewing all the MBA programs listed in The Financial Times, Business Week, and The Economist I found myself presented with a very obvious choice.

US or non-US MBA? Or should I say, "Do you want to live in the US?" Answering this question first is essential.

The rankings are filled with well recognized American schools. They do insert the international schools, but they never rank as well. They also separate the international schools off to the side, but that only makes them look more conspicuous. How to process all this information into a choice? Inspecting the international schools closer I could see a few of the higher ranking ones were from Canada and offered the 12 month intensive program I had been considering instead of the traditional 24 month program with an internship.

What does going to a US school means really mean? If someone were to go to the trouble of moving to the US for an MBA they would obvious want one of the better schools. Almost all of them are 2 years in length and cost $60,000 or more a year for tuition alone. Of course the schools are more than happy to hook you up with an agent who would loan you the money. Not only do you have to finance the tuition, you also have to pay for living in the US. Since you are a student you can't really work to earn money to offset the cost and since you are on a student visa it is unlikely your spouse can work either. At the end of the day you are out $200,000 to a US lending institute and you have an MBA from a well respected school.

Now what?

To make that MBA payout you pretty much need to accept the highest paying position, which is more than likely going to come from a US firm than anywhere else.

Transport yourself to the future 5 years. You have paid off you loan after slaving away and you are finally getting somewhere with the organization you have joined. Now that you are done you want to move home, in my case to good old Canada, right?

WRONG! There is no way you are going to uproot your wife, kids, and mix-up your career AGAIN! Remember, she still remembers how you went back to the "student" budget to complete the MBA and pay it back. Now that she has a house, kids, a car, friends, and a comfortable lifestyle there is no way you will convince her to give that up. Besides you would have to leave all your new friends, career, and lifestyle behind. Who is going leave all that?


I wouldn't mind moving to the US, but for it to be a requirement seems like I'm giving up a lot of freedom for future choice. I think I will stick to the Canadian programs. At least that way I get to choose if I want to be in the US.

Do you want to live in the US? Answer that question first because that is the real question you are answering when you are considering a US MBA program.

Other related links with in my blog:

• The Choice: Why go back for an MBA?
• Contemplation: Who Should Do An MBA?
• Plethora of Programs: Which one to choose?
• Decisions: US or Non-US MBA?
• Decisions: Which Canadian MBA Programs to Apply To?
• Contemplation: Is the MBA worth it?

(Update: check out what a 2010 Queen's MBA Candidate has to say on this issue on their blog)

Plethora of Programs: Which one to choose?

So, you have decided to return to school to earn an MBA. Now what? As if deciding to go back to school wasn’t enough! The choices are just beginning my friend…

There are thousands of business schools throughout the world and many of them offer MBA programs. How do you choose which one is right for you? It is like trying on hats. Each one fits a little different, but which one fits just right while accomplishing the goals you setout at the beginning?

Before you begin it is important to look at what you want to get out of the program and which options will provide this for you. After eliminating the ones that aren’t an option, you have to narrow the field still more to ensure you are picking programs that will really “click” with your individual learning style, personality, and goals.

Below I have compiled some very basic information on MBA programs I found during my search a program.

I must pay credit where credit is due. The majority of this information was obtained from a online presentation given by Lori Garnier, the Associate Director for Queen’s MBA, during the Canadian Business Expo 2007. I knew it all from my research, but the way it was presented just really made everything click.

Types of Programs

Full-Time (Pros)

• Allows you to fully immerse yourself in your studies; can go deeper into subject matter
• Not distracted with workplace responsibilities
• Allows for greater access to faculty, administration, alumni, guest speakers, resources, and career management

Part-Time (Pros)

• Ideal for someone who is not in a rush to earn their MBA
• A flexible learning environment .evenings or weekend classes are sometimes possible
• A more risk-averse approach (keep working while you study)

Executive MBA (Pros)

• An experience-rich learning environment; executives bring their considerable experiences to bear in class
• Minimal risk .participants continue to work while completing MBA; many are sponsored by organization

Full-Time (Cons)

• Greater financial risk (lost wages during your studies, no guarantee of employment upon graduation)
• Must conform to class schedule

Part-Time (Cons)

• Could take 3 years or more to complete your degree
• A less rigorous learning environment than a full-time program

Executive MBA (Cons)

• Participants must juggle significant workplace and home responsibilities with their studies
• Participants must possess managerial work experience to be accepted into these programs
  

Teaching Methods

Traditional Classroom Teaching (Pros)

• Maximizes face-to-face interaction with fellow students and faculty
• Students are usually in the same building as program administration and career management staff

Distance Learning (Pros)

• A self-directed approach: learn what you want when you want

Videoconferencing (Pros)

• Technology allows for live interaction with fellow students and faculty despite physical separation

Traditional Classroom Teaching (Cons)

• Can be a challenge to be involved in your studies and interview for potential jobs

Distance Learning (Cons)

• Can take 3 years or more to complete your MBA
• Student/participant must exercise self-discipline
• Limited (if any?) opportunity to interact with professors
• Limited (if any?) opportunity to collaborate with peers
• Limited interactions with program administrators, guest speakers, alumni, career management staff

Videoconferencing (Cons)

• More limited interaction with class as a whole
• Possibility of technical glitches

Individual versus Team-based Learning

Individual Learning

• A more conventional way to learn
• May have had bad experiences with teams earlier in academic career
• Team-based model is not for everyone

Team-Based Learning

• Mirrors the workplace; students are asked to treat learning teams like a job
• Students/participants learn to function in a high-performance team setting
• Team facilitators monitor team’s interactions
• Learn valuable project lead, team-building, and conflict management skills

1 Subject versus Integrated Subjects

1 subject at a time

• More conventional method of learning; used throughout elementary, secondary, and most postsecondary institutions
• Can zero in on a particular topic

Integrated, cross-functional approach

• Most business decisions are complex, multidisciplinary considerations; shouldn’t management education reflect this?

Teaching Styles

Case-based teaching

• a useful tool to analyze business problems
• analyzes issues from a multi-disciplinary approach (e.g. finance+marketing+human resources)

A blend of teaching styles

• cases not well-suited to all subject matter; some courses require some theory up front
• we do not have the luxury of hindsight to deal with real-time business decisions
• business simulations can be effective means of exploring subject matter (e.g. .Beer Game that examines supply chain management)

International Exchanges

International exchanges can allow you to experience life in a different culture first-hand while getting an understanding of how business is conducted elsewhere in the world and increase your global awareness. Exchanges can also open door to career and networking opportunities abroad.

Electives

Specialize in an area that’s important to you since you probably will want to end up working in that aspect of business. However, you may need to be cautious when considering schools that offer too many different electives. They may be spreading their resources a bit thin and the result will hurt your education. Sticking to a solid core of four or five specializations (e.g. Entrepreneurship, Finance, Marketing, and Consulting/Project Management) allows a school to offer top notch instruction since they can devote more resources to them than if they were offer more.

Additional Designations

Many MBA programs are starting to offer the opportunity to students the option to earn additional credentials beyond the degree itself such as a Project Management Professional (PMP), Certified Management Accountant (CMA), or Certified Management Consultant (CMC) designation. You will need to consider if you want to try to take on this additional challenge and if it is important to you.

Coaching?

Some MBA programs are beginning to offer professional coaching and guidance to their students while they are in school. Why is coaching important? For the same reason coaching is important in so many other competitive venues it is can also play a key role in your MBA experience. Having someone there to assist and you in your “training” can allow teams to work more efficiently. A good coach can develop your leadership and interpersonal skills faster and beyond what you may have been able to achieve on your own. All this combined means having a really great MBA experience which will develop your confidence in your education and your capabilities. Therefore, access to professional coaching and guidance could be a part of which MBA programs to consider.

Play to Your Strengths

Although most MBA curriculums will emphasis areas as accounting, economics, marketing, and IT will be sure to address any of your weaknesses, what about areas of strength? In the end you not only want to reinforce your weakness, but you want to vastly improve your strengths.

Once you have taken it all into consideration you will have several schools to choose from. Narrowing that list down can be an even tougher task. Hopefully this information can help you pick out a few trees among the forest and make your decision a little easier.

Other related links with in my blog:

• The Choice: Why go back for an MBA?
• Contemplation: Who Should Do An MBA?
• Plethora of Programs: Which one to choose?
• Decisions: US or Non-US MBA?
• Decisions: Which Canadian MBA Programs to Apply To?
• Contemplation: Is the MBA worth it?