Mark Zuckerberg being hauled before Congress is a signal to some people that at 33 years old, the tech founder is finally "growing up." So, maybe it's also time to retire the idea successful entrepreneurs should drop out of college to get ahead. (After all, companies like Facebook are called "unicorns" for a reason.)
Those of us who didn’t start a multimillion dollar company in our dorm rooms have to consider other paths to becoming business leaders. But it's wise to think twice before spending tens, if not hundreds, of thousands of dollars on a master's in business, but it's also important to remember that an MBA isn't meant to be a prerequisite for starting a business at all. The 2018 Alumni Perspectives Survey from the Graduate Management Admission Council (GMAC) found that 79% of b-school alumni worked for another company and 10% were self-employed. So, this degree usually comes in handy for people who have dreams of being high-level business executives in a variety of industries.
If you're toying with the idea of getting an MBA but aren't sure if the time and financial commitment are worth it, here are some things to consider.
What It Is For?
Writing in Harvard Business Review a few years ago, executive coach Ed Batista said the three key uses for an MBA were: practical leadership and management skills, a job marketplace credential, and access to a vast alumni network. Those may sound like abstract rewards but in some circumstances, they can reap concrete benefits: MBA alums can generally expect higher salaries than those other grads, with a median base salary of $115,000, depending on job level and location.
Twenty years after graduating, how do you run a team of thousands of people under you?
Sabah Khan, an MBA admissions officer, at the Stanford Graduate School of Business says students learn about finance, accounting, strategy, operations through unpacking hundreds of business cases, but they also learn how to make high-level decisions and direct a company's future.
"It really comes back to the interpersonal skills [students] gain of how to inspire people and lead huge teams," she says. "Twenty years after graduating, how do you run a team of thousands of people under you? Or 10 years later, when you have to fire someone for the first time, how do you do so in a way that doesn't undermine your organization?"
The other big benefit of an MBA is the robust rolodex of people students and grads can tap for internship opportunities during the program and assistance with landing a job or getting a new business idea funded after graduation.
How Much Will It Cost?
There's no point being delicate about it: MBAs are expensive.
To attend a program at a school like Stanford, you can expect to exceed the $100,00 mark over your two years there. Financial aid, in the form of loans and fellowships, is available, but how much you get of either naturally depends on your individual assets. "On average, people receive $36,000 or $37,000 in fellowships per year. But that average is pretty meaningless because some people get full rides, and others get zero," Khan says. "If you work in a pretty low-income job, you're going to get a much higher financial aid package in terms of the fellowship proportion to loans."
In an analysis of a 2016 GMAC report, Fortune found that "MBAs who got their degree part-time, at an average tuition cost of $25,000, took just two-and-a-half years to earn back their investment, as did executive MBA grads who paid roughly the same tuition." These programs have many shapes and forms, and that can impact the cost as well. For instance, Value College's ranking of best-value MBA programs revealed degrees can be specialized (organizational behavior and HR management or global supply chain marketing?), format (full time, part time, off campus?), and region.
What About The Gender Pay Gap?
But don't forget that the gender pay gap may offset some success. "Women who are considering earning an MBA can expect the same post-degree salary bump as their male classmates" — amounting to a $20,000 bump, GMAC found. But that halo dissipated in time: The median salary for female b-school grads in the U.S. was lower compared to men's median salaries, across all job levels — up to 80 cents to the dollar at the executive level.
There are easier, cheaper, more efficient, and shorter ways to incubate a business idea.
Is There Another Way In?
The gospel of education can sometimes make it seem like getting any degree, and as many as possible, is necessary to advance. But there's no point in wasting your time and money on a costly credential that reaps little benefits. Khan says online MBA programs, an increasingly popular option, may be worthwhile for people who want to gain exposure to specific subject matter — like accounting, for example. (Just do your homework on online programs especially.) On the other hand, if you simply want to learn a skill, you can also enroll in an accounting class without going the full-on school route.
Rather than thinking of what you could potentially do with an MBA, it might be wiser to have an idea in mind and then consider if an MBA will get you there. Do people who have your dream jobs all seem to have that credential? Then it may be tacitly or overtly necessary for you to follow the same path. But if there are a variety of ways in, an MBA may not be necessary.
"There are easier, cheaper, more efficient, and shorter ways to incubate a business idea, and that's not what we're designed to do," Khan says. "We're not the graduate school of entrepreneurship; we're the graduate school of business. If you have the expectation of [getting] a paying customer in hand for your idea, you could probably better serve yourself by joining YCombinator or StartX or another program that's designed to help you do that."
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