Let the MBA Buyer Beware
Choosing between business schools can be maddening, unless you know exactly what you're looking for.
By Jeffrey Pfeffer

(Business 2.0) – So you're thinking about getting a master's of business administration, and you want to know which school is the best for you. With tuition at top-tier schools reportedly up 55 percent in the past six years and white-collar jobs moving overseas, the cost--and risk--of taking time off for a business education has never loomed larger. Naturally you would assume that objective guidance for such an important decision would be plentiful. You would be wrong. You can find a greater number of reliable, fact-based comparisons of breakfast cereals than you can for deciding which business school to attend.

Many aspiring MBAs consult third-party rankings. But there are serious problems with ranking business schools, which is why this magazine takes an entirely different approach (see "The ROI on Your MBA," page 99). First, surveying students and alumni to come up with an "objective" score invites bias, because criticizing one's school diminishes the brand that is one's degree. Attaching numbers to return on investment is similarly flawed. Forbes gets a 28 percent response rate to its survey assessing pre- and postprogram salaries. If you make the reasonable assumption that the un- and underemployed are more difficult to locate and less likely to respond to a questionnaire that reminds them that they wasted their time and money, then that magazine's years-to-payback estimates are probably rosier than reality. Recruiters--another common source of numerical rankings--are naturally swayed by the accommodations and services offered by on-campus recruitment offices. Would you rate a medical school based on how much hospitals enjoy recruiting there? Instead, how about whether its graduates are better trained than others?

Unfortunately business schools have resisted (to put it mildly) the wave of evaluation and self-examination that has washed over the rest of education. The Association to Advance Collegiate Schools of Business (AACSB), which accredits U.S. business schools, has talked for years about objective measurements of learning but so far has taken little action. When entrepreneur Mike Mebane and Wake Forest Business School professor Bern Beatty started the Certified MBA organization to test what students learned in core business subjects--spending hundreds of thousands of dollars to ensure that the test was reliable and valid--let's just say that business schools (including my employer, Stanford's Graduate School of Business) did not jump to participate. Turns out, the schools were doing their reputations a favor: Mebane tells me that a third of students from AACSB-accredited schools fail his exam.

Nevertheless, the most expensive schools are going to come under increasing pressure to prove that they are, to use their own lingo, adding value. Fewer than half of the students currently pursuing MBA degrees are enrolled in full-time, two-year programs. And there is already anecdotal evidence that demand for the most competitive of those full-time programs is flagging. Applications to the top 30 schools in Business Week's rankings fell almost 30 percent between 1998 and 2004. (Some schools on the list saw declines of as much as 50 percent.) Already, highly regarded programs at schools such as Carnegie Mellon and the University of Texas at Austin have cut the size of their entering MBA classes.

For now, though, the best advice I can offer is pretty simple: Decide what you want from your business education. If you are chiefly looking to network with high-powered classmates, apply to schools with great reputations and active alumni networks like Harvard, Stanford, and Wharton. If your aim is to learn about business without going bankrupt, however, choose cheaper accredited schools like Purdue or the University of Florida. Better yet, consider schools that offer one-year master's degree programs--such as Emory's Goizueta Business School or France's Insead--which will cost less in lost income. Truth is, the concepts and textbooks are about the same wherever you go.

Most important, don't get an MBA just because it's what everyone else is doing or because it seems to promise great wealth. An MBA can be a road to a fulfilling career, but only if you know where you're headed.