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MBA is still very effective to increase your earnings | Relevance of MBA from ROI Perspective

MBA is still very effective to increase your earnings | post-MBA salaries

Earlier we have discussed when an MBA is not worth it and if you really need an MBA to fast track your career. In this post, we will look at the scenarios where an MBA is not only worth but actually very effective in your career progression. Additionally, we will see to what extent an MBA can increase your salary.

 

An MBA can help professionals enhance their career opportunities, earn better pay and get job promotions. An MBA can provide the skills and knowledge necessary to start a new business, and many employers require an MBA for certain management or leadership positions.

 

If you are doing an MBA for the right reason and at the right time, an MBA is still very relevant and effective. The range of backgrounds MBA programs attract is a testimony to the course’s broad appeal – elite athletes, creatives, military officers, engineers, coders, and charity managers, as well as the bread and butter intake from the worlds of finance and consulting.

 

Do an MBA from a Reputed School; and more importantly, from the Right School

 

However, that does not mean that you should pick an MBA program blindly. Unless a candidate earns a degree from a respectable program, it might not be as valuable as expected, while going to a top-tier business school greatly increases the value of the degree.

 

Recruiters and hiring managers are not likely to view an MBA earned from an unknown or online-only educator to hold the same weight as from a top business school. For professionals forgoing a few years of work to go back to a Tier-2/3 school could end up being a waste of time, money, and opportunity. Read more about why the brand is important while choosing a business school.

 

At the same time, a TOP B-SCHOOL doesn’t necessarily mean the BEST school for YOU. It’s all about the RIGHT school.

 

Pursue an MBA for the Right Reasons

 

Secondly, you should also think about doing an MBA for the right reason. Some people pursue an MBA because their professions require it; others because they are looking to switch careers; and yet another cohort seeking to formally build upon business skills obtained on the job.

 

Top 5 Reasons for Doing an MBA (GMAC Survey)

 

1. Acquire New Skills and Knowledge about Business – 57%

2. Access to Job Prospects (including Opportunity to Switch to a New Career) – 49%

3. Access to Strong Network and to Advance a Career within the Same Industry – 48%

4. To Increase Salary – 38%

5. To Make a Positive Difference in the World and to Improve Society – 35%

 

Judging by the high placement rates of top-tier MBA graduates, I would judge that the MBA is still relevant. As long as people want to hire graduates of the school and as long as people keep attending, it will continue to remain relevant.

 

More often than not, we will always think if an MBA is worth or not, from the ROI perspective – how much an MBA will increase your earnings. As per the Financial Times, MBA students stated that the main reason they study for an MBA qualification is to increase their salary. Personal development, interpersonal skills, and ethics matter to them, but students still expect a decent return on investment. So, let’s look at how effective is an MBA in terms of increased earnings.

 

An MBA is still very effective to increase your earnings

Co-authored by Parinita Gupta

 

Many of the students have many questions related to MBA. The most common question is, whether an MBA degree will show any kind of direct impact on job opportunities, career growth, and salary package or not?

 

It’s very important for students to understand the value of a degree in the market and to analyze its future trends before deciding to take any course, it will help them to choose the best.

 

An MBA degree has a significant value in the job market. There is a major difference between a degree grad and an MBA grad. In positions, salary, and performance, MBA grads are preferred over others. In this corporate world, educational qualifications have considerable importance.

 

If a student has good scores and had studied in top B-school will add more value over other candidates. At the same time, it has also become an important key and a deciding factor for a better pay scale. And yes, an MBA can even increase the existing salary package.

 

Most importantly, Many MBAs do not have downtown. Any industry can see the fall or recession, but management is a sector which is always in demand. There is a belief in the industry that MBA grads will have exceptionally good interpersonal skills, managerial skills, and leadership skills that can really support and increase the company’s profits and benefits.

 

Why MBA is Effective?

 

In the past decade, it was seen that the interests towards opting MBA had increased by 40%-60% every graduate irrespective to the field, want to do an MBA from a good college. So that they can get placed in the best companies and earn well. The main reason for this massive increase is due to its stability in the market.

 

The entire IT sector saw a major downfall and a huge recession but Management sector had survived well and prevailed its stability in the market. Though the managerial studies are very costly, it is a field in education which brings 100% or more than 80% of ROI within very less time. A graduate from the best or recognizable college will start his career with a salary range of 15L to 20L. Such huge packages are especially seen only in this industry.

 

MBA is preferred by all the undergraduates due to its versatility. It is the only course in the field which allows you to switch over other domains. It teaches you all the essential tools, skills, and knowledge and allows you to select a domain in which you want to work and make a career.

 

Average Salary Increase after MBA (India and Abroad)

 

We have aggregated data from credible sources like GMAC, Financial Times, PayScale, The Wall Street Journal, BusinessBecause etc. As per various surveys and findings, an MBA does increase your earnings by a significant margin. Let’s dive into more details.

 

Post-MBA Salary Increase in India

 

According to Payscale, the average salary of a graduate is between INR 3L to 3.5L per annum while an MBA graduate’s average salary is more than INR 8L to 9L and it was observed that there is nearly 81% of the increase in income for MBA graduates from 2010 to 2018. If a student has any kind of prior work experience or internship experience, then there are many chances to earn more or increase in the salary packages.

 

Post-MBA Salary Increase Abroad

 

According to PayScale’s survey of thousands of MBA graduates, approximately 1.6% of participants had less than one year of work experience and an average salary of $52,872. Those with one to four years of experience (21.8%) had an average salary of $60,779. Additionally, 32.9% with 10 to 19 years of experience earned approximately $100,283 per year. Based on these results, work experience contributes significantly to an MBA’s salary.

 

According to the GMAC survey (2018), here are the expected increases in salary after earning an MBA for several major sectors of the economy:

 

Products/Services: 59% increase

Nonprofit/Government: 45% increase

Technology: 35% increase

Manufacturing: 34% increase

Finance/Accounting: 34% increase

Health Care: 33% increase

Consulting: 32% increase

Energy/Utilities: 24% increase

 

According to an article on The Wall Street Journal, 75% of those who earn an MBA switch careers and they can double their salary by doing so.

 

As per Craig O’Callaghan, head of content at QS Top MBA, the average MBA graduate increases their salary by 77% after graduation (completion of MBA).

 

MBA students had a tough time after the financial crisis of 2008. Between 2008 and 2014, the average salary of MBA graduates three years after they left business school increased by just 4% to $127,000. At the same time, the average cost of a two-year MBA increased by 44% to $104,000.

 

MBA is still very effective to increase your earnings
Source: Financial Times

 

But, salaries reached an average of $142,000 in 2017, and early data analysis from the 2018 ranking indicate that salaries are still increasing. Average alumni salaries have increased year on year for about three-quarters of schools.

 

An MBA Is Worth for Salary Increase
Source: Poets & Quants

 

Brand Does Matter

 

Post-MBA Salary Increase
Source: eGMAT

 

As discussed earlier, apart from the MBA degree, the name of the college or the institution where you graduated makes a huge impact on your pay scale. If you study at a top-notch B-school, your pay scale will vary according to the college’s reputation. According to past placement details it was observed that “More the reputation of the college, the higher the salary package offered”. In this situation, your college speaks more about you than your marks or grades.

 

In India, 93% of MBA graduates struggle to find jobs with decent pay. Quite often they end up with jobs that pay INR 8,000 – 10,000 per month. This is due to the lack of employable skills and attending mediocre business schools. Read what’s wrong with the Indian MBA programs.

 

An MBA means worldwide recognition; if you earn an MBA degree, you will have many opportunities opened for you across the world. It increases credibility and allows you to build a career.

 

By earning an MBA degree, you will gain a broad perspective on how businesses are handled and deal with the problems and this quality will outrange you from the lot and bring a better salary package than others.

 

Irrespective to the salary packages, an MBA grad will have 50% more chances of getting a better position in the management level. Most of the senior managers in the world are MBA graduates. This factor had built up a trust in the MBA grads which led them to better positions than others.

 

Conclusion

 

There is no rule that the more education you have, the more the pay, it just depends on how you take your career forward but according to Bloomberg, almost all the top employers like Deloitte, Ernst & Young, McKinsey, Boston Consulting Group, Apple, IBM, Procter and Gamble, and Amazon and many more are preferring to hire MBA graduates for better performance. So at least to join your dream company you should have an MBA degree which has become a deciding factor for your career and better pay.

 

 

 

Author Bio: Parinita Gupta is a full-time banking professional. Additionally, she is also a passionate blogger and digital marketer.

She mostly writes about the Banking & Finance, Technology, and FinTech sector. But, she also enjoys writing on other topics as well.  You can follow her on Twitter.

 

 

 

Sources: 1, 2, 3, 4, 5, 6.

Author: Tanmoy Ray

I am a Career Adviser & MS Admission Consultant. Additionally, I also manage online marketing at Stoodnt. I did my Masters from the UK (Aston University) and have worked at the University of Oxford (UK), Utrecht University (Netherlands), University of New South Wales (Australia) and MeetUniversity (India).

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