Not just letters after your name

Philip Schofield looks at the positive effects that an MBA can have on your career and pay packet
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The Independent Culture
An MBA continues to be a first rate investment in a manager's career development, according to the latest MBA salary and career survey by the Association of MBAs. A manager taking an MBA can expect an average salary increase on graduation of 42 per cent. Even when this figure is adjusted for salary inflation during the period of study, the increase attributable to having an MBA is still 27 per cent. As the survey says, this makes "the return on investment impressive".

Almost 1,600 graduates from accredited MBA programmes were surveyed. On average they now earn a base salary of pounds 53,700, almost 15 per cent up on 1995. But there are wide variations from this figure. The median is pounds 44,000, the average being boosted by the small number (six per cent) who earn pounds 100,000 or more. Moreover, almost one in five (18 per cent) earn pounds 30,000 or less.

In addition to base salary, 57 per cent receive some form of performance related pay. When this is taken into account the average total cash pay is pounds 656,300. Most MBA graduates receive other benefits, almost three quarters are on a company pension scheme, and over 60 per cent get a car and private medical insurance.

It is widely assumed that most MBAs change employer very soon after graduation. As a result some employers are reluctant to sponsor employees on MBA courses. However, among those who are employed while studying, 60 per cent remain with their existing employer for at least a year after graduation.

Those who do stay with their existing employer pay a fairly high price for their loyalty. Those who change employer after graduation see salary rises averaging 59 per cent, those staying with an existing employer see an average increase of 16 per cent - only three per cent when adjusted for salary inflation.

The report says of those who stay with their existing employer "for the majority who see no change in reward or status, there is considerable frustration. Over two thirds believe that their employer has failed to make the most of their new knowledge. A further 39% feel frustrated and undervalued as a result."

MBAs are often associated with big companies, but MBAs who do change employer tend to move from larger organisations to smaller ones. They become big fish in smaller ponds. The report says:

There is a trend away from seeing the MBA solely as a way to change career direction. In 1992 this was the main aim, cited by 95 per cent of respondents. The main aims now are, in order of priority: to improve job opportunities; to obtain a business qualification, and intellectual stimulation.

Most MBA Graduates (96 per cent) worked before undertaking their studies - over half having done so for between six and 15 years. Another one in five had more than 16 years work experience. This supports today's view that the MBA should be a post-experience as well as a postgraduate qualification.

Traditionally, most students of MBAs were male. However, the number of female MBAs has risen in recent years, and 23 per cent of those who qualified in 1996-1997 were women.

The educational background of MBAs is biased to engineering (32 per cent) and the sciences (24 per cent). This perhaps reflects fears that employers typecast engineers and scientists only for technical functions. The MBA can offer an escape route into general management roles.

Astonishingly, with the growing globalisation of business, and every business school claiming international credentials, few MBAs speak another language. Those that do stick to languages learnt at school. Even here, less than a quarter claim at least competence in French and fewer than one in ten in German. Moreover, only 28 per cent agreed that "the international content of the degree was of fundamental importance," while 32 per cent disagreed.