In this week’s episode of Business Casual, our hosts will be delving into the 2023 annual report on prospective students released by the Graduate Management Admission Council. This in-depth study surveyed more than 2,000 individuals who are keen on pursuing graduate management education, covering a wide range of topics including the most popular degrees and Gen Z’s take on business education, among other things. A key finding worth mentioning is that one-year MBA programs have now edged out two-year programs in popularity for the first time. Our hosts will also examine other popular degree choices such as Master of Finance and Master in Data Analytics.
Join John, Maria, and Caroline in this insightful episode as they unpack this valuable report, explore the latest trends in graduate management education and what this could mean for the future of the field.
[00:00:07.210] – John
Well, hello everyone. This is John Byrne with Poets and Quants. I’m here with my co host, maria Wich Vila and Caroline Diarte Edwards. We are here again for Business Casual, our weekly podcast. And we want to take a deep dive into the 2023 annual report on prospective students that is published by the Graduate Management Admission Council. This is probably the largest single database research project on would be students who want to take advantage of graduate management education in the world. In this particular study, more than 2000 people responded and it covers a lot of different things. Obviously, the motivations would be students who want to do a degree program in Management and business. It covers what are the hottest graduate management education degrees. It tracks Gen Z opinions about business education and what they would like to see more of. And it’s a pretty thorough report as well, many pages long. There are many different facets of it. I’ll just give you a few highlights and then Maria and Caroline and I can discuss them. To me, one of the big surprises is that one year MBA options have, for the first time, to my knowledge, overtaken two year MBA programs in popularity. It’s only by a small margin. It’s something like 22% of the prospective applicants favor the full time one year MBA, 20% favor the two year. The next most popular degree, incidentally, is the Master of Finance, preferred by 9% of the respondents. And then it’s the Master in Data Analytics, which is really interesting that that would pop up in front of Executive MBAs, Masters in Management and part time MBA programs and online MBA programs. In any case, it’s worth noting that when you look at who responded to the survey, only 18% of the respondents are from the United States. In fact, there are more respondents in this survey from Africa 20% than the US. And I think that may have a lot to do with why the one year MBA option seems to be at least as popular, if not more popular than the two year MBA today in this survey. Caroline, did that surprise you? I know you’re a big fan of the one year option. Having been a graduate of INSEAD, which has a ten month program, and having admitted many people into that program.
[00:03:03.720] – Caroline
Well, of course it’s a killer proposition, John. I mean, who wouldn’t prefer one year to a two year program? So I’m sorry to say it’s the beginning of the end for the two year program. No, I’m joking. But I do think that it’s an interesting time to see that maybe this is the moment when this Pivots and one year programs have been growing steadily. I mean, of course, INSEAD was the first school to develop. INSEAD pioneered the one year format 70 years ago and developed that expressly with the goal of providing the education that you can get at a school like Harvard Business School. But in a more accelerated and more efficient format. And what an incredible vision that was. And it’s really proven to not only stood the tests of time, but proven to be even more relevant today than it was back then and has been replicated or other schools have sought to imitate that format. So I think that that trend will continue. I mean, as you note, it does seem that it has more attraction for international candidates than for domestic American candidates. And that’s not surprising given that the top programs in the US.
[00:04:23.750] – Caroline
Tend to be two year programs rather than one year programs. And so if you’re looking to do one of the most prestigious programs in the US. Then most likely you’re targeting a two year program. But that is not necessarily the case internationally, and international candidates may be more concerned about the cost of a program. Many international candidates are coming from countries where they will not have had the salaries and the savings power that a candidate from the US. Would have had prior to their MBA. And therefore, the value proposition of doing your MBA in one year rather than two years is very powerful, right? So you’re paying not only less in tuition fees, you’re paying much less in living costs. You’re foregoing your salary for one year rather than two. So when you look at the return on investment for a one year program versus a two year program, it’s often the top programs, one year programs. You have a much faster return on investment for the one year programs than the two year program. So if you are concerned about cost, and that’s a significant factor for you, and that often is the case for the international candidates, then the one year programs are a great option.
[00:05:41.230] – John
Now, Maria, as someone who has spent two years at Harvard Business School getting her MBA, do you like this idea that the one year MBA might be better than the two year?
[00:05:52.420] – Maria
I can certainly see the appeal for all the reasons that Caroline mentioned. And I think that there’s a real a couple of opportunities for business schools really jumped out at me from this report. One of them being that if business schools want to attract more candidates from US. Business schools that are primarily two year, if they want to attract more candidates from the Middle East and Africa and Europe, that they should look into perhaps investing more and creating a one year MBA option. I did see in the report that the one year option is mostly favored, understandably, by people who majored in Business or Economics in undergrad, which makes a lot of sense, though I will say that I took Accounting and Finance in undergrad, and when I encountered those same courses as an MBA, I was initially a little bit grumpy. I thought, oh, why are they making me? I already took these classes in college. Why do I have to take them but the perspective with which they were taught at the Master’s level was very different. So the undergraduate level was much more about the mechanics of how do you build a balance sheet, how do you do debits and credits versus at the Master’s level, it was more about how do you use accounting as a tool to create value or to support your strategy, which is a very different it’s still accounting.
[00:07:01.260] – Maria
And both classes were called accounting, but they are looking at it from a very different perspective. So I don’t know that it’s the same experience in terms of exactly what you would be studying in a one year versus a two year. Not simply because it’s shorter, but because I do think that there might be some things being missed out on. But I also think that it’s a Pragmatic world that we live in. And I don’t know that it makes sense for everyone to take two years out of their career and spend all that money, especially if they don’t want that big career switch.
[00:07:31.470] – John
The other surprise to me was that actually Gen Z seems more interested in the two year MBA and Millennials are more interested in the one year, which is kind of surprising on some level, but that’s one of the findings in this study. The other surprise for me is how full time MBA programs, whether they’re one or two years, are really the most popular program. So 42% of the respondents were most interested in an in person program, only 4% were interested in an online MBA program. And given the growth in online options, the gap 42 versus four kind of surprised me because that’s pretty darn low. So you ask yourself, well, is it a function of the sample? And I would have to say that I do believe it is. In other words, I do believe that online MBA programs, given the growth, given the number of them, given the enrollment of people in them, is sort of discounted in this study. And I think there’s a very good reason for that. The way the study is basically done is that people who register on GMAC site to take the test are then invited to participate and that’s the majority of the respondents, they collect some other data from their MBA Tours acquisition, which is now called GMAP tours their business because their website in the United Kingdom or this test that they acquired in India.
[00:09:04.260] – John
But largely it’s people who are going to take the GMAP. And most online MBA programs do not require a standardized test. So therefore, they’re going to miss all these other applicants who are interested in not only online MBA programs, but all kinds of specialty master’s programs, many of which no longer require standardized test, along with many programs that are in person MBA programs now that are either test optional or, in fact, are very generously waiving a standardized test if you have the right grades and the right background for them to be assured that you can handle the minimal quant in the core curriculum. So to some extent, you’re getting a slightly odd view of things. And this has been exacerbated over the years because of the numbers of people taking the GRE as arrival to the GMAT, meaning that those people are no longer going to GMAT’s website and they’re no longer being invited to participate in this study. But that said, it’s still a very sizable and substantial sample. And one of the other things, basically the study showed, and maybe this is something that Caroline would like to talk about, that the United States remains top study destination still.
[00:10:33.770] – John
And I think that’s largely because there’s so many options in the US. And historically the US. Got the first start on business education. We do know that Europe and other regions of the world have in many cases, not only caught up, but are offering fantastic options. But it’s still surprising that the US. Remains a top study destination. Caroline, what do you make of that?
[00:10:58.450] – Caroline
Well, I think it might be what you mentioned, John, that it’s partly due to volume, right, the number of schools in the US. And the number of places available compared to number of schools and places available in other markets. But yes, I mean, certainly the US. Has a historic advantage given that the MBA started in the US. And is better established, and many of the international schools have started more recently and so are still working on developing their global reputations. Many of those schools have great national reputations, perhaps regional reputations, but some of them don’t yet have the global reputation that the US. Schools have.
[00:11:47.090] – John
It’s true. Yeah. Even so, it’s not like it’s a big gap. And incidentally, the US. Lost a top spot for a year in 2020 when the Pandemic was really raging and people didn’t want to travel. But the percentages of respondents who said they prefer the US. 42%, followed by Europe 37%. So right on the heels of the US. And Canada was 9%, incidentally. So not very far behind, which also to me is acknowledgment of the great opportunities that now exist in Europe to get a superior graduate management degree.
[00:12:26.190] – Caroline
The advantage, the US. Schools also have is the opportunity for candidates to get a work visa and stay and work in the US. And of course, it’s a very large job market here. And so that is a big factor for many international candidates who may be looking to get access to the US. Market and switch their career and make a move into the US. And then the job market, until recently, has been very strong in the US. And so perhaps when these candidates were surveyed, the job market in the US. May have been stronger than it was in other markets.
[00:13:13.070] – John
Maria, did you find other things in this report that were interesting to you?
[00:13:18.350] – Maria
One of the things that I thought was interesting, that gave me a bit of a chuckle was that when they asked prospective applicants about whether or not an online MBA is just as equivalent, that it offers the same opportunities. Even the people who were applying to the online MBA, many of them said like, no, it’s really not fully equivalent in terms of the outcomes that you can get, especially in terms of the career opportunities afterwards. And so I think if I were in charge of marketing an online MBA program or running an online MBA program, one little light bulb that went off for me was if I were to invest in having a dedicated career Services office that could help my online MBA candidates get those same elite, high paying, post MBA jobs that may be some of the full time candidates. If they could achieve some sort of parity, or if they could start to approach some sort of parity with the career outcomes, I think that would really help Skyrocket interest in the online degree, which is great for schools because there’s a lot less overhead, et cetera, et cetera. So that was something that jumped out at me.
[00:14:24.040] – John
Yeah, that’s really true. I thought that that was fascinating, frankly. The other thing is, consulting has long been the most sought after post graduation employer and that fact has endured in these studies across generations and regions. But what you’re seeing here is that the Gen Z folks are a little bit different. They have a preference for finance and accounting jobs, according to this study over those in tech and startups. And Gen Z candidates interest in the tech sector is actually below the global average and their millennial counterparts. And I wonder if part of that is a function of all the layoffs that we have seen in the past year to 18 months by tech companies, which has been putting a lot of people on the street, and also a function of perhaps our disillusion with tech. I think years ago we saw technology and its advances as something that was incredibly positive. And now with concerns over privacy, social bullying, the misuse of social media to manipulate election results and send out misinformation has made people sour on the tech industry to some extent. Maria, do you think that’s true?
[00:15:53.810] – Maria
Yeah, I think that there’s a lot of tech. We’ve always seen these kinds of ebbs and flows and bubbles inflating and popping and so I think we might be sort of on the downward side of that right now, but I don’t expect that to last. I think that tech always rearranges itself and reemerges in a new, different way each time. So I think right now we are in that valley of disillusionment, but I don’t know that that’ll last forever. But consulting as the number one area of interest makes perfect sense, right? I mean, it’s a great training ground. You get so much experience, so much valuable experience, that I expect that to be the number one preferred destination for forever.
[00:16:37.310] – John
Yeah. Plus the salaries are high. I mean, really high doesn’t hurt.
[00:16:42.010] – Caroline
[00:16:42.740] – John
And when you’re graduating with debt, if you go to a McKinsey Bain BCG deloitte, that $35,000 sign on bonus helps an awful lot to erase a good amount of your debt, along with the starting pay, which is right now 165,000 to start at a McKinsey Baine or BCG. And so those packages of over 200 grand a year, right from year one, are pretty attractive and hard to turn down if you can get them. Because just as it is hard to get into an INSEAD to Harvard or Stanford or Wharton, it’s equally hard to land one of these jobs. Although an MBA degree is certainly an entry card to do so. Lots of different things in this report. We have a bunch of stories on them. Actually, I think there are four stories we’ve written already based on the results in the report. So you might look at Poets and Quants and see what we’ve said about the prospective student report, if you’re interested in that. I think the other one thing before we sign off is the motivation for people who are wanting an MBA or wanting a graduate degree in management. The report makes a fair bit of noise, I think unjustifiably so in saying that the main reason is because people want to have a more meaningful career.
[00:18:19.850] – John
And while that’s true, people also want to have more money. And I think the fact is that if you can increase the money you make and live a better life as a result of that, there’s nothing wrong with that. So we don’t need to almost play up this other reason why you might get an MBA. Only because we want to disabuse you of the notion that people who go into a business school are only interested in money. Caroline, what do you think?
[00:18:50.490] – Caroline
Yeah, I think that it’s great to see that candidates are actually more interested in having a rewarding and fulfilling life and career, and that is a higher priority for them than just earning more money. And I think related to that, it was interesting to see that for this generation, sustainability and CSR are now really fundamental to what they’re looking for as regards a business school curriculum, that wasn’t the case 1020 years ago. So that’s a big change that we’ve seen over the last few years. And I think that this survey shows that that’s about half of respondents that see that as core. And I think that trend will continue, and that will continue to become a fundamental part of what people are seeking from their education, because they also recognize that that’s very relevant to their future career. And that’s a big issue that many employers are grappling with. And so it’s also not just for their personal interest and sense of having a positive impact on the world. It’s also very relevant for their career and the responsibilities that they will be managing the future. So I think that that is a positive trend that we see in this survey.
[00:20:14.200] – John
True. Maria, your last words on this.
[00:20:17.670] – Maria
I think just like the business world is constantly evolving, management education is going to have to constantly evolve with it. And we’re seeing some of those different trends emerging in applicants to business schools. So interesting things emerging. Like Caroline said in sustainability, a really market increase in interest in data analytics that I think maybe 510 years ago. I don’t even know if ten years ago data analytics was something that applicants to business school even cared about. And now I believe it’s like the second most popular topic that they want to study. So we’re just going to have to as business changes, the education for business leaders will have to change. And I think we’re just going to keep seeing that year over year.
[00:20:59.060] – John
Absolutely. Maria and Caroline, thank you so much. And for all of you out there, if you want to know more about the prospective student report from GMAC, come the Poets and Quants. About four or five stories on this already looking at it from every single angle or just get the report and pour through it. There’s some fascinating conclusions in there. You’ve been listening to business casual. Our weekly podcast. This is John Byrne with Poets and Quants.