Fortune’s First MBA Ranking
Maria |
July 20, 2021

There have been a number of MBA rankings available on the internet for years, but today’s focus will be on Fortune’s “Best MBA Programs”  — a fresh new MBA ranking from a publication that has never fully covered graduate management education in its whole history.

Listen in and find out why the team finds this new MBA ‘US-centric ranking’ annoying and what makes it different from the rest.

Episode Transcript

[00:00:07.210] – John

Hello, everyone. It’s John Byrne with Poets Quants. Welcome to Business Casual, our weekly podcast featuring my cohost, Caroline Diarte Edwards and Maria Wich Villa. And Maria is, of course, the founder of ApplicantLab and Caroline is the co founder of Fortuna Admissions and the former director of admissions at INSEAD. Well, guess what, folks? We have a new MBA ranking. And I don’t mean one that’s been updated, that has been previously published, but I mean one that is brand new and has never been out before. And it comes from an old, venerable media brand in the United States called Fortune. Now, if you younger people have never heard of Fortune, that’s understandable because magazines aren’t what they used to be, and even their websites aren’t quite magnets for younger people. But Fortune has been a consequential media brand in the business space, along with Business Week and Forbes in the United States. Those were the big three business magazines of yesterday. And so it is somewhat consequential. And I know that Maria has been eagerly looking forward to this new ranking. Right, Maria?

[00:01:20.510] – Maria

Hallelujah. I wake up every morning and I think, will today be the day? Finally, that a new night appears. It’s like Christmas in July. We need more of in the world.

[00:01:35.610] – Caroline

Not a hint of sarcasm there.

[00:01:37.540] – Maria

No, not at all.

[00:01:41.590] – John

And I know that Caroline is equally joyous about this occasion.

[00:01:45.230] – Caroline

Yeah, I’ve long had a love affair with MBA rankings, as you know, from dating back to my days of compiling the data for the rankings publishers when I was back at it.

[00:01:55.910] – John

Yet, of course, that would have been part of your job back then.

[00:01:59.560] – Caroline

Yes, it was.

[00:02:00.440] – Maria

It was a threading.

[00:02:01.480] – Caroline

Part of my role.

[00:02:04.750] – John

Imagine the number of eyes that went on that submission to the Financial Times.

[00:02:08.910] – Caroline

Yeah, it was quite painful.

[00:02:11.950] – John

So here’s the Fortune ranking. It’s the first time they’ve done this. Fortune has never really had much coverage of graduate management education at all throughout its entire history, which is kind of surprising, but they see this as a potential area of clicks and eyeballs. And so this is actually their second MBA ranking. The first was an online MBA ranking that came out earlier this year. It was a fiasco you can read about at Poets and Quants. And now there’s this. And wouldn’t you know, the top three schools in order are Harvard, Stanford, and Wharton. Now, I am so surprised. Now, Where’s London Business School, Where’s all the other great schools in Europe and Asia and Canada, for that matter, nowhere to be found because this is an entirely US centric ranking. So altogether, Fortune ranks 69 different MBA programs. And what’s really notable is what the omissions are. There’s no Michigan Ross, there’s no UCLA. There’s no USC Marshall School, there’s no Emory Goizueta. In addition to the absence, of course, of all the European and Asian players and Canadian players that have become very important to the whole industry, how come in part, we believe Michigan, UCLA, UFC, and Emery weren’t included because they declined to participate.

[00:03:40.450] – John

So that’s interesting in and of itself. And we’ll get to that a little bit later. But I wonder if we can just generally get some reaction from our two experts here about the value of this ranking, if any, to MBA applicants. Maria, want to take it first?

[00:03:58.870] – Maria

Sure. Look, this ranking feels pretty safe. In fact, it almost makes you wonder if they almost finagle their methodology to reverse engineer a list that makes a lot of sense as opposed to picking a methodology upfront and then saying, okay, come hell or high water. This is a methodology. I think the emphasis on salaries, I mean, it’s 65%, if I’m not mistaken, of the waiting is simply based on salaries. And I understand that. Look, people go to the MBA program to enhance their professional careers, and that often means making more money. But I think that saying that of the value of an MBA is only based on the number, the amount of money you’re making when you graduate. I don’t know. I get that it’s important, but I don’t really love it. And I think it might sort of. What about wonderful schools out there that are sending that are making tremendous progress in creating impactful leaders in the field of social enterprise and nonprofit? Right. Those schools are going to be penalized simply for being more mission driven. So I think that was one of the first things that jumped out at me about this ranking.

[00:05:11.530] – John

Yeah, really true. And of course, by only looking at base salary and then the employment rate three months after graduation, which is 65% of the ranking, as Maria just indicated, you’re getting no idea of what are the admission standards and the quality of students are admitting. What about the actual academic and cocurricular experience that people are getting in the program? What about even what employers think should be the demand for these graduates and what their track records might be in their firms? That tell you something about the education and the quality of the students that are entering? What about the faculty? Are the faculty up to snuff? It doesn’t matter to Fortune because there is no factor of that. The rest of the ranking that you just pointed out is a so called brand survey based on business professionals and hiring managers that accounts for 25% of the ranking. These are not people who actually go out and recruit and hire and even work with MBAs. They’re just what they are, whoever they could find at top companies who are willing to respond to the survey. And if, in fact, they do have an MBA from a top school, that’s not figured in this ranking.

[00:06:31.450] – John

So in other words, if I go to let me pick a school out of the blue, if I go to Berkeley, which would be a bad choice, and I’ll tell you why. But if I go to Berkeley and I say the number one school is Berkeley and I don’t name any others, there’s no adjustment or discount for the fact that I’m an alum of the school, and then the remaining 10% is even worse. It’s reflected in the number of each school’s alumni who are C suite executives at Fortune 1000 companies. So that’s reflective of what happened 30, 40 years ago, not what’s going on today. And worse than that, it’s an idea of the economy. That’s old school doesn’t capture any of the dynamic part of the economy with some of the larger employers of MBAs, including McKinsey Bain, BCG, which are obviously not Fortune 1000 companies because they’re not public companies and it doesn’t include startups or early stage companies are really some of the more exciting places that NBA get to work in today, including social enterprise, healthcare, and other fields. So that’s a real kind of crazy methodology. Caroline, what’s your take on all this?

[00:07:40.750] – Caroline

Yeah, I think it’s very reductive. Right. As you said, there are a lot of reasons that people choose to go to business school, and there are a lot of elements of value that students and alumni get out of the experience. And you can’t say that most of that can be summed up as your salary. That also assumes that the main reason people going to business school is to earn a bigger salary afterwards, which is for many people, not the case. Right. They’re looking for more things than just the largest sum that they could possibly command. So I think it’s incredibly reductive. And as you mentioned earlier, the lack of international schools really makes my eyes roll. It’s such a myopic view of the world and the US has to move beyond this.



[00:08:29.790] – Caroline

And this has been an issue in the US for, well, I guess forever. But there’s a very reductive view of the world, and most people assume that the world ends at the borders of the US. And I thought that we were getting beyond that. Obviously, the US news ranking still only focuses on the US schools, but a lot of the other rankings have encompassed the whole gamut of international programs as well as US programs. So it’s very disappointing that a new ranking that could sort of make a claim for having a different positioning in the US market has such a sort of old fashioned approach of the world is just what we see around us in our immediate geography, and we can’t look beyond their own borders.

[00:09:26.010] – John

Yeah, that’s really true. And particularly when you’re starting from scratch today, that’s insane that you would actually have such a myopic view of the business world because let’s face it, they took out a blank sheet of paper and they could have done anything that they wanted to do and they could have done a true global ranking the way the Economist does or the way the Financial Times does. Or at least they could have done a separate international ranking the way Bloomberg Business Week and Forbes do. But instead they decided, though, no, we’re just going to do US schools and we’re going to do it on the most simplistic measure possible, starting salary and placement, basically, and two surveys that are really meaningless and inconsequential and don’t reflect on the quality of any of these programs whatsoever. It’s kind of annoying, to be honest. It’s almost like they’re lazy and they didn’t want to do the hard work of adding value to our community, our field, which really troubles me, to be honest. And that’s with the caveat. Let’s face it, all of these rankings are on some level distortions of the marketplace. Maybe altogether over time, they get you to some sort of greater truth.

[00:10:45.290] – John

But anyone list in any one year from any one outlet isn’t going to tell you with any kind of great confidence what the best schools are. Nonetheless, these rankings have become an obsessive feature of the search for the right business school by applicants. They are widely consulted, they are widely consumed, and a would be applicant who doesn’t know a lot about the market could take this list and assume that these really are their choices and this is their decision set, their consideration set for an MBA. And if they were to do that, they’d be making a huge mistake. Here’s a quick stat that’s kind of fascinating. 40% of the top 100 US schools, never mind international 40%. Four out of every ten US schools that are in the top 100 in US news are missing from this ranking. 40%. And as I mentioned before, it includes some great schools with world class MBA experiences, like Michigan, like Washington University in St. Louis, like USC in La in UCLA and Emery in Atlanta, and many others, not to mention Ncata, London Business School, Paris IESC in Spain, and many other great schools, Cambridge and Oxford and others.

[00:12:09.300] – John

It’s a distorted view of what the market is. Yes, the top of the ranking does look incredibly familiar. And Maria is right. It’s as if they basically looked at what the top schools in US News survey were and basically duplicated them with some few exceptions. But it’s kind of wacky Harvard, Stanford, Wharton, Chicago, Booth, Northwestern, Kellogg. That’s number five. Then you have Columbia, NYU Stern, MIT Sloan, Yale, and Dartmouth Tuck. They make up the top ten familiar cast of characters, and pretty much more or less you may disagree with where one school is over another, at least among the US programs. But by and large, it’s what you see and what you get in US news. One surprise, MIT Sloan is coming in below NYU Stern, which is really kind of shocking, to be honest, but pretty much yeah, but that’s just the top ten. And this is supposed to be an overview of all MBAs. Should an applicant just totally ignore something like this and just move on. I’m thinking that’s what you would recommend. Caroline.

[00:13:15.090] – Caroline

Well, I don’t think it brings much new information. Right. So as you said, I don’t think that there’s much to be learned from it. So why not have a look at it? If you’re looking through all the rankings, I don’t think candidates should base their decisions on any single ranking. So why not look through this as part of your scan of all of the rankings? But it’s not terribly informative. So as you said, it’s a shame that they didn’t sort of set out to add a bit more value to candidates in sort of helping them navigate the choices, which are increasingly complex. It is a global marketplace. Today candidates in the US as well as elsewhere are looking at international schools. International candidates are looking at coming to study in the US. So it is a global marketplace, and that makes it much more complex for everybody to navigate completely missed that. And so the decisions and the choices are more difficult for candidates, I think, to figure out what is the best option for them, which may not be as obvious today as it might have been ten or 20 years ago. And I don’t think this adds anything to the process and assist them with that decision making.

[00:14:34.100] – John

Yeah. And to your point about the fact that it doesn’t any add any value, even if you look at the base statistics. Okay. Starting salaries and employment three months after graduation. These are year old numbers. In six to eight weeks, the schools will be reporting their latest numbers. Fortune couldn’t even bother to wait and get the newest data from the schools. Instead, it went back for data that’s almost a year old to crank out this ranking. The other issue is for publicly available data. Any applicant can just go and construct their own ranking. They don’t need Fortune to do some cockamamie thing that has little to no revolence and only misinforms people. So it’s kind of really annoying to me that Fortunate at least didn’t even wait to gather latest statistics and then to deliver them. Maybe before anyone else in a ranking, maybe. At least then there’s some new information that they’re throwing into the marketplace. But in this case, there’s nothing at all. Maria, did you rely on rankings when you went to Harvard?

[00:15:38.990] – Maria

No, I really didn’t. I looked around in my industry who had an MBA and where they had gone. I mean, it sounds pretty simplistic, but at the time in entertainment, MBAs were not everywhere the way they are today. And so a couple of programs sort of filtered up to the top from that. And I also had geographic requirements. I wanted to be on the East Coast because my family was there at the time. And also I based it on people that I had met who had either graduated from certain programs or who I knew from undergrad or from other contexts who I heard through the grapevine had gone to certain programs. And that definitely impacted my view, perhaps rightfully or wrongfully. But it definitely if somebody I don’t like, someone who is really cruel or mean in College, and I heard through the grapefront like, oh, they’re going to that program. It certainly did not put that program at the top of my list. So I went through my industry and then also location and then finally like, all right, who do I know who’s gone there?

[00:16:41.820] – John

Yeah. And that makes sense. And Caroline, I’m sure that was the same calculus that brought you to INSEAD.

[00:16:48.830] – Caroline

Yeah. I had a number of colleagues who I was working with and consulting who had been to INSEAD. So I was inspired by their stories of the amazing experience that they had had. I had studied language as a University and really wanted to sort of launch myself internationally and get out of the UK. So I sort of had instant appeal to me as that wonderful platform for international recruiting. So I think pretty much as soon as I started to learn about it, it really resonated with me. And I felt that that was the right place for me to go pretty quickly after that, I didn’t actually look very seriously at other schools.

[00:17:35.750] – John

Yeah. And that totally makes sense. It may seem a dubious exercise, to be Frank, to nitpick the ranking even beyond what we’ve already said, but I just can’t help myself.

[00:17:52.830] – Maria

You’re the founder of the rankings, right?

[00:17:55.000] – John

Yeah. And that’s a dubious thinking. Yes, I do lay claim of creating the first of the regularly published MBA rankings for Business Week in 1988. That was before US News and before Financial Times in The Economist, in Forbes, all of which are in the game still today. But let’s just even look at some of this stuff, because to me, it also shows the error of measuring the quality of an MBA program merely by base salary, by and large, is what’s going on here. Berkeley, Haas great program, always in the top ten of MBA programs in the United States and usually in the top ten when you take out the European region schools in The Economist and the Financial Times. Why are they number 13 in this ranking when in US News are number seven, you might ask. Okay, well, wait a minute. How can that even be possible? Because certainly the graduates of Berkeley do exceedingly well in the job market. They’re meeting salaries of about $140,000 a year. Actually, that’s the exact number certainly compares well with their peer school. So how can they not be in the top ten? Well, if you want to know why, here’s why.

[00:19:23.440] – John

Because the number one industry that recruits at Berkeley is, not surprisingly, technology. Nearly a third of the school’s graduates go into tech firms. Now here’s what we know about what tech firms pay in base salary. They pay lower than consulting or finance and sometimes considerably lower. Now those jobs may be more valuable to MBAs because in many cases you get to do more things. You may be less likely to be a cog in a big wheel. They may not involve 60 to 80 hours of work a week, and travel is constantly as a consulting job might. But the fact that a third, the largest single chunk of people who graduate from Berkeley with an MBA going to technology actually hurt the school. Now that’s ridiculous. Those are choices made by the students, many of whom actually go to Berkeley because they want to enter what is perceived to be one of the most dynamic industries in the world economy today, in one of the most dynamic parts of the world economy, the Bay Area. And yet here is the school being penalized for that. So it’s things like that that really annoy me and just don’t make any sense, don’t you think?

[00:20:41.390] – Maria

Yeah. Also taking into account the fact that I think a lot of the tech firms give pretty significant equity packages so that base salary might not match what you would get in banking, but you might get 5100 thousand dollars worth of stock that will vest over time. And if the company stock goes up, then the value of what you were granted will go up too. So it is a little bit simplistic to only look at base salary. Like one of my classmates dropped out of business school to start Yelp, and I’m pretty sure his salary when he was starting Yelp was probably zero or not that high. And today he’s doing pretty well. So it’s sort of a simplistic metric to use, I think.

[00:21:22.220] – John

Yeah. I mean, not even sign on bonuses were used where to some extent that’s a little more differentiating in terms of what employers think about MBAs at different schools because obviously the better schools are going to have graduates who are more likely to get sign on bonuses than schools that are not as in great demand by employers. Another piece of the puzzle is other guaranteed compensation when you have people going into finance in particular and increasingly in private equity, venture capital and hedge funds. We talked about this in fact last week. There is something called carry that can frankly match your base salary or exceed it in any given year. All of these elements of compensation are completely not covered by the ranking at all. It’s only base salary. Even on that level, it tells you very little. And then of course, if you have a large international contingent and they go back to their home countries and their home countries tend to be, let’s say India and China, the compensation levels of people who go there are significantly lower. You work for McKinsey in India and you make a fraction of what you would make in North America or Europe.

[00:22:36.440] – John

And that’s just a reality of those marketplaces that’s totally unaccounted for by just taking a single number base salary, whether median or average, as Fortune does, and saying this is the worth of your MBA. Here’s another interesting thing. I mentioned earlier that 40% of the top 100 MBA programs in US news are missing from this ranking. Now, you know, if 65% of the ranking was based on publicly available data, meaning things that you could just go to the website and within a minute or two, find out what percentage of the class is employed three months after graduation, what did the class make and median and average salary. You can find that by going to any website within a minute. And if you couldn’t get it on the website because maybe they only reported a median instead of an average or an average instead of a median, a single email to the PR person at the school would have given you that information. Did Fortune do that? Absolutely not. As a result, if a school just didn’t want to cooperate and complete the questionnaire, they were not included in the ranking, even though all his Fortune had to do was take a minute to go to a school’s website and get that information to still put them in the ranking.

[00:24:01.250] – John

It’s just laziness. It’s the worst possible way that any journalistic organization in particular should be cranking out a list like this. Well, here’s my advice for everyone. Ignore this list entirely. Go to others. And when you go to another list, go to multiple lists. Don’t just look at any one list if you’re going to go and look at a ranking. I mean, the two most prevalent rankings are US News and World Report for US schools and the Financial Times for a global picture of what’s happening. And I think those two rankings have the most credibility and the most authority, even though both of them have significant flaws as well. So that’s my advice. What’s your advice, Caroline?

[00:24:47.350] – Caroline

Yeah, I think that makes a lot of sense. I think take them all with a pinch of salt and spend some time understanding the methodology. Because the methodology is basically trying to replicate the decision making process of what is the right school. Right. And that is very individual to every candidate. In fact, the things that they are measuring and the things that they are giving a lot of weight in the ranking may or may not be important criteria for you. So I would certainly encourage dig into what’s underneath all of this, because far too often the rankings have just taken at face value.

[00:25:24.810] – John

So true. Maria, last words.

[00:25:27.610] – Maria

I think the only ranking people should look at is the Poets and Quants ranking.

[00:25:33.670] – John

Thank you.

[00:25:34.400] – Maria

Find that ranking at Poets and Again, that’s Poets and Quants.

[00:25:41.870] – John

And seriously, let me put it in. I’ll tell you why. Because in one single glance, you can find out where every school ranks on all the five most influential rankings, which would be US News Financial Times, The Economist, Forbes and Business week. So you go there and you see the latest ranking of all of the five most influential organizations that actually do this and do it somewhat credibly, even though each of those are flawed and then you see the mashup of these five rankings and it’s not a simple average. What we literally do is look at the methodology. And because I do have the dubious distinction of having been in these black boxes, looking at these numbers, I can tell you that some rankings have greater credibility than others based on their consistency over the years or what they’re measuring. What they’re not measuring. So we account for that and come up with our overall composite ranking. And Maria, you are right. That’s where you want to look at a ranking.



[00:26:46.310] – John

All right. Hey, for all of you out there, thanks for joining us. Once again, it’s been fun. We love beating up on rankings, Incidentally. And we know that they are overused by most people who are on their journey to a business school. I know for sure that Caroline and Maria have counseled applicants who have been deciding which acceptance to accept and enroll which program to enroll after they’ve been accepted to multiple programs. And I guarantee you that discussion of rankings has sometimes come into that conversation, am I right for sure. Reluctantly Caroline and painfully as well. So, hey, thank you for listening. This is John Byrne with Poets and Quants.

Fortune’s First MBA Ranking
Maria |
July 20, 2021


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