MBA Pay: The Impact Of Moving Overseas
Maria |
January 16, 2024

Welcome to a new episode of the Business Casual! Today, your hosts John, Maria, and Caroline delve into a topic that resonates with global-minded MBA graduates. We’re analyzing the impact of international relocations on MBA careers, guided by a comprehensive study of over 1300 MBA graduates. Are you an MBA grad thinking about an overseas move? Curious about how global mobility might influence your career trajectory and salary? Then this episode has got you covered with some essential insights.

Discover the compelling findings that MBAs moving internationally once or twice may face slower salary growth, whereas those labeled as ‘superglobals’ – who move more than four times – often see significant earnings increases. This episode is perfect for those who blend a passion for travel with their professional aspirations, offering a deep dive into how international experiences can shape and enhance your career path. Tune in now for an enlightening discussion on the intersection of travel, career growth, and the MBA experience.

Episode Transcript

[00:00:07.290] – John

Hello everyone, it’s John Byrne with Poets and Quants. You are listening to Business Casual, our weekly podcast with my co hosts Maria Wich-Vila and Caroline Diarte Edwards. We’re going to talk about the impact of moving overseas if you are a newly minted MBA. There’s a study out by professors from the Wharton School, the London Business School and Utrecht University on this. The professors surveyed over 1300 MBA grads who have pursued international careers and here’s what they found. If you are an MBA who has moved internationally once or twice, you will likely get less pay growth compared to those who have stayed put. However, you might very well be a superglobal and a superglobal is an MBA grad who has moved more than four times internationally and those folks have actually seen substantially higher pay growth. Caroline, you’ve moved around more than anyone else after getting your MBA at INSEAD of us three. So I wonder what you make of this.

[00:01:19.290] – Caroline

It’s a very interesting article and very interesting that the researchers found that with fewer moves there was a less positive impact on pay than for those superglobals who had several moves. So I mean, having moved around a lot, as you say, I think that if you have those opportunities, you are building a differentiated skill set where you’ve demonstrated your ability to integrate into a new environment, to work across cultures and so more of those opportunities come your way. So I can see how multiple moves can make someone very attractive to an employer. And I also think that people who get those opportunities to move multiple times, a bunch of them will be on some sort of expat track, right, where they are working for a company and they are extremely successful in their role. And those are the people who get picked for the overseas assignments because overseas assignments are often more challenging, right? And big companies do have experiences of moving people around the world and it not going very well, right, because there’s a lot of factors that play into it, people’s ability to be flexible, to adapt, it could be language skills as well.

[00:02:43.430] – Caroline

It’s also they may have family who coming with them. And sometimes family factors can be a positive or a negative when someone is moving internationally. If you are someone who is very successful, you get an overseas assignment. If that goes well, then they’re going to offer you another plumb job in another country. And so you build up that experience over time. So I think with those superglobals, it’s a combination of they were probably people who were identified as high potential early on in their career and therefore they were offered those opportunities to move. And then when they did well in those different opportunities, in those different roles, then they had further opportunities to move. And of course, if you’re an expat, then you are probably earning more than you would if you had stayed in your home country, because you are often getting additional benefits, housing. If you have kids, they’ll often pay school fees. It’s often a very lucrative deal where people are able to take home a much bigger chunk of their salary than they would if they had stayed in their home country.

[00:03:53.130] – John

Yeah, true. And I’m also thinking that to be a super global is relatively rare. I mean, then you would be identified as a true global executive if you’ve worked in four different international locales, or even more than that. And there aren’t many people who have that kind of experience working in four or more very different cultures from each other. And so I would think that provides a lot of value to a global company, and that value has to be recognized by higher pay growth. Now, Maria, you also have worked abroad. During your career. Were you paid a lot more or a lot less?

[00:04:34.070] – Maria

So when I was moved, I actually was on one of these aforementioned expat packages. And so I was moved from the Latin American division based in Miami, to Hong Kong, where I worked on big projects. I was based in Hong Kong, but I was working on projects in India and Taiwan. And I did actually get a big. I got a bump up because of the housing allowance, as Caroline mentioned. So I got a housing allowance. And then also, one thing that we were chatting about a little bit, this is a very sort of uncommon, perhaps, loophole that may not apply to everyone. But before we started recording, John, you mentioned this sort of the tax implications. Like, if you’re living overseas, you get a break on your US taxes. And I just so happened to me at the time, Hong Kong had a, I believe it was a 16% flat income tax rate, which was not a bad thing at all. It was really nice. And by the way, it was really easy because the government would just send you a bill at the end of, like, you didn’t have to fill anything out. It was, side note for the IRS, in case anyone.

[00:05:36.890] – Maria

So much better. I don’t know why we don’t do that here, but anyway, so, yeah, I definitely at first had a huge benefit because I was on one of these aforementioned expat packages. And I think one of the things that the study, if the people who did the study want to continue this research, which I think is really interesting, it would be really useful. I think to divide it out into people who made these moves within one company, let’s say, where the company itself is saying, okay, we want you to move to this other region, because if you then move back to, say, the headquarters, and now you can manage four different regions globally from the HQ or from some sort know, main office, now you’re that much more valuable to the larger company. I would wonder if sometimes some of the decreases that they found might be if people move from one company to another, where you then have to reestablish that political capital and reestablish that reputation, and maybe the next company in the next country might not appreciate what you did elsewhere.

[00:06:43.130] – John

Yeah, that’s a really good point. Know, as an expat, you are given Benny’s perks that more often than not really are pretty significant when you add them all up. I know when I went to London, I had a cost of living allowance. I paid virtually no US tax, only a little UK tax, so most of my income was free. I had a very lucrative expense account that I can use for pretty much whatever purpose I wanted. And in one swell move, it worked out really well for me in the three plus years I spent in London. Early on in my. You’ve been, let’s see, you’ve worked in the UK, Indonesia, India and United States. Do I get them all?

[00:07:34.100] – Caroline

And France.

[00:07:36.050] – John

Exactly. So you are super, super global to me. And the study mentioned something else. They call it the three P’s, and it’s really a good lens to view an international opportunity with three P’s are personal enrichment, professional opportunities and pay. So while it may be true that if you only have one or two assignments overseas and you aren’t an expat being moved there by a company with a lucrative expat package, it could well be that, frankly, the personal enrichment and the professional opportunities you gain from that global experience far exceed the pay in terms of their value for your own professional development. I’m imagining that in both your cases, certainly in mind, there is no question about the personal enrichment and the professional opportunity I was given by moving abroad, which really played a very important role in my professional development and my personal development. And even though the pay worked out, frankly, the greater benefit, the greater value was in that enrichment, in that opportunity that occurred. I’m sure that was true of both of you, right, Caroline?

[00:08:54.570] – Caroline

Yeah, I’ve hugely enjoyed the different places where I’ve worked. In addition to those countries that you mentioned, I’ve also done sort of extended assignments in Switzerland and Germany and Singapore. And I’ve loved my time in learning about different countries, working with teams from very different backgrounds. It’s a big learning curve. Right? So it’s not for everyone. It is often very challenging, and it may be, especially if you move to a country where you’re not fluent in the language or it’s just an incredibly different culture, you may have some period of adaptation where it’s not easy and you may rock up at a country and not know anybody to start with and not have any friends, and you have to reestablish your social network as well as your professional network. It’s not easy all the way. It can be quite a roller coaster when you’re working outside of your home environment, but definitely incredibly rewarding. And I’ve greatly relished the opportunity to live in a country and really immerse myself in a different culture. And I find that absolutely fascinating. I had studied languages at universities. My major was in French and German, with the aim of being able to work in different countries.

[00:10:17.350] – Caroline

That’s something that was sort of part of my goal in life from an early age, and I can’t imagine going back to the UK. To me, it’s much more interesting to live in a different country and to be an observer of all those cultural differences and also have the opportunity to discover so much and meet people who I wouldn’t otherwise have met. So I would agree that the personal enrichment side, which also then can feed into your career. Right.

[00:10:47.410] – Caroline

There’s often great benefits, as you said, of having that international experience and proving yourself in a very different environment that is often highly valued by employers.

[00:10:57.850] – John

And it is an adventure. Right, Maria? I mean, I imagine your Hong Kong days were days you look back on incredibly fondly.

[00:11:07.270] – Maria

A thousand percent. I miss living in Hong Kong tremendously. I think I will always be grateful to the company for sending me to Asia. That is something that I would have never had that opportunity otherwise. I had been living in Miami, but working in Latin America, and for someone to take, someone with my background, I had no Asian language experience, Asian background. I had never even been to Asia on vacation. And so for them to move me there was quite an experience. And I loved it. I loved experiencing the culture in that deeper way. And I think there’s, know, Caroline touched upon this. This idea of, like, you develop so much resourcefulness when you are suddenly in a country where even things like opening a bank account or renting an apartment, where you just sort of take it for granted, like, well, this is how I do it. I go to the place every little thing is so different. Getting a cell phone. Everything is so different. So you suddenly find yourself having to negotiate things and teach yourself things. And if you don’t even speak the language, so much harder. But then you also are thinking, wow, I am a lot more resilient and a lot more independent than I thought I was.

[00:12:19.500] – Maria

So that also comes with a sense of accomplishment and of course, the people that you meet and the cultures that you learn about, and it’s just so expanding in so many ways. So I wouldn’t trade it for the world, even if they would have paid me less, but don’t tell them that I still would have done it.

[00:12:35.730] – John

Agreed. There is a dance in business, and the dance is crucial to getting things done. And in each country, that dance is different. Sometimes differences are subtle, sometimes not. But to have worked in different cultures in business is to have experienced different ways that people do business. And I think that’s extremely valuable, because if you become good at that, you become incredibly flexible. You’re like the utility player on a ball team. If you can play all kinds of different positions, you have greater value, even though you may not play each position as well as someone who’s always been there. And there is real value in that. And again, I think even beyond the value for a company, the greater value is to your own personal development and the friends you meet.

[00:13:31.490] – Maria

And even professionally. I remember when I moved to India and we were looking to set up what is today known as Tata sky. So it’s like a satellite tv company, like a direct. And. And there was this big question of, India is such a vast region, and how are we going to. Are we going to set up individual shops in each of these 1000 cities across the town? And I remember that when I was working in Chile, what they had done is they had this sort of a van that would go from village to village to village. Because Chile is not nearly as large as India geographically, but it has these very remote, mountainous towns. And so I was able to bring that idea from one market to another that I don’t know that they would have come up with that on their own. And we’re even seeing it. I mean, entertainment is one of those environments where you can see it so often, where you see shows like squid game on Netflix that are brought over, that have become sensations in other countries, or you see a company like Mercado Libre, which is the Latin American eBay, which is now this high flying stock.

[00:14:34.800] – Maria

So I think this kind of cross pollination, even if it doesn’t pay off financially in the immediate term, you get this sort of cross pollination of ideas from going to different markets and seeing what works in different markets and what are the similarities and what are the differences and what are the opportunities. And I think a savvy, resourceful person can really make a lot with those observations.

[00:14:55.450] – John

Yeah, definitely. This conversation also reminds me that way too often, applicants and students make a simple calculation about the worth of an MBA that is so wrong. And that is this. They look at what the starting salary is after you graduate, and they measure ROI and they measure the worth of the MBA on that first number that people gain after they graduate with the degree. And the truth is, more important than that number is your own personal growth. And your personal growth occurs in the program, but it also especially occurs with the knowledge and skills and connections you gain in the program that you then use in the world of work. And personal growth is as important, if not more important, in those early jobs, I think, than the actual compensation you receive. And yet we give little to no consideration of that when you’re applying for the MBA or even when you’re a student and you see your colleagues going after the $175,000 starting salary, McKinsey Bain BCG with a $35,000 signing bonus, and you’re saying, oh my God, how can I take this job that I know I really want when I can pay down all my debt in a couple of years with a salary like that?

[00:16:20.570] – John

But personal growth is super important. How do you measure it? How do you even think about it when you are a student or an applicant and you’re thinking about what are you going to do when you actually get the degree and you do your first job?

[00:16:36.770] – Caroline

Caroline, I think it’s very important, as you say, to go through that reflection process. And I think it’s really worthwhile doing that before you get to business school, because once you’re at school, you can get swept up by the feeling that everyone is going for the high paying private equity job or the role at McKinsey. And maybe that was not something that with your heart’s desire beforehand, but it’s hard not to get swept along with the crowd if a lot of people are targeting something that seems more popular and perhaps more glamorous than what you had initially intended to do. So I think it’s really worthwhile doing that deep reflection before you apply, to think about what it is that you want to get out of your career and think about it over time, what you want to do when you graduate.

[00:17:25.000] – Maria

What you want to do in the.

[00:17:25.660] – Caroline

Medium term, what you want to do in the longer term, because I think at that point you will probably be. Maybe it’ll be easier for you to think about what are the values that are really important to you and what is driving your motivation for your career. And for sure, you will go through a transformation when you’re at business school and your goals may change. But I think it’s useful to have an iterative process of reflection which you start way ahead of getting to campus so that you have a strong sense of what it is that you are aiming for and what is the right thing for you and don’t sort of go down the wrong route. The great thing as well about having the MBA is that even if you do get swept along and you take that fabulous, glamorous, high paying job when you graduate, you don’t have to stay there forever, right? You have so many options to change careers later on, and it’s a credential that will open doors for you throughout your life, not just when you graduate. So if you do take a step that turns out to be not the right one for you, it’s fine, right?

[00:18:45.670] – Caroline

I’m sure there’s a lot you can learn from it and you can move on and do something else, and there’ll be lots of other great opportunities waiting for you. And I think the MBA just gives you the comfort that you can take a risk. Because if something doesn’t work out, if you go for a job that for some reason it doesn’t work out, then you still have a fantastic resume and you have a fantastic network and you can open doors that might not otherwise have opened. And I think if I hadn’t gone to business school, I mean, I’d moved to France before I went to business school, but I sometimes know how my life would have been different if I hadn’t gone to ins yet. And I think I probably would still be in France. I had no particular desire to go back to the UK, but I think it would be unlikely that I would have left Europe had I not done the. You know, that’s hard to imagine now because so much of my life has been about living in Asia and different places and now in the US, and it’s been so much more enriching than if I hadn’t done that.

[00:19:49.600] – Caroline

So it opens lots of doors that you can’t even anticipate when you’re in your 20s.

[00:19:56.050] – John

So, no remorse for Caroline?

[00:19:58.020] – Maria

How about for mean? I probably shouldn’t have left this job that I loved so much in Hong Kong. I was actually warned that I was going to regret it. And the person that warned me of that was right on many levels. No, but I think, as Caroline was saying, I think going into business school with a sense of what your values are and knowing that you will undoubtedly have to make some trade offs at some point and before you’re in that crucible moment, going in prior to that and saying, okay, if I am faced with a choice and I have to choose X versus Y, salary versus location, growth, opportunity versus stability, entrepreneurial excitement versus the large company, day to day, that will probably be a lot less, will have a lot less twists and turns. But there’s no right or wrong, right. It just depends on who you are and what you want. And so sort of thinking in advance, what am I going to prioritize? And if I’m given a choice between X and Y, how am I going to make that choice? I think that’s really beneficial. And so, yeah, I think the international, you asked, how do you measure the personal growth element to do before you’ve actually done it?

[00:21:17.710] – Maria

But I think afterwards you can say, well, as Caroline mentioned a second ago, how would my life have been different if I would have never left? Know for me, how would my life have been different if I would have never left? And it doesn’t take a lot of thinking beyond that moment to say like, oh, yeah, no, actually, it was completely worth it for me to expand my horizons and get that extra experience.

[00:21:39.630] – John

That’s so true. Well, there you have it. The impact of moving overseas on MBA pay. Sure, the study may find that it could actually hurt your pay prospects by moving internationally, but if that is in fact true in your case, you got to think about the other two P’s, personal enrichment and professional opportunity. And you got to know that those other two elements of satisfaction and growth are going to more than make up for whatever slower growth in pay you might experience. And if you are super global, it won’t matter because the study found that you will get significantly higher pay growth. Interestingly enough, the study doesn’t really give us any numbers, which actually is kind of unsatisfying to me, but it is interesting nonetheless. So look it up. MBA pay, the impact of moving overseas. It’s on the Poets and Quants site. It’s had over 35,000 readers already, and maybe you’re already one of them. And in any case, we hope you enjoyed our discussion. Good luck to you and your MBA journey. This is John Byrne with Poets and Quants. You’ve been listening to Business Casual.

MBA Pay: The Impact Of Moving Overseas
Maria |
January 16, 2024


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