In the latest episode of Business Casual, the hosts discuss the 2024 Bloomberg Businessweek MBA rankings. Stanford tops for the sixth consecutive year, with Harvard and Wharton unexpectedly trailing schools like Chicago Booth and Northwestern Kellogg. Columbia significantly drops to seventeenth. The hosts critique the ranking’s methodology, emphasizing compensation while noting its subjective basis heavily reliant on alumni and student surveys. Caroline highlights inconsistencies in the rankings, particularly the varying emphasis on diversity between U.S. and international schools. 

The discussion reflects on the rankings’ lack of transparency and the potential biases in data collection, urging prospective students to consider more than just rankings when selecting an MBA program.

Episode Transcript

[00:00:04.370] – John

Well, another ranking is out, and we’ve got all the details. This is John Byrne with Poets and Quants. You are listening to our weekly podcast, Business Casual, with my co-host, Caroline Diarte Edwards and Maria Wich-Vila. And this past week, it was the Bloomberg Business Week MBA ranking. This is the 2024 version. Top of the news for the six time in a row, Stanford Graduate School of Businesses is number one. And interestingly enough, yet again, Harvard Business School and Wharton both lag, which is not necessarily surprising by this ranking because last year, both Harvard and Wharton lagged as well. In fact, Harvard and Wharton are below Chicago Booth, which is number two, Northwestern Kellogg, which is number 3, Dartmouth Tuck, which is number 4, and UVA Virginia Darden, which is the highest rated public university business goal on the list. All of them finished higher than Harvard and Wharton. Rounding out the top 10, Michigan Ross at number 8, Carnegie Mellon at number 9. That’s a big jump. And MIT Sloan at number 10. If you’re wondering where Columbia is, Columbia had a fairly significant fall in this ranking. We’ll tell you exactly where they were.

[00:01:31.900] – John

They were, of course, in the top 10, as you would expect Columbia to be in the top 10. This year, they are all the way down to 17. They actually fell 12 positions year over year from a rank of five in 2023 in this particular ranking. That’s a bit of a shock among quite a few shocks in this ranking, and we’ll get into the details of that. As you know or may not know, Bloomberg Business Week uses certainly five primary metrics to measure the quality of an MBA education. The first is no surprise, it’s compensation, and that’s given the most weight. Then there’s a category called learning, which is second. Networking is another one, entrepreneurship. Then finally, diversity, which is given the least amount of weight at 6.6%. That’s compared to the highest one, compensation, which is 37.7%. Each of these metrics contain a number of other measures that make them up. Most of the ranking is based on surveys of alumni and students and employers. Maria, what do you make of your school coming in at sixth?

[00:02:52.740] – Maria

It’s fine. You could make a ranking where it’s the number one school in the world. You could make a ranking where it’s the worst school. I think that it all depends on what the methodology is and not only what the different weights are, but also what goes into those weights. So yes, compensation in this ranking is 38%, but the other roughly two-thirds is, quote-unquote, learning and networking and entrepreneurship, completely based on surveys given to alums, students, and in some cases, I believe, prospective employers or corporate recruiters. It’s not really clear. It’s like they were asked on a scale of agree or disagree or on certain comments about, Oh, you could either completely agree or completely disagree and anything in the middle. So they I’d allocate points depending on how much you answered or to disagree with the statements. It all seems very subjective. Compensation, while a flawed metric in that there are ways that you could play around with it, the rankings that will say things like, oh, what’s the % increase in compensation? Well, great. You just let in people from lower paying fields at first, and then, hey, lo and behold, you’ve got this huge percentage jump.

[00:04:13.130] – Maria

For this one, though, it’s just obfuscated. It’s like, well, we just ask them a bunch of questions, and then they can either completely agree or not agree or something in the middle. And then based on that, we gave seven points. And they talk all about it. For one of them, they even talk about, we use a logarithm of the whatever. I’m like, okay, but what were the questions?

[00:04:34.320] – John

Right. Yeah. They can reveal the questions.

[00:04:37.340] – Maria

There seems to be more ink spilled describing the mathematics of the methodology than there is very simple inquiries or question marks that I have. Like, okay, we asked people, what was the learning experience like? Okay, great. Cool. I love that. It’s business school after all. You should judge it on how much learning you did. But what were the questions? And I don’t know. It’s a little bit strange. I think as we have talked about before, one of the challenges with the rankings that ask for subjective questions from alums of the program and current students is that you really only get to attend one business school ever. So it’s not as though you can say, Well, I attended these four different business schools, and for me, the one that had the best learning experience was this one. So as long as you are happy with the learning experience, that doesn’t necessarily… It sounds like it’s It’s testing more satisfaction and warm, fuzzy feelings, perhaps, than it is anything that is a bit more concrete. I don’t know. It’s a little bit strange. It makes it easy to not be able to poke holes in it when you don’t really share what your methodology is on a granular level.

[00:05:53.080] – John

Yeah, that’s true. I will say, I created this ranking back in 1988, and when I was in charge of it, we provided all the questions that we asked out into the public. Not only did we provide the questions, we showed you the score of every single school that we surveyed on every single question. So the transparency was complete. And that just doesn’t happen anymore, sadly, because it is important to know how these questions are worded and what exactly is being asked of alumni and students and even employers to make sense of it. And then it’s important to understand the ingredients in each of these vague metrics like learning or networking or entrepreneurship or diversity for that matter. The other part of this ranking, which I should point out, is unlike the Financial Times, which does a true global ranking of all the schools that participate in that ranking, ranks them all together, Business Week has separate rankings for the United States, which is what we detailed in the beginning of the podcast. Then it has a ranking for 19 European schools, for six Canadian schools, and for a number of schools in Asia-Pacific. In Europe, the number one school for their full-time MBA program was IMD in Switzerland, which unseated Bocconi in Milan, which was at the top of last year’s list.

[00:07:30.880] – John

Caroline, your alma mater, INSEAD, ended up number five behind IESA in Barcelona, Bocconi in third, London Business School in fourth. Do you think INSEAD is really fifth in Europe?

[00:07:47.130] – Caroline

I don’t think so. I don’t think candidates will judge it that way either. I’ve never had a candidate who has, for example, been admitted to INSEAD and a school like Bocconi and then chosen Bocconi over INSEAD. I think at the end of the day, candidates make their own choices and they take these rankings with a pinch of salt. If the ranking doesn’t make sense, then it undermines the credibility of the ranking. If it looks like a strange list, then you know that there’s something going on behind the scenes that doesn’t quite make sense. As we’ve said, there is no transparency in the data here. And survey data is, of course, very subjective. It depends a lot on people’s expectations. It’s possible that students who go to a school like Harvard or go to INSEAD have higher expectations than students who go to some other schools. So they may, therefore, not rate things in the same way as another population. There’s definitely a lot of bias, I think, in the results. Then there’s some weird things. Diversity is included for the US schools, but it’s not included for the international schools. But actually, diversity is critical to the experience of the international schools.

[00:09:09.640] – Caroline

That’s something that’s really part of the DNA of a lot of these schools and is a huge part of their value proposition. Just because diversity may have a different definition outside of the US, and it doesn’t in the US, doesn’t mean that you should strip it out entirely. To me, that’s a very US-centric perspective, and they don’t really understand what these schools are about and why people attend international business schools. I think it’s not a very credible ranking in my view.

[00:09:44.720] – John

Yeah, and even the way they define diversity in the US is wanting, for example, it’s largely based on gender and race. But you can argue that, obviously, international candidates who come to US school add tremendous value to the educational experience. That is a core component of diversity at the European and Asian schools, for that matter, that doesn’t get a US school any credit at all in this diversity measure, which seems awfully strange. Neither does the diversity in the backgrounds, the work backgrounds, and the undergraduate backgrounds of students, which is another aspect of how diversity can be and should be defined. Another element in a lot of schools are beginning to report this is the percentage of students who are first-gen college graduates in MBA programs. This is a stat that’s increasingly being reported by the top schools because it is a measure of diversity. In some cases, it may even be a better measure than giving a statistic for minorities, in part because it doesn’t run a foul of the Supreme Court affirmative action decision on admissions. In the past year. And yet it tells you a lot about the disadvantages those students probably had in not growing up around a dinner table with educated parents who had very different kinds of discussions and very different aspirations in their life.

[00:11:18.930] – John

So it’s a very odd measure of diversity. And sure enough, all you got to know is while the number one school in diversity, according to the business week, is George Washington University, which has a full-time MBA intake of 65 students only. That seems weird, but the number two school is Howard University, where there’s not a single white in the class, and it’s largely Black, and that’s hardly diverse, even by the so-called standards that Bloomberg Business Week is supposed to be applying based on race and gender. But there are a lot of weird things. When you look into this ranking and you start parsing the data very closely, particularly in the different categories, you see some very odd and strange results. I’ll give you an example. Even on compensation, right? Business Week now thinks that a Chicago Booth MBA makes more than a Stanford MBA. We know that’s not true, okay? But it depends on how you measure compensation, given Maria’s point. Some Some places measure it by starting pay alone. Some people add sign on bonuses, and they adjust for the percentage of graduates who get them. Some folks add anticipated first year extra compensation.

[00:12:45.460] – John

Some don’t. Some people may add, even though this is a much more difficult thing to add, stock options, restricted stock, and other kinds of stock grants that you’ll be surprised how many MBAs, particularly from the very top schools, No surprise, Stanford MBAs, many of whom go to work for tech companies or early-stage companies or startups, are more likely to get a piece of the action in terms of equity than a Chicago Booth MBA. But Business Week is saying Chicago Booth MBAs make the most money. They’re saying, NYU grads get our ninth in pay. You’re in New York, you get paid a lot of money while you come out of school because the cost of living New York is very high. Incidentally, MBAs from Columbia and MIT, Sloan, according to Business Week on this compensation metric, they don’t even crack the top 10. Harvard MBAs, they’re 12. Who would believe that a Harvard MBA graduates with competition that would put them 12 in the pay sweep stakes of MBA compensation? It just doesn’t happen. There’s some really oddities. Then you even look at their entrepreneurship measurement. Mississippi ranks better in entrepreneurship than Columbia Business School. Brigham Young ranked second, with Wharton at 27th, and Michigan-Ruston at 23rd, which really seems peculiar.

[00:14:18.650] – John

The number one school for learning, guess which one it is? It’s William and Mary Mason School of Business. Now, I’m sure I know the learning there is fantastic, but is it really a school that ranks 32nd overall? Is it really number one in learning? I don’t know. But that’s an odd ball result. So up and down the ranking, you’ll see some crazy things. Nonetheless, I don’t think that the editors of business week are deliberately trying to put out misinformation. They may be mindless and and and misinformed about how to really measure the quality of a MBA experience. But it’s an interesting list, I have to say. You find any other oddities in this list, Maria?

[00:15:16.940] – Maria

To your earlier point about the rankings for entrepreneurship, it makes more sense when we dig into the methodology and again see that the entrepreneurship score a school gets is based upon students and alumni answering questions such as, was entrepreneurship central to my training in the school? What did the school take entrepreneurship as seriously as other career paths? What was the quality of the entrepreneurial training that was offered at the school? So again, that’s one of those things, where I mean, first of all, how do you know if you didn’t actually go to that school or if you perhaps didn’t participate? If someone goes into something like banking, they’re like, oh, yeah, it looked like the entrepreneurship people were having a pretty good time. So So it’s just, again, I think it’s odd to have so much of it based upon a feelings or a subjective feel. Did you feel that your school was a place where women could participate? Okay, I guess you could use that. But look, I mean, one of the benefits of these rankings, when the rankings do have these weird results, is that it does help, I think, some otherwise overlooked schools have a chance to shine.

[00:16:27.870] – Maria

And I also think it because they are so fickle and it is so easy to poke holes in not just this one, but in any of the methodologies of any of these rankings. Hopefully, it helps candidates to business school realize that the rankings are not, in fact, the be all and end all. If a school can jump seven places up or down or four places up or down from year to year, don’t make the ranking such a guiding North Star in your choice. Really use it as a place to start your research. But then after really focus on what are the academic offerings that they have that are specific to your goals, what’s the culture like, and other more relevant elements like that.

[00:17:10.350] – John

Yeah, absolutely. Caroline, any other observations about this ranking?

[00:17:15.380] – Caroline

Well, yeah. When you look, for example, at the HBS ranking, learning rank, they’re languishing below the top 10, right? I mean, who would actually really think that HBS is below the top 10 in the US for the learning experience?

[00:17:31.400] – John

Absolutely not.

[00:17:32.580] – Caroline

Then it’s great to have entrepreneurship in the ranking, but does it really carry that much weight over and above other areas, other academic areas that you have at business school? I mean, entrepreneurship is relevant for some students, but not everyone is going to business school to become an entrepreneur, right? So for a whole bunch of students, right? Entrepreneur may have just been irrelevant or it, or it may have just been something that they thought was fun and they took a few classes, but it’s not really going to be core to their career. I don’t know why they decided that entrepreneurship is an academic area that carry so much more weight over everything else that you learn in business school.

[00:18:17.280] – John

That’s a really good point, because in general, only 5% of MBA graduates actually started business right out of school.

[00:18:25.070] – Maria

In fact, in Poets and Quants this week, there was an article about the highest-funded MBA startups, and I believe an INSEAD alum, INSEAD alum has raised the most amount of money in the past year or so, for a billion dollars raised, if I remember correctly. So it’s interesting to… Okay, well, You can ask someone in a survey, do you think your school did a good job in entrepreneurship? And they can say, yes, seven out of seven. They are so good at it. But when we look at the data such as, okay, which schools are graduating the alumni that go out and actually start companies that actually raise money that actually become unicorns, I’m not sure that the results of a subjective survey match what the data would actually imply.

[00:19:10.410] – John

Yeah, that’s very true. And here’s the other thing about all that. Of course, the money thing is an important thing. I mean, a lot of these businesses are launched on the fly with not a whole lot of capital. But is entrepreneurship more important than finance? Is it more important than leadership? Is it more important than Is it more important than any function in which MBAs get the majority of their jobs? No. I saw it a minority piece. Now, the business schools will argue that we’re not teaching students to be entrepreneurs, we’re teaching them an entrepreneurial mindset that they can apply at whatever job they get, which is probably business week justification for including it. But nonetheless, I agree with Caroline that it’s an odd ball metric to include, and you’re measuring it based on the opinions of people. Now, here’s the other problem with the ranking. Everyone who fills these surveys out knows that it’s being used to rank their MBA and their school. They are completely inclined to be cheerleaders as opposed to realistic assessors of their education. Now, you could argue that the cheerleaders are spread throughout the survey and they cancel each other out from one school to another.

[00:20:40.430] – John

To some extent, that’s true. But what it does mean is that the school on these scores are highly clustered, so clustered and so close to each other that the actual statistics are meaningless because we talk about a margin of error of every day now because of all the election polling going on. Let me tell you, the margin of error in the survey responses is so high as to make them all pretty much meaningless because when you have an 8.8 versus an 8.9 or even go an extra decimal point, that’s meaningless, really, right? And yet that’s what’s going on with these questions because of all the cheerleading that alumni and students do in filling out a survey that knows that they know will be reflective of their school and their degree on their CV. So you got that internal bias in this rank that’s really problematic. Same is true when you survey employers. The way that business week surveys employers is they go to each school and they ask for a list of the recruiters who came on campus. Now, anyone who really recruits MBAs in any sophisticated fashion, what they do is they send the alumni of the school to recruit.

[00:22:06.120] – John

So business week has an immediate bias because if I graduated from Harvard and I now work at McKinsey and I go back to Harvard to recruit only Harvard MBAs. I have no track record of assessing the MBAs at Chicago Booth, Kellogg, Stanford, Berkeley, or whatever other school McKinsey recruits from. But I have every tendency to say, Oh, I love Harvard because after all, I got my MBA from Harvard, so I’m going to score Harvard well. That’s another problem, even with the employer survey. This just gets to the point of how hard it is to really get your arms around the quality of the MBA experience in a good school, because in most cases, you really don’t get a sense of what are people really learning and what is this education all about from one to another. Then what you can measure may often be less important than what you can’t measure. That’s always a problem with these rankings. The one good thing is there are a lot of them. You can put them all together, you can look at them, and you can make your own observations. I know very few people are going to read the methodology and apply the logic to the reading of the ranking based on the approach a magazine or an organization takes when it ranks these programs.

[00:23:33.440] – John

I also think that in any one year, there are anomalies that always occur, and it’s better to look at rankings over many years. If you look at the 23 years in which business week has ranked MBA program is back from 1988 to the present, the school that has received the most number one ranks is Stanford, which is six, Kellogg with five, Wharton with four, Chicago with four, Harvard with three, here are some of the real anomalies, Duke with one. Then if you look at, okay, what schools have been in the top three of the business week ranking over all that time? The number one school, Harvard, 15. The number two school, Chicago Booth. Number three, Kellogg with 13. Top three rankings, Wharton with 12. Stanford with six, which is interesting. So there you have it. Any closing words, Maria?

[00:24:34.480] – Maria

I wish that I could make my own ranking. You’d rank on yield, right? You’d rank on yield. If I had to, if you said there’s only one metric and one metric alone you can choose, I would do that, even though that’s one that can also be manipulated. But I would like to do one where it’s either like, okay, you’re a prospective student, you can only choose one They force rank. Okay, so between this school, X school, X and school, Y, which would you choose? Between school Y and school Z, which one would you choose? Between school Z and school B, which would you choose? And then do it that way, because I think what Caroline said earlier about she’s worked with candidates to European business schools, and she doesn’t think she’s ever had someone get into both Bocconi and INSEAD to choose Bocconi. It’s the same thing with Harvard. I love that these rankings give the spotlight to other programs, but also in I work, usually, Harvard and Stanford are the two number one schools that people most want to go to. And even if they get into one of these other programs, it’s not clear that they would necessarily take it unless there was a massive scholarship dollar involved in that.

[00:25:44.090] – Maria

The other way that I would change rankings is I would say, you can vote for any school except for the one you went to. So which school do you think as an alumnus, now that you’re five years out and you’ve been interacting in the world with people from other schools, which school do you think has the the most prepared students? It might be a difficult thing to measure, but it’s certainly not any less logical than saying, well, you’re not in entrepreneurship, but do you think your school that you went to six years ago has a good entrepreneurship program? Okay, fine. You can’t name your own school. You’ve been out in the business world now for a number of years. Surely you’ve interacted with other people professionally. Do you have a sense of what those other schools are like? That might be a good way to do it. I know one of that, I think, is it maybe US news for for one of the ones where they ask the actual either faculty or administrators, I think you’re not allowed to vote for your own school. There’s one of them on the academic side, I believe.

[00:26:40.430] – Maria

And so that would be an interesting, maybe not from a quote unquote ranking, but just to get some interesting data.

[00:26:47.510] – John

Yeah, at that point.

[00:26:48.660] – Maria

Some subjective data that might be a fun one to do.

[00:26:51.650] – John

Yeah. And the Financial Times used to ask that question. I don’t think they ask it anymore about other MBAs, who would you hire?

[00:26:59.450] – Maria

Yeah. Oh, See, there’s a good one. I like that.

[00:27:02.030] – John

Yeah, exactly. Caroline, your final thoughts?

[00:27:04.750] – Caroline

Yeah, John, I think you should make this a project for P and Q and publish Maria’s ranking.

[00:27:13.860] – John

Yield, though, is really a good data point because if you’re accepted to five or six schools and you go to one, that does say something. Now, I know scholarship money gets in the way, but that’s okay. We know that the yield at a Harvard is on the order 89, 91%, which is probably right neck and neck with Stanford. But then there’s a big drop off after that. The yield does tell you a lot. It’s where people really want to go. Let’s face it, most people are applying to five or six schools, at least. That’s really good information to have. I also think endowment is a really good number because it just tells you what resources available to deliver a high quality education, not only by being able to recruit and retain the best faculty, but your ability to fund the best students buy them off the market, and your ability to fund different programs, the infrastructure of the school. I know a lot of people would probably be angry about including endowment in a ranking, but if you did it by student, that could be a very valuable metric point to address the quality of a program.

[00:28:37.890] – John

And then obviously, outcomes are super important in a professional school. And it is true that most of the rankings do try to measure one way or another career outcomes, but they generally put too much weight on compensation and less weight on actual getting a job. Then there’s no weight at all placed on getting the job you want, which is a whole other issue that tends to be on explore. It’s one of the questions we ask in our undergraduate surveys for our undergraduate ranking. Not only did you get a job, but did you get actually the job you wanted in the industry that you wanted to work in or even the company that you wanted to work in? You get to that fine level of detail and you get really very good information for prospective students to examine. Anyway, take it with a grain of salt. But the Bloomberg Business Week ranking is one of the major ones, along with the Financial Times and US News. It gets a fairly wide exposure. I can tell you that I recently wrote about a commentary on this, which is this. As much as business schools moan about these rankings, they’re very responsible for our obsession with them because as soon as they do well, you can believe it.

[00:30:02.200] – John

You go on their website, you go on their social media feeds, and it’s all over there. Every school is trumpeting an increase in ranking or a better ranking, with the exception of maybe three or four. But everyone is thumping their chest. What they are doing is telling people that these rankings matter when in many cases they don’t. If you want to read more about the Business Week ranking, check our stories out. We have the 2024 Bloomberg Business Week MBA ranking, Stanford makes it six in a row. Then we have the 10 biggest surprises in the ranking. You’ll find it on the website. Meantime, Caroline and Maria, thank you once again. For all of you out there, thanks for listening.