Wharton’s Class Profile, Kellogg MBA Pay & A Controversy At Harvard
Maria |
August 22, 2023

In this week’s episode of Business Casual, our hosts delved into the latest MBA admissions trends across three of the top business schools, and explored academic controversies within one of them.

They discussed Wharton’s ability to maintain high standards despite a 14% drop in applications, highlighting the consistent quality of top-tier MBA applicants. Kellogg’s robust employment numbers for the Class of 2023 reinforced the enduring demand for MBA graduates.

Additionally, they addressed a controversial case involving a Harvard Business School professor accused of research misconduct, underscoring the importance of due process and equitable treatment within academic institutions. The hosts reflected on the conflict between leadership teachings and the handling of the controversy, emphasizing the need for consistency in upholding values and principles.

Episode Transcript

[00:00:07.290] – John

Well, hello everyone. Welcome back to Business Casual, our weekly podcast. I’m John Byrne with Poets and Quants. And I have with me my co hosts Maria Wich-Vila Caroline Diarte Edwards. Caroline, of course, as you all know, is a co-founder of Fortuna Admissions, and the former head of admissions at INSEAD, and Maria is the founder of Applicant Lab. We have had a lot of bit of news since we were gone on vacation and other things during this last part of the summer period. First and foremost, I think, and this is of great interest to all the applicants out there, Wharton released its class profile, and what’s interesting about it is that applications to the MBA program last year fell by 14%. That’s more than 1000 fewer applications than the school received a year earlier. But lo and behold, Wharton was able to maintain its record average class. GMAT score its high undergraduate class average for GPAs at undergraduate institutions, and achieve gender parity for the second year in a row with 50% of the class composed of women. And I think it just speaks to the depth and the quality of the MBA applicant pool at the top schools.

[00:01:38.530] – John

Maria, you agree?

[00:01:41.470] – Maria

Yeah absolutely. You know, I think it’s funny. Sometimes people, applicants in particular, understandably so, try to read the tea leaves of what do these trends mean? And this year it’s more people are applying or fewer people are applying. And if there are fewer people applying, does that mean it’s, quote unquote, easier to get in? And the fact is that, no, the standards are still going to be the same. I mean, statistically speaking, from a pure numbers perspective, it might appear to be easier to get in, but the fact that the GMAT scores are remaining the same and a lot of these other metrics are remaining very high, really does point to the fact that it’s never easy to get into a school like Wharton. And so hopefully, if anyone out there is trying to say, well, there are fewer applicants, so I’m going to roll the dice. Yeah, you should roll the dice. No matter what. But don’t expect it to be a vastly different landscape.

[00:02:34.070] – John

Yeah, that average GMAT score 733 for the second straight year and the GPA average was 3.6. Caroline, do you think we’re going to see this at other schools as they begin to report their class profiles?

[00:02:48.250] – Caroline

Yeah, I think that we will see that there was a drop in the last season of application volume, but I think that we will also see that the top schools have done a very good job of maintaining the quality of their class. And as you say, these schools have a really strong pipeline year in, year out of outstanding candidates. And people often make a big story about, oh, application volume is up a bit, or it’s down a bit, and that makes a big difference to your chances of getting in in one direction or another. But it doesn’t necessarily make a big difference because what happens is you have this solid, strong pipeline that is coming through year in, year out. And actually what happens when there’s a spike in application volume, it’s often not the best quality candidates who are throwing their hat into the ring at that point. And I saw that when I was at INSEAD and we saw that during the pandemic as well, that when there’s a surge in application volume, it’s often quite speculative candidates, people who maybe hadn’t planned necessarily to do an MBA, it’s not part of their sort, know, was not a long term ambition.

[00:04:03.050] – Caroline

But suddenly their circumstances may have changed and they think, oh, what am I going to do? Well, perhaps that’s a good idea to head off to business school. And maybe they are not the best prepared candidates, right? Maybe they don’t have the same quality of profile as some of the candidates who have been plotting their path to Harvard or to Wharton or to INSEAD over a number of years. And so those fluctuations in application volume can be a bit misleading because it doesn’t actually mean that there’s a dramatic difference in the competition. And it may actually make more of a difference for schools who are a bit further down the pecking order. But for the top schools, they have this really loyal base of prospective candidates coming through regardless of the cycle. And that’s what we see here that Wharton, regardless of quite a big drop, as you say, in application volume, it has had apparently virtually no impact on the quality of the class.

[00:05:14.450] – John

Yeah, really remarkable and a testament to really the quality of applicants at the top schools. And I agree with you that second tier schools, this is going to look a lot different. But at the very top, we’re talking the top 1520 schools, we’re probably going to see equivalent drops, at least double digit drops for last year’s admission season, but pretty good stats overall. Another M seven school reporting a stat is Kellogg. Now Northwestern. Kellogg did a little sneak peek at their preliminary employment numbers and it’s really the first hint at what the job market was like for the Class of 2023. And lo and behold, despite all the talk about, oh boy, is there going to be a recession or not, or MBAs who took jobs with consulting firms who are often asked to delay their start dates and all that. But at Kellogg, which sends more people into consulting as a percentage of the class than just about any school, median starting salary went up $10,000 to 175,000 to start, which is really good news not only for Kellogg, but I think we’re likely to see that elsewhere. And if you look back to pre pandemic days at those median starting salaries, you will see that the increase is on the order of almost 25%.

[00:06:48.690] – John

Really impressive. What does that tell you about the market, maria, I mean, one of the.

[00:06:54.520] – Maria

Principal tenets of capitalism is supply and demand. And it says to me that employers deeply value the value that an MBA graduate from any of these top schools can bring. And so I think this is an important thing for folks to keep in mind once they do get accepted, if they do not get the scholarship support that they were expecting, don’t despair because there’s a really good chance that you’re going to be making pretty decent salary when you graduate. And therefore paying back the student loans will in fact, be pretty feasible.

[00:07:33.030] – John

And not to mention the sign on bonus, which in consulting is $35,000, which that goes a long way to helping pay down your debt or taking a very extravagant vacation and not worrying about your debt, which maybe some people might actually be tempted to do. Caroline, you know, those.

[00:07:55.990] – Caroline

You know, it’s really encouraging to see this data, right, because we have been concerned about what’s happening with the job market. So it’s very impressive to see these numbers. And it’s quite an extraordinary bump that you mentioned, John, from that data that you highlighted, compared to the pre pandemic salary data, so up 25% since the class of 2019, I mean, that’s quite an extraordinary increase. So, again, a wonderful testament to the value of an MBA from a top school. I have heard anecdotally that some graduates from the classes this year have had offers not rescinded, but they’ve had employers have said, okay, we’re not going to bring you on in August or September. We’re postponing for a few months. So I have heard that from some people who are graduating this summer. So I guess that wouldn’t necessarily be taken into account in this data that we’re looking at now, right? Because they would probably still be reporting their packages even if they are not starting immediately. But nevertheless, as Maria said, it’s a very impressive testament to the value of the MBA and the demand that is out there despite a somewhat wobbly job market.

[00:09:19.490] – John

True. In fact, we just have a story right on the homepage today. I’ll just read the headline, which is kind of amusing. Newly hired consultants are getting paid to sit around and watch Netflix. So while many people in the consulting field who took jobs or many MBAs who took jobs in consulting and have been asked to delay their starts are getting some kind of stipend or pay before they actually start work, part of this is an attempt by some firms to say, hey, if you have three, six months of delay, why don’t you volunteer and work for a nonprofit and we’ll pay you what we intended to pay you? In this way you can do some community good. And so that’s what’s kind of behind that. But true enough, that’s not really going to affect the actual numbers on pay and a Kellogg that has not done so the other interesting thing about the Kellogg report is what Kellogg didn’t reveal is the percentage of graduates employed at graduation. And three months later, that’s to come when the full employment report comes out in the fall. Last bit of news we want to talk about is a big controversy over at the Harvard Business School.

[00:10:39.710] – John

Some of you may have read that one of the superstar professors there, Francesca Gino, who is an Italian born behavioral scientist of some note, highly popular at the school among MBA students and her colleagues, was caught up in allegations that four of her research studies had data that had been manipulated in one way or another. There is a blog out there called Data Colada by three business school professors that made these allegations. Harvard Business School put together a three person committee of former and current faculty members to investigate them. They concluded that there was a problem and that research misconduct did in fact, occur in this case. And they recommended that she be placed on unpaid administrative leave, that she be stripped of her title at the Harvard Business School, that she be banned from campus, that she would be prevented from ever publishing again on any Harvard Business School platform, including the Harvard Business Review. And that proceedings should begin to strip her of tenure. Stripping a professor at a business school of tenure is a big deal, and it becomes a bigger deal at the Harvard Business School. Now, what’s interesting about this case is that Gino recently filed a $25 million defamation lawsuit against the dean at Harvard Business School, against Harvard University itself and the authors of the blog that initially made these accusations.

[00:12:26.990] – John

And the lawsuit is filled with the kinds of details that really make you severely question whether she was treated fairly, number one. Number two, whether in fact Harvard and the dean breached her contract with the school on a number of details that I’m not going to really get into here. But meantime, two law school professors have independently at Yale and at Harvard, questioned Harvard’s treatment of her, and both basically are suggesting that she has a good case and Harvard is likely to either settle or lose. Now, this is your alma mater, Maria, so I should give you the chance to talk about this first.

[00:13:11.310] – Maria

Yeah, I mean, as with all things lawsuit, one never knows what is the truth and what is merely yeah. I have no idea who’s right and who’s wrong. I will say, though, that I think whenever any sort of potential, quote unquote crime is committed, whether it’s shoplifting or fudging data in your study or selling nuclear secrets to Saudi Arabia, whatever it is, I do believe in the power of due process. Right. And there is a law and there are laws that need to be followed. And I believe that Harvard Business School did, in fact, have a process in place that was meant to deal with allegations such as the one that Professor Gino encountered, and it’s my understanding from her lawsuit that those processes were not in fact followed in her case. One of the allegations is that, for example, when she finally met with the Dean, he basically said to know you’re not allowed to speak, which is shocking and honestly it’s a little embarrassing. I am not actually very familiar with this Dean who’s been around for only a couple of years. I did not encounter him, so I can’t comment one way or the other.

[00:14:15.640] – Maria

But I do think that it’s a shame that in a school that prides itself on selecting people for leadership potential and on training future leaders, that this does not any situation where you call someone into your office and you say, okay, shut up, you’re here, but you’re not allowed to say anything. I don’t think anyone would say that that’s a good leadership technique. Who knows who’s right, who’s wrong, who’s not lying? Maybe everyone’s lying, maybe nobody’s lying, who knows? But if these allegations are true, it doesn’t sound like it was handled in a fair way that would have been applied perhaps to other professors in similar situations. So that’s disappointing.

[00:15:05.660] – John

Yeah. And that meeting was the only meeting that Dean had with her, even though he had first heard about these allegations two years. Mean, any good leader would have immediately confronted her directly and asked about this instead of waiting to the end when you’re going to deliver a decision and incidentally, then you tell her you don’t have the right to speak. And you bury your head in a piece of paper and read word for word what the punishment is, which is appalling. Absolutely appalling. That occurred. Even if she’s guilty, even if she did commit fraud, that’s not the way you deal with something like this. It’s really unbelievable that something like that could happen. And this is at Harvard Business School where previous deans have taken great pride in running a very tight ship. Process means a lot at the Harvard Business School. There are a lot of rules and guidelines and regulations that have been promulgated with the approval of the faculty and that are followed religiously. Sure, I get that all universities are highly politicized environments, but they’re also in many cases collegial environments and that’s not the way you treat a colleague.

[00:16:23.530] – John

Caroline, any thoughts?

[00:16:26.010] – Caroline

Yeah, I agree. And Maria, you often say I’m very diplomatic and I love the way that you said that telling someone that they can’t speak in a meeting is perhaps not the best leadership style.

[00:16:39.470] – Maria

I’m learning from you, Caroline.

[00:16:42.930] – Caroline

Your time in England this summer was very well spent.

[00:16:46.230] – John

Okay. This reminds me of the scene in Barbie when the Kens take over, come in and they’re brow beaten into being women again and assuming the secondary role in society. Imagine you come in and the man tells you, no, you’re not going to speak during this meeting.

[00:17:08.970] – Maria

Go get me a brusky beer in my mojo, dojo.

[00:17:12.100] – John

There it is. Okay, I know that Maria saw Barbie now.

[00:17:16.010] – Maria

Sorry, Caroline. Go ahead.

[00:17:18.990] – Caroline

The irony of a school that is supposed to be teaching people how to lead and manage teams and train the next generation of business leaders and actually practicing leadership like this is extraordinary. I mean, schools are sometimes not the best practitioners, right? They sometimes don’t practice what they preach. But this seems to be quite an extraordinary example of not practicing what they preach. And I mean, apart from anything else, right? I mean, schools are very concerned about their reputation, and surely he would have been aware of the terrible PR that would fall out of the way he handled this. So I just find it extraordinary that it seems to have been so badly handled. Know this is awful publicity for the school. And as you know, Harvard has so many policies and procedures in place and is so carefully guards its reputation that you wouldn’t expect this to come out of Harvard Business School, of all schools.

[00:18:23.430] – John

Yeah, that’s really true. And after she filed the $25 million defamation lawsuit in US district Court in Boston, eleven days later, obviously feeling pressured by what was going on, the dean sent an email to the faculty. And even in the email, he sort of shifts the onus for the actions that were taken against her on the investigation committee, as opposed to standing up and saying, I believe this was the right thing to do. I made this decision. And it was backed, sure, by whatever conclusion the committee had. But it’s almost like he’s not even wanting to stand up and courageously be a leader in this sense and saying, yes, I made a decision and I stand by the decision. Really sad, but at least we have good news from Wharton and Kellogg. All right, there you have it. That’s the latest stuff that’s happened. We’re looking forward to getting back to our normal routine next week. And thanks for listening. This is Poets and Quants. You’ve been listening to Business Casual.

Business School News | General | P&Q Podcast "Business Casual"
Wharton’s Class Profile, Kellogg MBA Pay & A Controversy At Harvard
Maria |
August 22, 2023

Video transcript, for you skimmers out there: 

I love the fact that they. Report on this metric, right? The salary percentage increase, I think is an incredibly valuable metric because there are so many business schools out there that are great for so many people. And at the end of the day, these programs are in fact able to do what a lot of business school applicants are hoping for.

They are in fact able to provide a real change in the trajectory of someone’s career. They are, in fact, able to help people leapfrog. Into a higher career stratum than they would’ve otherwise been able to be in. So from that perspective, I love the fact that the FT reports on the salary percentage increase.

So valuable. I think it helps, when sometimes I talk to people at the beginning of the business school journey, I will frequently hear something like, well, it’s M seven or bust, you know, it’s Harvard, Stanford, Wharton, or bust.

And I’m often like, look, slow your roll, man. There are so many programs out there that are going to get you. They might not be the first ones that you think [00:01:00] of, but wow, does that even matter? I mean, whew. Look at some of these numbers. $170,000. That is nothing to sneeze at, especially if it’s one and a half times more than what you were making before business school.

I mean, wow. , That is life changing. , And these schools can really change people’s lives. And I think it’s important to have this metric available because I think it helps open people’s eyes. To, To be a little bit more open-minded. , And I think that’s wonderful.

Where my little quibble is. Is that I believe this is an important metric to report upon. However, I do not believe that it is a metric that should have significant amount of weight in the rankings because if we think about what is the purpose of a ranking, it is meant to be some sort of a representation of relative quality.

Now rankings. The entire concept of them is flawed the entire, for me, the entire concept of an ordinal ranking is ridiculous. Like school versus two versus four, versus seven versus six . You know, like, there, there’s sort of [00:02:00] these tiny miniature marginal differences. I think that school rankings should instead be in buckets.

Like, here is the top bucket, and then here is the also very good, but just underneath the top bucket, the next bucket. Um, but no one, no one listens to me. Uh, but so anyway, to the extent that a ranking. Is intended to be some sort of a measure of a program’s quality. I don’t think that this metric is one that should be included in the weighting.

Look, again, . Life-changing levels of improvements in salary. But when I look at, okay, so these were the top five programs by the salary percentage increase, but now when I look at it by the weighted salary, right, the top five US programs, by weighted salary, it’s not entirely accurate to say that.

Well, these programs, you start with people who have lower incoming salaries and they end up in the same place as the other programs. The numbers do not [00:03:00] really, , the numbers would tell a slightly different story. So if you look at the weighted salary a few years out for the top five programs by salary,

we’re talking about a $70,000 a year difference, roughly 240 a year versus 170 a year. That’s about a 40% difference, which I don’t think is a small, you know, if we were talking 5%, even 10%, I’d be like, yeah, 10%, that’s nothing. It’s, you know, nothing but 40% I do think is a pretty, I think it’s a pretty significant difference, uh, that is worth noting.

And so. Your point about like, well, they were letting in the people who were already on a, you know, if you were making, let’s see if we can, if we figure out, okay, so if we take this, these numbers, then we can sort of back into what’s an implied pre MBA salary, you know, that would indicate maybe something in the mid sixties before MBA versus, you know, one 10 something, [00:04:00] 1, 1 10, 1 15, for these other programs.

I get your argument. Your argument is like, look, these people were already clearly high achievers prior to business school, and so, mm-hmm. Is it not true then that the business school, like they would’ve continued to be high achievers And in fact, this is true, some of the most successful, financially successful people I know skipped business school altogether and they didn’t need it.

, However, I think GMAC often does, polls or surveys of MBA graduates, and I think the vast majority of them, at a minimum say that they’re glad that they went to business school, that they do feel that it was worth, their time. So. How much of this is,, nature versus nurture.

We, we will never know. , But I would gently push back on the fact that I, because these numbers essentially to the extent that they’re lower than say these numbers, it effectively penalizes thes e schools in this ranking. And for that reason, I don’t think that it should be part of the ranking because you’re penalizing a school for letting in more successful people.

But there’s a benefit. [00:05:00] To attending. Like, first of all, if you are a more successful person, think of the opportunity cost that you’re giving up. So the fact that these schools are able to lure away people to give up two years of their salary, in order to go to business school in the first place, I think is a pretty good indicator of the desirability or the perceived desirability of those programs.

Also, I do think that there is merit to thinking about like, who are my peers going to be in a business school? and. If a school is attracting people who were more successful prior to business school, I actually think that that is an indicator of the quality of the school, not only because it shows the people that are willing to give up those two years of salary, but also think about who the peer group is once someone is in the school.

Right? That means that if you are attending one of these schools. This percentage isn’t as high, but you’re surrounded by people who, prior to business school, were already achieving on a different level. And also after they graduate, they continue to achieve on a different level. True. The slope is not as sharp.

Right. But the.

[00:06:00] Result is a larger number. So I think that this implies that perhaps at the school itself, you might be surrounded by people who are driven. some people might say more competitive, which might not be everyone’s cup of tea, but people who are more driven and also after they graduate, they continue to be driven.

And so I think that also implies something pretty powerful about the ultimate benefit of the network because business school isn’t just the two years you go there and it’s not just that first job you get out of school or that third job you have five years out of school.

it’s also who’s your network gonna be and, and who are you gonna call 10, 15, 20 years after graduation? To invest in your company or to partner with your company or to start a company with. so I do think that there is value to attending a school and to have your peers during school and after school be people who were, for lack of a better term, high performers.

[00:07:00] I don’t think that this should be punished because I do think that this does yield a better business school. Experience and a better result in the long term. And so my quibble, again, I love this metric. I think this is an amazing metric to provide, but my quibble is that this should not be given honestly, any weight at all, and certainly not the high level of weight that it’s given, because again, you’re punishing the schools that, you know, you’re basically indicating that I, what I would say is an indication of quality.

An indirect indication of quality, but an indication of quality all the same. You’re basically punishing the schools that have sort of higher quality, quote unquote, coming in. And, and that to me is. Counterintuitive and kind of wrong. And so that’s why I continue to think that this should not be, uh, reported upon.

Absolutely. Tell us. It’s important. I think it’s great to know. I love using this information, but I don’t think it should be used in terms of like, let’s figure out which programs are the , [00:08:00] quote unquote highest quality programs. But what do you think? What did I miss? let me know. Thanks.

Maria

New around here? I’m an HBS graduate and a proud member (and former Board Member) of AIGAC. I considered opening a high-end boutique admissions consulting firm, but I wanted to make high-quality admissions advice accessible to all, so I “scaled myself” by creating ApplicantLab. ApplicantLab provides the SAME advice as high-end consultants at a much more affordable price. Read our rave reviews on GMATClub, and check out our free trial (no credit card required) today!