Compensation and Employment Impact of a Full-time MBA Program

The changing Master of Business Administration (MBA) marketplace and considerable direct and indirect costs for an MBA degree mean that school administrators and other stakeholders need a better understanding of what factors may influence the rate of return to their MBA programs. We investigated the potential of using analytical frameworks to identify those variables that may predict employment probabilities and starting salaries of full-time MBA graduates, in the context of a single, private MBA program. Our results suggest that for graduates of this particular program, pre-MBA salary and work experience in accounting, banking, finance, and consulting industries predicted higher post-MBA salary levels, as did having a liberal arts major as an undergraduate. Other human capital measures, such as Graduate Management Admission Test (GMAT) scores or elite undergraduate education, were not associated with higher employment probabilities or salary levels for this program’s students, while having an undergraduate business major was associated with lower employment probability. Although our study has limited inference to determine the value of an MBA education more generally, it has potentially important implications for administrators of MBA programs, who could gain useful insights on applying empirical analysis to their own programs. Although this process can be costly and time consuming without a supportive institutional environment, it could provide useful evidence-based guidelines for practice with substantial payoffs for both the program and the students.