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So you have risen up the ranks of your organisation and now hold a managerial role with a team of employees reporting to you. You have your eye on a senior leadership role but are unsure how to take your career to the next level. This is the stage where many young professionals start thinking about attaining a Master’s Degree in Business Administration (MBA) as a way to fast-track their careers.
But does an MBA guarantee career progression, and is an MBA worth the investment?
why study for an mba?
The aim of an MBA programme is to prepare students to work in executive positions. It usually includes a series of business-related modules such as economics, corporate finance and strategy. It also covers human capital management, organisational behaviour, marketing and IT while equipping students with leadership skills.
Now let’s start by finding out what an MBA does for you.
1. higher base salary
One of the biggest reasons professionals study for an MBA is the uplift in salary. An MBA is a significant financial investment which usually costs more than US$100,000 at the top business schools. However, you may be able to recoup that by the pay increase you could potentially get after you graduate.
Salary increases vary considerably as they are based on a wide variety of factors, including the rank and prestige of the MBA programme, the profession you are in and what your current salary is.
A survey from the Graduate Management Admissions Council found that the median starting base salary US companies offered new MBA hires in 2019 was the highest on record (US$115,000). This was notably higher than the median offered to direct-from-industry hires (US$75,000) and more than doubles the amount that was offered to new bachelor’s degree hires (US$55,000).
While most may not see an immediate uplift in salary upon their return from school, there is a greater chance of getting promoted post-MBA and securing a more senior role and corresponding salary over time. Generally, the extra qualification of an MBA should lead to more leadership opportunities within your company.
2. easier career switch
However, not everyone does an MBA for purely monetary reasons. It can actually be easier to change career with an MBA under your belt. Mark W. Nelson, Dean of Cornell University’s Samuel Curtis Johnson Graduate School of Management, says that an MBA is suitable for those who want to initiate a “major change” in their career trajectory.
MBA skills are transferable across sectors, making you more attractive as a candidate in the market. Along with the career shift, you will also have increased knowledge and confidence to bring to your new job. While this may not necessarily mean an immediate monetary gain, it could lead to a more senior position and higher pay in the longer term.
3. grow professional network
Another major reason for taking an MBA is the opportunity to grow your network and business contacts. If you are taking an MBA because you are ambitious and want to hold a more senior position in the company, then there’s every chance the people on your course will also have the same mindset.
So you could find yourself studying alongside future managing directors, CEOs, and in some cases start-up founders and unicorn entrepreneurs.
While LinkedIn is a great place to grow your professional network, people who take MBAs together make more meaningful connections having studied alongside each other for two years and are more likely to stay in contact even after they graduate. Saying you went to business school with a Fortune 500 CEO can also open up new opportunities on both personal and professional fronts.
mba has an expensive price tag
While an MBA has many proven benefits, it comes at a hefty price. The tuition fees have been steadily rising over the years as the qualification becomes more popular. Some MBA students continue to pay off their tuition fees well into their 40s.
Like most things, the more prestigious the school, the more expensive the fees. Tuition fees at the top business schools in the US cost more than US$120,000, based on a two-year full-time MBA. Less well-known business schools like the Tuck School of Business charge less, where their MBA (part of Dartmouth College) is around US$70,000. MBA programmes in the US are also seen to be more attractive, due to its close association to Wall Street, billionaires and Fortune 500s. MBA programmes in Europe and Asia generally tend to be cheaper in comparison.
On top of the tuition fees are the accommodation costs that you would incur if you are studying overseas, as well as the loss of income while you’re not working. That can push the total costs easily above US$200,000. Many people forget the salary loss is also an ‘’opportunity cost’’ to consider while pursuing a full-time programme.
do employers care if I have a masters?
So going back to our original question of whether is the MBA worth the time and cost studying for one, and if employers really care? To answer these questions, you might want to first evaluate your current situation. Is an MBA necessary for the type of career, industry or business that you want to work in?
If you want to pursue a career in the start-up community or with a local SME, an MBA may actually make you overqualified and put people off hiring you.
But there are opportunities in rapidly-growing STEM sectors, where there is a need for people who have strong knowledge of budget management in very specialised areas, along with a good grasp of global economics.
And if you aspire to be in a regional leadership position or a global executive, there are benefits of having an MBA. Having a disciplined, data-driven approach to business, which an MBA provides, could help you stand out from the crowd. In some cases, you may already be working in a senior executive role or have hit the highest salary you could possibly achieve. An MBA will not make any difference in breaking through that ceiling.
do your homework before you invest in an MBA
So as you can see, it’s a difficult question to answer as it depends on so many personal and professional factors.
If you are seriously considering an MBA, start by doing some financial calculations first. Look at your opportunity cost and tuition fees of your preferred business school to gauge what your total investment will look like.
As you do your research, speak to as many people as possible including those who have done MBAs and ask them for their opinions. If you need an impartial opinion, you can speak with a specialised recruiter on the type of leaders that companies are looking for these days.
An MBA is a significant investment in your future, so make sure you get as much help as you can. Connect with us today and our trusted specialist recruiters are here to help you reach your dream goal.