Is an MBA worth it?

I've recently hired my second employee, a newly-graduated technical writer who aspires to one day run his own business. He's proactive, punctual, hardworking and very capable. The mentor in me wants to make sure he has a great career ahead of him. So imagine my alarm when I heard him say, “Yeah, I'm thinking about going for an MBA in a few years.” As the holder of not one but two MBAs (it's a long story), I have a somewhat negative view of the degree. An MBA often costs a lot of money and provides very little return. However, as I began to consider how to tell my new employee that his plan was flawed, I also began to reevaluate my view of the MBA.

Note: MBA stands for Masters of Business Administration. It's a two year graduate degree that is held up as the “must have” for any executive or mid-level manager hoping to one day become an executive. The top business schools tout their MBA programs as a must-have for any career-oriented person, promising fast-track promotions, higher salaries, better networks, and a whole host of other benefits. Oddly enough, very few of these schools actually talk about the quality of their curriculum — but that's a whole other story.

So, if I'm going to be honest with my employee, I first need to be honest with myself. Was the MBA worth it? Or was it a big waste of money? Was there a flaw to the program itself? Or was I to blame for not taking advantage of what was offered me?

ROI Analysis

I first tried to do this calculation in purely financial terms. Take the cost of an MBA and the average return per year and see if the return on investment (or ROI) makes sense. Unfortunately, both costs and returns vary widely. For example:

  • A full-time MBA program at a top-tier school might cost you $80,000 in tuition and $140,000 in opportunity costs, but that assumes you're paying for it yourself.
  • A part-time MBA at a middle-tier school will cost $50,000 and very little in terms of opportunity cost, but the return might be lower depending on your chosen career.
  • And what about students who get their MBA programs paid for them by their employers?

In the end, I decided that a financial analysis would be too generalized to be worthwhile and focused more on the actual deliverables of the MBA.

Marginal Benefits of an MBA

Schools will tell you that their advanced degrees will help you earn more, advance faster, work smarter and in general be a better human being. But what does that actually mean? What do you really get out of an advanced degree that's supposed to help you in getting all of this? Let's take a look.

  • Knowledge. First, you gain a lot of information. This information could be useful or it could be useless but either way, you know it. For example, after the MBA, I know a lot more about how the Federal Reserve operates. Is this going to advance my career in tech? Probably not, but it's useful nonetheless. Personally, I believe that no knowledge is ever truly useless (except possibly knowing that James Cameron's first movie was Piranha 2: The Spawning) but the problem with this knowledge is that I could have picked it up elsewhere for a lot cheaper. During business school, I had several classes (at $8,000 a course) from Nobel laureates and I could have picked up the exact same knowledge by reading their books ($19.95 a copy). So really, the MBA experience is not worth it if you're looking for knowledge.
  • Skills. As opposed to knowledge, skills are the ability to do something. For example, business school taught me how to analyze a balance sheet, value a company, and negotiate a deal. These are directly applicable to my day-to-day work. Could I have picked up these skills elsewhere? Probably. In fact, almost certainly. There are plenty of books out there on these topics. You can also learn by doing, or you can just download video podcasts of many business school courses if you want. However, learning from a qualified teacher is better, in my opinion, so score one for the MBA program.
  • Network. Graduate schools are a great place to make friends with people who will be able to help you later on. It certainly was for me. However, I could have made the same sort of connections in other ways. In fact, I find that former coworkers are a much better network than my fellow MBA grads.

So really, what I gained was knowledge that I could have picked up elsewhere, skills that I could have picked up (more slowly) without the MBA, and a network I could have built myself. So far, this isn't looking so good for the MBA.

Actual Benefits of an MBA

There are two more intangible advantages to an MBA which I've yet to come to. Namely:

  • Inflection point. Going to business school is a good point at which to reevaluate your career and make a change without any penalty. In fact, this is almost expected; many people make career-path changes post-MBA. You could probably do this in other ways, but the business-school path is very easy.
  • Prestige Yep, there's a certain amount of prestige that you get simply by holding an MBA, especially from a top-tier school. Sure, some people may not care, but for the most part Western society places an emphasis on advanced schooling. This means that simply by having an MBA, some people will pay more attention to you and your opinions, which does help with career advancement. This is especially true in large traditional companies. In these companies, an advanced degree like an MBA is almost a must-have for moving up the corporate ladder.

As I looked at these items, it occurs to me that the value of business school is really the fact that you can put “MBA grad” on your resume. Which means that an MBA is only worth it if your career is in a place where an impressive resume makes a difference.

The two best cases:

  • You plan to work for large traditional companies like GM, Pfizer, and others. In this case, the MBA is a wonderful investment.
  • You're trying to make a career change and you work at a large company, especially from a technical field to a business-oriented one. For example, you want to move from being an engineer to being in marketing. The MBA will give you the credentials to make a lateral move like this without taking a step back in your career.

Notice that in both of these cases you have a very specific career path planned.

The Bottom Line

So, is an MBA worth it? In some cases, yes. What makes an MBA worth it?

  • Working at organizations that appreciate the prestige if an MBA (large companies, banks, government). A quick way to figure this one is to see if your target organization has a tuition reimbursement plan. If they do, it means they value the MBA. By the way, since it's the prestige of the MBA that matters here, you're better off going to a top-10 school. If you can't afford a top-10 school, then get a job at a company with a tuition program and then apply. Don't waste your time getting a degree from a no-name school when you're essentially banking on the prestige of your degree.
  • Having a specific career goal that you verify ahead of time will be helped by the MBA (technical to business, small company to big company).

Sadly, neither of these applies to my situation but hopefully I can help others make a better decision than I did.

One last note, for you wannabe entrepreneurs. If you think you need business school to teach you how to run a company, you're wrong. Business school is for people with a plan and who are averse to risk. That's usually the exact opposite of an entrepreneur.

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Panda
Panda
9 years ago

Absolutely largely agree.

For me my MBA was mostly a signaling tool to my company/management about the type of career I want to pursue.

It also introduced me to some of the best drinking buddies $75k can buy.

Worth it? Only because my company picked up the tab.

Sol
Sol
9 years ago

Great post and something I have thought about often.

My feeling is that, in general, much of what you wrote can be said about getting a college degree in general.

Steve
Steve
9 years ago
Reply to  Sol

The only difference is, there are far fewer jobs that an MBA unlocks.

Gal @ Equally Happy
Gal @ Equally Happy
9 years ago
Reply to  Steve

Too many responses to respond to all but will try my best.

Steve is exactly right. An undergrad is far cheaper and opens far more doors. As such, it’s a great investment. An MBA is more of a targeted tool that should only be used if you’re sure of it.

Adrian
Adrian
9 years ago
Reply to  Sol

Sol Is Right On The Money. One Must Bear In Mind That Any Post-Secondary Education — If Taken Solely For Career Advancement, Which I Imagine Most Are — Is Only Valuable If You Actually Obtain A Career In Your Field Of Expertise, Hence, If It Actually Helps You To Gain Employment. It Is, In That Scenario, Simply A Means To An End. As J.D. Has Pointed Out On Numerous Occasions From His Very Own Personal Account, Neither Of His Creditations (In Psychology & English) Had Anything To Do With Any Of His Careers, Especially His Very Own Entrepreneurial Endeavour. (Although… Read more »

Patty
Patty
9 years ago
Reply to  Adrian

Adrian…do they teach you to capitalize every letter in your sentences at Ivy schools? The price tag definitely isn’t worth it then…
😉

Justin @ MoneyIsTheRoot
Justin @ MoneyIsTheRoot
9 years ago

My MBA was very useful to me, and believe me I always wondered if it would be. Within a few months after receiving it, I found a new job that paid me considerably more. I have since been laid off from that job, but then found another within 2 months (just before my severance ran out) making even more money….both positions required an MBA. This market is becoming more competitive. I think if you desire to work in a business function within any Fortune 1000 company, then you should definitely pursue this route….after all, I have worked for three of… Read more »

LJ
LJ
9 years ago

Rather than get an MBA, the person should go into debt and start a business. Regardless of whether your business succeeds or fails, in 2 years of attempting to run a business you will learn everything that you would learn in business school. More importantly, the debt you accummulate in starting a business is dischargeable in bankruptcy whereas the debt you accummulate to go to school is nondischargeable.

Suzanne
Suzanne
9 years ago

Wow, your former coworkers are better connections than your MBA classmates are? Unless you worked at McKinsey or Goldman, that is surprising. On the other side of the equation, I work for a top B-School and meet with MBA alumni regularly who use the network extensively, who formed companies with their classmates that are now highly successful, and who used the connections they gained with other alumni, professors, and staff to further their careers immensely. A network is a living, breathing thing that you have to feed and water over time. Plus, oh yeah, you do actually learn something while… Read more »

Suzanne
Suzanne
9 years ago
Reply to  Suzanne

I think that the biggest point of caution for someone choosing an MBA is whether or not it’s the right degree for them. In B-School you learn to lead, to manage organizations, and to start businesses. If your career goals are different – say, being an individual contributor of some kind, then an MBA may not be the right choice for you.

madrabeag
madrabeag
9 years ago
Reply to  Suzanne

What are your thoughts on the criticisms I’ve heard, that today’s (full time) MBAs are full of kids with little to no life experience rather than those with diverse business experiences to share with one another? Is it true?

Shawn Conaway
Shawn Conaway
8 years ago
Reply to  madrabeag

The idea that there are exclusively young adults in B-school is dated. B-school has evolved to cater to working adults by having most classes in the evenings. I’m 40 and I’m among the oldest in my MBA program. There are about 20% that are > 40. The balance of the people are pretty evenly spread between 23-40. Almost everyone has a full-time job and the experience comensurate with the job.

Gal @ Equally Happy
Gal @ Equally Happy
9 years ago
Reply to  Suzanne

Suzanne,
I work in the silicon valley. My former coworkers are at places like Google, Apple and others. They’re also starting companies of their own (I believe my latest LinkedIn update of friends showed around 10 in new start up in which they are founders). My MBA friends? Not so much. That may not be true of all places but it’s certainly true here.

Justin
Justin
9 years ago

I’ve had an itch for years to go back and get an MBA but really just for the sense of accomplishment and the networking. I haven’t let the lack of one keep me from launching my own start up.

JaM
JaM
9 years ago

Interesting perspective! Please do tell the story behind TWO MBA degrees leading upto your current views.
Recently as I evaluated and projected my career forward, what bothered me was plateauing at middle management. I work in business IT for a ‘large traditional’ company and have a graduate degree in engineering. So I hope the pursuit of an MBA partly supported by my employer helps in a change of track and spur my career forward. Investing in education is never in vain.
Entreprenuers need fire in their belly not necessarily an MBA. But an MBA opens doors!

Danielle
Danielle
9 years ago

This post is perfectly timed for me. I’ve been going down this path to pursue an MBA, and even had an interview for a program this morning! However, I’m not willing to take on $80k+ in debt for this degree, and my company doesn’t have tuition reimbursement. As you can see, I’m conflicted about what to do, so this post will certainly help me evaluate the MBA programs I’m looking at.

Eric
Eric
8 years ago
Reply to  Danielle

According to the Author’s advice, it’s as simple as just going out and getting a job at a company that will pay your tuition! Please. I can speak from both sides. Went to a Big Ten school for my undergrad, worked for the man for 8 years, then started my own business (Franchise). Doubled the sales and decided enough was enough, got a great offer and sold for a nice profit. A GREAT experience. Would never regret it. However, what I didn’t anticipate is that the job market would be horrendous and that basically no companies paying even a half-ass… Read more »

Jon
Jon
9 years ago

I’ve wondered the same thing, many times. I got an MBA from a top-tier school, but didn’t network as I should have, and later found I was somewhat allergic to working for large organizations, so it was somewhat wasted.

The “M” does allow me to be an adjunct faculty, but it doesn’t help much (or at all) with my entrepreneurial pursuits.

Tyler Karaszewski
Tyler Karaszewski
9 years ago

If you want to be a software engineer it is not going to do you any good to have an MBA. If you want to be an executive at a software company? Hmm, maybe, but you’re just as likely to get promoted through engineering, I’d think.

I think the applicability varies wildly by field.

indio
indio
9 years ago

If you want to work in IT project mgmt or any role that is a liaison with the business, not specifically an engineer, an MBA is very helpful. Being able to translate business requirements into IT speak and IT speak back to the business, without all of the technical how-to jargon, is very important and not a widely available skillset.

The Other Brian
The Other Brian
9 years ago
Reply to  indio

Agreed, but you are better of getting the advanced degree in software engineering and learning the business stuff OTJ instead of the other way around. I work with many engineers who became managers simply because they received their MBA and the ones that suck at management will never progress beyond small group-lead roles. The authority/autonomy of these individuals is equivalent to that of a principal level individual contributor. I also work with many director level individuals who do not have an MBA; those that are good will continue to progress in the company. In my company (Fortune 1000), you don’t… Read more »

jim
jim
9 years ago

thank you for this post! i’m currently studying for my GMATs yet i’m not entirely sure about getting an MBA. i would love to hear everybody’s take on this topic.

Marie at familymoneyvalues
Marie at familymoneyvalues
9 years ago

I’ve seen the deliverables go both ways – some folks took off like a shot and others still plodded along in the same old track.

Since I was a late starter (stayed home with the kids for 10 years), it didn’t make sense to spend the extra dough on an advanced degree as I didn’t have the time left to make it pay off.

Cole Brodine
Cole Brodine
9 years ago

I would argue that the top tier school isn’t always needed. In my company, we are a regional company spread over one state with about 2500 employees. They value the MBA, but the executives all have MBA’s from regional state colleges. In this enviroment, I would say an MBA from the same play the CEO got his is probably sufficient.

Gal @ Equally Happy
Gal @ Equally Happy
9 years ago
Reply to  Cole Brodine

Very true. There’s actually a really good B school here in the valley (Santa Clara U). They’re not top 10 but well known in the area. However, you need to know what you’re getting. Outside of the area (or outside of your company), that MBA will not be worth as much.

Hunter
Hunter
9 years ago

Like you say, it’s up to the individual to carefully build their career based on need. An MBA does not materially benefit many, I’m sure.

One thing is for certain, it’s critically important to always be learning new skills. If not an MBA, then niche courses that give you specific skills to advance your towards your goals are excellent investments.

Lulu
Lulu
9 years ago

Timely post for me as I start my GMAT class next week and plan to apply in the Fall. I’m in the nonprofit world and think the MBA will help make the transition to for profit much easier. Also, I’m at a point in my career (I’m 28) when I’m not really being considered for upward moves because I’m just so good at my job. Nobody sees me as a manager – they see me as an excellent employee who will do anything they ask efficiently and effectively. I’m hoping my post-MBA career will start with an assumption that I… Read more »

Anne
Anne
8 years ago
Reply to  Lulu

Same here!!! Let me know how it goes.

Oliver
Oliver
7 years ago
Reply to  Lulu

Hi Lulu,

Coming a little late to the thread, but wondering how things have turned out for you so far? I’m in the exact same position (26, not 28) and trying to assess whether getting an MBA would help me make a general swing towards the for profit sector.

Chris
Chris
9 years ago

So the question is, is an MBA worth it, and the answer like any is, “it depends”. If you get into a top tier school, i.e. Harvard, Stanford, Northwestern, etc., then going full time is most definitely worth the return on investment. One thing that isn’t often mentioned is that these same schools that are the “most expensive” usually have very generous grants so that it isn’t that expensive after all. I recently was admitted into a top school and my tuition of 60,000 a year was cut to 24,000 a year because of grant money. This wasn’t anything that… Read more »

Alexandra
Alexandra
9 years ago
Reply to  Chris

Some of the consulting companies value Ivy League school graduates so much because they know that the school has done the screening process for them. Hiring an Ivy School graduate means this person has done extra curricular work, shown leadership, excelled in academics, was well-rounded, etc. – and the schools made sure of this as part of their admission policies. The top businesses are smart to hire these graduates because they have the exact same criteria for the people they want to hire, and the schools have done the heavy lifting in terms of seeking these people out and training… Read more »

Terrin
Terrin
9 years ago
Reply to  Alexandra

Or it means the person is the kid of somebody famous or an alumni.

Matt (with The Online Budget)
Matt (with The Online Budget)
9 years ago

The more articles that I read questioning the value of not only the MBA, but college degrees in general (especially the Ivy coated variety): the more I’m beginning to actually look down a little on those young people and their families whose only focus is getting that vaunted piece of paper. Blindly going after a degree (MBA or otherwise) without doing some due diligence is looking more and more like a questionable goal. For starters, let’s look at the supply-and-demand curve with respect to lawyers. Open up any yellow pages and you’ll discover that the largest number of listings (generally)… Read more »

NicoleZ
NicoleZ
9 years ago

Really Matt? You look down on those who aspire to get a college degree? I hope that just came out wrong.

Matt (with The Online Budget)
Matt (with The Online Budget)
9 years ago
Reply to  NicoleZ

In fact, I have a degree myself – don’t get so offended, NicoleZ. Yet, noone ever calls out those degree holders who look down on those who pulled themselves up by their bootstraps. Sorry about your insecurity.

Christian
Christian
9 years ago
Reply to  NicoleZ

Matt’s statement was “I’m beginning to actually look down a little on those young people and their families whose only focus is getting that vaunted piece of paper.” (emphasis added).

I interpret this to refer to people who value only the degree itself, without considering future value (or personal edification). I gained far more from my educational experiences than the degree itself and had I been single-mindedly pursuing a degree I would have missed an incredible amount of education.

Catherine
Catherine
9 years ago

I got my MBA thirty years ago when it was a much rarer beast, and it was absolutely beneficial to me as a woman to get into the financial world. I had a two year traditional program and no job — none of this nights and weekends and on the computer courses that have sprung up since and have, IMO, devalued the degree. The most important things I learned from my MBA program was a methodology for problem solving that I still rely upon as well as learning how to work as a team. I think that is hard to… Read more »

Gal @ Equally Happy
Gal @ Equally Happy
9 years ago
Reply to  Catherine

100% agreed. Please note, and this is for everyone, I am not saying do NOT go and get an MBA. I am saying, please consider why you are going and what you hope to achieve very carefully before going.

I see too many people getting an MBA simply because they think it will somehow improve their career. If you don’t know exactly how you will use the MBA then it’s not worth your time or money to go get one. However, if you have a good plan, it can be a great investment.

Steve
Steve
9 years ago

All the people I know with MBA’s are still looking for work.

jeffeb3
jeffeb3
9 years ago

That “prestige” piece is more than just the western world’s stereotypes. If you have an MBA from an accredited university, you have more than just the skills, knowledge, and network. You have the PROOF that you have the skills, knowledge and network. That proof may not be 100%, but it’s a lot easier to convince someone than “I totally deserve this $75K because I read this many books at the library.”

J.R.C.
J.R.C.
9 years ago

The other thing to consider is that companies actively recruit at some schools for MBA grads. Yes, you could learn everything an MBA grad learns (minus the collaborative case studied and gaining from the past experiences of your classmates) from books… But then finding a job at a company you want for a job you want is difficult. At B schools the recruiters come to you! You are already prescreened by virtue of fact you made it into B school. That doesn’t make you magically guaranteed a job, but you can almost always get an interview, as well as a… Read more »

Michael
Michael
9 years ago

I was almost positive I wanted to get an MBA ever since High School. My dad has one, and he seemed to do alright. Then my wife graduated before I did, and decided to get her MBA while waiting for me to graduate. I read several of her text books, most of her case studies and helped her with various projects and realized that it wasn’t for me. I realized that I’m a programmer and creator at heart and that I didn’t really want to deal with running a business and managing people. She is happy she got her MBA… Read more »

Chris
Chris
9 years ago

This reminds me of a lot of classmates I had in undergrad. We all graduated with our bachelors in 2009 from a top 40 undergraduate program. Not the best, but we did place our fair share of candidates at Goldman, Big 4 firms, and a few other investment banks. A lot of people who didn’t have job offers decided to stay for a 5th year to get an MBA (fast track). The MBA at my school was a pretty horrible program and didn’t really add much over the bachelors. The MBA courses were just the undergrad electives with extra requirements… Read more »

Gal @ Equally Happy
Gal @ Equally Happy
9 years ago
Reply to  Chris

Actually, one of my MBA’s is from Columbia 🙂

Jake
Jake
9 years ago

Ok, I’ll rise to the bait. I have an MBA, and I am extremely happy with the choice I made: * I increased my salary pre- vs. post-MBA roughly 700% (yes, thats a 7 with two zeros) * My MBA investment earned an IRR north of 20% – thats after accounting for lost wages, $100k in tuition and board etc. I wish I had more such investment opportunities * I had a GREAT time (attended more parties in those 2 years then in the entire rest of my life) * I made some of the most important friendships of my… Read more »

Joe Milunas
Joe Milunas
8 years ago
Reply to  Jake

Hi Jake, My undergrad GPA is 3.67 and I have about 8 years of building training programs for medical and major colleges. My goal is to purchase apartments using my wife’s salary in a few years, and be in organizational development full time. I can either go to a 8k MBA at Wayne State College, or apply to the other top schools. Keep in mind, debt load is a major factor, as I plan to replace my income using investments over the next 10 years and a large 1,200 student loan payment would burden that goal. How did you get… Read more »

Daniel
Daniel
9 years ago

I cannot point to one job and say that I would not have gotten it if I had not gone back for my MBA. But I can say that I would not be where I am if I had not gotten it.

I am a techie. The MBA taught me critical thinking skills that I could not have gotten just by reading the course material in another form. It reshaped the way I looked at problems and to this day, 20 years later, affects in a positive manner the way I approach all aspects of my job.

Jaime
Jaime
9 years ago

My mom used to be an English professor in college who later quit to go into business for herself. She started her own small business and ran it for two decades, sold it and has recently retired. She never went to business school. I’ve taken a few freshman business courses in college, I’ve found them to be very straight forward, full of common sense, but also really boring. I’ve stopped taking them because I just couldn’t stand them anymore. I think the MBA might be valuable to people depending on what their life goals are. I’ve noticed that a lot… Read more »

trokyman12
trokyman12
9 years ago

I don’t have an MBA but I started business at the age of 14.

One of my company makes $ 60,000-$70,000 gross monthly and my net monthly is $ 40,000 minimum. This contract alone is forever. So I don’t need to sell/market anything.

My age is in late 20’s, started the company at early 20’s.

Dan
Dan
9 years ago
Reply to  trokyman12

Since you’re in your 20’s, I have to tell you one thing: Nothing is forever. Period.

Nancy L.
Nancy L.
9 years ago

I am in a field that traditionally doesn’t care about degrees, yet even in this field I’ve noticed a shift where many managerial jobs now demand an MBA on top of practical experience. It’s really easy to sit on the other side of the fence and say “Oh yeah, it totally wasn’t worth climbing over!” But for those of us on this side, it’s very hard to stand still and be passive about future options. It’s really a gamble either way–for every unsatisfied MBA grad, there’s most likely a comperable person frustrated bc their career has stalled or is moving… Read more »

Dave @ Money In The 20s
Dave @ Money In The 20s
9 years ago

I think the most important thing to note about getting an MBA is that you should have a good reason for getting one. If you don’t have a reason for getting one, you are probably wasting money. And your view that you should only go to a top 10 school is short sighted. I would widen that number to top 25. There are many high quality schools that are not in the top 10 (Darden, Kenan-Flagler, Ross, Fuqua, Tepper). One question, how did you get two MBAs? Especially if one is from Columbia. Most top tier schools won’t even look… Read more »

Sam
Sam
9 years ago

An MBA these days is a requirement if you want to advance in the corporate world b/c a college degree is just seen as the minimum education required. As such, Mr. Sam went back to school for his MBA, and although his company at the time picked up more than 1/2 of the cost, he still ended up with $25,000+ in student loan debt. Was it worth it? Well thankfully he didn’t have to pay for the whole thing. And while he has not recouped the full cost in salary increases/promotions, he has remained employed in a very tough market… Read more »

s
s
9 years ago

“$80,000 in tuition
cost $50,000
$75k
$100k tuition for 2 yrs
tuition of 60,000 a year
$100k in tuition and board”

Wow, at about $17,000, an MLIS is a bargain. Granted, the starting salaries are about $35,000 – $45,000.

Earning a degree, any degree, shows you can make a committment and stick to it.

Epell
Epell
9 years ago

I am in a PhD program in biology at the moment. In academia, we all make fun of MBA and for a good reason. They are “Masters” in title only. Everything they learn in MBA program can be done in a fraction of time of it takes to finish MBA. Some MBA program don’t even have Friday classes at all (They party on Thursday night, recover from hangover on Friday, and party again on Saturday). I understand it helps to have extra education on the resume to advance in a corporation. But if the people who is advancing you have… Read more »

Alexandra
Alexandra
9 years ago
Reply to  Epell

Yeah, I’ve heard some of the MBA jokes.

My favourite is that MBA stands for “Mediocre, But Arrogant”.

Classic!

Glen
Glen
9 years ago
Reply to  Epell

Epell, I feel so sorry for you. I was once in a very similar situation. We used to poke fun at those “idiots” in the Business College that had flunked out of the Engineering programs, or those that were just in school to party. Fast forward 20 years… All those “idiots” that stumbled their way through school either drunk or stoned half of the time are the very same managers that devalue all technical jobs, doling out stagnant raises that barely meet inflation, outsourcing engineering, development and other technical work overseas and stuffing their own pockets with giant raises and… Read more »

Alexandra
Alexandra
9 years ago

Just wanted to say that this was really well written and interesting – one of the best guest posts.

Alexandra
Alexandra
9 years ago

For those of you interested in a longer and very funny read on this subject, Matthew Stewart wrote a great article in The Atlantic awhile back called The Management Myth: http://www.theatlantic.com/magazine/archive/2006/06/the-management-myth/4883/ Here’s a small excerpt: “As a principal and founding partner of a consulting firm that eventually grew to 600 employees, I interviewed, hired, and worked alongside hundreds of business-school graduates, and the impression I formed of the M.B.A. experience was that it involved taking two years out of your life and going deeply into debt, all for the sake of learning how to keep a straight face while using… Read more »

Steve Jones
Steve Jones
9 years ago

As a recent MBA grad, I’ll fight the urge to reply in bullet points. The author hits the primary justifications for getting one – for me, the MBA was immensely worth it, even given the opportunity cost and student loans. But it’s all on the individual – I’d say most of my classmates think they made the right decision, although there are a few who question it. Getting the most value from my MBA required much more work than I’d anticipated. It was a 12-14 hour a day job, with too much weekend work. Classes, leadership roles, extracurricular academics, meetings… Read more »

Joe G
Joe G
9 years ago
Reply to  Steve Jones

Yes, MBAs can be valuable in almost any organization, but there are issues to going into non-traditional MBA venues. The biggest is the payback, but additionally, it’s tougher to get good career mentoring and I’ve seen MBAs get frustrated because their bosses didn’t know how to take advantage of their backgrounds (whether they earned it or not). A VP I worked with recently would advise MBAs from top programs (he was from Sloan) never to go to work for a non-MBA (he had done it much of his post-MBA career). To some managers without an MBA, it’s just another advanced… Read more »

10-C
10-C
9 years ago

1st time commenter here: This subject hits a little close to home because I was grappling with the same decision 2 years ago. At the time, I was working with 2 individuals with MBAs and they were at the same level as me (I only had a bachelor’s degree). That, in addition to other factors ultimately led me away from pursuing a MBA. An MBA is a business administration degree, meaning that you dabble in a little bit of this and that without a concentration/focus on one particular area within the business field. You become much more of a generalist,… Read more »

Eileen
Eileen
9 years ago

Seth Godin’s alternative MBA program: http://www.squidoo.com/Alternative-MBA

Also, Chris Guillebeau, in his book The Art of Non-Conformity, outlines an alternative grad program you can do on your own, anywhere, for about $10,000.

Also, here is Guillebeau on Godin: http://chrisguillebeau.com/3×5/visit-to-seth-godin-alternative-mba/

HollyP
HollyP
9 years ago

I’ve paid for two MBAs, one at a good mid-tier school and one at a top-tier school. Both were worth every penny they cost. Mine, from the mid-tier school, enabled me to switch careers, jump up several levels, and double my salary. (However, my salary was low to start with.) It has also given me more career options. MrP earned an MBA as a second master’s from the #1 school in the country in the year he graduated. He had a good job as a consultant, but realized that his coworkers with an MBA earned 30% more than he did.… Read more »

Kevin M
Kevin M
9 years ago

I’d rather take 2 years and buy 50 of the best business books and at the same time start a business. There is a HUGE difference between reading about something in a book or hearing it in a lecture and actually applying it in real life, with other people involved. With this plan, you get the best of both – technical knowledge and real life experience. I don’t know, I just feel like the whole MBA thing is a clever marketing trick by universities. Where does it end? In 15 years are we going to be reading a post on… Read more »

Chris
Chris
9 years ago
Reply to  Kevin M

Please scroll down on the following link and ask me if these people got pawned into a “clever marketing trick” http://en.wikipedia.org/wiki/Harvard_Business_School Obviously every school has notable alumni and while this list can be considered the exception rather than the rule, I think you’d be hard pressed to find Jamie Dimon as CEO of Chase, Jeffrey Immelt as CEO of GE, or Michael Bloomberg all in their positions if they read 50 books. Like many have said before, it isn’t just about the knowledge, it is as much about what Steve mentioned prior to this. The main issue many people are… Read more »

Kevin M
Kevin M
9 years ago
Reply to  Chris

I can name just as many CEOs that never finished college, much less an MBA that are equally successful – Bill Gates, Paul Allen, Richard Branson, Michael Dell, etc.

“An MBA is an investment in yourself.” I’m not so sure – I would guess most MBA hopefuls just see it as a ticket to what you said – higher salary.

Joe G
Joe G
9 years ago
Reply to  Kevin M

And if you notice, those folks are entrepreneurs, much in keeping with the comments of the author of the original article. The reality is MBAs run companies that other people started. They don’t usually start those companies themselves.

Joe G
Joe G
9 years ago
Reply to  Kevin M

Part of the value of a high end MBA (like HBS) is the level of connections you make. Your classmates came from top companies to go to school and will end up going to McKinsey, Bain, Goldman Sachs, Microsoft, Google in (potentially) high visibility positions. Your faculty write books, have lucrative consulting practices and have incredible connections/access to venture capital, consultants, business leaders, investors. Just using the directory of alumni, you can connect to people all over who have “juice” and will talk to you because you share an educational connection. Getting a local, part-time MBA (like I did) doesn’t… Read more »

Kevin M
Kevin M
9 years ago
Reply to  Joe G

“It won’t change your life, but it might help you get to where you want to go.”

That seems like an expensive risk to take.

Joe G
Joe G
9 years ago
Reply to  Kevin M

A part-time MBA costs a lot less than a full-time program (I saw anything from $200 to $1500 per credit hour) and a lot of employers will pay part of that. It’s also spread out over time (2-6 years isn’t uncommon) and some of the programs are 30 credit hours rather than 60. It’s not cheap, but if it’s a passion or important to you as an individual, it’s not outrageous.

A full-time, high end MBA probably will change your life, if that wasn’t clear in my comment.

Chris
Chris
9 years ago
Reply to  Kevin M

It’s a risk of course, but taking the averages, there will be exceptions both high and low, but simply looking at the average salaries of the top B-schools at roughly 120k, compared to the average incoming salary of 60k, a typical 25 year student who goes two years, graduates and has 38 years left to work will make roughly 2.9 million more dollars than one without an MBA. That is assuming 3% raises for both the non-MBA and MBA grad. Sure, are there exceptions and people who could move up without one, but you can’t argue against the average starting… Read more »

Joe G
Joe G
9 years ago
Reply to  Kevin M

Great because that model works for you.

There is a certain type of person for whom the MBA is perfect — they play (mostly) by the rules, they think highly of themselves, they like the status & prestige of their station in life and they want more.

Many of the people who got MBAs probably shouldn’t have gotten them (though they won’t admit that). But that’s true of almost any profession. And there are successful people who wish they had gotten one along the way. It’s not a panacea.

Sneeje
Sneeje
9 years ago

Really amazed at the completely unfounded assertion: “So really, what I gained was knowledge that I could have picked up elsewhere, skills that I could have picked up (more slowly) without the MBA,…” This makes very little general sense if you even poke at it a little bit. There are some people who can completely synthesize knowledge and obtain skills through independent pursuit. But I really challenge whether that is a reasonable expectation for the majority of people? Getting a degree requires you to immerse yourself in a particular environment and collaborate with others to achieve common objectives. I do… Read more »

Hannah
Hannah
9 years ago

My former boss who I love dearly gave me some good advice about pursuing a Masters or MBA. Do it if your work/employer will pay for it! If an employer promotes continuing education then take advantage of it.

She’s in her early 40’s got her MBA at NYU and she’s still paying for it. After she got her first job, she found out that had a really good tuition reimbursement program.

Joe G
Joe G
9 years ago

I started recruiting MBAs back in the early 90s, primarily in the tech sector, which doesn’t highly value MBAs (as a whole) and in management consulting, which lives on MBAs. One thing about an MBA is that completing one from a top school is (just about) the only way to get into certain companies and/or certain jobs. If you crave consulting, venture capital or investment banking, you just about have to go to a top 15 b-school. At the top schools, completing the degree is an absolute deflection point for careers and can open doors that aren’t usually available to… Read more »

Jess
Jess
9 years ago

Having just graduated with my MBA from a state university this month, I found this post really interesting. Personally, I had a liberal arts undergrad education and the MBA really filled in a lot of blanks for me with how the business world works. It provided a lot of general knowledge, but not a lot of specific skills. Many of my classmates were just getting it because their companies paid for it, which made me feel discouraged since I was footing my own bill. Other classmates were looking to make a complete change in career, and were using the MBA… Read more »

Slackerjo
Slackerjo
9 years ago

A bunch of MBAs at work spend all day telling me how to do my job. Problem is they have NEVER done my job. Suffice to say, they stumble around thinking up stupid policies that someone else has to enforce.

Sometimes life experience is the best lesson!

Sahil
Sahil
9 years ago

The whole point is that you could have got things for lot less but with some effort.

MBA basically spoon feeds you all this in 2 yrs time.

It finally bowls down to:

If the (ROI on Network/Knowledge/Prestige which is all spoon Fed during MBA minus the cost of MBA) is greater than (the effort you would have to put in otherwise)

Matt
Matt
9 years ago

Couldn’t the same arguments be made for undergrad college? You can get the same knowledge from books and build your network elsewhere.

“See, the sad thing…is, in 50 years you’re gonna start doin’ some thinkin’ on your own and you’re going to come up with the fact that there are two certainties in life: one, don’t do that, and two, you dropped 150 grand on a … education you could have got for a dollar fifty in late charges at the public library!” – Good Will Hunting

Paul
Paul
9 years ago

I think your article has just strengthened my belief that the MBA is only marginally useful. If I will proceed to get one it will be for prestige and of course will be when I have the money to throw around. For now I have my company to build.

Very dispassionate and impartial judgement on the over rated MBA

No Debt MBA
No Debt MBA
9 years ago

I feel that the value of an MBA very rapidly drops off as school prestige declines. Business Week ranks schools based on return on investment.

It’s also worth noting that an MBA from a top ten school could be very worthwhile for a budding entrepreneur since many schools provide significant support for start ups including funding, office space, mentors etc and a top school can provide you access to an excellent VC network and angel investors. That is actually the safest way to start a business – with someone else’s money.

Joshua Heckathorn @ Creditnet
Joshua Heckathorn @ Creditnet
9 years ago

I actually went into my part-time MBA program as a risk-adverse “employee”, seeking the corner office while enjoying a higher education on my employer’s dime. I came out an “employer”.

For me, it was a pivotal experience in my life. Definitely worth the time and effort. I just wish I didn’t have to cut a fat check back to my previous employer for the tuition. That was a bit painful.

Alex
Alex
9 years ago

I’ve heard a lot about the automatic increase in salary if you get an MBA and I was wondering if anyone had any information on that. Is there data on salaries for people hired with an MBA and people without across all industries or in business industries specifically?

Chris
Chris
9 years ago
Reply to  Alex

http://www.mymbacareer.com/mba-facts/mba-salary.html As for the automatic increase, there really isn’t one, simply because it depends on what you did before, where you lived etc. You could have done finance in NYC before your MBA, got an MBA from a top school, got a strategy job in Chicago and theoretically taken a pay cut. Now, not many people would do that, but the “automatic” increase you speak of would address people working on an average salary of 40k-60k and leaving taking a job paying 90k+. Rather than look broad brush, it is much easier to look at the schools that you are… Read more »

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