The decision to study Master’s in Business Administration (MBA) is never easy, but it can help professionals tap into new career opportunities, increase earning potential or promotion into more senior roles. On some occasions, an MBA can provide the knowledge and build confidence to launch a new business and an MBA can be a prerequisite for managerial or leadership positions.
There are hundreds of options to choose from when selecting an MBA programme depending on the individual needs of the applicant and, although the school’s reputation and rankings play a major part of the process, these are not always a good measure of the value of the program. Considering the substantial costs of top business school programs – sometimes exceeding $100,000, a question that is often being asked comes to mind, is an MBA worth it?
Unfortunately, the answer isn’t as simple – it all depends on quite a few factors that we will cover in this article. The MBA market is growing at a high speed with more traditional campus learning as well as, increasingly popular online studies. Institutions have relative freedom in delivering programs which are accredited and therefore more expensive or non-accredited and cheaper. The value of an MBA also stems from that fact and accredited programs tend to charge more. Coming back to our question of “Is an MBA worth it?”, the first criterion is whether one wishes to hold an accredited degree that could lead to further education, for example DBA studies or if an MBA is more an opportunity to update skills – in that case the accreditation is not as important.
Is an MBA worth it? – MBA salary increase
One of the many drivers motivating MBA applications is the potential salary increase and so, when answering the question “is an MBA worth it?” many see the growth in earning potential as something that can pay of the initial investment into the degree. According to a 2021 report on Alumni Perspectives on the Value of Graduate Management Education by the Graduate Management Admission Council (GMAC), both the recruiters as well as graduates themselves agree that an MBA increases their earning potential (GMAC, 2021). In fact, according to the report, around 79% of graduate business alumni agreed on the positive impact of their MBA on their earning potential.
How much does an MBA increase your salary depends on several factors and the four main drivers we consider as particularly relevant for MBA in Germany are:
- Business School and its network
- Level of responsibility including budget and team
- Relevance and amount of past work experience
- Industry or sector within which the new MBA graduate is operating
When considering if an MBA is worth it, one may look for rankings which, may provide indication as to the level of satisfaction of alumni. The rankings can provide a good reflection although they can also be quite volatile for example, when the number of respondents does not meet the threshold of a particular ranking. One factor that is prominent in the rankings are the networking opportunities provided throughout the program of the MBA and post-graduation.
Applied Sciences Universities although not usually ranked high come in a privileged position due to their “application” orientation. The schools often have solid networks of partners and faculty itself operates between the business world and the classroom. This balance enables students to get the best of both worlds in particular in the MBA. It’s also important that an MBA facilitates some sort of business projects as those can be a great way to network and justify a higher starting salary. Essentially, through project collaboration in an MBA, your potential employer gets a trial of how you work and with the right approach, your starting salary may be higher thanks to good performance.
The level of responsibility one takes on upon graduation isn’t an evident factor that influences whether or not an MBA is worth it. However, a well-rounded applicant who is able to perform well in the recruitment process generally has a better chance to raise their starting salary and this may influence whether or not the MBA one chooses is worth the investment. A well-rounded curriculum enables the applicant to showcase a range of skills and level of preparedness to take on responsibility for budget or leadership over a team. This has vast impact on the starting salary post-graduation of the MBA and naturally influences the response to our question.
Relevance and amount of past work experience can have an impact on the salary post-graduation especially if the recruiter is offered high work experience backed by an MBA degree. This is important and that is why MBA program entry criteria require work experience as a non-negotiable element. It’s to ensure that the classroom learnings can be applied within the right context and a student can not only learn whatever the curriculum requires but more importantly, they can apply the knowledge to situations faced in the past and improve for the future. In that context, an MBA is worth it and may come with substantial financial benefits post-graduation.
Last but not least, the earning prospects post-MBA can be influenced by the industry or sector a fresh MBA graduate enters post completion. Naturally, if we are talking about a career change, an MBA is worth it as it provides ground knowledge that allows the shift. The earning potential in that case increases but the degree of impact is not as high as in the case of remaining within the same industry or sector. Take for example a software engineer willing to enter operations within his profession. To learn the business side of things, he or she takes a year to complete an MBA and then returns to work for a larger company within business operations. Past engineering knowledge puts the applicant high on the list of the recruiter and, naturally due to the experience in the field, the applicant has a better chance to negotiate a higher starting salary successfully. In that context, an MBA is worth it and may unlock additional financial incentives.
Is an MBA worth it? – How long does it take to get an MBA?
From the perspective of time, the length of programs varies and this may have an impact in terms of whether or not an MBA is worth it at a particular point in time. An MBA degree is typically 12 months long when studied full-time. Such arrangement also means that one becomes fully committed to studying and this in itself is a cost to be factored in as realistically at least one of the semesters may prevent taking up job opportunities. With part-time MBA programs, this may be easier considering that they tend to take around 24 months and so realistically students take half the normal load of modules in comparison to full-time studies.
In the time, one has to factor in the costs of studies and living expenses but also the fact that the earning potential during studies is reduced for the time of studies. To minimize this “hidden cost” it is best to complete the MBA program as soon as possible, 12 months is what it is, it flies quickly and then transition into the job market. For international students, this may not be an easy endeavor but good MBA programs are able to support this aspect by delivering additional help with adjusting with local customs and requirements of the job market. Career Accelerator programs is what makes the difference and makes an MBA worth it – particularly when it comes to relocating to another country for studies. Since MBA graduates are quite important for German businesses, having additional support to “impress” is a good idea and making the most of such support within the 12 months of MBA studies is what can really make a difference when entering the German job market.
To add yet another perspective as to why is MBA worth it is the applicant’s age, students mostly decide to go for a graduate degree in mid to late 20s. Some decide to earn even more work experience and rather than going for a typical Masters degree go for the MBA. Both routes have their justifications and some decide on doing Masters and following up with an MBA – this is also quite common. An MBA demonstrates its value when someone already has some work experience which, naturally comes with age and so the average age of full-time MBA program is around 33-34 years. By then, applicants have some work experience and can really benefit from MBA studies, particularly considering the value they extract from it. There are no lower and upper age limits on MBA study programs so the decision to study depends more on the individual circumstances of the person. An MBA program is worth it no matter the age at which one decides to go for it.
Is an MBA worth it? – Career opportunities for MBA graduates?
The next important question applicants often ask is what kind of career opportunities become available once somebody graduates with an MBA degree. Now, since the earning prospects are likely to increase post-graduation, it is also quite probable that new career opportunities open as a result of completing an MBA. In that sense alone, an MBA can be a valuable boost when it comes to success in an increasingly crowded job market. Another argument for the MBA is the growing impact of Artificial Intelligence on jobs, which, in the long term may result in the reduction of available opportunities and increase the demand for highly qualified candidates. Considering the wide-spread push for automation, upskilling may be an important factor that in the first instance secures one’s job and second, gives an opportunity for improvement of employability prospects in the long-term, also in terms of vertical advancement.
Following from the career perspective, an MBA degree comes with a lot of opportunities to complete business projects or thesis, for example Munich Business School and its partners at Microsoft, Allianz or Flixbus. These are of course “nodes” within the network and may result in potential employability opportunities after the MBA if successful – whilst not a guarantee, it is certainly something that can have a positive impact. Aside from that, employability events are a great opportunity to brush shoulders with potential employer representatives and make MBA worth it in the context of employability. Typically, recruiters are involved in running those events and so having these opportunities is making an MBA more valuable in the employability context, in particular with the right support to make it to the job market upon graduation.
Is an MBA worth it? – Changing careers with an MBA
Deciding if pursuing an MBA for a career change is worth it involves considering key factors, especially the potential for moving into a new career path. MBAs can provide important skills across different areas like finance, marketing, operations, and strategy, which are useful in various industries and roles. Connecting with classmates, alumni, and industry professionals can help secure new roles and advance in a different career direction. Also, having an MBA from a respected institution can boost credibility when it comes to recruiters, which is helpful in competitive fields or when aiming for prestigious jobs.
Hands-on experience gained through internships during MBA programs is beneficial for those transitioning to new careers. These experiences offer practical knowledge and ease the adjustment to a new professional environment. When deciding on whether career change through an MBA is the way to go, one has to look at personal goals and the industry they are about to enter. Additional programs, like the MBA, that go hand in hand with the curriculum are an excellent way to look into the goals and redefine them so that once in the MBA program, a student has a better idea of the steps that need to be taken in order to shift careers seamlessly and develops a strategy to do so effectively.
In summary, whether an MBA is worth it depends on quite a number of factors, most important one being the personal circumstances of the applicant. Potential benefits of an MBA include access to new career opportunities, increased earning potential, and preparation for entrepreneurial ventures or leadership roles. However, the substantial costs associated with top MBA programs prompt many to question whether the investment is worthwhile. While reputable schools and rankings play a role, they don’t always reflect the program’s true value. The decision to pursue an accredited MBA for further education or as a skills update depends on personal preferences and career aspirations.
One of the primary motivations for pursuing an MBA is the potential for a salary increase. Research indicates that both recruiters and graduates acknowledge the positive impact of an MBA on earning potential. Networking opportunities, hands-on experience through internships, and career services offered by MBA programs also contribute to their value. Applied Sciences Universities tend to offer more practical, application-oriented programs with strong industry connections which may be a better option especially when it comes to studying MBA in Germany. The reasons may be versatile however when it comes specifically to increasing job prospects in Germany, an MBA is a great way to grow. With high competition on the MBA degree market, it’s not just about the curriculum anymore but also the career aspect which is at the center when it comes to the various motivations for taking up an MBA program.
