A professional work environment, opportunities for continuous learning and development and team camaraderie are all important factors when weighing up your employment options. But these are often the icing on the cake, the cake being a steady and increasing paycheck.
Getting an MBA can set one back quite a sum of money, which is why you should look at the return on investment when scrutinizing the advantages and disadvantages of your choices.
To help you with the analysis, we are taking a close look at the difference an MBA degree can make to your bottom line.
We consider it in the context of various industries. We also look at the type of factors that influence the salary levels of MBA graduates.
Salary growth after MBA
Most people would not need much convincing to agree that an MBA degree gets you a higher salary. Let’s see what the statistics and surveys reveal.
According to the annual Corporate Recruiters Survey of the Graduate Management Admission Council, an international non-profit organization of business schools, the average starting salary ($115,000 median) for MBA graduates exceeds the starting salaries of those with bachelor’s ($75,000 median) or master’s ($95,000 median) degrees by far.
The former earn from 22 to 40 percent more than the latter. More than 70 percent of 941 corporate recruiters surveyed confirm that MBA graduates earn and expect to earn more at their companies.
The top three reasons cited by recruiters for their confidence in hiring MBA grads included strong communication skills, versatile skillset, strategic thinking ability.
Another survey by TransparentCareer, a US-based compensation and organizational culture platform, makes the salary difference even more pronounced. With an average pre-MBA salary of $79,505 and an average post-MBA salary of $116,248, MBA graduates are reported to enjoy a difference of nearly 50 percent.
In terms of the highest starting salary levels, consulting, financial services, and technology are the three industries where you can expect to earn the most with an MBA degree.
In consulting, your maximum starting salary can exceed $150,000, while in financial services and technology, you can start earning up to $130,000 and $125,000, respectively.
In terms of salary differences between pre-MBA and post-MBA compensation levels, MBA graduates earn considerably more across the board. The differences are too stark to miss.
Top industries offering the highest salary hikes after MBA
Below is the list of the top 10 industries where you can expect the largest spike in post-MBA jobs.
|Industry||Salary increase (USD)||Percentage|
|Food, Beverage, and Tobacco||$41,250||65%|
|Printing & Publishing||$35,000||60%|
|Agriculture and Forestry||$36,500||50%|
|Technology, Internet, and E-commerce||$36,800||43%|
As noted, the gains are obvious for MBA graduates; although, you still need to do your due diligence to put the above figures into perspective.
Keep in mind that these amounts indicate the salary hikes, and not the total salaries. Investment bankers and consultants are paid high pre-MBA salaries, so the salary growth immediately after the MBA may not put them at the top of this table. But in terms of total compensation they are the best pay-masters dominating every other industry.
The cost of MBA matters, but you should choose an MBA program judiciously that can give you the best bang for your buck, taking into consideration various aspects including brand name, location, placement and compensation statistics and a program that can help you achieve your career goals and professional development needs.
The factors influencing the salary levels for MBA graduates also merit mention here.
Let’s unpack some of the main factors to help you with your analysis and deliberations.
7 Factors affecting MBA salary
A number of factors are at play when the starting salaries are determined for MBA graduates. They can work as discrete factors or in some combination to influence your offer.
1. MBA salary increase by industry
After earning an MBA, you can expect to be placed in more senior positions with more attractive paychecks. As discussed above, MBA holders earn significantly more than what they earned in their pre-MBA jobs.
But the difference varies from industry to industry, ranging from about 35 to 65 percent. The above stats give you a good sense of the ballpark figures you can expect for your starting salary.
2. MBA salary increase by location
There are notable differences depending on where you work. For example, in the United States, in New York and Boston, your salary can exceed $135,000, while in Chicago and Atlanta, it is in the range of $125,000. In Houston, you’d have to settle for about $120,000.
It goes without saying that the starting salaries in less vibrant urban areas are
lower. The cost of living is a helpful and logical proxy indicator for estimating the starting level. The higher the cost of living, the more you can hope to earn.
3. Specific roles & skills
A lot may depend on the type of skills companies are looking for. For instance, you can augment the value of your MBA by offering a set of exceptional skills such as negotiation, conflict resolution, excellent communication, time management, leadership, digital technology skills or multi-tasking.
For recruiters, it is challenging to find the right candidates offering a balanced combination of these. Hiring managers will be willing to offer a higher compensation if you can demonstrate the added value of a multi-faceted skill set.
4. Work experience
This must be a no-brainer. Your experience is directly correlated to the expected salary level. As a novice, you cannot expect to be offered the same package that seasoned candidates with numerous projects under their belt would get.
If you are combining work and study, your company might decide to reward you for your willingness to seek continuous learning opportunities that have a direct bearing on company performance.
5. Professional network
Having the right professional network can be a great way to get a foot in the door in the industry of your choice. You can make connections during career events, such as job fairs and conferences or through internship programs.
You can leverage the school alumni network. You can participate in various alumni events and get to know well-connected and established alumni who could in turn put you in touch with the right persons in the industry. They can also provide valuable mentoring that can be useful during job search.
6. Type of MBA and business school
Some companies and recruiters also factor in the reputation of the business school and the type of MBA (full-time, part-time, online) you have completed.
The top-tier business school grads get paid much higher compared to other MBA program grads. For example, the average salary (excluding bonus) at top ranked programs like Cornell Johnson is $155,048, at Berkeley Haas, it is $152,831, at Stanford, it is $160,000.
These figures would greatly vary depending on the school. Here are the latest average salaries at other MBA programs – at Indiana Kelley, it is $130,000, at Babson, it is $102,141, at UT Texas Jindal, it is $106,000, at Pittsburgh Katz, it is 99,177.
Surely, this can be subjective, but this can be another item on your list when researching your MBA study options.
7. Total earnings
The salary is not the only type of compensation and rewards you should be looking at. Do consider it in the context of the entire compensation package offered.
Other benefits and perks, such as a health insurance policy, retirement plans, overtime compensation, training opportunities, and many more, can drive up your total earnings to a lot more than your base salary.
MBA Crystal Ball admission consultants can help you get into the best MBA programs in the world. Send us an email, if you’re looking for professional mentoring: info [at] mbacrystalball [dot] com