Author: MBA Staff Writer

The MBA Ranking System

Article,   | June 14, 2018

by

What is a Ranking?

[dropcap]W[/dropcap]hen prospective students are looking for a business school to go to, they will want to choose one that has an excellent reputation for teaching and which will have a positive benefit for their future. To do that, they need to compare various institutions to see what is on offer and how they measure against each other for quality. Widely publicized rankings, based on specific criteria, have become a big part of that decision making. In particular, schools offering the MBA (Masters in Business Administration), vie for a top ranking to attract the best students.

However, as will be seen below, there is not just one system for ranking these courses, but several. All have a different ideology for measuring success, based on various metrics, and therefore each system will list the business schools differently, often leading to a measure of confusion.

History

One of the first ranking systems to be used was what was called ‘The Gourman Report’, first appearing in 1967. Yet, as Gourman refused to reveal his methodologies, the ranking’s validity was questioned, and students were encouraged to treat the Report with skepticism. Other early attempts to rank universities were a bit more transparent. For example, in 1974, MBA Magazine surveyed deans, students, and graduates about academic quality and employment status, and produced a ranking from those.1

However, it wasn’t until 1988 that ranking systems, as we know them today, became established. The man responsible was John Byrne, who, at the time, was the business editor at BusinessWeek. Although a journalist, he wanted to improve the rankings system and make them work for what he perceived were ‘the customers’ – prospective students and employers. In his version, he wanted the schools that served those ‘customers’ properly to come out on top, and those that concentrated solely on faculty and research to do less well.2 Others followed suit, the most ‘trustworthy’, i.e., the ones with the better methodologies and least flaws becoming the ‘top five’ publications: Bloomberg Business Week, The Financial Times, Forbes, US News and World Report (USNWR), and The Economist.

A Look at the Metrics

There are many ways in which the value of an MBA program can be measured and, although all have their advantages and disadvantages on deciding rank, many are used again and again. In addition, some metrics may be relied upon by some publications and not others; hence the data used may cause inconsistencies in the rankings of schools. Here is a list of the information that can be gathered to provide a ranking.

Acceptance Rates or Academic Selectivity

This looks at how hard it is to get into a particular institution. Obviously, a prospective student needs to know whether they are likely to get accepted on a business course; some will prefer a place where there is a lower rate as it means that the school will have a higher reputation and, so, graduates are more likely to gain employment from going there. The better business schools are also characterized by higher than average GMAT (Graduate Management Admission Test) scores. These entrance exams are taken by prospective MBA students, and it is said that the average result is 551.94.3 However, to get into the top ten, a score of over 700 is necessary.

Alumni Networks

Networks of former students can often point to a strong MBA program. Alumni often provide a useful marketing tool for the university – showing off the achievements of former MBA students who have done well after graduating. But, despite this, a recent study by Carrington Crisp – an education consultancy – has shown that prospective students don’t tend to look at this aspect of university life when choosing where to study. Alumni networks are much more useful to postgraduates. Because of this, this metric is rarely used, and currently only the Economist chooses to take this as one of its parameters.4

Salary and Employment Rate

In contrast, tracking the careers and salaries of graduates is much more popular in determining whether a business school is doing its job or not. These metrics look at how many graduates are employed at a specified point after graduation and their average salary; the higher percentage of graduates in work and on a high wage, the more chance the business school has of appearing in the top ten.

Quality of the Faculty

This looks at the quality of teaching as well as the staff to student ratio. This data is collected not just by looking at the number of full-time staff on a school’s books, but also from surveys sent out to students. Furthermore, the number of research articles published by faculty staff can also be taken into account.

Demographics

Some ranking organizations also look at the demographics of the student population: male to female ratio, age, ethnicity, and how many international students study there.

Of course, not every ranking organization uses all of these, and of the criteria used, weighting is not applied evenly. For example, one publisher will use salary as a measure and will weight it heavily, say 40% of the whole score, whereas another will only give it a weighting of 20%.

The Value of Ranking Publications to Business Schools

It goes without saying that a top ranking in one of the top five ranking publications can directly increase a school’s reputation as well as the number of students who want to attend it. More students bring in greater finance, which in turn can lead to improvements that see that school maintain and maybe even increase its standing in the following year’s rankings. Conversely, poorly performing business schools (as measured in the metrics) can find themselves sliding downwards and thus decreasing their intake and funding. This does not necessarily mean that these places are not good at teaching, just that they might specialize in subjects that the rankings are not based on. Thus, you could say that those who do well, do well at playing the rankings game by making sure that they excel in all that gets measured by the top rankings publications.

Although there has been a large intake of overseas students to business schools in the US over the years, there is now evidence that those numbers are declining, while in other countries, such as the UK and India, they are rising. There are several probable causes, including the ‘Trump effect’ (President Trump’s threatened policies on immigration), an increase of MiM programs, and also improving programs in home countries. However, it still seems that the top schools are still attracting a good number of international students, mainly because they stand a better chance of getting jobs (and visas) after graduation. Thus, ranking in the top ten can be a lifeline in attracting foreign cash for many institutions.5

The Problem With MBA Rankings

Ever since the ranking system began, there have been criticisms of the methodologies and results. Even John Byrne, the ‘father of the modern ranking system’6 has said: “…by and large rankings are intellectually dishonest, they are highly flawed [and] in many cases statistically meaningless.”7 In 2017, the disquiet felt about rankings came to a head when the administrators and other academics from 21 business schools across the United States got together to point out the problems inherent in the system, publishing the results in a report: ‘On Academic Rankings, Unacceptable Methods, and the Social Obligations of Business Schools’.8 The criticisms included:

  • The way that data was combined to form a ranking was oversimplified, leaving out more subtle differences between schools that might make a difference to a prospective student.
  • Ranking by numbers did not clarify the difference in ranking results. The institution ranked as number two may have only just missed out on being number one by a few points. Alternatively, it may have had a result far below the one that came top. By using the ordinal number system, it is difficult to evaluate the true value of the results.
  • Many metrics are unaudited by the publishers and may even have been collected from a third party source if the school, for whatever reason, did not wish to reply to a publisher’s survey. Such invalidated resources negate the aim of the exercise.
  • Just as all students have different interests, schools have specialties. These specialties may not lead to the high-flying and well-paid jobs that create high rankings in the current system, but the graduates may have better job satisfaction and are also involved in projects that provide for a better world. Salary and job positions are given full priority over less easy-to-measure but just as important job satisfaction and social responsibility.
  • When reporting salaries, job location is not taken into account. Some places have a higher cost of living and so pay more than other localities.
  • Publishers not only use many various metrics to rank schools but also give different weighting to what they deem to be important – and this can vary from publication to publication, often leading to some disparity in the results. Out of the big five, mentioned above, The Economist has a reputation for being the least trustworthy, due to using a methodology that sometimes throws up odd results, but they all can fall foul of unexpected discrepancies.

For example, in 2010, Southern Methodist University’s Cox school was ranked 12th in BusinessWeek’s rankings, but by 2012, they had dropped to 29th. What had happened was that Cox, considered as a much lower ranking institution by other publishers, was doing well with BusinessWeek because it satisfied their metric for recruiters. Although the school had only a small base of recruiters, they were very enthusiastic, and that had thrown the results off. Therefore, BusinessWeek changed the system by making the metric all about the number of recruiters rather than the level of fervor. Two years later, with the new criteria in place, Cox dropped 17 places even though it had not changed one thing about its MBA program or faculty.9

Another thing that cannot be ignored is the economic value of the rankings to the publications themselves. Print versions attract sales of the paper in which they are published, while online stats draw the attention of paying advertisers. Such a lucrative enterprise has encouraged others to start producing rankings and, over the last decade, there has been a proliferation of them, although none have the reputation of the big five. They range from Princeton’s ridiculed ranking system (because of its seeming lack of methodology10), to the completely outlandish attempts by a goat farmer and others who use their own made up rankings as click bait to lure unsuspecting victims into their sales lead funnels.11 The advice tends to be, if you are going to look at a ranking system, make sure that its methods are transparent and relevant.

So what is to be done about the inequalities within the ranking system (of the top five, that is)? Can anything be done to bring all into line? At present, it seems not, although the online MBA information site, Poets & Quants, founded by John Byrne, himself, has now launched its own ranking system, based on a merging of the data from all of the top five publications. However, weighting is applied depending on how stable and accurate Poets and Quants views that publication’s rankings to be. Thus, U.S. News has a weight of 35%, Forbes, 25%, while both the FT and BusinessWeek are given a 15% weight. The least reliable of the five – The Economist – is given 10%. Of course, it still contains imperfections, but amalgamating the information in this way does seem to even out the usual peaks and troughs, especially in the top 25 business schools.

The ranking systems for MBAs will always have an importance for prospective students, no matters what the detractors say, and so they will continue to exist. Maybe though, we will see a change in the future in what is measured – taking into account the emerging trends of sustainability and cooperation in business and perhaps a lessening of the importance of the salary metric. Moreover, perhaps it is time for deans and graduates to engage with the rankings publications to make sure that the current metrics do not belong to an out-dated business world – one that values making money at all costs. Indeed, this could even see smaller business schools getting a chance at reaching for the top ten; after all, isn’t aspiration what it’s all about?

  1. Linda Wedlin, Ranking Business Schools: Forming Fields, Identities and Boundaries in International Management Education, Edward Elgar Publishing, Jan 2006, p.5, accessed at: https://books.google.co.uk/books?id=ruTwG_219BYC&printsec=frontcover#v=onepage&q&f=false, on 05/18/2018
  2. Taken from video ‘Father of B-School Rankings: John Byrne, Online BusinessSchool, 12/11/2015, accessed at: https://www.youtube.com/watch?v=rgYWp7HcGfQ&amp=&feature=youtu.be, on 05/18/2018
  3. Laura Dorwart, ‘Average GMAT Scores by School: How Do You Compare?’, PrepScholarGMAT, accessed at https://www.prepscholar.com/gmat/blog/average-gmat-score-by-school/, on 05/08/2018
  4. ‘Who You Know, Not What You Know’, Which MBA, The Economist, 05/24/2017, accessed at: https://www.economist.com/whichmba/mba-rankings/alumni-network, on 05/07/2018
  5. Ellie Bothwell, ‘US Business Schools See Decline in International Applications, Times Higher Education, 10/04/2017, accessed at: https://www.timeshighereducation.com/news/us-business-schools-see-decline-international-applications#survey-answer, on 05/17/2018
  6. Taken from video ‘Father of B-School Rankings: John Byrne, Online BusinessSchool, 12/11/2015, accessed at: https://www.youtube.com/watch?v=rgYWp7HcGfQ&amp=&feature=youtu.be, on 05/18/2018
  7. Ibid.
  8. Published in Decision Sciences, Volume 48, Issue 3, 04/25/2017, accessed at https://onlinelibrary.wiley.com/doi/abs/10.1111/deci.12274, on 05/13/2018
  9. Lauren Everitt, ‘MBA Rankings and B-Schools’, Poets & Quants, 05/22/2014, accessed at https://poetsandquants.com/2014/05/22/mba-rankings-and-b-schools-a-love-hate-relationship/, on 05/13/2018
  10. John A. Byrne, ‘Can You Trust This Online MBA Ranking?’ Poets & Quants, 05/13/2015, accessed at: https://poetsandquants.com/2015/05/13/can-you-trust-this-online-mba-ranking/ on 05/17/2018
  11. Ethan Baron, ‘Why a Goat Farmer Ranks Business Schools’, Poets & Quants, 11/10/2014, accessed at: https://poetsandquants.com/2014/11/10/why-goat-farmer-ranks-business-schools/, on 05/17/2018

MBA Staff Writer