Personal Finance 

The Value of a Masters in Business Administration (MBA)

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Originally published April 27th, 2005.

The company I work for has a great continuing education program where I can get a post-graduate degree on their dime and no commitment after I finish (it’s typical for companies to require another year or two of service after graduation). The continuing education covers tuition and registration, but not books or other supplies; a pretty standard agreement. Some places offer free books too but at the cost of perhaps only $100/class versus tuition which, at Johns Hopkins University, runs around $1500 a course… it’s small potatoes. Given that, is getting an MBA worth it?

Wholeheartedly, I would say YES. It could result in a 0% raise and it wouldn’t matter because by taking six classes a year, I am continuing my learning, giving myself a $9,000 a year raise, and scoring the one degree that helps “round out” an engineer. (I have a undergrad double major in economics and computer science, grad in software engineering – very little actual “business”)

In a Yahoo! Finance article, the GMAC, the people who administer the GMAT, claimed that the average MBA graduate gets a 35% raise from $56k to $76k. They didn’t go into if that raise was the result of a job change (which I suspect, a 35% raise is pretty sizeable) or a promotion, but 35% means the outlook is positive. Personally, I don’t expect a raise (and it’s not why I’m doing it) for it. They want to learn how to think different and, for engineers, the gray areas of business are hard to accept for people who are used to numbers, laws, and rules. In engineering, if you design something, it follows the laws of physics. In, say, marketing, when you design a plan, you certainly get feedback and statistics about its effectiveness but it’s not the same as the results of a simulation of a designed part. I think that’s one of the hardest things for engineers to understand and respect.

MBA’s are also about networking, which is difficult in a part time program. But I’m unable to leave work, spend a couple years at a Wharton/Harvard business program (if I could even get in) and get the serious business schooling an MBA really means. I think unless you go to a top tier school, the rest pretty much are the same: take some classes, pay some money, and get your degree. Ultimately, the MBA is trying to teach you experiential knowledge in a classroom setting.

Update: FYI for our RSS Feed readers who can’t see comments, I strongly suggest you visit the site and read the comments. They’re very informative and give disparate opinions on the whole part-time MBA issue. (4/29/05)

{ 14 comments, please add your thoughts now! }

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14 Responses to “The Value of a Masters in Business Administration (MBA)”

  1. Kevin says:

    I agree with you completely. I find myself in the same boat as you are- not willing to give up my job for a full time mba (i too have already squandered two years in a graduate degree in CS) and do not forsee any great salary hikes coming my way due to an mba. At the same time, I think of it as an investment- an investment in the one thing that values most- yourself. I believe that the knowledge, networks and the experience would be definitely worth the $55k im shelling out.

  2. Tim says:

    I seriously considered pursuing an MBA last year. I spoke with numerous people in our company and the overwhelming response was that the best thing for me (as an engineer) is to solidify my technical expertise first. Most successful people in our industry have gotten where they are because of their technical expertise and experience. This is not to say that in other industries it is different.

    Another _great_ point I heard from is that if I went and got my MBA, I would be 28-30 when I finished. Great, now what? There really isn’t any position that I would be elligible for. So I would continue in the same job position I am in now. The key piece that swayed me was–you forget things you don’t use. I wouldn’t use an MBA until I was around 35-40, usually around when you become manager elligible. I would not have used the MBA practically in the real world. One more point is that MBAs sometimes require real world experience to fully understand the concepts you are learning. A person fresh out of school may be book smart but they can’t fully understand the complexities and other concepts that are only learned through time. If you are ever in a position where you need an MBA it should be fresh in your mind (timing is everything) and the company will send you to get one.

    Personally, it is a better fit for me to concentrate on solidifying my technical background which will be the foundation on which I build my career. Focusing on engineering is the right thing for me.

  3. jim says:

    Solidifying technical expertise is more valuable for an engineer, but since I already have the master’s degree in my field there isn’t any more academic work I could really pursue (PhD is out of the question). Since I would rather take the MBA courses now while I have the free time, it’s a better decision for me to pursue the MBA now.

    Certainly I may not use the MBA until much later but the foundation would be set for me. Let’s say I do lose some of the knowledge, a refresher is significantly easier than learning something for the first time. Also, an MBA is just broadening your knowledge base – nothing you do will require an MBA as an engineer. Even if you enter management, an MBA doesn’t really help you, learning how to manage people isn’t something that is taught in a classroom.

    Ultimately, if an engineer with an MBA wishes to pursue another career – perhaps starting their own business, they will be more effective than if they didn’t have an MBA. An engineer who is great at engineering will always put food on the table (and be able to live very well) but will be forced to stay within his or her field of expertise. I put a greater premium on that flexibility.

  4. jm says:

    I too looked into getting an MBA after getting an MS in CS. Talking to people led me to the same conclusions that Tim found…unless you are 35+ or have some management related opportunity available to you, nobody will take the MBA seriously (unless of course it is wharton, hbs, stanford, etc.). So I don’t think it’s a stepping stone into management. That being said, having it on your resume when you become a manager will be a nice plus and provide the warm fuzzies that you actually have some training in what you are doing. Therefore, I think it makes a nice long term investment, but probably won’t net you the 35% raise or the promotion right off the bat.

    In your neck of the woods, I would definitely recommend checking out U. Maryland’s part-time program. When I checked it was one of the top part-time programs in the country.

    Any thoughts on the full-time vs. part-time? A friend of a friend just quit a great tech job to go to Wharton for 2 years. He believes he will make up any cost very quickly upon graduating. Perhaps this is a good move if you can get into a top tier school?

  5. jim says:

    Your prior performance is what will dictate whether or not your superiors believe you’re suitable for management, an MBA doesn’t help or hurt that. If you’re an engineer, you think people will care you learned accounting, marketing, and corporate finance when they have you become the project leader of an engineering project? Probably not.

    And to say that people don’t take it seriously just because you’re young or inexperienced with an MBA is too cynical of a viewpoint. If anything, they’ll give you more credit because you did take on extra work in your spare time… something lots of people squander. But to expect a level of respect because of the MBA would also be a mistake.

    But yes, you will get a 0% raise after you complete an MBA, but it sets the stage for bigger things in the future.

    I just don’t have the guts to pick up shop and do the MBA full-time. 🙂

  6. KLF says:

    Thanks! I’m half-way through my MBA program. Unless I change jobs, I’ll get a 0% raise and my employer (ranked very high on Forbe’s “Best Companies to Work for List”) pays 0% towards anyone’s continuing education. My undergrad degree was a BS in Business Administration, so I’m in a slightly different group than the engineers. I do plan to pursue a PhD at some point.

    I would suggest anyone who is interested in learning more about business, how businesses work, and how individuals influence business, to strongly consider entering a part-time MBA program.

  7. Omar says:

    I’m currently finishing up my company-sponsored MBA (graduating Dec 2005), and I think jim’s nailed right on the head that there is a significant premium on the flexibility it can provide. I have a CS undergrad degree but pursued the MBA much for the same reasons listed above. My company’s paying for tuition and materials, so that does amount to about a $9k bonus every year — although there is two-year commitment after that. I would like to start a business someday soon, and if nothing else I’ve got a wealth of reference material at my disposal now and I didn’t have to pay for any of it!

    Also, I should point out that I’ve already been able to use some of my MBA education on-the-job (the leadership, negotiation, management courses) and in my spare time investment dabbling. An MBA program will teach you things you can use NOW (no matter what your primary field is) and things you might use in the future. If your employer is paying for it and you have the time and even a small interest in it, I think there’s no reason not to do it. And if you ever want to change careers and concentrate primarily on business (as a CPA, for example), the MBA could most likely be applied to some certification coursework.

    It should be noted that a lot of part-time MBA programs currently offer or will soon be offering an online vehicle for coursework. The one I’m enrolled in is a mix — in-class and online — and I’ve stuck to the online courses when I could (I’ve taken four of seventeen in-class). It’s a great option and can really help with work-, school, and life-balance.

  8. Great post. I’m contemplating whether to go for my MBA. I graduated computer science major and have been working full-time for nearly 3 years. I can either quit my job and attend school full-time, or I can look for another job that will fund my tuition costs. I’m still trying to envision what the MBA status will bring into my future and whether if it’s worth it.

  9. damian says:

    Don’t believe a single salary figure you see posted by GMAC or especially in the business magazines. They are purely marketing devices, and trust me you’ll be disappointed if you base your expectations on the figures quoted within.

    The MBA is definitely more useful with more work experience. The full time experience is great because it is immersive and shows a certain level of commitment. It also avoids the lifestyle of working full time and going to school, which is difficult to say the least.

  10. Joshua Ross says:

    Leaving your current work to pursue a graduate degree, especially an MBA, can be a slippery slope. I think going part-time, especially if your employer is paying for it and it does not impede your ability to prosper at work, is an easier decision. Since the costs are somewhat of a moot point, unless there are strings attached, it really comes down to whether or not you want to spend your leisure activities studying and immersing yourself in the program. Nothing is worth doing if you are not willing to fully devote yourself to it. You are completely correct in identifying that contacts and networking is the most important facet of an MBA program. If you not committed to developing those contacts and your coursework is average to sub par, then you are wasting your time. When it comes down to it, the piece of paper is not worth much but the confidence you gain in your abilities and the people you inspire to believe in you through your actions is what will be worth the most.

  11. NJ says:

    Hi Folks,

    I enjoyed reading diff view points regd value addition of a full-time/part-time MBA program. I guess I am just one among the many who have a tough time figuring out which is the right option. Do you know any resource online for more discussion on this topic? Also do you know which are good part-time MBA programs which are worth the money and effort.

  12. Amanda says:

    I think that whether you pursue your MBA part-time or full-time should be dependant on a number of factors. As Jim mentioned, if you are getting your MBA but plan to stay in your current industry, and especially if you plan to stay in your current position, post-graduation, I think that part-time is best. You will not have to forsake your income – which is a huge perk.
    On the other hand, if you are interested in changing industries/careers, I would definately recommend going full-time. In addition to the necessary networking that you will need to pursue new career opportunities, you will also benefit from the corporate recruiters that work with your University: they tend to pursue full-time candidates.

    I began taking classes part-time at the University of Chicago GSB in January of this year. At the moment, I am still working full-time. However, I intend to go to full-time status in a year. If you are having trouble deciding one way or the other, I would recommend beginning part-time and seeing how things progress.

  13. As someone who has completed an MBA, I have to say that I am fully convinced that it is worth it. Both in terms of getting in the door to some places as well as future earnings. During each move I have made in my career, the three letters behind my name have added a premium onto my salary. For me it was more than worth it.

  14. PGoyal says:

    It was great to read this page. Clarity in thinking and expression along with wise choice of words is what makes all of your comments so valuable. Though I’ve just spent a couple of hours searching the web for arguments against/for pursuing an MBA, this page was the most educative read of all. Thanks.

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