Jan 29, 2011

Business School Rankings - Which one to look at?

During the last decade, many firms and publications have started analyzing the business schools across the world and as a result, business school rankings have mushroomed all over the place. MBA aspirants give particular importance to these b school rankings and their decision to apply to a school and attend a business school can sometime be substantially influenced by these rankings. This is especially true for international candidates who rarely get the opportunity to do the campus visits and know the school first hand and hence, outside perception of these business schools is the usually the main input their decision making.

Few of the most prominent rankings are published by Business Week, US News, Financial Times, Forbes , Economist and Wall Street Journal. With so many rankings to choose from, and with multiple instances of a substantial variance in the ranking of the same school in different rankings, interpreting the ranking numbers is not easy. Should you watch them closely? Should you just leave them out of decision making? The answer is yes, you should use them but intelligently.

Limitations of B school rankings
The best way to understand these B school ranking is to first understand the limitations of these ranking. so let's look at them -

1. Each B school ranking publication has specific criteria against which it measures all the schools. These criteria vary from publication to publication. Hence, the eventual ranking of a school in a particular publication is a reflection of how good that particular school fits those set of criterias defined by that publication. It is NOT a very accurate indicator of how good a school is. Rankings are created to generate excitement and sell magazines, and they indeed do a great job.

2. The ranking involves data collection through surveys and many other points. Hence, just like with any statistical evaluation, the result will be objective in nature and the ranking models will not completely incorporate the subjective part of MBA education in a business school. For e.g. While the ranking may tell you that the school has good recruitment relationship, excellent faculty and world class brand based on certain criteria but it will not tell how HAPPY, a very subjective thing that may have a different definition for different individuals, a student is in the same B school.

3. Ranking do not measure what YOU want out of your business education,  they rank what they seems fit to rank a business school on.

4. Ranking is based on the survey results coming from B school students and these students, knowing that their action can influence the school's ranking, can very well talk more positive about their respective schools. Although advanced statistical techniques can be and is used to elimiate this behavior to certain extent, it is impossible to completely eliminate it.

5. Overall ranking mostly hides the strength of a particular school in a specific functional area. For e.g. one of the top enterpreneurship course is available at one of the schools which is not ranked in even top30 range of most of these publication's ranking.

Overview of the major rankings
Having seen the limitations, let's see what the six major publications care about and uses as a criteria set to evaluate business schools against :

1. Business Week
It was the first publication to do a ranking. They issued their first in 1986 and focused on MBA students and corporate recruiters. 45% of the ranking is based on graduating students' survey responses. The recruiter poll accounts for 45% of the ranking and, since 2002, the remaining 10% is based on an intellectual capital rating from tallying journal articles and books published by faculty.

2. US News

It started in 1987 and ranks all MBA programs accredited by the AACSB. Rankings are based on 4 measurements: The deans and directors ratings account for 25%; the ratings from the recruiter survey account for another 15%. Placement success accounts for 35% and student selectivity accounts for the remaining 25%.

3. Forbes

It began publishing a ranking of MBA programs in 2000 based on return on investment. Forbes calculate ROI by looking at alum compensation five years after graduation minus the tuition and the forgone salary during school. They survey graduates five years after graduation.

4. The Financial Times

It has surveyed graduates three years after graduation and gathered data directly from the schools since 2000. The FT ranks schools based on three factors; performance of the MBA program accounts for 55%. Diversity accounts for 25%. The research rating accounts for 20%.

5. The Wall Street Journal

This ranking, first published in 2001, is based on surveys of corporate recruiters. The ranking components for all schools measured include three equally weighted elements: perception of the school and its students (20 attributes), intended future supportive behavior toward that school, and a measure of mass appeal based on how many indicated that they recruit at the school.

6. Economist Intelligence

This branch of the Economist organization has published a book on business schools, "Which MBA?" since 1988. Their online ranking began in 2002. They collect data from the schools, current students and recent graduates. The ranking measures career opportunities for graduates (35%), the quality of the educational experience (35%), increases in salary pre and post MBA (20%), and the potential value of the alumni network (10%).
Souce: Accepted.com

How to look at the rankings?

Use the ranking only for the initial research on the schools. Rankings from different publications can be used as a sanity check to do the reputation check. However, don't get fixated on the absolute rank of the school but observe the range in which most of the publications have put a particular school to understand where it stands. If, for e.g., Chicago Booth is ranked #1 in Business Week and #6 in US News but Wharton is ranked #3 in Business Week but #1 in US News, it just means that both these schools are top tier schools and are in about top - 10 range. It does not mean that Chicago is better than Wharton or vice versa, because the definition of "better" will depend on what YOU consider better.

Look at the criteria of the various pulication's ranking and compare that with your own set of requirements from a business school education. This comparison will help you to understand which ranking should mean the most to YOU out of all the available rankings. However, it still does not mean that the ranking should be your sole criteria for selecting a school. None of these rankings can replace your own research about the school through campus visits, interaction with current students and alumni, and rather be used only as a starting point.

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