Tom Hamnett, MBA Class of 2014
A recent post by Benjamin (“Benji”) Pelled on the NYU Stern Class of 2014 Facebook page generated a Kloutastic 41 comments from fellow classmates. [Comments on posts in private groups do not generate K+ – Ed.] The topic? A Forbes MBA ranking of NYU Stern at #23 among U.S. business schools. What earned us such a low ranking? Was Forbes upset that NYU had bought their 5th Avenue headquarters back in 2010? Did Dean Henry turn their Boardroom into a personal half-court basketball gymnasium? Perhaps, but the ranking that caused such rancor had nothing to do with those issues. The madness was in the methodology.
This article examines the good, the bad, and the ugly of five major business school ranking publications: U.S. News and World Report, The Economist, Forbes, Businessweek, and the Financial Times. Each varies in the consideration set of business schools, and more importantly, varies in the methodology in assessing business schools. Why, you may ask, are so many different and varied methodologies needed to rank business schools? The short answer, is eyeballs. If everyone agreed on the best ranking methodologies, publications wouldn’t sell magazines or get those sweet, sweet clicks. Sex may sell, but so does dissent.
Each examination of the methodologies will include the following: Publication Name, Summary of Publication, NYU Stern Rank, Detailed Methodology, The Good, The Bad, and How to Help Stern Improve. Please note one or more of each category may contain statements not intended to be factual.
Publication: U.S. News and World Report
Summary: Largely considered the Gold Standard of U.S. business school rankings (http://poetsandquants.com/2013/06/10/which-mba-ranking-is-best/), U.S. News and World Report rankings rated 140 US.S business schools in its latest release.
NYU Stern Rank: 10
Methodology: U.S. News generally breaks down its rankings into three categories – Quality Assessment (40%), Placement Assessment (35%), and Student Selectivity (25%).
The Good: Thorough analysis of perception in the higher education and recruiter communities, fact-based ranking of post-graduation employment prospects, student aptitude, and demand for MBA spots
The Bad: Ignores student satisfaction, does not adjust for potential lower salaries of graduates entering start-up or social enterprise fields (skewing towards I-Banking and consulting feeders)
How to Help Stern Improve: Convince other deans that we’re “cool,” graduate with jobs that pay $1m base plus $3-5m bonus, do better on your undergraduate GPA (note: time travel required), reduce full-time class size to one student (lowering acceptance rate to 0.035% and improving selectivity score)
Publication: The Economist
Summary: The Economist lists its top 100 global MBA programs in its rankings. We are not sure if they are the Gold Standard of global rankings, but we’ll say they are since they rank us highly.
NYU Stern Rank: 7 (in THE WORLD!)
Methodology: The Economist uses four major categories in its ranking – Open New Career Opportunities (35%), Personal Development/Educational Experience (35%), Increase Salary (20%), Potential to Network (10%). Additionally, The Economist builds in “memory” to the rankings by taking a weighted average of 2013 (50%), 2012 (30%) and 2011 (20%) data.
The Good: Assesses student satisfaction across a number of areas, fact-based assessment of student salaries and scores
The Bad: Focus on internationalism may hurt U.S. schools, does not adjust for potential lower salaries of graduates entering start-up or social enterprise fields (skewing towards I-Banking and consulting feeders)
How to Help Stern Improve: Award all non-PhD faculty honorary PhDs, hire temps as faculty to boost up faculty-to-student ratio, graduate with job that pays $5m base salary (no bonus), be extremely satisfied with all aspects of Stern life – from alumni network to career services
Summary: Forbes takes a utilitarian stand on business school – with a singular focus on ROI. This, in turn, generates significant ROI for Forbes, since it can drive significant clicks and eyeballs with minimal research effort invested. Some may call it lazy – I call it lazy as a fox! (Note: a different fox from the quick brown one that jumps over the lazy dog) NYU purchased the Forbes headquarters in 2010, with a five-year lease-back provision included. After 2015, Dean Henry plans on turning it into the Institute of MBA Salsa and Related Dancing, replacing the current foyer with a Root Beer fountain (source: https://twitter.com/PeterBlairHenry/statuses/389565080079065089)
NYU Stern Rank: 23 🙁
Methodology: “ROI”-based methodology comparing pre-MBA salary to post-MBA salary of graduates over a five year period. (OK, it’s a bit more complicated than that, I’ll let Forbes explain – “We compared the alumni earnings in their first five years out of business school to their opportunity cost (two years of forgone compensation, tuition and required fees). We adjusted the median ‘5-year M.B.A. gain’ for cost of living expenses and discounted their earnings gains using a rate tied to money market yields. We also discounted tuition to account for students who pay in-state rates and for the non-repayable financial aid that schools dole out. We did not deduct taxes from the earnings gains. We assume that compensation would have risen half as fast as their post-M.B.A. salary increases had these alumni not attended business school. The 5-year M.B.A. gain represents the net cumulative amount the typical alumni would have earned after five years by getting their M.B.A. versus staying in their pre-M.B.A. career.”)
The Good: Easy to understand methodology and results, based on a few numbers
The Bad: Focuses largely on salary, punishes pre-MBA success, punishes post-MBA chasing your dream
How to Help Stern Improve: Work a minimum wage job pre-MBA, found the next Facebook during your MBA, IPO upon graduation and give yourself a juicy salary
Summary: Businessweek, owned by Bloomberg, for the past twenty-plus years has been judging global business schools on how well they serve their two main constituencies: students and corporate recruiters.
NYU Stern Rank: 16
Businessweek uses surveys of students (45%) and recruiters (45%) to determine its rankings, and also assesses a school’s intellectual capital (10%). The current year survey is weighted 50%, the survey from two years ago is 25%, and the survey from four years ago is 25% (applies to both employer survey and student survey).
Each No. 1 rating earns a school 20 points, each No. 2 rating gets it 19 points, and so on. Using each school’s point total—along with the information on where the company recruits and how many MBAs it hires—constitutes a school’s recruiter score.
Each aspect of the student experience is assessed on a 10-point scale.
The Good: Seeks to address the primary consumers of MBA programs – students and recruiters, reduces year to year anomalies by taking multiple years into account
The Bad: Excludes fact-based indicators such as test scores and salary information, low results in one year will continue to affect the two iterations of surveys
How to Help Stern Improve: Be extremely satisfied with all aspects of Stern life, convince recruiters that Stern is “cool,” tell professors to “publish or perish” (and make it a credible threat)
Publication: Financial Times (FT)
Summary: Financial Times ranks 155 business schools from 28 countries that meet strict entry criteria: for example, schools must be internationally accredited and the MBA must have run for at least four consecutive years. Rankings are based on two surveys, one for the schools and one for alumni who completed full-time MBAs in 2009. Alumni responses account for 59 per cent of the ranking’s weight. School data accounts for 31% of the ranking’s weight. Data for the most recent year and one-two years prior (where available) are included. (Note: Financial Times website provides inconsistent weightings – the reporting weightings are included below, but do not add up correctly.)
NYU Stern Rank: 19
The Good: Assesses the success of alumni in the field and the diversity and quality of faculty
The Bad: Ignores current student satisfaction, highly weights salary increase hurting those who were successful prior to business school, gives weight to doctoral graduates despite a greater focus on the MBA for most business schools
How to Help Stern Improve: Work a minimum wage job pre-MBA then make bank after business school, include a free PhD with every MBA degree, tell professors to “publish or perish” (and make it a credible threat), be extrem
ely satisfied with all aspects of Stern life when you become an alumnus, obtain dual citizenship en masse prior to graduation
Although every ranking has its flaws, there is no denying that rankings are influential in attracting the best applicants and the best recruiters to any MBA program. While we here at NYU Stern interact every day with our smart, interesting, thoughtful classmates, a strong ranking helps reflect that to the outside world. Among the most thorough and most respected ranking systems, NYU Stern generally fares well. And the strategic direction Dean Henry and the rest of the administration has laid out for Stern represents a promising indicator of continued strength. Despite any ill will Forbes has for Dean Henry’s Salsa dreams for their current headquarters, the current caliber of Stern students, faculty, and alumni positions it well to maintain and improve its brand, prestige, and ranking into the future.