07/03/2013 01:24 pm ET Updated Sep 02, 2013

Rankings: The Best B-School Advertisements

B-School rankings, for the last few decades, have determined admissions, salaries, grants, publications in major journals and other factors linked closely to these numbers. The rankings are like advertisements for the schools that get featured in them. Harvard Business School, Wharton, Kelloggs, Stanford... we've all associated certain brand values to them, without one single, traditional, advertising campaign. It is solely based on the thriving rankings-game that we relate qualities of excellence, ROI and sheer awe to the previously mentioned institutes, among others.

The Basis of Rankings

Rankings are based on a few core components of the school's program and the students.
Because rankings rely heavily on numbers and numerical data, the average GMAT score of the school becomes essential for an overall perspective. A 700 and above average score is always considered to be superlative and is usually what the top five institutes on major ranking lists score. For instance, the 2012, average GMAT Score of the top institutes, as per websites that track these numbers, were as follows: Harvard University - 724, Stanford University - 729, U-PENN - 718, MIT - 710, Northwestern (Kellogg) - 708 and Columbia University - 715.

The other parameters are employment rates and median salary range. B-Schools such as Harvard and U Penn have consistently high employment rates. Their graduates are picked by the biggest companies from around the world in sectors as varied as consulting, entertainment and healthcare.

The 2012 median base salary of Harvard School of Business students, three months after they graduated was as follows:

Consulting - $135,000
Entertainment/Media - $110,000
Financial Services - $125,000
Healthcare - $120,000

It is not wonder that Harvard often features among the top five institutes in various annual rankings.

The rankings that matter

Many of the top business magazines compile rankings that matter highly to the prospects of a B-School. Some of them are: Bloomberg Businessweek, Forbes, Fortune and The Economist.

Rankings in some of these publications are extremely important, because they're read by prospective students, top recruiters and, by and large, by the people that really matter. The ranking techniques of each of these ranking agencies usually vary by degrees. A Financial Times study in 2007 indicated that rankings can be classified into two subsections. One section of rankers uses short-term, number and statistics intensive data, while the other section uses long-term information like employment rates, long-term salary median, and recruiter satisfaction as their criteria.

As per their findings, here are details about how some of the important findings are arrived at.

Financial Times 100 Global Business Schools

The rankings are made with information gleaned from a survey of alumni, graduated three years before, data about the school and an assessment of their research capabilities and output.

Forbes Top 50 US and Top 20 Non-US Business Schools

The Forbes ranking is based on the ROI of the alumni, five years after they have graduated.

Bloomberg BusinessWeek and Economist

Both publications' rankings are based on students' experience of the programme

Wall Street Journal

Wall Street Journal surveys recruiters and uses their ratings of the students to compile their rankings.

But do they really matter?

Having discussed the rankings that are widely respected, we should also, perhaps, question, if these rankings really do matter.

A study published in the Academy of Management Learning and Education found that the ranking of the business school had a huge impact on the salaries of its students. The study confirms that students earn much more if they go to business schools that are highly ranked -- like Harvard, Stanford, Wharton, Columbia, Chicago, and Kellogg. The biggest salary increase was found among students that were in the top 50 schools. Prof. O'Brien, who led the study said:

"Our results suggest that, all else being equal, MBAs from tier-1 schools (top 50) average about 27% more salary per year than those from tier-3 schools, and that MBAs from top-budget schools earn about 30% more than those from schools with average budgets. The 21% premium from an optimal research program may fall short of those numbers, but it certainly compares favorably to them"


Studies like this affirm the importance of these rankings, which work far more effectively than advertisements. The fact remains, that advertisements in any of these publications -- BusinessWeek, Fortune, Forbes, etc. -- can be bought, but their credibility is huge in the global business world and ultimately, that is what turns these rankings into major promotional tools for the schools. This helps them attract the best students, the top companies and major grants that are required for research.

The value of research

In recent years, B-School research and their subsequent publication in journals, has come under the scanner. Many critics feel that most of the research is not in sync with the real world. In fact, Harvard Business Review, which publishes research that is often esteemed highly, has said, "Relevance is often systematically expunged from these [scholarly] journals."

Studies have found that the quality of research is directly proportional to the quality of students in these institutes and the how much they earn eventually, as graduates.

According to the study, which was published in Academy of Management Learning and Education, "the level of scholarly research activity at business schools appears to add considerable economic value to MBA students' future salaries."

This "value' is as much as 21 percent, as the graduates earn that much more.

A parallel examination by the dean of UT Business School led to the same conclusion. Which is why, he decided to join the already crowded B-School ranking "market" and in 2005, launched UT-Dallas Top 100 Business School Research Rankings. The rankings go beyond recruiters, students and focuses on research output, as the study reveals, this has an impact on student salaries.

In other B-School ranking news, in the 2012 rankings, The Stanford University Graduate School of Business topped Harvard Business School, after tying with the school for three years in the U.S. News's 2012 rankings of Best Business Schools!