| Topic Name: |
Who is hiring? |
| Message Name: |
Continued... |
| Date Posted: |
05/11/2003 |
| In Reply To: |
I think ROI is a valid piece of the analysis, but the problem i have is that its often weighed too heavily,
i.e. if you have to choose between in state at berkeley versus out of state at Wharton, ROI can tilt the equation to berkeley.
also, i think the opportunity cost is over estimated by a lot of these calculations. I think there is a non-monetary value to taking two years off work. I think rather than looking at the lost Revenue (i.e. income) over the two years, it would be more accurate to look at the lost Net Income (i.e. Savings) over two years. That number will bring the opportunity cost down considerably. Because your spending will go down during business school but your return on the money you do spend will likely go up. In fact one can argue that the ability to take two years off while improving your resume is well worth the opportunity cost and then some.
Finally, concerning the ??soft?? knowledge gained by looking for an interesting new job versus the knowledge gained with the resources available to b-school, its no comparison. That is a specious argument at best, at worst it??s a foolish statement.
My only point is to realize ROI is just a tool, and it should not be over relied upon. That many of the potential upside is very difficult if not impossible to quantify. So much of business is luck and so much of luck can be created. If you want to start a fishing firm, don??t move to Iowa and so on. Surrounding yourself with 300 to 1200 highly energetic, ambitious intelligent people for two years is the best way to place yourself in fortune??s way. Its like fishing in a fishery. That value is hard to quantify yet considerable.
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| Message: |
Now this is getting interesting. I think we agree on some points and disagree on others.
First, I also believe that "ROI is a valid piece of the analysis", and that it is not the only criteria to use.
I presume that you believe that Wharton is a better school than Berkeley based on education, prestige, etc. but that Berkeley in-state is cheaper. If the lifetime earnings of a variety of ranges of Berkeley students is within $100K of Wharton students, perhaps the difference in quality and "prestige" is overestimated... [by the way, I expect that the lifetime ROI at Wharton would be higher than Berkeley, but I believe the numbers need to validate this...]
Importantly, ROI needs to be measured WELL to count. Measuring median compensation for alumni is not enough - a more sophisticated analysis of sub-groups is needed. For example, the median ROI for Berkeley and Wharton could be the same, but a larger percent of Wharton grads could have "breakthrough" careers with high upside.
Sub-group analyses might reveal populations with negative ROI... for example, does it still make sense for a highly successful individual who has been "promoted through" to an MBA-level position to return to school?
As for measuring net income instead of revenue, I disagree. Money is money - unless you can strongly argue that certain significant expenses are job related. I suppose I could buy this for a NYC i-banker who goes to b-school at Duke. However, I could say the opposite for a P&G employee in Ohio who chooses Stanford. I would instead use tax-adjusted income [and possibly benefits, if measurable] as the currency of choice.
I also disagree that the idea of gaining "soft" knowledge on the job is specious or foolish. Quite the contrary, it depends on finding the right jobs and having the skill or luck to obtain those jobs.
Also, there are many ways to place yourself in fortune's way. B-school is admittedly one avenue. There are many firms in both professional services and in traditional product companies that are filled with "highly energetic, ambitious intelligent people". Those MBAs go somewhere after they graduate, after all!
Again, I don't want to knock b-school as having zero potential to advance ones career and compensation. [I think B-school has a positive ROI in many cases.] I am simply saying that an MBA's impact in increasing lifetime compensation is measurable and that this is an important data point in deciding on an MBA.
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