Tag Archives: MBA

‘The ticket to executive positions with a six digit salary’ has long been the tag on the MBA degree. MBA degrees contain a kind of magic that inspires a soaring expectation from the candidates. According to Poets and Quants collection of salary expectation of MBA candidates cross different countries, the US MBAs expect a 140 per cent raise for their MBA degree, a 148 per cent salary increase is expected from UK MBAs and a whopping 245 per cent salary raise is expected from Chinese MBA candidates. However, according to the talent flow survey conducted by RMG Selection in China, the average salary raise from job-hopping is 20 to 30 per cent, regardless the position level or the qualification of the job seekers. As unrealistic these expectations are, these rate rises do not come from nowhere.

The great story and the not so great reality

For years there has been a love story between the Wall Street Firms and the top MBA programmes graduates, making the MBA the ticket to investment banking and other top finance sectors. MBA candidates are immersed in misleading reports and stories that make them believe in the magic of MBA degree automatically getting them leadership positions.

However, even the love affair between Wall Street and Harvard MBAs didn’t survive the big financial meltdown of 2008. According to Poets and Quants, only 27 per cent of Harvard MBAs have been recruited into financial sectors this year, down from 35 per cent last year and 39 per cent in 2011. Also Bloomberg reported a continuous two year decline of MBA recruitment in all business schools with a recruitment rate of 70 per cent, down from 75 per cent last year. The hard reality also plays out for Chinese MBAs. Because of the bad employment conditions of China this year, 25 per cent of MBAs postponed their graduation – as reported by Hexun news. If that wasn’t bad enough, the private sector in China claimed that they were not recruiting MBAs because of the high hiring cost.

Facing the not so great reality, it is important for MBA candidates to sort their priorities of what is important in a job instead of relying on the authority of the degree or those outdated stories. Candidates also need to remember that the cost of gaining an MBA exceeds the amount required for fees. Actual cost is significantly higher since it includes cost of living expenses, foregone salary and other opportunity costs such as a perspective promotion. And even having paid that cost a candidate’s return on investment is far from certain time-wise. According to the China Talent Flow Survey of 2013 by RMG Selection, the response rate of online resume application of MBAs does not show any radical difference from that of experienced bachelors over a six month period. The brand equity added simply from the privilege of an MBA degree is therefore not as dramatic as candidates imagine. Put simply, MBAs are not rewarded more money because of their degree.

Recruiters: the Checklist for hiring an MBA

Facing such high salary anticipations of MBA talents, it is very important that recruiting companies make meticulous hiring decisions between an MBA and an experienced professional and have a clear and specific recruitment need. The following are a checklist recommended to HR facing MBA recruitment:

1: Does this position really need MBA credential?

An MBA is not the must for every higher position. Most consultancies prefer their candidates to have an MBA because the jobs require critical management and leadership skill. Also the networks created from the MBA programs could benefit the company in the terms of Business Development. Also for above director level position, an MBA candidate is recommended because the executive management plays a crucial role for these positions. On the other hand for more technical and specialized positions, such as a Head Engineer or the R&D manager, it is the expertise in the specific field that is most valuable. The MBA credential does not differentiate one candidate from another.

2: What type of MBA program is candidate enrolled in?

Most hiring managers or HRs focuses on the school where the MBA degree is issued. Recruiters are likely to neglect the type of MBA program the candidate participates. Most candidates will not list the type of MBA program they are enrolled in on the resume unless it is a full time MBA program. Therefore, additional questions need to be asked even if the candidates graduated with a Harvard MBA.

Typically, there are three types of MBAs:

• The two year full time MBA

• Part time MBA

• Online MBA

Most universities have the first two programs but some community college or specialised MBA education institution offers the MBA courses online. The MBA experience varies through different type of programs candidates are enrolled in. The full time MBA engage candidates to study, practice and networking with their classmates and annulus. Due to less time commitment, the part time MBA may not guarantee the engagement in the course learning but the daily work practice is also likely to lift the practical benefits that candidates get from the courses. It is also worth mentioning that there are different variations in MBA programs, such as International MBA, Overseas MBA and EMBA, which all have different focuses in terms of function, industry and courses.

3: Can the MBA education add practical value to the candidate and the company?

MBA degree on the resume should only boost their chances to get interviewed but not their chances to get hired. One of the most valued benefits from MBA education is the range and quality of network MBAs are likely to have after your graduation, especially if they are graduating from one of the top programs. However, the networks will lose its value when the candidate does not have enough networking and relationship management skills. It is important to learn about how the candidates practice what they have learned from the courses or cases into real business practices before you made the decisions to pass all the other candidates.

4: Can you afford an MBA?

From a financial perspective, though MBAs expectation to have a more than 140 per cent salary raise is not realistic, recruiters do need to understand and manage MBA graduates’ expectations. It is crucial for recruiters to set up clear and firm offer ceiling, the highest or the most costly offer package that the company can afford, during the salary negotiation because it is very likely for recruiters to end up with a higher planned salary for an MBA than a normal experienced professional.

From a management perspective, although recruiters are most likely to hire an MBA for a managerial position, the team dynamic should also be taken into consideration. There is a risk to hire a manager rather than internal promotion due to the possible disruption of the team effectiveness. If the MBA is not the right leader for the team, there are possibilities to lose one of the former employee or the MBA talent after all and affect the efficiency of the whole department.

5: Make your retention plan effective.

No company wants a quick turnover of their management team. Therefore, if you have MBA candidates entered your final round of interviews, it is important to make the retention plan before you make the actual hiring decisions because it is very likely that you are going to employ an MBA. Besides the salary raise and a good title, MBA candidates also have high expectation of their career development. A detailed career development plan not only increase the chance of the candidates accept the offer but also controls your internal position turnover and human resource planning, especially when you have decided to hire an MBA.

Also, after you have hired an MBA manager, certain support is needed in order to make the transition. For instance, it is recommended to arrange a senior manager to mentor the MBA to fit in the team dynamic and coordinate the subordinates as well.