When you’re seeking new opportunities, hoping to increase your knowledge, or aspiring to enhance your professional career trajectory, pursuing a Master of Business Administration (MBA) can be a valuable step. While it’s important to consider the investment involved, the benefits of an MBA can be significant. Here are some factors to consider when deciding if it makes financial sense to pursue an MBA.
Understand Your Goals
Before you begin to think about programs, you want to understand what you want to achieve by going through schooling. You want to narrow your goal to a specific job title and industry to understand what that role needs and what success will look like for you.
For example, let’s say you are a professional who has been working many years at a large tech company and you want the opportunity to be considered for a Chief People Officer position, but an MBA is a minimum requirement at your company. In this case, you’ve already got the necessary connections and experience, you just need the degree for the next step in your career. An online executive MBA program that you can self-pace may be the best option.
However, let’s say you’re a little earlier in your career and want a high-level operations position in an industry you’ve never worked in before. You were a management consultant and now want to work in the nonprofit space. In this case, your future success might heavily hinge upon networking opportunities at a reputable school and less on the weight the degree may hold on your resume.
What Can A Program Do For You
An MBA program can provide networking opportunities, strengthen your knowledge and position in your own industry, provide education about industries outside your own, and give your resume a boost when you are applying for jobs. Generally, a higher degree of opportunities come from the top MBA programs.
Cost Benefit Analysis
The Graduate Management Admission Council surveys alumni of MBA programs and found that 85% of graduates think they had a financial net positive from their education investment. The results varied widely based on industry, work experience, and the school they attended. The report also found that the median starting salary for an MBA graduate in the United States is $125,000, which is 25%-40% higher than graduates without an MBA.
Calculating your own cost benefit analysis is essential to understand the value of your own goal. Let’s look at two examples:
- A banker who makes $120,000 per year wants to pursue an MBA at one of the top business schools for $85,000 per year. The banker wants to be a Chief Financial Officer at a nonprofit once the degree is completed, which would lead to an average salary of $261,553 per ZipRecruiter. If this person can secure employment, the return on investment is fairly immediately positive.
- The same banker wants to pursue the same MBA at the same top business school but would like to be a Chief Financial Officer at a hospital instead. According to ZipRecruiter, the national average salary is about $123,000 so while the person may be making the career change they want, the salary change does not justify the cost of the program.
When An MBA Doesn’t Make Financial Sense
If you are pursuing an MBA to gain access to a role or income that you could achieve without an MBA, then you won’t find a lot of value from your program. MBAs are most valuable when paired with relevant industry experience, so going in straight from undergrad or without a game plan can diminish the benefits. Additionally, as previously discussed, not all MBA programs are created equal. Just having an MBA does not guarantee success or employment, but an MBA from a top-ranked school can increase your odds.
Conclusion
Deciding whether it makes financial sense to pursue an MBA hinges on various personal and professional factors. Understanding your career goals and how an MBA aligns with them is crucial. If your aim is to advance within your current industry or transition to a new one where an MBA is a prerequisite, the degree can be a valuable asset. However, the financial investment is considerable, and it’s essential to conduct a cost-benefit analysis specific to your situation. Consider the potential salary increase, the reputation of the program, and your existing experience and network. An MBA can open doors, but it is most effective when it complements your career trajectory and not just as a standalone credential. Ultimately, the decision should be guided by a clear understanding of how an MBA will help you achieve your long-term professional objectives.