Are MBA Rankings Still Relevant?
Sixty-two of the world’s most renowned business schools—including Harvard Business School, Stanford Graduate School of Business, and the Wharton School of the University of Pennsylvania—were nowhere to be found on the Economist’s full-time MBA ranking when it was released in January 2020.
IESE Business School, which topped the ranking, took to social media to celebrate its success. The ranking is based on surveys of MBA students and alumni as well as data on graduate salaries, employment rates, and class GMAT scores sourced from business schools.
Yet this year’s Economist ranking was notable for its absence of schools that were either ineligible—some declined to survey students or returned incomplete data—or refused to participate.
The simple facts about MBA rankings remain: no one ranking should be taken as fact; every ranking is designed to be different; candidates should use rankings as just one resource when researching business schools; and lists that claim to represent the world’s best business schools are inherently flawed when schools are missing.
Business schools, while championing ranking success, are also quick to point out that ranking results do not tell the whole story. They say that the rankings—largely based on graduate employability and salaries—don’t reflect their true value.
A movement against MBA rankings has been building for some time. As with so many things, the COVID-19 pandemic is acting as a catalyst for this cause, calling the continued relevance of MBA rankings into question.
Business Schools vs. Rankings
Rankings do provide tangible benefits for schools that perform well. According to data sourced from the Graduate Management Admission Council (GMAC), over 80 percent of prospective students globally say they consult rankings when researching which business schools to attend.
For business school marketing departments, ranking success is like a golden egg, enthusiastically promoted on websites and in brochures.
Yet the recent Economist MBA ranking shows how rankings fatigue is not limited to business schools that struggle in the rankings lists. Seven top-10 schools from the previous Economist ranking declined to participate in 2021.
While more schools participated in the 2021 Financial Times Global MBA Rankings in February, several big-name schools, including the top-three ranked schools from the 2020 list—Harvard Business School, Stanford Graduate School of Business, and the Wharton School of the University of Pennsylvania—pulled out.
So why are business schools snubbing MBA rankings?
Schools have had mixed feelings about the rankings industry for some time. Few schools believe rankings reflect the true performance of their programs.
While rankings tend to give significant weight to graduate salaries, a high salary may not constitute success for every graduating student. Increasingly, students are launching businesses of their own or venturing into less traditional MBA industries like healthcare and nonprofits, where they are paid less but able to make a greater societal impact.
Rather than serving as feeder institutions for high-paying banks and consulting firms, business schools are increasingly dedicated to fulfilling students’ individual career goals, which makes them harder to rank according to standard metrics.
Tomas Gomez Arias, dean of the College of Business at California State University, Stanislaus, and chair of AACSB’s Diversity and Inclusion Affinity Group, says differentiating elements are typically excluded from rankings tables as well as the important element of “fit” for students.
“Each ranking is based on an artificial index combining different variables arbitrarily selected, each one with arbitrarily defined weights, so what a ranking measures is very difficult to tell,” he says.
Silvio Borrero Caldas, dean of Pontificia Universidad Javeriana Cali’s School of Economics and Business Administration in Colombia, suggests rankings are unfairly angled toward more established institutions.
Latin American schools are not well represented in rankings but offer high-quality programs that serve their societies. Pontificia Universidad Javeriana Cali was recognized as one of AACSB’s 2020 Innovations That Inspire for its focus on entrepreneurship and impact in the local community.
“Sheer size of an institution is often a strong predictor of a program’s placement in rankings, as size, resources, positioning, and market attractiveness are strongly correlated,” Borrero Caldas notes.
“This results in a virtuous (or vicious) cycle with high-ranking programs attracting more students and external resources, which, in turn, are reinvested to foster growth and positioning, which ultimately leads to a higher ranking, and thus the cycle tends to perpetuate,” he says.
Rankings place an administrative strain on business schools, required to gather data and survey students and alumni for the information needed for various rankings publishers.
The sheer number of business school rankings has led to rankings fatigue, and historic issues with misreporting data have been damaging for some business schools.
Rankings fatigue predates COVID. When the Wall Street Journal and Times Higher Education released a new MBA ranking in 2018, several big-name business schools declined to participate.
Yet the impact of the pandemic cannot be downplayed. In April 2020, major industry organizations representing business schools—AACSB, GMAC, and EFMD—penned an open letter requesting delay in the development of business school rankings to mitigate the impact of the crisis for schools.
COVID-19 would have unknown impacts on key metrics that rankings institutions rely on—employability and salaries in a turbulent jobs market—which, the letter read, stood to “skew results in a way that calls the viability of rankings surveys into question.”
Bloomberg Businessweek subsequently postponed its 2020 MBA ranking. The Economist delayed its ranking, but its January 2021 release still may have come too soon for many business schools.
According to a survey by Kaplan, 10 percent of U.S. business schools don’t plan to participate in any ranking in 2021, while 62 percent plan to participate in only some of the rankings.
Schools say the 2020 admissions challenges associated with GMAT test centers closing and the subsequent relaxing of admission requirements made for a less quantitative decision-making model, which “does not easily translate to the criteria forced by the ranking methodology.” GMAT scores are used by rankings publishers to measure the quality of the MBA class.
Although IESE Business School ultimately achieved success in the Economist ranking, Elisa Simon, director of IESE’s Corporate Information Unit, says the school thought carefully before participating this year.
“For some schools, it may be that they simply didn´t have the capacity to take part in the data gathering process for the ranking [due to COVID]. Others may have used this opportunity to reassess which rankings they wish to participate in, particularly if there are rankings they traditionally do not do as well in,” she says.
With the relevance of rankings waning, some seek reform from within. Presented at the World Economic Forum in 2019, the Business School Rankings for the 21st Century report suggests 20 actions needed to improve business school rankings, some of which include:
- Eliminating or reducing the weight of the salary differential measure
- Incorporating criteria that measure environmental and social impact
- Crediting schools that train students who work for low-paying but societally valuable organizations after graduation
Under pressure, the Financial Times carried out a comprehensive review of its rankings methodology and has incorporated new metrics including a corporate social responsibility rank. Yet, aside from the schools missing, the FT’s 2021 MBA ranking results are similar to those of the past.
Caldas suggests that providers should reconsider how rankings are put together. He favors a “scorecard approach” based on performance indicators rather than absolute quantities, which account for school size and regional context.
He also calls for greater transparency and access to raw data. “We should try to compensate for headlines that boldly affirm that a school or program is ‘the best,’ just based on a particular ranking,” he says.
Others want to do away with traditional rankings tables completely. The Positive Impact Rating (PIR), launched at the World Economic Forum in 2020, categorizes business schools based on the positive impact they have on society.
To sidestep rankings fatigue, data collection is organized through student associations, which distribute a survey within their school. Students are asked to assess their school across areas including governance, culture, learning methods, student support, and public engagement. The result is a list, which identifies the “best” schools for the world rather than in the world.
There is still work to be done to optimize this initiative. A limited number of schools participated in the 2020 rating (51 of the 100 business schools invited to participate). The PIR also specifically invited schools listed in the top 50 of the Financial Times Master in Management Ranking as well as the Corporate Knights Better World MBA Ranking, which is focused on sustainability.
While the PIR drew interesting conclusions from this approach—none of the top-25-ranked FT business schools were featured in its top positive impact category for 2020—the rating relied on the rankings, and thus the traditional measures used to rank schools, for its school selection in the first place. The rating surveyed bachelor’s and master’s students and is not specific to MBAs.
Ultimately, MBA rankings remain relevant to the thousands of prospective students who use rankings to research and compare business schools each year. But, as more schools decline to participate, the continued relevance of rankings is under threat.
Whether business schools will return to the rankings in 2022 remains to be seen. What’s likely is a concerted effort by schools to reduce the number of rankings they participate in.
Some rankings publishers will survive the boycotts. Others will suffer. Business school candidates will favor the ranking that appears to be the most credible.