MBA Compensation is on the Rise


By Daniel Casciato

Results of the annual Graduate Management Admission Council Alumni Perspectives Survey reveal that compensation packages for MBAs are increasing as the economy begins to improve. In the survey, involving 3,490 business school graduates, MBA graduates are earning an average of $5,500 more in annual salary and $7,500 more in bonus compensation from three years ago.

“Because of the current state of the economy, when companies spend their employment dollars, they definitely want to make sure they get the most value for their buck,” says Ken Buckley, director of the career management center for Baylor University’s MBA program in Texas. “So they’re very concerned about overspending their limited recruiting funds.”

Ninety-three percent of the respondents said they were employed–a 3% increase from 2009, while 88% of those who graduated in 2010 had jobs upon graduation. Meanwhile, 70% of this graduating class stated that their starting annual base salary either met or exceeded their expectations. The median starting salary was $78,820. The median salary by all respondents was $94,542, compared to $89,000 in 2007. The median bonus compensation was reported as $17,565, compared to $10,000 in 2007.

“As businesses are operating with less resources and increased pressure from competitors, managers need individuals who understand the business climate, are innovative and have technical as well as soft skills,” says Lori Hollenbeck, assistant dean of St. John Fisher College’s Ronald L. Bittner School of Business in Rochester, NY.

Hollenbeck adds, “An MBA focuses on developing these skills and differentiates candidates in the job market. Many business programs are re-evaluating curricula to ensure relevancy to the needs of employers especially with the recent and current economic conditions.”

The GMAC survey drew responses from business school graduates who earned their MBAs between 2000 and 2010.

“Years ago you could look at your career and you could look at the industry, and there were jobs you were going to do because people had been doing them for 10 to 15 to 20 years and then there were people retiring after having done those jobs,” says Buckley. “Today, the jobs are changing so fast. For students who are currently working on their degrees, their future jobs and job titles and responsibilities could be changing dramatically by the time they get out. They’re actually being prepared for jobs that haven’t even been developed yet.”

Whether a master’s in business today means more than it did a decade ago is debatable for Hollenbeck.

“There are more MBAs today than a decade ago which means employers have more choices,” she says. “There are definitely more programs and more program differentiators, so degree pursuers and recruiters have to do their research.”

Other findings in the survey revealed that alumni rated their MBA as excellent and and felt that their business degree provided them with excellent preparation for their chosen career. It also provided them with opportunities for quicker career advancement.

“If you’re hiring a person with an MBA, you’re getting somebody who has the ability to make a high-level impact on your business,” says Buckley. “Having that MBA gives you credibility. Now you have to deliver on that, but you at least get a chance at bat.”

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