Besides a prestigious degree, an MBA from a top B-School opens the door to a plethora of opportunities, from changing your career to learning successful management skills and building a network of peers that you can leverage long after your MBA. However, for some aspirants, another goal serves as a great motivator for pursuing an MBA degree i.e. post MBA Salary.
It is a known fact, that an MBA degree greatly increases your earning potential with prospects of higher salaries and various other components of compensation such as performance-based and guaranteed bonuses. In this article, we will explore the various factors that affect your post-MBA salary and how you can ensure the best outcome – in terms of monetary compensation. GMAT Score, the prestige of your business school, the industry you choose to work in, your pre-MBA work experience, and the country you choose to work in are a few important factors that affect your post-MBA Salary. But on which point should you focus first to get an above average post-MBA salary? – That’s the question you’ll be able to answer yourself after going through this post!
Did you know?
In the United States, people who score 740 on average on GMAT earn $40,000 more than those who score 700.
Here is a brief outline of the factors we will explore in this article:
- GMAT Score and Business School Rankings
- Role of Job Industry in post MBA Salary
- Average MBA Salary according to job level
- Does your Post MBA Salary depend on the country you work in?
GMAT Score and Business School Rankings
In a competitive job market, an MBA from a top-ranked Business School catapults your career into the high gear you want.
Let us look at the relation between average MBA salaries and GMAT scores.
We have used data from the Forbes Ranking of best business schools to understand how the Business School rankings affect your post MBA salary. We can clearly see that the average post MBA salary for students graduating from a Top 50 B-School is around $100K. There is a strong correlation between GMAT score and Post MBA salary. The correlation coefficient is 0.79 – which means that the higher the GMAT Score, the higher are your chances of getting a higher salary!
We’ve prepared this scatter plot with the help of the data in the table below for the top 60 B-Schools in the US:
|S. No.||Business School||Post MBA Salary (2016)||Average GMAT Score|
|2||Pennsylvania (Wharton)||$225 K||730|
|4||Northwestern (Kellogg)||$195 K||730|
|5||Chicago (Booth)||$195 K||730|
|6||MIT (Sloan)||$201 K||730|
|8||Dartmouth (Tuck)||$200 K||720|
|10||UC Berkeley (Haas)||$212 K||720|
|11||Virginia (Darden)||$180 K||710|
|12||UCLA (Anderson)||$181 K||710|
|13||UNC (Kenan-Flagler)||$157 K||710|
|14||Texas-Austin (McCombs)||$160 K||710|
|15||NYU (Stern)||$195 K||710|
|16||Michigan (Ross)||$185 K||708|
|17||Cornell (Johnson)||$172 K||700|
|18||Duke (Fuqua)||$181 K||700|
|19||Notre Dame (Mendoza)||$150 K||700|
|20||Michigan State (Broad)||$117 K||700|
|21||Washington (Foster)||$150 K||700|
|22||Iowa (Tippie)||$111 K||700|
|23||Georgetown (McDonough)||$165 K||700|
|24||Washington U-St. Louis (Olin)||$131 K||700|
|25||Carnegie Mellon (Tepper)||$180 K||690|
|26||Minnesota (Carlson)||$145 K||690|
|27||Georgia Tech (Scheller)||$134 K||690|
|28||Rice (Jones)||$131 K||690|
|29||USC (Marshall)||$163 K||690|
|30||Arizona State (Carey)||$125 K||690|
|31||Alabama (Manderson)||$96 K||690|
|32||Boston (Questrom)||$132 K||690|
|33||Vanderbilt (Owen)||$140 K||690|
|34||Emory (Goizueta)||$137 K||683|
|35||Indiana (Kelley)||$145 K||680|
|36||Rochester (Simon)||$129 K||680|
|37||Texas-Dallas (Jindal)||$109 K||680|
|38||Boston College (Carroll)||$150 K||680|
|39||Brigham Young (Marriott)||$135 K||672|
|41||Ohio State (Fisher)||$125 K||670|
|42||Penn State (Smeal)||$120 K||660|
|43||SMU (Cox)||$140 K||660|
|44||UC Irvine (Merage)||$138 K||650|
|45||Maryland (Smith)||$141 K||650|
|47||Case Western (Weatherhead)||$115 K||650|
|48||Georgia (Terry)||$106 K||645|
|49||Texas A&M (Mays)||$133 K||640|
|50||Babson (Olin)||$147 K||640|
|52||Temple (Fox)||$116 K||639|
|53||Purdue (Krannert)||$136 K||636|
|54||Tennessee (Haslam)||$118 K||630|
|55||William & Mary (Mason)||$116 K||622|
|56||Pittsburgh (Katz)||$125 K||610|
|57||Missouri (Trulaske)||$84 K||610|
|59||Rollins (Crummer)||$85 K||556|
|60||Willamette (Atkinson)||$84 K||550|
Business school rankings can be tough to decipher. Learn what they signify and how you can make use of them in your business school application process by reading this article.
This reaffirms the belief that a high GMAT score can make a big difference in your post-MBA salary.
How? You ask? – The logic is quite simple. To get a high salary you need to get an MBA degree from a top business school. A high GMAT score will help you get into a top business school. A high GMAT score assures the business school that you will ‘get through’ their rigorous MBA program. That’s why the top 10 Business Schools boast a very high average GMAT Score of their incoming batch as compared to the next 10 business schools.
Let us consider the following 2 Candidates:
- Candidate 1 – GMAT Score 750 – Admitted to Stanford GSB
- Candidate 2 – GMAT Score 700 – CMU Tepper
While Candidate 2 on an average can command $180,000 as a starting salary, it pales in comparison to the $215,000 that Candidate 1 can command post-MBA. That is a whopping $35,000 difference in starting salaries and this gap only widens with the passage of time. Considering a 10% return the additional $35,000 would be worth almost $650,000 in a 10-year timeframe.
Let us try to understand why this seems to be the case:
There are many factors which are taken into account while assessing an applicant for any Business School. The weight-age each criterion is given can be neatly summed up by the graphic below:
As we can see, significant weight-age is given to an applicant’s GMAT Total and Quant Score – 22% in fact! Hence, top Business Schools consistently accept candidates with higher GMAT scores. To add to this, many studies have shown the GMAT score to be a reliable predictor of performance in an MBA program. Hence, it is not a stretch to say that a higher GMAT score is a key factor affecting your post-MBA salary.
To sum up, we can confidently say that a higher GMAT score allows you an opportunity to get into a top B-School and hence gives you a better chance of commanding a higher Post MBA Salary.
Average MBA Salary vs Job Industry and Work Profiles
MBA graduates are hired into diverse businesses owing to their vision, innovation, and the ability to help businesses grow. MBA aspirants should also consider Business Schools’ placement figures and statistics to understand which industries and profiles would give them the maximum return on investment post their MBA degree.
Looking at the data of a survey conducted by US News of the Class of 2017 graduates of full-time programs at the top 10 universities, we can see that MBA graduates that enter the consulting industry command the highest salaries.
|Post MBA Salary Breakdown by Industry|
|Class of 2017 MBA graduates of full-time programs|
|Industry||Average Post MBA Salary|
|Financial Services||$ 115,094|
|Real Estate||$ 103,744|
|Consumer Packaged Goods||$ 101,107|
|Transportation & Logistics||$ 71,202|
Furthermore, Consulting, Financial Services, and Technology are the top employers of MBA graduates with an average MBA Salary of over $100k. Also, it is noteworthy to observe that a graduate working in consulting can earn at an average, $60K more than a graduate in the transportation and logistics industry.
NOTE – The above figures are reported based on basic pay that the MBA graduates receive, and these figures do not include joining or performance-based year-end bonuses and other benefits such as tuition reimbursements or stock options, which can easily add another $10K-$30K to your first-year post MBA salary.
From the data mentioned above, we can conclusively say that graduating from a top Business School into a career in Consulting, Finance or Technology offers the best opportunities in terms of salaries and career advancement. This also has a lot to do with the perception that a graduate from a top Business School is a great investment for the recruiting organization.
Post MBA Salary according to the Prior Work Experience
Another important factor that determines what you can earn after your MBA is the number of years and quality of work experience a candidate has prior to his/her MBA. According to the QS TopMBA salary and trends report for 2018, employers overwhelmingly prefer candidates who have between 1-3 or 3-5 years of experience, with each accounting for a third of employer’s preferences. This may be because employers are seeking candidates who know what they are doing, but who are also not yet set in their ways and can grow with the company.
Post MBA Median Salary vs Prior Work Experience
|Industry||Entry Level||Mid Level||Senior Level||Executive Level||C-Suite|
|Consulting||$ 67,568||$ 108,000||$ 125,500||$ 175,000||$ 250,000|
|Energy/ Utilities||$ 70,000||$ 105,000||$ 128,000||$ 185,000||$ 212,500|
|Finance/Accounts||$ 55,000||$ 90,000||$ 124,000||$ 165,000||$ 250,000|
|Health Care||$ 55,500||$ 92,950||$ 125,000||$ 180,000||$ 255,000|
|Technology||$ 65,000||$ 100,500||$ 129,000||$ 162,500||$ 197,500|
|Manufacturing||$ 73,500||$ 95,000||$ 120,000||$ 155,500||$ 230,000|
|Government/ Non Profit||$ 51,500||$ 75,000||$ 100,000||$ 120,000||$ 135,000|
|Products/ Services||$ 60,000||$ 92,000||$ 119,500||$ 150,000||$ 236,000|
|OVERALL||$ 60,000||$ 95,000||$ 120,000||$ 155,000||$ 220,000|
The data in the table above clearly shows how your job level (post MBA) and prior work experience can affect your salary. Graduates that are hired into Senior and executive level positions mint $20,000 – $70,000 more on an average than graduates who join into mid-level positions. This data has been compiled by MBA.com based on an exhaustive survey of 6,616 alumni working in the United States.
The employers that were a part of this survey hire almost exclusively from the top B-Schools in the region. These employers consist of consulting giants such as EY, Deloitte, and PwC to financial services juggernauts such as Morgan Stanley and Barclays. *(Data Source – Poets & Quants)
Thus, to conclude, if you are looking to maximize your earnings post your MBA, your focus should be on acing the GMAT with a good score (740+) to get accepted into one of the top B-Schools. Careers in fields such as consulting, finance and technology pay handsomely and are more lucrative in terms of salary and bonuses compared to other industries that MBA graduates get hired into.
Does your Post MBA Salary depend on the country you work in?
Simple Answer – Yes it does.
The geographic location and the surrounding market for jobs also heavily influence the average MBA salary. The QS TopMBA report on jobs and salary trends for 2018 (refer table on the right), conclusively shows that an MBA graduate from a North American school (the US and Canada) or a European country such as France or the UK on an average earn $10K- $40K higher in terms of overall salaries post MBA. Graduates from schools in these regions also earn higher bonuses compared to their counterparts in other countries.
An important reason that many candidates consider while deciding on an MBA program is the opportunities available after completing the degree and international exposure in terms of class composition and teaching methodologies. While US universities have steadily maintained a 20%-40% ratio in terms or international vs national students, in European universities, such as INSEAD, this figure may go up to 80%-90%
Takeaways | Post MBA Salary
- A high GMAT score opens the door to better opportunities and hence the opportunity to earn a significantly higher post-MBA salary.
- Consulting, Financial Services, and Technology are the industries which offer the highest average salaries.
- Your work experience plays a big role in deciding the level at which you start your post-MBA job. This job level eventually defines your salary.
- Your post-MBA salary also depends on the country you decide to work in or do MBA from.
As an aspiring MBA graduate, many of the factors discussed above may or may not be in your control but what is in your control is your GMAT Score. A high GMAT score opens the door to top-ranked Business Schools, and hence the opportunity to earn a significantly higher salary after you graduate. With leading employers that hire candidates straight out of B-Schools demanding that candidates reveal their GMAT scores, a strong performance in your GMAT certainly smoothens out your path to a high paying and rewarding career regardless of geographical location and length of previous experience .
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