Will any of last year’s top winners even be on the new list?
After The Economist‘s bizarre MBA ranking last week, the Financial Times Global MBA ranking is set to go public on Feb. 8. The new ranking will arrive a week later than typical for the FT, yet that is much quicker than The Economist‘s list which was published two and one-half months behind schedule.
The big question confronting the new list? Will the FT ranking face a similar boycott that led 15 of the top 25 business schools in the world to decline cooperation with The Economist. Given the FT‘s importance in business education, particularly in Europe and Asia, speculation is that the list won’t suffer the same fate as the revered Economist. But it’s likely that at least some schools will part ways at least temporarily with the FT, using the pandemic as justification.
Last year, Harvard Business School nudged aside Stanford Graduate School of Business for top honors on what was the 21st edition of the Financial Times ranking. Since 2000, when the Financial Times began its MBA ranking, Harvard has only captured the top spot six times out of 21 chances. The biggest winner? Wharton with ten overall wins. Wharton, in fact, topped the ranking for the first nine lists, though Wharton shared the limelight twice, once with Harvard in 2005 and twice with London Business School in 2009 and 2011. The dominance of the U.S. MBA programs is striking. European schools have claimed sole possession of the FT ranking in only three years, with INSEAD earning top honors in 2016 and 2017 and London Business School in 2010. None of these schools participated in The Economist‘s 2021 ranking.
LAST YEAR’S TOP TEN GLOBAL MBA PROGRAMS ON THE FINANCIAL TIMES RANKING
Following Harvard on the 2020 list were the University of Pennsylvania’s Wharton School, No. 3 Stanford Graduate School of Business, No. 4 INSEAD, and No. 5 CEIBs in Shanghai, China. These were the exact five MBA programs at the top of last year’s Financial Times’ ranking, only reshuffled. Stanford slipped two places, while Wharton improved two spots from fourth to it second-place finish. INSEAD inched lower by one spot, while CEIBs maintained its highest rank ever achieved last year in fifth.For the first time ever, HEC Paris cracked the top ten, soaring ten places to rank ninth from 19th a year earlier. That impressive jump put HEC Paris just below No. 8 Columbia Business School and one spot before the No. 10 MBA program at the University of Chicago’s Booth School of Business.
Any significant boycott obviously would scramble the list’s traditional winners, clearing the field for the schools that cooperated with the FT just as they did with The Economist’s 2021 ranking (see Ten Biggest Surprises In The Economist’s New 2021 MBA Ranking).
THE FT RANKING IS BASED ON 20 DIFFERENT METRICS
The Financial Times global ranking is the most closely followed in Europe and Asia, while U.S. News’ entirely U.S.-centric ranking has become the most influential in the U.S. The FT’s methodology is based on 20 different metrics, including several that tend to favor non-U.S. schools. Among other things, metrics that add score points to a school’s standing include the percentage of students, faculty, and trustees who carry passports from a country where the school is not located, whether students and alumni worked in foreign countries, whether students had an international course experience and whether the school requires students to learn extra languages prior to graduation.
What any of these criteria have to do with the quality of an MBA degree is a matter of opinion. This year will be the third with a relatively new metric: Corporate Social Responsibility. With a weight of just 3%, it is based on the proportion of teaching hours from core courses dedicated to CSR, ethics, social and environmental issues.
Often, an even greater impact on a school’s rank can be the result of the FT’s decision to use a purchasing power parity (PPP) formula to convert and count actual salary data — the most heavily weighted metric in the methodology. Such currency gymnastics favor schools that supply graduates to countries with high rates of poverty. With the PPP adjustment, for example, it’s probable that CEIBS would not have finished in the top five last year. The school’s latest employment report shows that the median base salary for MBAs in 2019 was $64,278. The FT’s adjusted salary today figure for CEIBS alumni three years out is $184,731, nearly three times larger. Or consider the starting median salary for graduates of IIM-Ahmedabad. They earned only $27,951 two years ago, but the FT’s adjusted salary today for alums is an extraordinary generous $186,866. This adjustment has an especially negative impact on U.S. schools because the vast majority of international students who get an MBA in America want to live and work in the U.S. where their compensation would not be inflated by the PPP filter.
THE RANKING DOES NOT MEASURE INCOMING STUDENT QUALITY
What’s more, even though the FT places a 40% weight on these pay numbers, they fail to account for total compensation — just salary. In the U.S., a good many MBAs from elite schools often get stock options (at Stanford, a record 41% of this past year’s graduating class got stock in their starting packages) and significant annual bonuses that would put their schools well ahead of many of the institutions that are routinely ranked higher by the Financial Times.
Unlike U.S. News, moreover, the FT pays no attention at all to incoming student quality in its ranking — another reason why U.S. schools do less well on this list. GMAT and GRE scores and undergraduate grade point averages, all key components of a business school admission decisions — are ignored. Another issue with the FT ranking is that the newspaper fails to reveal the underlying index scores that allow it to crank out the numerical rankings. Those scores show whether a school’s rank is statistically different among other schools ranked nearby. In most rankings, these index scores tend to cluster in close bands and often show that there is no meaningful statistical difference between a school ranked 45th and one ranked 50th. The FT concedes that clustering is a reality and that there are four different groups of schools on its list of the top 100.