Applicants Motivated by More than MBA Salary

One of the most eye-catching findings in this year’s QS TopMBA.com Applicant Survey is a nearly across the board drop in the salary expectations of MBA applicants. The global average in 2013 stands at US$113,000 – down significantly on last year’s record figure of US$126,500.

This drop in targeted post-MBA salary occurred in every region, with the exception of Western Europe, in which a US$3,000 increase (from US$125,000 to US$128,000) could do little to counteract the global shift.

But while this indicates a shift towards more realistic expectations, two key qualifications must be made. The first is a drop in the average current salaries of applicants, with the global average falling from US$44,333 to US$40,000. Again, this is the case in nearly every region, with the exception in this instance being the US & Canada, where salaries have gone up from US$61,000 to US$63,000.

We might ascribe this to a slight drop in the average age of applicants as compared to 2012 (notably, the average age went up in the US & Canada), with a younger cohort of applicants commanding lower salaries in line with lower levels of seniority. With current salaries inevitably playing a part in determining target salaries, this is undoubtedly a factor.

The second is that, quite simply, targeted salaries still err towards the unrealistic. The 2012/13 QS TopMBA.com Jobs and Salary Trends Report, based on a global survey of over 3,300 MBA employers, shows that even where remuneration levels are on the up, applicants are still targeting a post-MBA salary higher than that which they can expect to earn in their home region (again, there is one exception, this time in Latin America).

Of course, many will choose to work elsewhere, but even then, meeting these expectations may prove a struggle.

Average salary and bonus offered by international employers (2012/13 QS TopMBA.com Jobs & Salary Trends Report)

Average target salary (2013 QS TopMBA.com Applicant Survey)

Africa/Middle East

$65,396

$94,000

Asia Pacific

$78,969

$104,000

Eastern Europe

$84,344

$128,000

Western Europe

$103,806

$128,000

Latin America

$75,156

$70,000

US & Canada

$108,421

$145,000

Maryke Luijendijk-Steenkamp, director of MBA marketing and admissions at the Rotterdam School of Management, believes that some applicants perhaps need to consider more carefully how publically available salary figures relate to them.

“Candidates often base their expectations on statistical information alone without taking consideration of the context. There are many factors influencing the next career step post-MBA that can have an influence on post-MBA salary – candidates entering an MBA are not always aware of these factors and are therefore basing their expectations only on statistics made available and not verifying whether it would be applicable to their personal profile and situation.” 

Arkadiusz Mironko, executive director of graduate programs at the University of California, Riverside A. Gary Anderson Graduate School of Management, concurs with this analysis: “Salary expectations are generally directed by the market and they may seem high if people are going for jobs that are not traditional high-level corporate jobs, i.e. government, non-profit. This,” he surmises, “may be more a misalignment of expectations rather than high expectations.”

Career change a major motivator

There is no getting away from the fact that expectations are slightly higher than is realistic. However, there is more to an MBA than an improved salary, and indeed, the QS TopMBA.com Applicant Survey shows that while the MBA certainly does attract applicants who aim to improve their salaries, this is not most respondents’ central aim. In fact, only around a third of applicants cite improving their salary as a one of their key motivations.

Isabella Pinucci, career service coordinator at SDA Bocconi School of Management, speculates that today’s MBA candidate is increasingly motivated by effecting a change in their career – cited by just under 45% of respondents as one of their primary motivators.“Whether it’s sector, industry or function or country or region, this seems to be driving a greater proportion of candidates.”

This is not necessarily tied in to money – she cites the luxury sector as example of a field into which many candidates want to move, but which they accept will not offer the most lucrative salaries. “Salary is still a driver, because candidates want a return on investment, but personal values come into play a great deal. People want to work for companies they admire and with which they share values.”

Gretchen Shinoda, director of career counseling at the International University of Japan, agrees that this seems to be the case – particularly with candidates who want to do their part in reestablishing Japan as a global business powerhouse: “For IUJ, thankfully, our students seem to be more and more motivated by contributions they can make to companies, especially small and medium-sized companies as Japan struggles to expand overseas.  There definitely seems to be a shift in attitude as compared to 10 years ago when the focus was so much on investment banking salaries, to serving specific needs of companies especially related to Japan-overseas business activities.  They are choosing places that need their skills, and want their talents.”

She also observes that candidates seem to be choosing companies with strong growth potential rather than those which can offer the highest immediate salaries – perhaps something we can attribute to a more acute awareness of sustainable business practice in the post-2008 world.

MBA skills - more than just money

Notably, after improving their career prospects, which we can interpret in many ways, learning new skills is the most commonly cited motivating factor in this year’s survey. “Salaries in many cases are not [candidates’ main] motivation for getting an MBA. Some studies show that for nearly half of all candidates, self-development is a prime motivator, followed by career progress, with financial reward playing a very small part,” observes Mironko.

Indeed, the MBA is indeed a qualification which can deliver more than just higher salaries. Shinoda lists some of these deliverable skills: “I believe the IUJ MBA graduate leaves campus with an amazing international and professional-level network, strong cross-border communication and leadership skills, and sensitivity to various business and management issues that are very valuable and sorely needed in the globalized business world in which we are struggling to function smoothly.”

She believes that it is exactly these elements of the MBA which should be celebrated – and that perhaps our fixation with salary figures can be counterproductive. “If we could put more emphasis on this over how much an MBA should be making, those obtaining and MBA may end up more satisfied in their career choices.”

Of course, as well as more abstract skills, there are the more concrete entrepreneurial skills which are engendered in MBA candidates. Though this year there has been a slight drop in the proportion of MBA applicants who envisage themselves running their own business (from 28.3% to 26.8%), this is still the most common response to the question of where respondents see themselves in a decade’s time.

Candidates who are this way inclined, thinks Shadi Kelly, director of student services at Ashridge Business School, are also inclined to accept a lower salary – at least to begin with: “If [candidates] are looking to set up their own business, then in most cases, they realize that an MBA will significantly develop their skills and equip them to make more informed strategic business decisions but that they may not enjoy a high salary when starting up in the first few months.”

So, to conclude, it seems that, yes, MBA candidates do have slightly unrealistic salary expectations – though perhaps we are seeing a step back in a more plausible direction after 2012’s record high figure. But there is a lot more to the degree than just this, and this is something of which applicants are not only aware, but by which they are motivated.

And as a final note on the subject of motivation, Pinucci reminds us of one final motivation: doing an MBA can be fun. “Before applying to a course, many students talk to alumni, who to speak very highly of the experience. Not just job opportunities and outcomes, but the whole experience. All in all, they have a blast. Our program is only one year, so it’s very intense, but for many, it’s one of the best years of their life!”