How Are Business Schools Closing the Gender Gap in MBAs?

Business school remains a man’s world. In 2005, the average intake of schools in The Economist’s ranking of MBA programs was 30% women for example. By 2017, the figure had only crept up to 36%.

There are several reasons for the stubborn divide. The main one is financial. In the US, paying for an MBA is the biggest challenge for 30% of female prospective students, compared with 9% of males, according to a study by the Graduate Management Admission Council (GMAC). Women are not more risk-averse than men — but they consider their return on investment more carefully, says Andrew Crisp, director of Carrington Crisp, a consultancy.

Another reason is the pay gap. The cost of an MBA education can be astronomical. Women tend to be paid less before starting an MBA, according to GMAC. After graduation, women earn 18% less than men, and the research suggests that the gulf grows wider as they progress, although the gap may differ in different job functions and industries.

Schools have recognized the importance of enrolling more women in their MBAs. A more diverse classroom enriches the learning experience of all the participants, and may contribute to closing the gender gap in the higher ranks of business.

The very best schools are trying to recruit more women in different ways. One is to offer more financial help. The number of scholarships awarded by schools to women through a program run by Forté Foundation, a non-profit, was just 33 in 2003. In 2017, the figure had risen to more than 2,400.

Take China Europe International Business School (CEIBS) in Shanghai. Itintroduced a scholarship in 2012 for women who may otherwise feel a business education is unaffordable, alongside funding which does not discriminate between the sexes. It covers 50% of the school’s US$60,000 MBA tuition fees.In the five years since, the proportion of women on the program has increased from 32% to 40%.

Other schools are aiming at sectors that are not the traditional preserve of the MBA student. University of Edinburgh Business School has spent more time recruiting MBAs from industries with high proportions of women, such as the public sector. Its dean, Wendy Loretto, says too often, recruitment campaigns focus on traditionally male-dominated sectors like finance, exacerbating the gender gap in MBAs.

Targeting more female teachers is another approach. Edinburgh worked with recruitment agencies to do that, which has helped increase the proportion of female faculty from 35% in 2014to 41% in 2017. Having more role models on campus can encourage women to take an MBA, says Loretto. There is evidence that this approach is working: the share of women in the MBA has risen from 35% in 2014 to 55% in 2017.

All this matters because women remain a minority in management. They hold fewer than one-quarter of global senior roles, even though it has been argued that a company with women holding 30% of leadership jobs can add up to six percentage points to its net profit margin.

More women are going into well-paid careers as a result of schools’ efforts to diversify their ranks. The percentage of women MBAs employed within three months of graduating from Edinburgh has increased from 59% in 2013 to 73% in 2016. Research from Forté Foundation found that women see salary gains of up to 65% of their pre-MBA pay within five years of graduation, though the gender pay gap seems unlikely to close anytime soon.  

Women are opting more for specialist masters degrees, which require little or no work experience, and usually less time out of the workforce, than MBAs, according to GMAC. For example, nearly half of those taking a Master’s in Management course ranked by The Economist in 2017 are women.

In part, this reflects the high opportunity cost of taking two years out of the workforce to study for a traditional, campus MBA — and foregoing a salary. More flexible options, such as part-time and online tuition, are needed if business schools and businesses are to break the glass ceiling which women face, and reap the benefits of doing so.