How Much Will You Make with a European MBA?

The full-time MBA in Europe is delivering ‘remarkably strong’ returns for MBA graduates, with 20 business schools enjoying a 20-year return on investment of USD $3 million or more, according to new QS research.

The QS Return on Investment Report European Full-Time MBA 2015, out now, is the first in what is expected to be a series of QS reports on the return on investment (ROI) for MBA programs in all world regions. The first report covers 46 schools in Europe and is based on the cost of each program (including forgone salary), post-MBA salary uplift, and other factors, including the percentage of graduates who go on to start their own businesses.

One of the key findings of the report is that the full-time MBA in Europe is a far better deal than many of the more popular alternatives for graduate business education. In Europe, the average starting salary for an MBA graduate is US$91,586, more than twice that of a master’s graduate.

“The value of the traditional full-time MBA, even in a slow-growth economy like Europe, is holding its own amid intense competition from specialized master’s programs and a splintering of the MBA market into multiple formats including online, part-time, executive, and accelerated programs,” writes Nunzio Quacquarelli, founder and managing director of QS Quacquarelli Symonds Ltd., publishers of TopMBA.com and organizers of QS World MBA Tour. “In fact, employment rates and salaries for MBA graduates are much higher than those for graduates of other master’s programs, reflecting the value employers place on both the degree and the work experience MBA graduates bring.”

The report looks at the ROI from a number of perspectives, including 10 and 20-year ROI and the ‘payback’ period, or time required to recoup the business school investment. Europe fares well on all three measures due to low program costs—owing to a preponderance of one-year MBA programs – and high post-MBA salaries.

European MBA ROI – key findings

• Europe boasts the world’s highest average 10 year MBA ROI, USD $0.67 million over 10 years and USD $2.9 million at the 20-year mark.
• In all, 20 business schools in Europe enjoyed 20-year ROIs of $3 million or more: IE, IESE, ESADE and ESIC in Spain; INSEAD, HEC Paris and EDHEC in France; IMD and St. Gallen in Switzerland; Cambridge, Cranfield, Imperial, London Business School, Oxford and Warwick in the UK; Copenhagen Business School in Denmark; Mannheim and WHU in Germany; SDA Bocconi in Italy, and RSM in the Netherlands.
• MBA graduates in Europe, on average, can recoup their business school investment in just 30 months. At some European schools, graduates start earning a return on their investment in 20 months or less: ESIC (15), Bath (16), Edinburgh (17) Strathclyde (17), Mannheim (19), Durham (20 months).
• The salary uplift in Europe averaged 85% from a pre-MBA average salary of USD $50,226, increasing to USD $91,586. Among MBA graduates in Europe, 12 business schools reported post-MBA salary uplift in excess of 90%. The highest salary uplift was reported by Vlerick (155%), followed by St. Gallen (150%), the University of Edinburgh (146%), ESMT (145%), European University (138%), HHL Leipzig (127%), MIB (114%), HEC Paris (112%), Durham (111%), Bath (110%), EMLYON (110%), London Business School (107%).

MBA or specialized master’s?

The report also found that the value proposition for the MBA far exceeds that of specialized master’s degrees in a number of ways. While interest in specialized degrees is growing, job opportunities for MBAs are better worldwide – a 2014 survey by the Graduate Management Admission Council found that 80% of employers planned to hire MBAs, while only 44% to 50% planned to hire finance specialized master’s graduates in finance, accounting, and management.

Salaries for MBA graduates in Europe and North America, the report found, are at nearly twice as high as those for specialized master’s graduates taking jobs in many industries including consulting, pharmaceuticals, energy, and telecommunications. In part this is because of the work experience MBAs bring to the table – unlike specialized master’s programs, which are designed for recent college graduates, students typically enroll in MBA programs after 3 to 5 years in the workforce. While specialized degrees prepare graduates for technical roles, an MBA prepares them for higher-paying senior roles in general management and gives them the kind of alumni network they need to advance in their careers.