Adcoms are destroying MBA value
It is not news to anyone that the value of the MBA degree is diminishing as more and more firms decide to promote talented employees in spite of a lack of a "rounded business education." Instead of admitting, polishing and placing highly qualified individuals who might be able to compete with/outperform those promoted employees, it is my opinion that M7 MBA Adcoms are excessively focusing on diversity to the detriment of the degree and the institutions that brand them. As these Adcoms notoriously keep their admission criteria/statistics in a black box (in a frenzied attempt to avoid lawsuits), it is difficult to comprehensively understand the scale of the problem...
Inspired by the work of these guys https://poetsandquants.com/2020/01/08/who-really-…. I decided to use LinkedIn to try and characterize the population of post 2010 admits to HSW from my undergrad (Top 75 state school in a Top 15 Best States Education). I've attached the results of my analysis. I've not included the names of the people in an attempt to respect their privacy. I chose only to include people from my undergrad because I am familiar with their awards/majors and can credibly assess the relative "impressiveness" of any particular plaudit or the level of difficulty of a particular major. I've assessed the "impressiveness" of career based on my perception of how competitive that position at that company is. Obviously, I do not have exact GPA figures, but if you're applying to these schools at all, you've probably got something close to the averages and GMAT/GPA are unlikely to be differentiators.
Disclaimer: I am very much aware of the shortcomings of this exercise and the potential criticisms of my method. I can only include the people whom I can find and confirm details for on LinkedIn (20 people in total). I can only make judgements on their accomplishments based on the information on their profiles. While the analysis may have its flaws, you can certainly glean directional insights.
Group 1 (i.e. Blue Chips): Persons 1,2,6 (this guy is crazy impressive),8 and 11(McKinsey from my undergrad is unheard of). In addition to an impressive job, these people were accomplished academically either by difficulty of major or coveted scholarships, sometimes both!
Group 2 (i.e. on the fence): Persons 4,7(Office Depot CEO needed a COS, really?),12,13, and 15. I can conceive that something in their profile might have really impressed Adcoms and made them think that the person could add something unique to the classroom.
Group 3 (i.e. wtf?): Persons 3, 5, 9, 10, 14, 16, 17, 18, 19, and 20. Anyone with only red or yellow, I just don't see how they got into these schools if not for their 1)Ethnicity or 2)Sex or both. These applicants appear overwhelmingly average. You might argue that all may have had something in their profile that I'm not capturing here but I'd counter that while that may be so, it is also a remarkable coincidence that all 10 of those URM people had some intangible that I've supposedly not captured.
My conclusion is that Adcoms are unabashadly applying a woefully lower standard to URM's and usually trying to hit multiple diversity birds (School, Sex, Ethnicity) with one admittance letter stone. Furthermore, if the sample only included Groups 1 and 2 you'd still have 3 females (1 LGBT female) and 1 Black. Good URM candidates do not need the help of Adcoms, they are perfectly capable of competing and being evaluated on merit. It seems to me that Adcoms are over-correcting for a problem that no one gave a fuck about 20-30 years ago.
Putting aside any argument for fairness in the admittance process, why does this matter? It matters because Elite MBA programs are spitting out grads who are not likely to be competitive with their driven, accomplished, professional counterparts whom decided not to get an MBA. These schools have a responsibility to the people who paid them 250K, to maintain the value of the degree and the brand that their institution confers on that degree. If they churn out grads who squander the opportunity to achieve something substantial that the degree confers, in 25 years whose going to hire an MBA grad when they can just promote the guy sitting outside their office?
Yep. And it’s not just the admission standards, it’s also the litany of part time degrees, online degrees, executive degrees, short form courses, certifications etc. Some of these schools are just stamping the name onto any product they can.
Some of the biggest buffoons I know have graduated from a “leadership program” at Wharton where they hang out in Philly for a few weekends and, I don’t know, spank each other probably.
Our kids are going to laugh at our generation for the fortunes wasted on higher ed and personal branding exercises.
Scott Galloway of NYU often says that we're getting to a point where only the MBA business schools">M7 are worth going to, and even then, only for career changers. What I've always wondered is what will happen when even the full-time MBA degree becomes worthless. When the prestige factor no longer guarantees good outcomes, will all MBA and its auxiliary "degrees" basically become cash-grab tools for the uninitiated/clueless? What would happen to HBS when not just the top, but even the mid-level, candidates, no longer opt to go to bschool. What's HBS's "long-term strategy" here, or has it always only been about money?
It’s a great question. As Charlie Munger says, consider the incentives of the people in charge. The deans and administrators have their careers and paychecks to think about. Those are short term focus areas. Who thinks beyond 5 years when it comes to their own career? All they want to do is grow the program and revenue and get paid.
The only people with long term horizons are alums. So I think the only schools that will keep a long term view are ones where alumni money matters more than tuition money. And even then, some of the alums just want more growth.
So it’s really a battle between conservative, brand-focus alumni money on one hand, and all other money on the other hand (tuition plus alums funding new programs). It’s a tough battle because an alum donates a building thinking it helps, but the administration is free to use that building for things that hurt the brand.
My guess is HBS and Stanford will hold up because they have enough rich donors who may care more about the lasting image than the next new growth initiative. They also have the broader university pressuring brand management too.
Outside of those two it doesn’t look good. I’m an alum of one of those other M7’s and know several of the bigger donors because I worked for one. Nobody is raising the questions that you and I are.
I actually think in some ways it also has the opposite effect. "Over" represented folks (example: white male with finance background) are pushed further down the line to schools beyond the MBA business schools">M7. IB and MBB know this and have expanded recruiting accordingly.
I hold no bitterness and loved my MBA experience, but my stats, GPA, etc. fell strongly in line with MBA business schools">M7 (and a above at some). However, I fell to a top 10ish school where I did well, had multiple offers, and excelled academically (hard to make that sound not arrogant, sorry).
There were many like me, who if not for the diversity/non-traditional admissions slots alluded to in this post, would have likely been at an MBA business schools">M7 instead. I would argue that the "right" employers know this, and probably view somebody with a 730+ GMAT, top undergrad GPA with good job experience at Tuck/Duke/Yale/Haas as roughly the same caliber as a regular MBA business schools">M7 candidate.
Maybe that's wishful thinking?
I know some of these leadership programs can be fun/party/break type, but having not gone to business school myself and coming from a technical background, I splurged big bucks last year to attend general management program at Booth and I thought it was super amazing.
Between the quality of attendees, professors, and content, I came out a different person out of the program. I guess these things are what you make out of them.
Glad you found it helpful and I should have clarified . . it’s the degree/certification chasing that I think has a poor future. Actual education will be valuable and may even be increasing in value.
Curious what was the Booth program? I k ow their management conference is pretty highly regarded.
It's lowkey ridiculous when comparing the CV/Resume/Grades of an asian kid who got into H/W and a URM/female candidate.
Still don't understand how this isn't considered discrimination.
It isn't reverse discrimination, its just discrimination.
You're right, edited.
Absolutely - just look at person 6 (Vs ALL Asians) in the sample.
Don't get me wrong I don't mind if URMs/females get a slight leg up/there are programs in place that help them. Just that there's such a vast difference now in the caliber of regular admits vs diversity admits - it doesn't make sense anymore.
This is definitely not equal opportunity. It's sad because now my mind automatically filters based on which race/gender got the admit/offers, and I automatically assume that diversity kids are less capable whether in the workplace/MBA school (which is definitely not true, but different standards like this make it hard not to).
The companies that hire MBAs are also huge on "diversity" things nowadays. Think about it, if a business school is a "supplier" of MBA graduates, then shouldn't they conform to where the "demand" is? Don't blame this on business schools, it's the problem of the society as a whole.
I really wonder about this....I would think the only companies that are under real "pressure" in this regards are public companies. Public companies have stakeholders who can push for this kind of thing i.e. Blackrock climate change. I just don't see why private companies would really give a fuck about diversity other than maybe to pander to their existing employee base. The three industries that hire the most from top MBA programs are Consulting, Financial Services (mostly PE/HF/VC as opposed to Banking) and Tech.
MBB and most other consulting are all private so I don't really see why they'd be under pressure to ramp up diversity. However, they are fairly large organizations so maybe the diversity push is coming from the employees but idk why management would prioritize diversity over getting top notch talent when they are literally selling business "intelligence" to clients.
Aside from KKR, Carlyle, Apollo and Blackstone, most PE firms are relatively small private partnerships so very doubtful that they're asking for more minorities/women.
My understanding is that IB has grown increasingly unattractive as a post-MBA career choice for attendees of top programs so most banks have already started recruiting outside of the MBA business schools">M7 in order to fill up their Associate classes. So even if they are calling for more diversity, i don't see why the schools would pander to them as popularity is waning.
Tech firms are public and generally have a liberal/vocal employee base. Are they the ones pressuring top programs for more diverse MBA candidates in their applicant pool?
Clients apply a lot of pressure on diversity. That's the main reason the IBs are pushing it, and I can't speak for MC directly but I think the same thing is happening there.
PE/VC/HF have less pressure because small headcount means less room for an LP to tell them to hire more minorities and women. But I'm sure institutional LPs apply pressure where they can. For example if a big pension increases its PE allocation and wants to interview emerging managers, 99% chance diversity is part of the evaluation.
Not saying you're wrong, but I went through recruitment with a MBB company for a BA role. I asked an Associate, how come 80% of candidates are males? He jockingly said, "last year we hired all female analysts, so this year, to balance things out, we're looking for more male candidates". I also received 2 emails about joining the company's LGBTQ+ society while going through the final rounds of case interviews. And lastly, in my region, we even have separate BA programs for local students. A regional partner even said that he's tired of seeing all the Harvard and Stanford graduates filling up the ranks...
Don't want to get into a huge diversity debate but I think in the end merit will win out once these candidates enter the workplace.
For example the white/Indain/Chinese males that might be pushed out for a URM candidate and have to go down a tier:
Wanted HSW -> takes Columbia Wanted Tuck -> takes Stern Wanted Duke -> takes UNC Wanted UT -> takes Rice Wanted Darden -> takes Emory
I wonder if one compares the careers of the URM and the pushed down candidate in 5-10+ years out, if the pushed out candidate has accomplished more, however that is measured. I would hope that if that pushed out candidate really was more qualified, that they would, on average, achieve more. This is likely impossible to measure but I agree that the brand values of most programs will be diluted. Also I would imagine that the gap between programs would grow smaller if the gap in talent within a given program is growing. For example top T15 talent vs. Lower end MBA business schools">M7 talent.
Like you said, basically impossible to quantify on the basis of subjectivity, but my guess is that you're correct.
I am confident measurements will emerge over time that shine a spotlight on the stupidity of using race and gender based preferences. Its already been shown that diverse boards have lower shareholder returns. Which I assume is because when you use race and gender to choose people, you by definition get a weaker group than if you did pure meritocracy.
I think that this is spot on. Employers aren't stupid and know that this is the reality too so they are a second screen when it comes to hiring (although many still have the same pushes for diversity that the schools do though so you could almost argue the schools are doing what the employers want). 5-10 years down the road, the logic is that if more URM get these looks, they'll be just as prepared to move up just like the overrepresented groups but you hope that the reality is, after a certain threshold of power/seniority, no one is going to get promoted to very senior positions without some semblance of competency.
Graduated from a MBA business schools">m7 undergrad last year. There's less of a problem at the undergrad level, but the difference between the candidates is still considerable. I swear, some of the URM candidates were medically classified retards
Not even worth the argument
LOL you must be one of the "medically classified retards" I was talking about if that statement hurt you enough to comment back a month later. Thanks for the MS
I don’t think you can draw any definitive conclusions from this analysis without also adding in GMAT, GPA, and extracurriculars to the mix.
I would also question your ranking of some of the WE, seems like preference is given to people with engineering/tech backgrounds but consultants are bucketed under average/unimpressive unless MBB. From the bit of contact I’ve had with people who have gone through the process, the technical rigor of your pre MBA job is not the most important thing adcoms look for (hence the success rates of people with TFA backgrounds).
Anecdotally I think there is a trend away from credentialism in general, as I see a lot of the sharpest kids from my analyst class choosing to go into startups or otherwise skip the MBA altogether. So you probably get some degradation of the applicant pool from that alone before you get into diversity impact.
OP here - thanks for the challenging feedback. I'm happy to discuss the details further. I am by no means suggesting that you can draw definitive conclusions from this. As per the disclaimer, you can really only glean directional insights. However, I do not think its possible to do the kind of thorough analysis you are suggesting since Adcoms guard the data closely for fear of litigiousness. I think the recent Supreme Court Case "Students for Fair Admissions vs Harvard Corporation (https://www.nytimes.com/2019/10/01/us/harvard-admissions-lawsuit.html) is an example of the only way that data would ever really see the light of day.
"The trial was steeped in statistical evidence and terminology that spectators often struggled to understand. In the end, the judge’s 130-page decision was not overly seduced by statistics."
As for my preference for engineering/tech backgrounds over non-MBB consulting. This is 100% true as Consulting jobs at Deloitte (and other places lik IBM/Baker Tilly etc.) from my undergrad are fairly common as they recruit on campus. There are 9 people with only non-MBB consulting backgrounds 6 F and 3 M. 1 of the 3 M is a URM. The remaining 2 were a D1 Athlete and a Full Scholarship recipient. None of the 6 women (at least according to LinkedIn) demonstrated similar levels of achievement. So for otherwise professionally equal candidates, the W & I M had to achieve more to gain admittance.
I agree that technical rigor of pre-MBA job is not the most important thing Adcoms look for because they are too busy trying to hit a 40% F population target and getting in healthy populations of URMs. So I ask you, is it any wonder that there is a trend away from credentialism when the credential is losing value for these reasons?
http://samv91khoyt2i553a2t1s05i-wpengine.netdna-ssl.com/wp-content/uplo…
Most people predict the process to get more competitive once the recession hits. The value of the MBA was steadily going down until it jumped up heavily in 2008 with record applications.
How much jump in 2008 and did it decrease in 2009? I found mediocre increases in both years in my search.
Not sure. I just know the degree is not going to be worthless for the Top 7 schools. I am looking at ~130% increase in salary almost FWIW if I get into an associate gig in IB
Bookmarking this.
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