Is an MBA Worth it?

Is An MBA Worth It?

The Masters of Business Administration (MBA) is a one to two-year postgraduate degree that many obtain to develop their management and business skills to improve their professional careers.

It provides students with in-depth knowledge of business management, finance, accounting, economics, marketing, and more. Some common reasons for pursuing the degree are:

• Expanding one’s professional network
• Obtaining the degree if being subsidized (paid for) by your employer
• Climbing up the corporate ladder into management positions
• Reliving their college days

Other factors must be considered before deciding if a Masters in Business Administration is worth it. Things like return on investment, current circumstances, and scholarship greatly impact deciding to pursue this degree.

It would also be a good idea to compare a Masters in Business Administration with other certifications like the Chartered Financial Analyst (CFA) and Certified Public Accountant (CPA) designations, which you can read about in our CFA vs. MBA and CPA vs. CFA articles.

 Each certification has its benefits and focus area, which may be what you are looking for.

Expanding professional network using MBA degree

Having a large group of like-minded individuals is one of the major benefits of a Masters in Business Administration. This is because, to be accepted into the program, especially at the top schools, one has to be well-versed in various aspects, like communications, mental and emotional aptitude, leadership, and much more.

As a result, students can empower and motivate each other through their passion for progressing their careers. Students can also be inspired by others in a more advanced career stage, using this to help plan their path. 

Ultimately, people who participate in this program tend to be successful, and as the saying goes, you are the average of the five people you spend the most time with.

There are many benefits of meeting new people with similar goals, and connecting with them and sharing ideas will most certainly provide you with the opportunity to improve in many areas of your life.

Therefore, an MBA is worth it if you want to expand your professional network with people who are passionate about their careers and be motivated by them. 

You may need more convincing to apply to the program if you already have a strong network with many individuals from various industries.

Your employer is paying for your MBA

If your employer covers the tuition, this opportunity might be too good to pass up. The degree will help you get ahead and make more money. But, of course, the ideal situation would be for your employer to offer a position in the company that pays more after you complete the program.

This would allow you to take your time to complete the program while enjoying the holidays between semesters (a luxury that you can’t have once you work) and coming back to a job with a better salary.

On the other hand, if your employer wants to avoid paying, this might not be worth it. You might end up with extra debt that would take years to repay. So if your employer isn't willing to cover the full cost of the program, this might not be worth it for you.

Another slim possibility is that your employer pays for an MBA but decides not to give you a position in the company upon completion. 

Now you have a Masters's in Business Administration and the freedom to join any company you like, making this possible another reason to get an MBA that your employer pays.

Therefore, in most cases, it is a good idea to pursue a Masters in Business Administration if your employer pays for it since there is very little downside to it.

the Value of an MBA for Job Opportunities 

If you are a recent graduate or entry-level professional who feels stuck at your current job, then yes, an MBA is worth it. 

But if you are not feeling stuck, it's likely not a good idea because the average graduate from the top 100 business schools makes $11,000 more than the average graduate of a public college and just shy of $24,000 more than the average graduate of a private college.

Apart from feeling stuck, you may also attempt to break into a managerial or executive role. Here, an MBA would also be beneficial as it gives students the skills and knowledge to manage a business effectively. 

These points can be brought up in your application for the new role and increase your chances of success since it demonstrates your dedication, making you stand out from other applicants.

Pursuing a Masters in Business Administration if you are already progressing or enjoying your job could be more problematic than the benefits it is meant to provide. This is because a full-time program would require you to leave your current position to commit time and effort. 

Of course, you could negotiate with your current employer to allow you to take the two years off, though this would not be necessary if you are already doing well in your role.

Even a part-time MBA is not beneficial for those who do not find themselves at a plateau regarding career progression because it carries less merit than the full-time counterpart. 

In addition, it would also require you to take time after work to complete the coursework, which could negatively impact your performance at your normal job.

Therefore, it would be in your best interest to apply for an MBA only if you feel stuck in your current job or believe it would improve your chances of progressing in your career. Otherwise, it is advised against applying for one.

Career Prospects with an MBA

For example, if you want a “college experience” but the added benefit of having a Masters in Business Administration.

It's a win-win. You can enjoy the freedom of not being tied down to your job (that is, if you apply for the full-time program) and still have the chance to advance in your career. 

It is often seen as a chance to have a vacation or a short break for those who have spent a few years working after graduating, as the breaks between semesters are much longer than the normal holidays at work.

If you are looking for anything other than that, then no. There are much more effective ways of experiencing college without going back to school yourself (for example, attending summer classes at your favorite college).

Additionally, the MBA is an expensive commitment, so if you don’t have a lot of cash, it would be best to save this money for other things, like more urgent matters or a holiday trip to another country.

Especially during these challenging times of the COVID-19 pandemic, the wisest choice is to save some safety funds or make smart investments instead of dropping a large amount of cash to relive an experience.

However, the college experience is hard to replicate; if you place a lot of value on it, then perhaps it is worth more than a Masters in Business Administration.

Why shouldn't you get an MBA?

After reading about all these justifications on why the MBA might be worth it, it’s time to dive into reasons against pursuing the degree. Some of these reasons will link to the incentives mentioned above, like feeling stuck and having the program subsidized by your employer.

The biggest piece of warning against getting an MBA is that it is not an all-in-one solution to your problems.

Some people assume that getting an MBA will instantly lead to more doors opening and an easy 20-30% increase in one’s salary, but this is just not the case, and even then, you have to complete the program first, which is a difficult task.

This is why the application process requires proof of competency in multiple areas, like academic and professional. But most students are already successful in their professional life and seek further development instead of a golden ticket to success. 

If you are stuck in your role without a clear path for your future, it is best to work on that first to see if an MBA fits into your plans and lets you achieve your goals.

Continuing from this, since most students of the MBA are successful professionals seeking further professional development, it may not be the best choice to apply for the program if your only justification is to relive your college days.

Furthermore, if someone other than your employer is offering to pay for the degree, such as your parents, it is best to evaluate your passion for the program and to see once again if it will help you get what you want. 

This is because a Masters in Business Administration has a high cost, which would only be worth it if your employer subsidizes it. This is because there will be expectations from your employer and a clear end goal after you have completed the MBA. 

On the other hand, if your parents were paying, it would be entirely up to you to make the most out of the degree, which can be difficult if you are not passionate about it.

The final consideration is how valuable this degree is in the current market, given the number of world-changing developments that have occurred in the past few years as of 2022.

Value of an MBA in today’s market

Getting a Masters's in Business Administration was a significant investment in the past. So, many people decided that it wasn't worth the money and dropped out of business school after a short time.

But things have changed since then. With the huge financial crisis in 2008, colleges saw that they needed to ensure their students had a long-term future in business school. This led to the "MBA for all" initiatives, which both college presidents and professors support. 

This means those who can't afford a Master's in Business Administration can still get some value from their education by taking classes at a community college or university while working on obtaining an MBA degree later.

However, more jobs are now open to those with an undergraduate degree rather than just a graduate one. 

In general, this has caused the value of an MBA to decrease significantly over the last decade as employers are becoming more flexible about degrees and looking for people with specific skills instead of specific degrees.

Indeed, this opinion has increased in popularity, with Elon Musk speaking, back in 2020, of the diminishing value of college degrees compared to skills and experience . 

In this Forbes article, the diminished value of a Master in Business Administration is explored as the after-effects of the COVID-19 pandemic take place, challenging the traditional business methods and strategies which would have been studied in MBA programs.

Is an MBA worth it to you?

When an employer is paying for your MBA, it's worth it. That said, be careful with how much they're paying you; employers often offer more money when the amount of time required to get the degree is longer.

If you're stuck in your current role or not ready enough for your next advancement opportunity, returning to business school may help your career and give you a new skill set.

When considering whether or not to take on the additional expense, remember that classes can be expensive, but it's also possible to get an online or part-time MBA program.

Part-time MBAs are more suited to individuals who would like to work while they take the program to have a source of income still or if they need to keep their job. Some pros and cons of a part-time MBA include:

• A subset of part-time MBAs is the Executive Master in Business Administration, which is tailored toward people interested in applying for management and executive positions in companies.
• The part-time MBA allows you to continue working while taking on the coursework at a reduced cost and in less time. 
• It sacrifices some of the experiences of a full-time MBA, such as the extra time you can spend taking a break from work and a reduced chance of meeting other professionals.

Lastly, if you want to relive your college days and have fun with friends and colleagues from your past, then an MBA can be a great way to do this!

Many factors go into whether or not an MBA is worth it for your business, not just those three reasons listed above, such as the ones outlined below.

What is the cost-to-benefit comparison?

The cost of an MBA can range from $50,000 to $150,000, depending on which business school you attend. 

As for the benefits, on top of the three mentioned above, people tend to pursue an MBA to get a promotion, salary raise, or even a new job or break into a different industry. But, of course, the most obvious benefit of getting an MBA is the salary increase you will earn. 

A recent study showed that MBAs could expect to make about 20-30% more than those without an MBA. So, if you want more money, then it's worth it.

In general, here are some other benefits of getting an MBA:

1. Increase in marketability and employability 
   As mentioned earlier, with an MBA, you have increased marketability and employability and a better chance at advancing within your current company.
2. More job opportunities 
   A Master's in Business Administration is a sign of success among employers and can lead to many job opportunities. Some examples include entrepreneurship and non-profit organizations.
3. More prestige 
   Getting an MBA makes your resume look more prestigious on paper because of the degree title on the resume.
4. A better understanding of business 
   If you want to work in business now or the future, then getting an MBA could help you understand what's going on in business better than someone without one would.
   If these benefits outweigh the cost, then the degree is worth it. However, there is also the factor of the MBA experience, which is hard to quantify and include in your calculation of cost-to-benefit.

What are your other options?

However, infinite options are available to you in today’s market through the internet. These mostly come from online courses and videos, both paid and free. The paid ones would still cost less than a Master in Business Administration.

Some of the most notable courses and certifications include:

• Udemy and courses offered by WSO on valuation modeling, excel modeling, and much more.
• Other degrees that can benefit you if you pursue a career in business, finance, or management, such as:
  • CFA
  • CPA, or
  • Master of Finance

The options available to you also depend on what your situation is. For example, if education is not as important as experience in your career, then online courses would provide you with some knowledge to apply to your job and increase your experience.

An MBA is typically acquired to develop your professional career further, so if you can see the degree helping you achieve your goals, it is worth it. But, of course, you must make sure to research all other possible options first. 

With the advancements in technology and the availability of free and easily accessible knowledge, the value of a Master in Business Administration is beginning to become restricted to a few specific cases as new options are providing more value.

Researched and Authored by Chris

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