‘Why MBA’ & Factors That Matter To MBA Aspirants While Selecting A Business School | InsideIIM Recruitment Survey 2018
One of the most expected and common questions in an MBA interview is – Why MBA? While an MBA interview demands a cliched ‘managerial’ answer, the ulterior motives for pursuing an MBA are usually hidden. So why is it that a graduate or a working professional picks up her/his books and appears for exams like CAT?
As a first in the InsideIIM Recruitment Survey series, MBA aspirants were asked what their real reasons were to pursue an MBA. Apart from ‘Why MBA‘, the survey also covered an equally important question – What is it that you look for in your ideal business school?
1. The Usual Suspect
The survey found that 66% of the aspirant respondents decided to at least consider pursuing an MBA for its monetary returns. Shocking.
It is no secret that pursuing an MBA from a top management institute is considered to be (somewhat) a guarantee of a handsome paycheck at the end of every month. Recently, IIFT Delhi announced that one of its students had received a cool Rs. 1 crore+ package (converted from $US), while 4 students had received a CTC of INR 75 Lac p.a. At MDI Gurgaon, IIM Kozhikode and TISS Mumbai, the Class of 2019 on average received a CTC of over Rs. 20 Lac per annum. Even for relatively new management institutes such as IIM Trichy, the average CTC for the Top-25% of the Class of 2018 stood at INR 22.7 Lac.
Apart from the factors such as wanting to improve standards of living, a hefty paycheck is essential for an even more important reason – the colossal MBA fees. As per our report on ‘The Overall Cost of Doing An MBA In 2018″, it is clear that an MBA can be a huge drain on your bank account even after you’ve completed the programme and have a degree in your hand.
An interesting point to note is that according to the InsideIIM Recruitment Survey report on How Campus Recruiters Can Make The Hiring Process Better, MBA students actually rank compensation lower than other factors while choosing a job. Why does money become less significant after joining a B-school? Does an MBA enable you to think beyond the expected monetary returns? What changes in those two years between appearing for CAT and passing out of a B-school?
For aspirants, it is worth noting that while the (MBA=$$ x 10) equation may seem lucrative at first, not everyone receives a dream package. Even if one manages to receive a higher-than-expected package, the reality of the words ‘Fixed’ and ‘Variable’ is likely to strike them at the end of their two-year MBA programme.
Peer learning and networking is almost as important as money for MBA aspirants. 63% of the respondents believe that an MBA is a gateway to a strong network of intelligent peers. This assumption is most likely explained by the rigorous selection process of IIMs and other Tier-1 and Tier-2 management institutes, and the significant percentage of MBA students that belong to elite undergraduate institutes (IITs, BITS, NIT, SRCC, LSR etc.) and have previously worked with top organisations.
3. To Become More Qualified To Lead & Manage Teams
50% of the aspirant respondents are interested in getting promoted and qualified enough to take up bigger responsibilities beyond the scope of their current job description. While rising in the ranks organically is also a possible career trajectory that can be (and is) followed, an MBA allows you to expedite this process. A lot of companies even sponsor an MBA for its employees (based on certain criteria) so that they can grow within the organisation and take up leadership roles.
In fact, on-campus recruiters such as conglomerates Aditya Birla Group, Unilever, Mahindra etc. induct their new hires into their leadership programmes to specifically groom them further as future managers and leaders.
It is interesting to note that half of the respondents hold this reason for an MBA in high-regard, and are driven by the opportunities for growth and career progression that an MBA offers and not just the monetary returns.
4. To Switch Domains
An MBA is a generalist course that allows a candidate to not dwell on erroneous career decisions and move on to other opportunities and domains. Engineers switching to Finance roles after completing multiple levels of CFA/FRM, CAs and B.Com students switching to Sales roles, etc. is not unheard of and is possible through an MBA.
However, only 35% of the respondents are driven to pursue an MBA for this reason and are in the minority. This could be due to three possibilities:
A) 65% of the respondents are happy in their current roles and wish to remain in and progress in their current domain.
B) 65% of the respondents are freshers without any work experience and have not encountered the need to switch domains. They directly want to get into management.
C) 65% of the respondents don’t actually know if an MBA can help them switch domains.
Since the survey did not capture the work experience or age of the respondents, it is not possible to determine if they are freshers or experienced professionals. However, it is clear that while not a major reason for pursuing an MBA, aspirants do look at an MBA as an aperture to pivot into other roles and industries.
5. To Become An Entrepreneur
Although not a common perception, 31% of MBA aspirants believe that an MBA can help them in their entrepreneurial ventures. Perhaps these specific respondents have already attempted to start their own company and have found gaps that they believe only an MBA can fill. Another possibility is that the respondents believe that attaining an MBA degree can be just the push that they need to have their own start-up. These are valid reasons for wanting to pursue an MBA, and it is quite interesting that MBA aspirants have this level of clarity and foresight to embark on the journey of an entrepreneur.
Something for aspirants to consider is that, according to this report, only 36% of the founders of top upcoming start-ups have actually pursued an MBA. In fact, founders of SMEs turned giants such as Zomato, Flipkart, Ola, and PayTM have not pursued an MBA after their engineering and approximately had 2 years of work experience on average before they began on their entrepreneurial journey.
An observation that can be made is that 1/4th of the respondents think that just a Bachelor’s degree will not let them reach their career goals, and a Post-graduation degree is essential to be taken seriously by employers. However, in reality, even that is not a guarantee, especially in the case of an MBA, as can be seen in this report. In fact, Engineering graduates are far more employable than MBAs in India, according to this report.
Another observation worth mentioning is that only a meagre 8% of the respondents have decided to pursue an MBA because they are unclear of what their career plans are, indicating once again that aspirants are very clear about their desired career trajectories, and an MBA was always on the cards for them.
|Why MBA – The Most Important Reasons To Pursue An MBA For MBA Aspirants||Percentage of respondents|
|To earn a higher salary||66%|
|To network with smart peers||63%|
|To get promoted/qualified to lead and manage teams||50%|
|To change domains – E.g., shift from IT or Chartered Accountancy||35%|
|To become an entrepreneur||31%|
|To get at least one Post-graduation degree – Undergraduate degree is not enough||25%|
|I am/was confused and don’t/didn’t know anything else||8%|
|To please my parents||8%|
|To delay marriage||4%|
|To take a break from work||3%|
Important Factors Considered By Aspirants While Selecting A Business School
Joining a business school is a huge financial gamble – you take huge loans and pay exorbitant fees without any guarantee of breaking even for 2-3 years post-MBA. It is also a huge time investment, i.e., 2 years of incurring opportunity costs, when you could have been investing money in your own start-up or upskilling by investing in skills of the future.
To find out what factors influence aspirants during B-school selection, MBA aspirants were asked to rate on a scale of 1-5 factors listed out such as Placement Opportunities, Campus Infrastructure, Availability of Scholarships, etc.
Here are the findings of the survey.
1. Placements Come First
Considering the amount of money and time invested in an MBA, an aspirant wants the returns to be on a commensurate level. For instance, a B-school asking for a fee of INR 20 Lac and providing an average CTC of INR 10 Lac p.a. in return is less than desirable for any aspirant (although some still go ahead and join these institutes).
Additionally, apart from RoI, career opportunities are of utmost importance. For instance, if your ambition is to ultimately work with Goldman Sachs as an investment banker, it is important to know if GS even hires from the business school you are looking to join. Additionally, career opportunities can mean the type of roles offered on campus. In another instance, expecting top notch finance roles at MICA or ISB is not pragmatic, even though these are two of India’s top management institutes.
An average score of 4.8/5 explains exactly how much placements and career opportunities matter to MBA aspirants, corroborated by the survey’s aforementioned results for the question ‘Why MBA’.
2. Ultimately, The Brand Matters
Apart from placements, one of the reasons why lakhs of people want to get into a first generation IIM is the IIM tag that comes with it. It instantly lifts up the appeal of one’s CV manifold. An average score of 4.6/5 confirms that aspirants want to be associated with an institute that has good standing in not just rankings on MBA portals, but also in society as a whole.
This line of thinking is further confirmed by the profiles of current MBA student and alumni on LinkedIn, wherein a student or alumnus from IIMs ABCLIKS is likely to mention the name of his/her alma mater, while for those from second and third generation IIMs, just the term ‘IIM’ suffices because of the perceived gap in the brand value of the two categories of IIMs. Another factor that further confirms this is the lengths to which professionals, even those who have not pursued an MBA, will go to associate themselves with an elite B-school, even if they have pursued just a 1-month programme from the said B-school.
Ultimately, the brand value of a management institute is of paramount importance to an MBA aspirant.
3. How Good Are The Professors?
With an average score of 4.5/5, MBA aspirants believe that one of the most important factors for choosing a business school is the kind of learning that takes place, and the individuals who facilitate that learning. This is an interesting observation since MBA aspirants give more value to the quality of professors at a business school than even the overall fees of the programme!
B-school faculty do not receive as much recognition as they deserve, which is why InsideIIM has recently launched the ‘Professor of The Year’ competition, wherein B-school students vote for their favourite professors on campus! The results of that will also be interesting for aspirants to see.
4. Campus Infrastructure
Campus infrastructure is very important to aspirants, and understandably so since they will be spending 2 whole years of their lives at the B-school. Based on the findings of the survey, it can be inferred that your average MBA aspirant, if given a choice between studying at FMS or IIM Indore (not average after all), has a higher inclination to choose the latter for the sheer spread of the campus across acres of land.
For this reason, aspirants may also flock to cities less cramped than metros to pursue an MBA, as the location is not a significant deciding factor for them either.
5. The Cost of An MBA
A decade back, pursuing an MBA was not as expensive as it has become today. For instance, around a decade ago, one could pursue an MBA from IIM Ahmedabad (after cracking CAT, of course) by spending just a few lakhs. Now, the fees have gone up to Rs. 23 lakhs to get into one of India’s top IIMs.
MBAs have not become more affordable, and an exorbitant fee may be a major put-off for an MBA aspirant. Candidates rejecting IIMs for institutes such as FMS Delhi and JBIMS is not unheard of.
It is interesting to note that for MBA aspirants, the amount they will finally end up earning is much more important than the investment required for an MBA. One reason could be the increase in the threshold of disposable income when it comes to the Indian middle-class families. Another could be the ease in availing student loans. Yet another reason, albeit less positive, could be the lack of awareness of the Return on Investment (RoI) of an MBA. Perhaps MBA aspirants are swayed by the hefty packages mentioned in the placement reports of business schools.
|Factors that influence B-school selection for MBA Aspirants||Average Score (Out of 5)|
|Total Fees/Cost of the programme||4.0|
|Student Exchange/International Collaboration||3.7|
|Availability of Scholarships||3.6|
Also read in the InsideIIM Recruitment Survey series:
- The Most Desirable Management Consulting Recruiters In 2018
Which are the top management consulting firms for the MBA community? How desirable are top firms like McKinsey & Co., BCG, A.T. Kearney, Accenture etc.? Find out in this in-depth report!
- How Campus Recruiters Can Make The Hiring Process Better
How can the campus recruitment process be made better? What are the factors that MBA students look at before selecting a company to work with? Find answers to these questions in this post!
- The Most Desirable General Management Recruiters in 2018
TAS, ABG, General Electric and Mahindra are some of the leading conglomerates and general management recruiters. But how desirable are they in the eyes of the MBA community? Find out the list of the most desirable recruiters for one of the most desirable roles on a B-school campus!