Downturns aren’t always the best time to get a promotion but Luan Ha managed just that.
When the real estate sector slowed in 2009 Ha decided to upgrade his credentials by taking the MBA program at York University’s Schulich School of Business in Toronto. As a result, he went from being an analyst to the director of development at RioCan Management Inc., the real estate development company.
“It was basically a promotion of two levels,” he said. And his pay went up — his pre-MBA salary was around $50,000, now he gets $105,000 with a chance of a 15 per cent bonus. Plus, his tuition fees were tax deductible, further helping him recoup the thousands of dollars he paid to get the degree.
“For me it worked wonderfully,” said Ha, 31. “The payback period is definitely shorter than most people think.”
Return on investment
MBA degrees are incredibly expensive and generally take two or more years to complete. But does that front-end investment yield a healthy return? A recent Forbes’ ranking of the world’s top MBA programs provides some insight.
Schulich ranked ninth on Forbes’ list of the best two-year international MBA programs. Forbes noted that its class of 2010 had an average pre-degree salary of $42,000. By 2014, the average salary was $103,000. And it only took three years to pay back the tuition cost. Schulich’s two-year MBA runs north of $70,000.
Marcia Annisette, an associate dean and accounting professor at Schulich, said that salary boost effectively worked out to an annual 20 per cent raise in each of the five years after graduation. “This is an investment like no other,” she said. “Who has an investment that guarantees you a 20 per cent growth rate?
“An MBA is a transformative degree.”
Still, Annisette cautions against pursuing an MBA strictly for a salary increase. She also said there’s a “good time to do an MBA.” Schulich’s program is aimed at students in their mid- to late-20s.
“If you’ve got a young family it becomes more challenging,” she said. “It’s a two-year sacrifice of family life and social life.”
Recruitment
Tom Turpin can attest to that. He started an MBA program in the late 80s but dropped out after his son was born.
Turpin, president of Randstad Canada, which calls itself the country’s largest staffing, recruitment and HR company, said the debate over the value of MBA degrees seems to emerge every four to five years. But he insisted it remains a “fairly select designation.”
Employers, he said, still highly value candidates with MBAs, particularly when paired with a non-business undergraduate degree, such as science or engineering. “It’s a competitive advantage. It helps move that resumé to the top of the pile,” he said.
And the return for MBA graduates is largely universal. “People… tend to see immediate salary increases — whether it’s at their existing company or a new company,” Turpin added. “The majority of people who get an MBA will tell you, five years after they graduate, that it has helped them advance their career.”
Turpin, who started his career in an entry-level role, believes an MBA could have accelerated his advancement.
Dalhousie University’s Corporate Residency MBA program is aimed at students who have not established careers or families. Forty per cent of students entering the two-year program do so directly from undergraduate programs. Most are 22 or 23, and the vast majority enter with non-business undergraduate degrees.
Dan Shaw, director of the program, said a typical bachelor of commerce graduate can expect a salary in the range of $45,000. His graduates, with just two more years of school, are making an average of $67,000. “It’s a big upgrade… That’s the ROI,” he said. “And over a lifetime it can be a significant advantage.”
Students in the program do an eight-month paid internship, which helps them earn around $27,000 toward their $46,000 tuition. Many grads are quick to find work. BMO and Scotiabank, for example, hire a lot of Dalhousie MBA graduates. “It’s part of their pipeline for finding new managers down the road,” Shaw said.
Peter Burbridge received his MBA from Dalhousie in 2009.
Entrepreneur
Unlike most of his classmates Burbridge didn’t view the degree as a means to a more lucrative management position. He wanted to start a business. He just didn’t know how.
“I had no idea where to start,” said Burbridge, who had a science degree from Dalhousie.
He figured an MBA would provide a solid base of business knowledge. And if his business failed, an MBA would likely aid his post-startup job prospects.
In 2013 he launched North Brewing Company, a Halifax microbrewery, specializing in Belgian-style beer. The company is expanding into neighbouring Dartmouth. Burbridge said having an MBA has helped.
“I just wanted to be able to do my own thing. You certainly don’t need an MBA to [set up your own business], Burbridge said. “I was trying to learn some stuff and hedge my bets at the same time.”
Ha harbours only one regret: He wishes he’d taken two years to finish his degree, instead of the one-year accelerated MBA at Schulich.
“I should have prolonged it… Being a student is quite fun,” he said. “You don’t really have to rush into your career. You’ve got your whole life to work.”
Original Link: http://business.financialpost.com/executive/business-education/mbas-are-still-fairly-select-designations-with-great-returns