Employers paying less for MBAs

2005

Having an MBA boosts your average salary by 18 per cent upon graduation and more than 50 per cent within 3-5 years. But the premium placed on the qualification has fallen sharply.

The survey of 1,100 graduates from accredited MBA programmes for the Association of MBAs’ (AMBA) Career Survey 2005 found that base salaries increase sharply between three and five years after graduation, commonly associated with promotion to senior managerial roles or Board positions

Average salaries three to five years after graduation were 53 per cent higher than graduates’ pre-MBA salaries, the survey found.

In 2004 the average MBA graduate earned £66,500 in base salary and £19,200 in variable cash earnings such as performance-linked bonuses, for a total remuneration of £85,700.

In 2002, however, at the peak of the dot-com boom, MBAs could expect a 39 per cent increase in salary after graduation, more than double the premium expected today.

According to AMBA's Carl Tams, this may be because more employers are paying for their employees’ MBA studies and do not need to offer as large a ‘reward’ on graduation to hold onto them.

Half of graduates surveyed had all of their course fees paid by their employer and an additional 17 per cent had more than 40 per cent paid.

Alternatively, he suggested: “This could partly reflect the greater emphasis on bonuses and other variable cash earnings rather than higher base salaries. 95 per cent of respondents received some form of variable pay on top of their base salary in 2004 compared to 42 per cent in 2002. "

"But we may also be seeing a dampening effect on post-graduate salaries due to the high growth in the supply of MBA graduates in recent years."

The survey also found that full-time MBA graduates command the highest salaries with those who studied a two-year course earning an average £78,700 and those who completed a one-year full-time course earning £75,800.

Those who studied for an Executive MBA earned an average £65,900.

However the gender gap remains significant, with male MBA graduates earning on average £12,200 more than female MBA graduates

But prior work experience also strongly shapes future earnings ability – those with five to nine years’ experience before commencing an MBA had an average salary 11 per cent higher than those with less than five years’ pre-MBA work experience.