The fee charged by a B School for an MBA degree can vary, but the average all-inclusive fee for a two-year MBA program from any top-rated Indian business school exceeds INR 16 lakh. Here are the seven reasons which make it imperative to measure the Return of Investment (ROI) for an MBA programme.
- Understanding the financial value of an investment
Return of investment is a key performance indicator (KPI) that's often used by businesses to determine profitability of an investment made. The fee spent on the MBA programme is a significant amount of money, which is an investment made for building a lucrative career. Hence measuring return on investment (ROI) helps to find the gain or loss that’s generated by opting to pursue an MBA programme. This can be done by taking the mean, median and mode of the salaries offered by corporate for summer internship and final placement to the students and then compare it with the fee charged for the programme.
- Dividends paid longer and shorter
While pursuing MBA from top tier Indian B Schools is expensive, the financial return does not generally look good in the shorter term, but the value that the degree gives along with the brand value of the B School gives phenomenal advantage in the long run. Generally, there is an exponential raise in the salaries after a few years of work experience post-MBA. Hence the dividends paid in both short term and long term have to be considered while calculating the ROI. There are very few Indian B Schools which give phenomenal learning and placement opportunities to both freshers and also to those with experience. So these aspects have to be considered while calculating the ROI from an MBA.
- The intangible asset
Pursing an MBA degree is also about gaining personal growth, adding value to society, and building a strong network. These aspects also have to be considered while measuring ROI of the MBA programme. Also, other intangible aspects like the peer group, the quality of faculty members and the opportunity to interact with industry stalwarts - which is a great opportunity to develop oneself have to be considered while measuring ROI of an MBA program.
- The alumni connect
The strength of the alumni gives immense brand value to the B School and the MBA program. It would otherwise be impossible to get in touch and get connected to the network of such stalwarts who are spread across the globe, who are all from the same B School and have done the same MBA program. This is an important aspect to be considered while calculating the ROI from an MBA program. The power and strength of the alumni network is of great value to the students, as it helps them to connect faster and reap benefits much faster when compared to others.
- The Ranking of the School
There are several ranking agencies and magazines that rank Indian B Schools in India. Reliable source of the ranking of B Schools can be considered by the aspirants while they decide to pursue the MBA programme. This will impact the ROI of the MBA programme as better is the ranking of the B School - the better brand value the institution has. National Institutional Ranking Framework is a methodology adopted by the Ministry of Human Resource Development, Government of India, to rank institutions of higher education in India, could be one source of information. Also there are other agencies like Quacquarelli Symonds(QS) which rank Indian institutions or Times Higher Education World University Rankings – which is the annual publication of university rankings by Times Higher Education magazine or even the Business World B School ranking, could be used by the aspirants while they choose an MBA and calculate the ROI.
- Social Media Trends
A lot of information about the B School and the MBA program is generally available on the social media pages. Surfing through these pages can give an idea about what’s happening in the B Schools. There are B Schools that are steadfast in updating the social media pages and informing the aspirants about the happenings. But there are others who do not even update the website and social media pages and this could show the lackadaisical approach the B School has in maintaining its own business process, and could rub off in the way in which it manages meeting the aspirations of the students. Hence it is worthwhile to consider this while an aspirant is calculating ROI from an MBA program from a specific B School.
- Corporate competitions
The perception of corporate about a B School and its MBA program is to be looked at by aspirants while they choose an MBA program, as this affects the ROI of the MBA. There is a specific set of B Schools where corporate competitions like Mahindra war room, Godrej loud, HUL L.I.M.E etc. are launched. These corporate competitions give immense opportunities to the students to learn management in real-time and also earn good prize money along with pre-placement offers. There are corporate competitions which are launched in a very few Indian B Schools, and this gives the students a sneak peek into the corporate world while they are still pursuing their MBA programme. Participating and winning these competitions gives the students a lot of limelight by the media and also boosts up their confidence. This is a highly intangible factor that has to be considered while calculating the ROI that an MBA programme from a specific B School
Guest Author
The author is Professor and Director, Symbiosis Institute of Business Management (SIBM), Pune. His passion is working and interacting with the future corporate leaders.
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