Executive MBA calculating your ROI in today's economy

What return on investment can Executive MBA candidates expect in the current economic climate?

Executive MBA candidates are becoming increasingly creative when it comes to financing their business school degree. While company sponsorship was once an integral part of the EMBA financing process, recent years have seen this avenue of monetary support diminish. But as enrolment figures to some of the world’s top business schools show, this hasn’t stopped ambitious, career-minded professionals from sourcing other means of support.

From bank loans to scholarships, remortgaging the house to personal savings, EMBA candidates around the globe continue to see the value of investing tens of thousands of dollars into this prestigious qualification. But what return on investment (ROI) can candidates expect in the current economic climate?

According to William T. Valenta, Jr., Assistant Dean of the Executive MBA Worldwide Program at the University of Pittsburgh, Katz Graduate School of Business, while it may be tempting to think economic uncertainty would diminish the return on investment of an EMBA degree, the truth is, it only enhances it. “The reason is that executive-level skills are in even greater demand in this type of climate. Katz EMBA Worldwide students say our ROI is strongest in five areas: managerial development, networking, company promotions, increased earnings, and improved international mobility. We have many graduates who, after earning their degree, took on an international assignment or were promoted to a vice president position.”

At another US business school, the W. P. Carey School of Business at Arizona State University, one third of candidates in the Class of 2011 received a promotion before the second year of the program, while alumni of the Telfer School of Management Executive MBA program at the University of Ottawa consistently agreed they realized their ROI less than two years after the completion of the program, according to program director, Sophia Leong.

Alternative returns

Despite many Executive MBA programs tracking well ROI-wise in the soft economic climate, business schools are reporting it’s not just the financial return on investment that candidates are, nor should be, looking for.

According to Frank Crooks, Director of the Executive MBA at John Molson School of Business, Concordia University, there are two principle returns on investment candidates ought to consider. “The first is enhancing their own skill set; the second is by improving their own skills, they become more valuable to their employer.”

Meanwhile, at IE Business School, it is recognized that each student has a different personal objective in terms of the return expected from the program. “The greatest return we can give our students is the truly global perspective of business IE’s Executive MBA programs provide,” says Natalie Beamer, Admissions Assistant for Premium EMBA programs. “We give our students an Executive MBA that exposes them to global ideas and benchmarks from around the world. Our emphasis is not only on our faculty, but we also expect that 50% of each student’s learning will come from their classmates. The return on investment is giving our students the tools to succeed in the future and to think globally and differently,” she says.

At Royal Roads University, the admissions committee asks prospective EMBA students what they’re willing to invest. “ROI is a very quantitative approach to an integrated and highly interpretive answer,” says Donna March, MBA Program Manager at the School of Business. “In order to provide an answer we would encourage prospective students to speak with our alumni in order to better understand their personal returns from the program.”

Personal investment

The economic events of the past five years have proved a learning curve for many and provided business schools with a variety of case studies they can add to their curriculum. It has also highlighted the range of motivations prospective Executive MBA candidates have in relation to this degree – one of which is the personal investment they believe they will reap from time spent in the business school classroom, an approach reiterated by Kathleen Fitzgerald, Director of Academic Support for Chicago Booth’s Executive MBA program.

“We believe that people looking to make an investment in their human capital view this crisis as an excellent opportunity to invest in themselves,” Fitzgerald says. “Many prospective applicants for an Executive MBA program have been thinking about an MBA for a long time and for a variety of reasons have delayed moving forward. For many of those prospective applicants, the current economic environment has served as a catalyst to pursue an [E]MBA because they see the qualification as a necessary step to stay competitive in today’s environment. At the same time, we’ve seen prospective applicants have increased their due diligence efforts with the goal of mitigating risk in choosing the wrong program - thereby choosing schools where the quality of the education and networks are unquestionable.”

In such a situation, it’s not so much the return on investment post-EMBA candidates should be focusing on but choosing the right investment in the first place. “What determines whether something is a good investment depends on the goals of the individual,” Fitzgerald says. “What type of return does one care about? Financial return or otherwise?” she asks. “We assume individuals want to maximize happiness/satisfaction ("utility" in economics terms). It is then a question of what variables are considered when he or she is measuring whether they have made a good investment.”

Focusing only on the financial aspect, Fitzgerald says the return on investment depends on many variables, for example:

• Commitment to learning and applying the tools introduced in the [E]MBA
• Motivation of the individual to succeed in his/her career
• Current role and salary
• Industry
• Growth rate in salary in that industry with and without the [E]MBA
• Plans to change industries or function
• Time to retirement
• Cost of the [E]MBA – including the opportunity cost of lost salary (e.g., in a full-time program) or lost opportunities (e.g., promotions, etc. whilst studying)

Scholarships on the rise

When evaluating the potential return on investment of an Executive MBA program, candidates should also take into account the time, energy and money required of the application process. In some instances, this could be even longer than the time spent in the business school classroom.

During the application phase, candidates can consider how best to utilize their time in relation to the ROI they expect to receive. This is when time spent applying for scholarships could be beneficial. Recently, we have seen an increasing number of scholarships offered exclusively to EMBA candidates, as business schools are acutely aware of the declining tuition reimbursement in the current economy.

Whatever the return on investment you are looking for, financial, personal or otherwise, EMBA candidates must remember finding financing for “Project You” is just a hurdle, and one that can be overcome, as thousands of EMBA participants demonstrate year on year. You just have to do your research and get a little creative...

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