MBA boosts salary 18% upon graduation and more than 50% within 3-5 years

Master of Business Administration (MBA) graduates experience an average 18% increase in their base salary after graduation, according to the Association of MBAsí Career Survey 2005 released in London today.

The survey of 1,100 graduates from accredited MBA programmes also 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% higher than graduatesí pre-MBA salaries.

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.

Jeanette Purcell, Chief Executive, said that an accredited MBA qualification has a strong positive impact on graduatesí salary levels and career progression.

ìThe accredited MBA is the premier educational pathway to executive leadership, with 59% of graduates in senior management or board positions within five years of completing their course,î Ms Purcell said.

ìThe importance that employers place on the MBA to develop future leaders is apparent with 50% of graduates having all of their course fees paid and an additional 17% having more than 40% paid by their employers.

ìThe MBA continues to nurture and develop entrepreneurial skills that are vital to innovation and future economic and social growth. 22% of graduates chose to use their MBA skills to set up their own business and an extra 17% plan to do so in the future.

ìIt is noteworthy that while 41% of graduates employed in the public sector saw the MBA as a doorway to the private sector, 59% intended to remain in the public sector and apply their MBA skills to improve the quality and efficiency of service delivery,î she said.

Carl Tams, Manager of the Associationís Intelligence Unit, said that the average base salary has stabilised following the late 1990s peak associated with the dot-com era.

ìThis is not the end of the war for talent, but clearly there is a lull in the battle.

ìThe immediate salary boost after graduation has declined from 39% in 2002 to 18% in 2004, but the reasons for this compression remain uncertain at this stage.

ìThis could partly reflect the greater emphasis on bonuses and other variable cash earnings rather than higher base salaries. 95% of respondents received some form of variable pay on top of their base salary in 2004 compared to 42% in 2002.

ìIt is possible that because more employers are paying for their employeesí MBA studies, often with contractual obligations to be met, they do not need to offer as large a ërewardí on graduation to hold onto them.

ìWe 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.

ìWe will need to see if this trend continues in the next survey, and carefully monitor this as the number of European MBA schools grows as expected in the single higher education market,î Mr Tams said.

Other key findings include:
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 while part-time and distance learning graduates earned on average 57,600 and 62,800 respectively

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

Prior work experience strongly shapes future earnings ability ñ those with five to nine yearsí experience before commencing an MBA had an average salary 11% higher than those with less than five yearsí pre-MBA work experience

Base salaries were highest for graduates working in the North East (77,800) and lowest for those working in the South (46,350)

The 2004 survey is the sixth conducted by the Association. Previous surveys were conducted in 1992, 1995, 1997, 1999 and 2002.