MAKING SENSE OF THE ANNUAL
BUSINESS SCHOOL RANKINGS
By Dominic Basulto

Despite a wealth of evidence to suggest that the annual business school rankings are over-hyped and even inconsistent in their analysis of qualitative and quantitative factors, the fact remains that the latest results from say, Business Week or U.S. News & World Report, indisputably provide a much-needed aura of decisiveness to an otherwise highly subjective business school application process. These are results that are attentively noted by applicants, current MBA students, alumni, deans, faculty and recruiters. For Russian candidates who do not have ready access to other data or unbiased perspectives, the existence of these rankings often means that the rationale for selecting B-schools (even for the most well-informed candidates) inevitably boils down to the following: How is the school ranked in the latest business school poll? This system of rankings is a phenomenon that began in the United States and has now migrated to continental Europe, where the Wall Street Journal Europe and the Financial Times now rank the leading Euro business schools. With the much-needed caveat that these rankings are not the "be all and end all" of estimating the relative value of MBA programs, these rankings can nonetheless be used as an integral part of the application process.

POINT #1: SORTING THROUGH THE HYPE OF ADMISSIONS BROCHURES AND BUSINESS SCHOOL WEBSITES

Anyone who has ordered application packages from the leading business schools or perused the slick websites of these schools knows that it is extraordinarily difficult to analyze why a "Top 10" school is in any way superior to a "Top 20" school. Every piece of marketing material from these schools focuses on the same "fuzzy" factors, such as internationalism, diversity and teamwork. Moreover, the marketing campaigns of these top B-schools are often permeated by well-polished MBA jargon ("synergy," "competitive advantage," "value-added") that is difficult to analyze or even conceptualize. Well, the truth is that the difference between a top-ranked program such as Stanford or Wharton and the other hasbeens or wannabes further down the polls is substantial. In essence, the poll data signal the potentially uninformed consumer (e.g. applicants and recruiters) about discrepancies between what a B-school claims to be and what it actually is.

In this sense, the annual business school rankings can help make sense of the braggadocio (boasting) and self-important claims that some MBA programs make. After all, these rankings are based on a combination of qualitative ("recruiter satisfaction") and quantitative ("average starting salary") factors that are combined into a legitimate statistical model. While different rankings produce slightly variegated results, it is no coincidence that B-schools such as INSEAD, Harvard and Wharton consistently top the rankings. Even the most suspect rankings combine some easily-verifiable numerical data into a complex whole that can then be deconstructed.

POINT #2: DEVELOPING AN APPLICATION STRATEGY

The fundamental question that applicants must ask themselves is: Can I get in? As a rule of thumb, the most competitive candidates intent on attending business school should prepare a balanced application strategy that focuses on one or two of the "Top 3" schools, one or two schools ranked in the "Top 10" and one school near the bottom of the "Top 25." This is a typical hedging strategy followed by the best-qualified candidates seeking a top-rate Ivy League education but willing to accept the fact that an offer of admission from a highly esteemed, non-elite MBA program is not the end of the world. In this sense, the annual rankings can help applicants develop the appropriate strategy to maximize the chances of admission.

Of course, this strategy should be adapted to fit the profile of every candidate. Highly qualified candidates may want to focus more on the high end of the market, while lesser-qualified candidates should eschew the long-shot schools. In the vernacular, MBA programs in the "Top 5" are considered "reach" (or alternatively, "stretch") schools, while those in the bottom end of the "Top 25" are termed "safety" schools. Every candidate should seriously consider including at least one "safety" school in his/her application strategy. As an aside, it should be noted that most savvy candidates do not place undue emphasis on the rankings - rather, they focus on the "percentage of candidates admitted" statistic. "Reach" schools typically have admissions rates of under 15% while "safety" schools often admit over 30% of all applicants. Obviously, then, even the lowest-ranked schools can afford to be selective - a fact that weaker candidates should bear in mind during the application process.

POINT #3: ISOLATING THE COMPETITIVE STRENGTHS OF THE RESPECTIVE PROGRAMS

More important than the overall composite rankings are the departmental rankings of business schools. A candidate seeking a future career in marketing, for instance, would be well advised to choose a school ranked highly in marketing - even if that school is not in the "Top 10" in the overall rankings. In this case, these highly specific rankings (which are usually obscured by the composite rankings) are more instructive. As mentioned in an earlier Career Forum article ("Understanding and Selecting the Appropriate Business School"), business schools view themselves as differentiated brands that can appeal to a particular cross-section of the MBA world. Only the largest, best-endowed programs can sustain globally competitive strengths across all disciplines. Thus, B-schools attempt to define one or two niches in which they can excel as part of building a core brand. The rankings, then, can assist candidates in evaluating the relative strength of different brands.

The key is to peer below the surface and attempt to grasp what the various factors used in the annual rankings signify. For instance, a school boasting a large average starting salary for recent graduates is almost without question highly focused toward the various cash-rich consulting companies and investment banks that parade through the career placement offices of the top business schools. For instance, Columbia Business School will always have one of the highest average starting salaries due to its proximity to Wall Street. Less precise factors such as "student satisfaction" can give a clue whether an MBA program is on the way up or on the way down in the rankings. Most importantly, one should keep in mind that the rankings are highly mutable. Like any well-established brand, business schools that pay inadequate attention to market demand or global trends risk erosion of their brand and potential slippage in the polls. MBA programs such as Wharton or INSEAD are only able to maintain their positions due to constant self-improvement and attention to the end consumers, students and recruiters.

In summary, the annual business school rankings are not infallible and should only be regarded as another tool in the evaluation of MBA programs. That being said, however, these rankings can play an important role in 1) sorting through the hype of admissions brochures and business school websites 2) developing an application strategy and 3) isolating the competitive strengths of the respective B-school programs. The savviest candidates will balance the supposed indisputability of the polls with the viewpoints of recent alumni, current students, and perhaps most importantly, the corporate recruiters who will be hiring the next crop of MBA hopefuls.

Dominic Basulto is a 1998 graduate of Yale School of Management and currently works as a consultant for Pericles ABLE (American Business and Legal Education) in Moscow. Pericles offers a full MBA advising program.