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By Dominic Basulto

Perhaps the single greatest factor used in judging the relative strength of a business school is the so-called “ranking.” While the primary focus has been on the Business Week biannual rankings, other business publications such as the Financial Times, The Economist and now, the Wall Street Journal, have produced new rankings that promise an authoritative rating system for top MBA programs. These rankings from the Wall Street Journal released in late April 2001 are perhaps the most controversial rankings ever released for business schools- resulting in prestigious MBA programs such as INSEAD, IMD, Columbia, London Business School, and Stanford falling out of the Top 20. While some B-schools that ranked in the Top 10 (Dartmouth, Yale, Michigan, Kellogg, Chicago, Harvard) consistently perform well in all B-school rankings, there were also a number of new entrants that were somewhat surprising: Purdue, University of Texas, and SMU. How is this possible - and what does it mean for applicants in both the application process and the recruiting process?


Every B-school ranking system results from a mathematical formula that assigns a “weight” to various factors, which in turn are given a numerical value. In such a way, two major components determine the final ranking - the weight (or value) placed on each factor, and the selection of factors. In theory, some factors will favor certain B-schools, while other factors will favor yet another group of B-schools; only MBA programs with broad strength in a number of areas will receive the highest rankings. Thus, it makes sense that different ranking systems will produce different leaders. In most polls, an attempt is made to sample a broad range of factors, both quantitative and qualitative.

However, the Wall Street Journal ranking system was created solely on the basis of recruiter responses, under the assumption that MBA graduates are basically “products” that are “purchased” by recruiters. Within this framework, the Wall Street Journal constructed a “consumer’s ranking” based entirely on the opinion and experience of recruiters, ignoring completely such factors as average GMAT score, strength of alumni network, average starting salary, and intangibles such as “student satisfaction.” Only factors related to recruiting were included in the final mathematical formula for ranking the B-schools.

It would be similar to a ranking of the leading Russian manufacturers of chocolate, in which the only opinions that counted were those of the people who eat chocolate. Companies that make good chocolate are rewarded, and companies that don’t are not. Moreover, people who do not consume chocolate would not be asked their opinion. The opinion of the suppliers and distributors of the chocolate would not be important. It would not matter what the previous year’s net income was at a chocolate company. And it would not matter whether a company had recently installed a technologically superior new machine for making better-tasting chocolate.

While the WSJ poll sampled 27 different factors, such as the strength of the B-school’s career placement office and the strength of the core curriculum in producing talented managers, the bottom-line is that what is important to recruiters may not be important to incoming students. For example, recruiters consistently rated faculty, curriculum, and academic prestige as the least important factors when choosing to hire students from a particular B-school. In general, recruiters favored smaller B-schools (incoming classes between 200-400 students), a collaborative and supportive team-based learning environment, and real-world projects rather than academic theories. Moreover, recruiters routinely punished business schools that tend to produce arrogant, aggressive individuals with no team-based skills. Thus, INSEAD fell to #33, London Business School fell to #39, and Stanford fell to #45.


One take-away lesson from the Wall Street rankings is that in the world of elite business schools, image matters. And moreover, image is a constantly shifting factor that can change rapidly. Recruiters may choose to boost their allocation of new MBA hires based on their perception of the business school, or conversely, reduce their intake of MBA graduates from a particular program.

For instance, the technology boom in the U.S. during the late 1990s has had a tremendous effect on the image of Stanford’s Graduate School of Business. When the technology market surged, companies in the Silicon Valley region (located close to Stanford in Northern California) were eager to hire bright young MBA graduates, pay them outrageous salaries (usually with stock options or partial equity ownership of the company), and allow them to work in creative, fast-paced work environments. However, as the technology boom slowed and actually reversed itself, Stanford has paid a steep price. Recruiters at many U.S. blue chip companies now avoid Stanford’s MBA graduates, viewing them as arrogant, unrealistic about salary expectations, difficult to retain, and impossible to lure away from the sunny climate of California. As a result, Stanford plummeted to #45 in the rankings, given this recruiter dissatisfaction.

In fact, some recruiters interviewed for the Wall Street Journal survey on business schools consistently noted that sometimes it is more advantageous to focus recruiting efforts solely at second-tier business schools, where students are less arrogant and more willing to accept lower salary packages. While B-schools such as Purdue and SMU will no doubt report an increase in applications and recruiter presence, it does not mean that Russian applicants should stampede to apply to traditional second-tier B-schools. It does mean, though, that these B-schools may be an excellent “safety” choice for a candidate not able to attend a B-school such as Harvard or Wharton.


The reality is that business schools must pay attention to an important client base- the recruiters. After all, without an impressive recruiting program, it would be impossible to attract the best applicants, and without the best applicants, the ranking for the B-school would plummet. Thus, it can be expected that the Wall Street Journal ranking will have some impact on the acceptance profiles of incoming students. After all, if recruiters won’t hire aggressive, individualistic, high-achievers, then the B-school won’t accept them.

Consider again the example with the Russian chocolate makers. If a chocolate manufacturer finds that Russians no longer love a particular brand of chocolate, should it continue to produce this chocolate? If consumers consistently complain to customer service representatives that a particular brand of chocolate is too sweet or too bitter, will the manufacturer change the output? The answer (according to economic theory, anyway) is YES. In much the same way, if B-schools decide that recruiter satisfaction should be the primary component for judging themselves, then they will act to accept students that will appeal to recruiters.

So what appeals to recruiters? And more importantly, to admissions officers? From a broad cross-section of results, it appears that recruiters are most favorable about the following traits: teamwork, a strong work ethic, analytical and problem solving skills, interpersonal skills, and… humility. As one recruiter at Harvard Business School remarked sarcastically, “Some seem to expect to be CEO within two years.” Thus, applicants should emphasize their success within a broader framework of team-based or corporate success.


In the final analysis, the different B-school rankings are important, but they should be realized for what they are -- an attempt to place a value on something (an MBA diploma) that means different things for different constituents. In B-school jargon, there may or may not be “goal alignment” between recruiters, faculty, students, and business school administrators. Moreover, realize that the notion of ranking universities and graduate programs is a relatively new innovation, which originally began as a way of increasing magazine sales. Recent controversy over what should (and should not) be measured by the rankings even led one university official to declare about the system of rankings: “It is the most successful journalistic scam I have seen in my entire adult lifetime. A catastrophic fraud. Corrupt, intellectually bankrupt and revolting.”

Dominic Basulto is a 1998 graduate of Yale School of Management and currently works as a consultant for Pericles ABLE (American Business & Legal Education) in Moscow. Pericles offers a full MBA advising program. For contact information, please call: 292-5188/6463.

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