An MBA represents a substantial financial investment. Fees vary from school to school, but no student enrolling in a well-regarded MBA programme should expect to see much change out of HK$400,000-500,000. For an EMBA, such as the one offered by the University of Hong Kong (HKU) in its prestigious three-way programme with London Business School and Columbia Business School, the fees alone are in the region of HK$1 million. On top of that come travel and other related expenses. With that kind of financial commitment, any investor will expect to see a return.
The return on investment (ROI) on an MBA is a contentious issue. Only 10 years ago, the United States Census Bureau could produce figures showing that doctors, lawyers and people with MBAs earned an average of just less than US$100,00, outstripping even masters graduates by a factor of nearly two.
Yet the MBA was a rarer creature then and, as any MBA student knows, rarity carries a high premium. Over the past 30 years, the annual volume of MBA graduates has increased by at least 500-600 per cent, considerably more than the rise in annual requirement for new corporate high-flyers on telephone-number compensation packages.
It would defy all logic if the currency of the MBA had not been partially debased in that time. Consequently, an MBA today is considered by many leading corporations not so much as the icing on the cake of senior management excellence, as one of the basic ingredients required to bake it.
Maurice Tse, associate dean of MBA at HKU, believes that for many of today's MBA and EMBA students, the ROI is calculated using more than just financial criteria.
"Students on an MBA programme are more inclined to see this as a means of defending their position or gaining some upside in the current climate," he said.
"On the EMBA, these are senior managers who are investing in how to strategise their next move for their career within their corporation or organisation. It's a platform for networking on a global basis in the world's premier locations, particularly for finance."
Calculating in purely monetary terms, the remuneration path of MBA graduates has to be benchmarked against fellow professionals with no MBA qualification. Typically - and excluding exceptional events such as a change of company or a transfer to a different country - bachelor-degree staff, staying in a single corporation, will see their salaries rise with work experience. However, younger employees tend to receive higher percentage annual uplifts than older ones, and the yearly increases, as they approach retirement, will do little more than keep pace with inflation.
MBA graduates, according to at least one salary guide, can expect to earn HK$80,000-HK$250,000 per year more than their college degree co-workers. Therefore, taking a crude median value of HK$165,000 per annum increase in salary compared with their pre-MBA levels, against an average HK$500,000 investment in obtaining the MBA, graduates can expect to recoup their upfront outlay in only three years. After that, it's all upside.
If only it were that simple. Recent experience has proven that MBAs are far from recession-proof. There is certainly no consensus among researchers that an MBA carries with it significant payback (using data taken from the US Graduate Management Admissions Test (GMAT). Peter Arcidiacono, Jane Cooley and Andrew Hussey, in their article "Economic Returns to an MBA", concluded that returns could be as low as only 4.8 per cent for men and 3.8 per cent for women - and this was researched during the boom years.
Kathleen Slaughter, dean of the Ivey Business School, argued that graduate degrees did have an effect on salary levels, but not as a simple mathematical equation. "The salary increases come in two different ways - new opportunities that graduates see in their own companies and new careers pursued outside of their current companies. Much of this can be attributed to a greater confidence graduates have about their own capabilities."
Whatever the facts of an MBA's direct impact on salary, there is certainly no shortage of investors waiting to buy into the plan. Student numbers continue to rise year-on-year and Asia has overtaken the US as the world's largest MBA market.
Donald Chan, associate head of business and information technology studies at Baptist University, acknowledged that money, inevitably, remained a key consideration in the decision to invest in an MBA.
Personal satisfaction, expansion of learning horizons and career fulfilment rank consistently high in student self-assessments. For Dr Chan, the MBA should be seen as a life decision as much as a financial calculation.
"We can't know if students will receive immediate salary increases, or job changes, or promotions. However, we do believe that the analytical thinking we encourage will be a long-term and extremely valuable asset."
