Executive MBA Pay and Demand on the Rise
Savvy executives turned to the degree and thrived amid economic turmoil
In 2007, Steve Greenspon yearned to run his own business, but worried he lacked some of the requisite skills -- despite working in the business world since graduating from Northwestern University in 1991. He turned to his alma mater for help, enrolling in the Kellogg School of Business 's executive M.B.A. program. Because he was venturing out on his own, Greenspon was forced to finance his $130,000 education, but he doesn't question the investment.
He now serves as CEO of Honey-Can-Do International, which sells home storage products online. He started the company while taking classes in the E.M.B.A. program and credits the teamwork and leadership skills he honed there for making it possible to lead a company with 40 employees and offices in the U.S. and China. "From every class [at Kellogg], I've applied something to my business," Greenspon says. "I've never had a single day of regret about [enrolling] in the program or spending the money on it; I've never had any sort of buyer's remorse."
Numerous other E.M.B.A. graduates are likely echoing that sentiment. Recent surveys indicate that the degree is in demand among employers; students are applying in record levels; and salaries continue to climb rapidly despite past years' economic tumult. The Graduate Management Admission Council, which administers the GMAT, tracks applicant data annually. The group's 2010 Application Trends Survey , which reflects data collected in 2009, notes that 59 percent of E.M.B.A. programs experienced an increase in the size of their applicant pool, while only 41 percent of full-time M.B.A. programs saw an increase in application volume.
Michelle Sparkman-Renz, GMAC's director of research communications, notes that companies in industries like energy, manufacturing, and healthcare are placing an increased impetus on business acumen in their corporate culture and subsequently are investing more in their employees' business educations. "In the economic recovery you're seeing a more diverse selection of sectors looking for business talent and the talent thinking that this credential will put them in a position of power in their company."
The rise in applicant volume can also be attributed simply to age and experience, says Michael Desiderio, executive director of the Executive M.B.A. Council, an association of corporations and students involved in E.M.B.A. programs. The programs target older students, typically already employed, who want assistance ascending the final steps of the corporate ladder. The average age of E.M.B.A. students in 2010 was 37.1, according to Executive M.B.A. Council data, and these older students turned to the degree as a safe haven from the brutal investment world and to keep pace with younger employees that are increasingly entering the workforce with advanced degrees, Desiderio claims.
The programs do require sacrifice, given that the typical E.M.B.A. student will take classes on weekends for about two years, forsaking the little free time they have after completing already demanding workweeks. "Where were they going to invest these last few years? You couldn't invest in real estate, you couldn't invest in the stock market, but you could invest in yourself and hopefully you could control that return," says Desiderio. "[But], someone looking to get an M.B.A. that thinks this is the easy way to do it is going to be sorely disappointed."
Salaries, along with demand, have risen.
According to a 2010 Executive M.B.A. Council survey E.M.B.A. students' salaries jumped by 11.4 percent from $127,955 to $142,534, on average, from the time they entered an E.M.B.A. program until their graduation -- this is up from the 9.4 percent hike reported in the 2009 survey.
Desiderio notes that the salary inflation can be attributed in part to companies incentivizing their best employees to pursue E.M.B.A.s by rewarding performance with E.M.B.A. funding. In 2006, 35 percent of E.M.B.A. students got full funding from companies. That figure fell to 30 percent this year, highlighting companies' increasing reticence to fund average employees who seek advanced degrees.
"Companies are being more selective with who they send, and as a result, there's a higher percentage of people who are going to come out of it doing well," says Desiderio.
Though E.M.B.A. salaries continue to climb and new industries are sending workers to programs, GMAC expects the growth to be curtailed this year. The volume of GMAT test takers who indicated they plan on applying to an E.M.B.A. program fell by 19 percent from 2009 to 2010, but still remains at a relatively high level, according to Sparkman-Renz of GMAC. "I think there's going to be a mixed picture," she says. "It's softening slightly, but E.M.B.A. programs are still popular."
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