Why MBAs Are Becoming Less Important
As business schools strive to stay relevant while they compete with Silicon Valley for new recruits, here's one more reason not to go Your boss might not make you. According to an article in The Wall Street Journal this week, some private-equity firms, which historically required entry-level employees to leave after their first few years to go get a MBA, are now dropping that policy. The article cites Chicago-based private-equity firm GTCR, which will soon begin promoting deserving associates even if they don't have a graduate degree in business  something that was formerly a prerequisite to advancing in the firm. Besides skepticism over how much an MBA really enhances someone's skill set, the policy changes are apparently motivated by the soaring cost of going to b-school, which can put you out 1 million, according to the Journal. Top business school tuition  nearly 100,000 a year at Harvard and Stanford  plus giving up a private-equity job which apparently pays as much as 300,000 or more annually while working on the degree, can mean parting with a seven figure sum. Other private-equity firms, such as KKR  Co. Blackstone Group, Apollo Global Management, and Silver Lake, also have "flexible" policies on MBAs, the newspaper said, quoting recruiting firm Long Ridge Partners' Michael Goodman "Over the past decade or 15 years it's gone from a must-have to a nice-to-have.", Even rising to the CEO job may no longer require a MBA. Neither of Blackstone's heads of its private-equity and real-estate divisions  potential successors to CEO Stephen Schwarzman  have the degree. Nor does KKR's heir apparent Scott Nuttall. In an earlier interview with the Journal in March, Schwarzman said that in some cases, an employee is "such a natural athlete," b-school wouldn't do them much good. They can "use the firm as their university," he said. Still, advanced business degrees are common in the corner office. Seven or eight senior partners at GTCR have MBAs, although the degrees are less common in lower tiers of the firm. Another literal bonus to b-school The median starting salary for U.S. MBA grads reached six-figures, or 100,000, this year  that's 45,000 more than hires who just had bachelor's degrees.