Measuring ROI on MBA before getting into a top B-school

“An investment in knowledge pays the best interest.”~ Benjamin Franklin

In India as well as abroad, MBA remains one of the most appealing and alluring postgraduate qualifications. While an MBA seems to be a common and preferred choice, the average fees lies between Rs 10 lakhs and Rs 23 lakhs in top B-Schools of the country except for government-affiliated ones. So, after making the decision to pursue an MBA, one must measure ROI on their MBA degree before getting into any top B-school.

There are various factors one must consider; from which is the best time to why one should pursue an MBA. COVID-19 has landed all of us in an unprecedented situation, leaving us deep-pocketed. At this time, before incurring huge costs on MBA one must look into the ROI that their MBA degree has to offer. 

ROI typically measures the amount of return on a particular investment, in comparison to the investment’s cost. This cost-benefit analysis of MBA is essential and must be considered before taking a step forward.

While calculating ROI on MBA, one must consider the following: 

Long term future prospects 

One must look at the long term prospects while making any career decision. One must consider where they will be seeing themselves, 10 years after the placements. 

Reputed MBA Colleges give a great boost to the career opportunities of the candidates. While doing an MBA, one must look at the monetary as well as future aspects. Getting placed at exclusive corporate juggernauts can give a kickstart to the career of the candidate. 10 years down the line, one must look at the monetary benefits, growth prospects and dynamic opportunities to take up and handle new projects.

Opportunity costs

The cost of the next best opportunity forgone is referred to as opportunity cost. One could chose to do other and comparatively cheaper PGDM or Masters in the same field. One could also opt for campus placements after graduation.

While calculating ROI on MBA, one must consider the opportunity cost of a two-year salary that one could have received added with the fees that one needs to pay for their MBA college and other overhead expenses. Only after weighing these opportunity costs, ROI must be calculated.

Salary to debt ratio

The cost or fees of MBA colleges are exorbitant. Not every candidate can afford to pay such huge fees so they take educational loans to pay the fees. While making a decision to get into the MBA college one must look whether the costs rightfully coincides with higher starting salaries or not.

The figure used for the salary is based on starting salaries, while the debt figure is the total debt including all the expenses one would assume to attain the degree. If the starting salaries are greater than your debt component i.e - you have a lower debt to salary ratio, then it is a higher ROI on your MBA.

Creation of valuable corporate networks 

Pursuing an MBA from a top-notch B-school has immense transcendental value. Along with great career prospects, MBA provides great opportunities to connect with industry experts and corporate stalwarts. Along with that, interacting with an active network of alumni gives incredible advantages to the candidates.

In these grim times where it is a herculean task to get a better job, these networks have great significance. These valuable corporate networks help candidates in getting a better job or in laying the foundation of their own start-up.

Links, references and networks matter a lot when it comes to the corporate world. The value of networks cannot be quantified but these networks are definitely of immense importance. While calculating ROI on MBA, one must consider the importance of networks.

Soft skill development

Soft skills are essential to survive in this highly competitive world. Recruiters look for the candidates with apt soft skills to survive dynamic situations tactfully. Getting in renowned MBA colleges helps a lot in better soft skills development.

The MBA programme emphasises on extensive soft skill development and trains candidates in leadership, problem-solving, self-reflection and critical thinking. All of these qualities are critical and essential, to successfully climb the ladder in the corporate world. In these times of mass layoffs, soft skills play a crucial role in bagging a respectable job. 

While calculating ROI, the exposure received and the growth in the potential and increase in opportunities must definitely be taken into account.

Life is full of crossroads. At every point in life, one equates the costs with their intrinsic benefits to arrive at a decision that's best for one’s life and career. MBA is a lucrative option which gives wings to one’s career. As per one’s requirements and ambitions and preferences for future prospects, one should weigh the ROI accordingly.

If you liked this article, here are links to a few more pieces that might pique your interest:

• ROI - Recovery of Investment of your MBA program
• BA resources that everybody swears by! - Dare2Compete
• 6 Best Ways To Enhance Your MBA Career With Corporate
• The subtle art of not giving up in order to convert MBA interviews -By Nitesh Singh from IIFT Kolkata
• Books for MBWhy A students in every specialization that should not be missed 
• The onset of virtual MBA - An era of Zoom calls and GMeet