Evidence-Based Innovation Blog

What is the ROI for an Executive MBA degree?

Posted on Jun 30, 2010 10:26:00 AM

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This time of the year, there is excitement in the air! This is especially true for those experienced managers who are ending the first year of their Executive Masters of Business Administration (EMBA) program or have just received their degrees. Some have worked in their fields for many years and desire to add to their credentials.

With the recent global recession, company executives are having to determine how to do more with less; how to keep their employees motivated; and ways to strategically grow the business.

Employees who are up to the challenge of moving their organizations forward often inquire about an EMBA, which allows them to work full-time while pursuing the advanced degree. Many companies provide full MBA tuition reimbursement, while others require that the student foot some or all of the bill.

Regardless of who pays, here’s the big question: Is there a significant payback to the organization and the employee?

Before investing all of the time and money in an 18- to 20- month program, one has to wonder if EMBA students and their organizations see a return on investment (ROI)?

According to the 2009 MBA Student Exit Benchmarking Survey conducted by Percept Research, the payoffs are tremendous!

In 2009, almost all (97 percent) of the 3,348 executive MBA students who participated in the survey say their MBA programs met or exceeded their expectations for the impact on their career. The same percentage of students also stated that their MBA program met or exceeded their expectations for the impact on their organization.

Assuming that they had to pay the full program cost, 2009 graduates estimated a payback period of 49 months to recover the cost of their investment. Due to the economic downturn, this payback period is up from 43 months, the expected payback period for 2008 graduates. During the course of the program, average student salaries rose 9 percent to $136,722, according to the survey.

No doubt, a salary increase is a plus, and a salary bump indicates that the employer recognizes improved value. But is increased pay the only reason emerging business leaders pursue an EMBA?

Students and alumni state other benefits that money can’t begin to buy.

“My personal brand has changed within my company,” says Daniel Stagnaro, Business Manager Pharmaceutical Films at Klöckner Pentaplast of America and a student, who recently completed his first year of graduate studies at the University of Virginia (UVA) Darden School of Business.

Dave Stagnaro
Daniel Stagnaro, UVA Darden EMBA
Not only did Stagnaro reap the benefits of attending graduate school, but those around him benefited, as well.

“Since I began the executive MBA program, my CEO and colleagues come to me more often for my opinion on business matters,” he says. “Anyone considering an executive MBA should definitely take a look at Darden!”

Stagnaro immediately began to bring additional value to his customers, too.

A chemist by training, Stagnaro traditionally saw the world in very technical terms. With just one year of EMBA studies behind him, he was able to implement a plan for a customer that would save that company $1.4 billion over 3 years. He credits knowledge learned at UVA Darden for this success.

Stagnaro doesn’t plan to stop there, however. He has his eyes set on climbing the corporate ladder, with increased responsibility spanning three continents—the United States, Europe, and Asia. With his EMBA degree, Stagnaro is well on his way. According to Percept’s 2009 MBA Student Exit Survey, approximately one-third of EMBA students were promoted and 44% received additional job responsibilities.

Stagnaro isn’t the only graduate who feels his rigorous EMBA program yielded great dividends.

David Bonenfant, the division manager of Property and Casualty Claims at State Farm in Charlottesville, Virginia, and a graduate of UVA Darden, says, “If I had not chosen Darden, it would have been a mistake. It is the greatest thing I’ve done in my life.”

Bonenfant feels that receiving his EMBA from UVA Darden provided him with the tools to lead his employees—rather than just learning how to manage them.

“I believe getting an MBA from Darden is about learning what tools you need to drop, what tools you need to leave for those behind you, and what tools you need to pick up,” he says.

David Bonenfant
David Bonenfant, UVA Darden EMBA

In addition to salary increases and promotions, other student considerations include the program itself. After graduation, many executive MBA students continue to be loyal to their programs. The Student Loyalty IndexSM continues to be strong according to the 2009 MBA Student Exit Survey.

The index is a composite measure of program quality, likelihood to support the program as an alumnus, and likelihood to recommend the program. Based on a 0 to 10-point scale, students averaging an index score between 9 and 10 are considered “Champions” of the program. Sixty-one percent of all EMBA students in the 2009 survey are considered champions.

Scott Bruner, who graduated from the Northern Illinois University (NIU) Executive MBA program and is Director of Sales and Business Development at American Profol, touts his program as being one of the best.

Bruner is being groomed to take the reigns at American Profol in the next 5 or 6 years, and notes that his company footed the bill for his education.

“I would have chosen this school, even if I had to pay for it out of my own pocket,” Bruner says. “The Executive MBA program was impressive and well-coordinated.”

Bruner also notes that program leaders were interested in both positive and negative feedback about all aspects of the EMBA student experience. There was a genuine willingness to change things if necessary. NIU’s EMBA program has developed a culture of continuous improvement with measuring and acting on student satisfaction feedback, which is enhanced by their use of the MBA Student Exit Survey in their toolkit.

The University of Pennsylvania’s Wharton Executive MBA program is another program that engages data from the MBA Student Exit Survey. Wharton graduate, Kathy Canum, discusses the financial and personal ROI of the program.

 
About Percept Research

Percept Research, a global leader in MBA market research, offers tailored benchmarking assessments for full-time, part-time, and executive MBA programs. To better position programs at each stage of the MBA Lifecycle, the research firm offers a MBA Student Entry Survey, Midterm Survey, Exit Survey, and Alumni Survey, which may be deployed individually or combinational together for longest lasting impact.

Percept Research conducted the EMBA Student Exit Survey as the research partner for the Executive MBA Council, an organization which provides a forum for more than 200 educational institutions to share best practices and gathers data for members to use.

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Topics: Executive MBA Council, MBA Student Exit Survey, Executive MBA, Business School Innovation