Dear Mentor:

How do I assess the cost/benefit of an MBA?

I have 3+ years of work experience and an engineering degree. Currently I am employed with one of India's best employers. I am planning to do my MBA. I understand I have to improve my written and spoken english for which I have to put lots of effort. Also the GMAT/CAT preparation needs lots of time. The nature of my job does not permit that. I am not sure whether I should move forward with my MBA plans. How much shall I gain for the time and money put in preparation and then 2 years of education. I want you to eveluate both the options of continuing in the current job and the MBA plan. Also, please let me know the suitable intitute for me.

MBA Analyzer, Bangalore, Karnataka, India

Dear MBA Analyzer:

We are impressed by your thoughtful inquiry. You are already on track for making good business decisions. Any problem solving technique requires one to identify options, evaluate each option using some objective criteria, and then make decisions.

The options you are considering are obviously your life with and without an MBA. But what are your evaluation criteria? The criteria should include your goals, ambitions, and interests. Let us propose some criteria: financial rewards (implicit in your inquiry), personal enrichment, and quality of work.

The issue of financial rewards is fairly straightforward. You need to compare the trajectory of career progression and associated remuneration for life with and without MBA. In a typical situation, and you may not be typical at all, an MBA graduate from a top school starts from a higher level of compensation with higher trajectory for income increases. But you do lose 2 years of compensation while being in the MBA school. If you leave aside the direct cost of an MBA itself, the following illustrates your earnings.

earnings     cumulative earnings

As you can see, a typical MBA from a top school at some point, not too long in the future, reaches a break-even point in cumulative earnings. Now if you include the costs of MBA, the break-even point for net earnings pushes out further into the future, as illustrated below.

adjusted cumulative earnings

You can set up a simple spreadsheet to do the "what if" scenarios for your assumptions for future earnings with and without the MBA. Studies indicate that a typical MBA from a top school recovers the cost of the MBA in 4 to 8 years. Is it worthwhile? That is your decision, based on your assumptions and the historic data on the graduates of your prospective college.

In terms of personal enrichment and quality of work, the evaluation is person-specific. No doubt you will learn new and more valuable things in an MBA program. Your career track will be management. You will make business decisions, not technology decisions. Is this the right track for you? Only you can answer the question.

We have addressed the issue of preparing for entrance exams in an earlier Dear Mentor column. You may wish to visit:

The issue of suitable institute depends on your performance, both academic and on entrance exams. In the iMahal Education Channel, you can find:

You can use the iMahal College Finder to identify colleges that best match your performance and needs.

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