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The Best and Worst Pay for MBAs

London Business School again

London Business School (LBS) has just released its new employment report for graduates of its MBA class of 2012. Plenty of LBS MBAs are still getting jobs in financial services. However, something strange is happening to their compensation. While average pay for MBAs in finance is stagnating, pay at the lower end has fallen and pay at the top end has increased dramatically.

As reported last week, MBA students joining the finance industry tend to earn the most at private equity firms. LBS doesn’t break out pay for different kinds of finance firms – it simply offers a single ‘finance’ category. For 2012, pay for LBS’s finance MBAs was as follows:

London Business School: Pay for MBAs in finance, 2012 (£ and $)

LBS finance pay 2012

Source: LBS

This compares to the following chart for LBS’s MBA class last year:

London Business School: Pay for MBAs in finance, 2011 (£)

LBS MBA pay

Source: LBS

LBS’s figures show that mean pay for first year MBAs in finance has stayed fairly steady (£137k in 2012 vs. £139k in 2011). Year-end bonuses have fallen while salaries and sign on bonuses have increased. Notably, the lowest paid MBAs in finance are earning less (£53k vs. £59k last year). But the best paid MBAs in finance are earning a lot more (£281k vs. £404K) in total.

London Business School didn’t return a request for comment. Sarah Jouillet, director of postgraduate careers at Cass Business School said more MBAs are going into risk and middle office roles this year, which could be reducing bonuses. The average salary for an MBA in an investment bank is anything from £70k-£100k, said Jouillet. A £400k package would be, “very high.”

Logan Naidu, CEO of recruitment firm Dartmouth Partners, says that bonuses for the associate roles filled by MBAs in investment banks will be down around 20% this year. Like Jouillet, he says a first year package of £400k in an investment bank would be unheard of. “That probably applies to one person in a hedge fund or private equity fund,” he suggests.

Comments (6)

Comments
  1. The MBA is really an over-hyped non-professional, non-academic certificate that get’s you access to a club. Give me a qualified professional or someone with entrepreneurial experience behind them and I’d hire them over any MBA clone.

  2. I haven’t got an MBA have good experience but hit a road block for various opportunities and have seen those with an MBA get those exact positions. With less work experience. A number of individuals echo what you are saying but unless it is a very specialist job they end up hiring MBA’s or give them interviews at least

  3. vidal, sour grapes, sour grapes

    you’re probably a nobody who can’t get into a top B school

    are you able to hire anyone? we know the answer, NOT.

  4. The average MBA has five years of progressive work experience behind them so it is just wrong to call them clones. It is one of the key differentiators of an MSc Finance and an MBA from a good school. You can get a person with a Msc Finance with no work experience. It would be difficult to do the same at a top MBA school.

    It is an MBA’s prior work experience, the demonstrated intellect of getting a high GMAT score, the cost of the programme, and the selectiveness and reputation of the MBA programme which factors into the final salary an MBA graduate is offered.

    An MBA who beat me for a permanent role at 3i a few years ago started his own technology company brought it public, then he decided to do an MBA at INSEAD, and upon graduation accepted a role at 3i. Is that entrepreneurial enough?

    I have heard some professors actually dread teaching MBA students because they will challenge their findings in class. Whereas undergraduates and Msc Finance students tend to be more passive. The MBA can use his work experience to say that what the professor describes does not actually happen.

    jjwalker…and for the record I have an MBA

  5. My money says that Vidal does not have the authority to hire anybody. Nor ever will

  6. If you can afford an MBA and do not have any prior business acumen it may be useful. The big problem is people are taking on debt to complete the degree and the ROI is falling dramatically as the financial services industry continues to shrink and will continue to shrink. Leaving the debtholders in debt servitude as their salary expectations are not met. The second problem is the people teaching the classes adhere to rules of a regime that no longer exists and actually caused the predicament we all face. But mindless drones of HR and MBAs past continue to value the degree so if you want to play in the game you have to play the game.

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