What is an MBA worth? It depends whether you are a man or a woman

It is MBA season, the time of year when graduates move back into the business world, hoping their hard work will propel them effortlessly to the top.

In November, we discussed the low number of women on MBA courses – fewer than a third, and remarkably unchanged for eight years. Various possible explanations have been mooted, including the unfortunate clash of MBA timing with child-bearing, the tendency for people to view MBAs as a route into the high-testosterone worlds of Wall Street and the City of London, and the fact that management as a discipline is a male-dominated field.

Penny de Valk, chief executive of the Institute of Leadership & Management, argued in the FT on May 23 that more flexibility in the structure of MBA courses, as in the workplace, may open the door to more women seeking higher degrees in management.

There is sense in all these arguments, but while female MBA graduates find they continue to earn significantly less than men, with fewer and less lucrative promotions, it must be asked why they should invest the considerable sums necessary to attend a second-tier school.

Catalyst, the US not-for-profit diversity group, has published research on the earnings gap between male and female MBA graduates beginning with their first job. Female graduates can expect to earn $4,600 less than their male peers, even after adjustments are made for academic records, prior career experience, industry, location and parenthood status.
The research also highlights that men are promoted more often and with greater salary hikes. According to data from 2008, men gained a 21 per cent compensation increase for each promotion, while women gained just 2 per cent.

Over a 40-year career, the impact of these earning disparities amounts to $431,000, Catalyst estimates – a shockingly high level of disparity.

The answer is not only to get more women on to MBA courses, but also to ensure there is sufficient pressure on companies to recognise women at work – and award them appropriately. And that simply means giving them the same breaks as their male colleagues.

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