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An MBA or Master of Business Administration is an investment made by individuals passionate about advancing their careers in the business sector and pursuing various leadership opportunities. However, many MBA aspirants are unsure if an MBA is worth the costly investment and what will be the ROI of MBA. This does put the worth of an MBA degree under threat. Before applying to an MBA program, prospective students should consider their career goals to help identify the potential ROI of the MBA degree they want to go for.
ROI is the Return on Investment, ROI of MBA is the Return you get on your investments made for an MBA degree. This investment is made by us in any commodity and the returns we reap from that investment. When we talk about ROI of MBA, it deals with what we invest in terms of fee, time and effort, and the return we get post-graduation as our annual salary package. There are a number of factors to be considered while calculating ROI, some factors are universal while some are unique to each individual’s choices.
How to Calculate the ROI of MBA?
To calculate your Returns, there are 2 vital elements- What You Get & What You Give.
From an MBA aspirant’s perspective what you get is the Annual Salary package offered to you by a Recruiter. What you give here is the Tuition fees and Time.
Consider the following example-
Amit is a B.Com graduate and is planning to pursue an MBA. As a fresher with no savings, Amit takes up an education loan for the entire tuition fees, of Rs.1 Lakh per year.
He has opted for a 2 Year MBA course. Average Annual Salary package offered by the recruiters is Rs.4 Lakhs. Amit’s ROI will be as follows:
---------- x 100 = 200%
Now that we have understood how to calculate ROI for the course and college our choice, let’s learn about some factors to be considered while computing ROI.
Factors to include in your MBA ROI Calculation
Professional Network Gains
An MBA vastly increases the quality and size of your network. Having a great network is one of the best ways to find new opportunities in your career and an MBA gives you the chance to connect with business leaders, seniors, mentors, professors and much more.
Financial Benefits from MBA
Pursuing an MBA is the perfect way to substantially increase your salary. Every company in the world needs to hire managers and leaders and that is why MBA grads are held in high regard irrespective of location.
At the end of the day, your personal priorities decide the ROI of an MBA. It is completely fine if you prefer salary over network or vice versa but you should be clear about your reasons for pursuing an MBA.
This will definitely help you in increasing the ROI of your MBA.
Factors Defining ROI of MBA
There are majorly 2 sets of factors considered for ROI computation. These factors are either quantitative, i.e like time, fees and salary or package. The other set of factors are qualitative,i.e. Cannot be calculated, like skills, the ranking of the B school, placement drives etc. These factors vary with your individual interests and career goals. Hence, they should be considered when calculating your ROI from a particular MBA program or institute.
- Quantitative- Tuition fees, Annual Salary package, Time
- Qualitative- Recruiters, Skillset, Ranking & Goodwill of Institutes
Conclusion - It's not just about the money!
We know that one does not only invest money when pursuing higher education, one also invests ample amounts of time and effort to reap fruitful results. This is also a reason why calculating your Returns on an MBA is vital, to know what your future holds, and if putting in the said amount of time and effort is worth it.
Interestingly, the idea of return is perceived differently by different MBA candidates. A lot of aspirants lean towards establishing a great professional network. Especially, in the case of business, a network helps you throughout your career and is also a kind of investment.
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