Wednesday, May 22, 2013

IMD in the rankings - Financial Times 2013

This is the second post in the "series" where I analyze IMD's placement in various MBA rankings. Today I'll take a look at how IMD fares in the Financial Times's 2013 global ranking. Here is a link to the first post, breaking down the Economist's ranking:

IMD in the raknings, part I - the Economist

In the FT ranking IMD has one of its poorest showings, coming in at #19 for the year, and at #15 for the "3-year average" rank. IMD is behind schools such as HKUST, Ceibs, Cambridge (Judge) and Berkeley (Haas), which IMD tends to place ahead of in other rankings.
The complete ranking is available here.

The FT's methodology

The FT places a great deal of importance on salary statistics. Post-MBA salary accounts for 20% of the total ranking score, and salary increase accounts for another 20%. The remaining 60% of the FT's methodology looks at other evaluation metrics of the MBA programs: Diversity of faculty and student body, employment within three months of graduation, "international reach", placement effectiveness, "value for money", and career advancement.

Interestingly, there are a few twists and turns on what exactly is meant by "post-MBA salary." Here's are some of the ways the FT is looking at the data:

   - They look at salary 3 years after graduation, once students are established in their new careers. Because of this, the 2013 ranking uses data from the class of 2009.

   - They use PPP (Purchasing Power Parity) to try and eliminate inflated salaries due to stronger currencies. More on this below.

   - They perform adjustments to level out variations between sectors.

   - They exclude the figures for MBA graduates in non-profits or in the public sector.

   - They eliminate the lowest and the higest salary from the data for each school.

   - Absolute and percentage salary increase have equal weight in the calculation.

Considering how much weight the post-MBA salary is given in the FT's rank, they seem to be making their best effort to create an "apples to apples" comparison across countries and across sectors. However, doing so does open up a number of variables and opportunities for fluctuation.

In particular, the use of PPP adjustments to salaries leads to some odd data points. I agree that cost of living and strength of currency should be considered for the salary comparisons to be fair. And in truth, PPP is probably one of the better ways to account for that. However, PPP is by no means perfect - it is especially fragile if used for short-term, small sample size calculations (and the FT's ranking includes no more than three data points for salaries!).

Looking at IMD's situation - the Swiss Franc has been very strong against the USD, the Euro and many other currencies over the last few years. Switzerland has after all been considered a "safe haven" from the various recent financial cises around the world. Using PPP implies the CHF has been an overvalued currency, and thus the swiss salaries reported to the FT will be adjusted downward. It is useful to keep this fact in mind when looking at the FT rankings.

More detail on the FT's methodology here.

  I suspect IMD's salary figures will look better in the next year or two of the FT's rankings, as the US and Eurozone continue to recover and the USD and the Euro regain strength.

IMD's strengths

  •  Placement success
IMD placed #1 overall in this category, which is defined as "the effectiveness of the school careers service in supporting student recruiting, as rated by their alumni".

This was one of IMD's strenghts in the Economist's ranking as well - it's clearly no fluke that IMD's career services is absolutely world-class. In my opinion this is a huge part of IMD's appeal, knowing that I will have the absolute best support and resources at my disposal for my job search and career guidance.  

I believe this result is also a testament to the loyalty that the IMD recruiters have toward IMD grads.

  • Aims achieved
IMD placed #2 overall in this category, which is defined as the extent to which alumni were able to fulfill their goals going into the MBA program.

This category goes hand in hand with the strength of IMD's career services. Considering the level of support available, IMD students are able to realize their objectives better than pretty much any other school's students.

  • International mobility rank

IMD placed #1 overall for international mobility. This is not a surprising figure considering the diversity of nationalities both in the student body and the faculty. IMD students are already able to work internationally and IMD opens even more doors.
  • Value for money
IMD came in 11th place in this category. I personally consider this ranking a strength, based on the premise that IMD's post-MBA salaries are too low in the FT's ranking, due to PPP calculation, i.e. an 11th place finish despite discounted salary figures is definitely worth noting.

I believe this is another big part of the IMD's draw. Students go in being prepared to work hard, but they know they are getting excellent return on their investment.

 IMD's weaknesses

  • Post-MBA Salary, Salary Increase 
Under the FT's methodology IMD's salary figures fall below most of its usual competitors. The "weighted" salaries for IMD were $147,380, and salary increase came in at 65%. While lower than LBS ($160,988/124%), Harvard ($187,223/121%) and several other schools, IMD's figures are still strong enough to place it in the top 20. 

It is interesting that in the FT's ranking IMD's salary stats are a "weakness", considering the fact that in the Economist's ranking IMD's salary figures were tops among all schools.

It is clear that the FT's PPP adjustments are hurting IMD's salary figures. Given the strength of the Swiss Franc, the PPP calculation causes the FT's figures for IMD to be underestimated. At the same time, the Economist's numbers for IMD - which are just the absolute salary figures compared across the board - should perhaps be discounted some because Switzerland is in fact a more "expensive" place.

The truth probably lies somewhere in the middle, which means IMD's salary stats are definitely still among the best out there.

  • "Alumni Recommend"
This is a quirky category where alumni are asked to pick three schools from which they would recruit MBAs.

Established brands like Harvard and LBS are leaders in this category. IMD ranks 16th, which is not actually a bad placement. It does indicate other schools have stronger brand recognition out there than IMD, but considering the small class size and network, IMD clearly still has a lot of reach and a lot of respect in the marketplace.

  • Research
IMD placed 75th overall in this category. Compared to other schools, IMD's faculty has less of a presence in the FT's particular list of publications as far as research goes.
This implies that perhaps IMD's faculty is not quite as focused on academia as in other schools. It's not totally surprising considering IMD's "real world, real learning" approach, and IMD's history as an executive education school (rather than a university).

1 comment:

  1. Excellent analysis, just a word to complete your "research":
    Because IMD does not provide Ph.D education (don't like LBS or INSEAD), it is one of the main factors that the rating of research is low.