June 11, 2008

INSEAD vs. US B-schools / Chicago GSB/Columbia/Darden/Ross/MIT

The official INSEAD 2007 career report is now out, see it here


Here it is - the post to discuss some top US B-schools and INSEAD. Like my FT analysis, this is going to be a rather long post - so if you can't be bothered, just skip it!

This post examines INSEAD vis-a-vis some top US MBA B-schools over a range of typical post-MBA career parameters. The purpose is to show how INSEAD compares to US schools, and to examine some commonly held beliefs. This is NOT about which one is 'superior'. The post is also meant to perhaps give a little more information to potential applicants wondering where to apply and where to study. The post is not so much about INSEAD vs. US B-schools as it is about "INSEAD alongside US B-schools" to give a numbers-driven idea and to answer the question "is your career a disaster if you cannot apply to a US school?"


For the purposes of this discussion, I am keeping Harvard, Wharton and Stanford out of discussion to avoid needless bickering. But if you are curious, you can look at an analysis I made long ago that has Wharton and Stanford in the list alongside INSEAD.


Choosing which B-school to do an MBA is not easy - this leads to a multitude of questions when it comes to decision making time. A lot of people aspire to go to the top MBA schools - and the US news rankings and FT MBA ranking are pretty widely recognized as those that perhaps best reflect the typical top 10-12 schools in the world. In general, US B-schools enjoy a stronger general recognition brand. This is changing, and there are many who are expanding their choice of schools beyond the US borders. So then, if someone wants to do a "world class MBA" outside US, the typical choices have been LBS and INSEAD. When figuring out if INSEAD is a good place to go, there are many doubts, some assumptions, and many blank stares from those who do not know about the school.When trying to research INSEAD and, say, a top US school, applicants face some oft-repeated phrases in forums – here is a sample I’ve seen over the last 1-1 ½ years – especially when the discussions comes between choosing between INSEAD and a top 4-7/10 US school.


  • It is “dumb” to compare to a top US B-school. For e.g. Chicago GSB is way ahead of INSEAD. For many, it's a no contest between applying to any US B-school vs. applying to INSEAD (or LBS, for that matter).

  • INSEAD is very heavily consulting oriented. Most become consultants.

  • "Big 3" consulting numbers are inflated because many are already from those companies.

  • People do not get into PE/VC.

  • Average age in INSEAD is much higher than US B-schools.

  • INSEAD’s Singapore campus is ‘worse’ than France – or, is it bad to go to “INSEAD Singapore”

Each school comes with the burden of perceptions. Sometimes, those perceptions are not questioned and are simply taken as granted. I figured the best way (the way I see it), is to simply put numbers instead of strenuously arguing pros-and-cons. Numbers tell a story behind them, they are a result of many factors, and they make it easy to get a sense of value.

Approach

My approach focuses on the typical MBA aspirant – outliers are not part of this discussion. All description going ahead is about the typical candidate. This post is about you and me – not about the superstar 4.0 GPA with 6 million $ in his account and now wants to do an MBA based on a school’s research output in bio-hazard management and impact on penguins and cares little about a school’s career services. A typical aspirant does an MBA for these popular reasons

  • Better career options – by way of growth or change in line of work, mobility

  • Compensation – 'nuff said

  • Strength of and access to a lifelong network, brand power


Recruitment strength determines where we end up in and with what, and follow closely with the reputation the school has built over years

  • With companies – by quality of recruits, their performance, and interactions with the school

  • With alumni – which is proud of the school, has fond memories, and is willing to help

  • In the press – by way of interaction, ranking, senior executive and CEO interactions

The stronger a school's performance, the better the intake gets, and consequently the better the output as seen by companies. For this reason, the way the students are valued in the job market is often the best indicator of a school's strength. And within that valuation is the perception of brand. My take on brand is that those who matter within corporate circles know the brand, and not your barber’s aunt knowing which school you went to.

With this in mind, the way I went about is to simply pick the latest available career reports and list them across 5 different schools. You could say no pattern is inferable without picking a history of reports - and I'd say that's not very necessary.

Typically these reports do not change drastically year to year (except in very bad or very good years), and wages get adjusted upward at roughly inflation levels. But the reports give a good view of how companies value and take students, who the top employers are, the quality of top employers, how big the school is, what sectors the school is stronger in, diversity of employment/international opportunities and so on - and every such number is a result of a huge number of parameters. I chose Chicago GSB, Columbia, MIT Sloan, Darden and Ross to get a spectrum of choices. Kellogg's career report was hard to use in comparison and I finally dropped it. I chose parameters that are most often quoted and looked at, and a few others to highlight interesting differences between schools.

I used 2007 data from the following sources

  1. Chicago GSB

  2. MIT Sloan

  3. University of Michigan, Ross

  4. University of Virginia, Darden

  5. Columbia

  6. INSEAD

If you find any discrepancy in the data, please let me know. A few notes before you get your cannons out of the barn,

  1. Don’t focus too much on specific numbers which change a bit every year. The idea is to see the entire picture to get a feel, and not kill ourselves on specific single lines.

  2. I was unable to get a clear picture of alumni strength as some schools mix all their programs together and also include their universities and cite that as the number. I need full time MBA alumni numbers.

  3. The reason there is no entry for pre-MBA numbers (GMAT, GPA etc.) is that I’m trying to figure out the post-MBA worth which sort of “packages” all this into an outcome.

So, here they are - Click a graph if you want to see it in a larger size

Very clearly, US schools are highly US centric and it is not surprising. INSEAD, on the other hand, is very international in where the graduates go. The largest % is to UK - about 28%. I could not find data for Darden and Columbia and therefore they are missing (anyone knows?)

Yes, INSEAD is big when compared on an annual class basis. Though if you actually take a specific graduating batch in an year, it would be half of what is shown above. People are often surprised to find how big INSEAD actually is. Even I was, when I first found out :)


Salaries

This is an interesting graph - you can see the sector % spread for INSEAD is actually less varied compared to the others where there are much stronger sector slants. But in 2008 I think we will see a drop in Finance (for INSEAD at least) given that we were unfortunate to be graduating in an absolutely awful economic conditions. Big-3 => McKinsey, BCG and Bain.


You can see that INSEAD and Chicago have pretty low "lowest" salaries which interestingly correlates directly with the % of international placement. perhaps the graduates in both cases went to emerging economies for lower paying jobs?

The table below does not format properly - if you are unable to read it completely, please open this PDF file that contains the same table.

The raw data used - all currency in $


INSEAD

Columbia

Chicago GSB

MIT Sloan

Darden

Ross

Program Length (Years)

1

1.5-2

2

2

2

2

Class size

885 (~2 x 450)

711

560

375

304

426

INSEAD is bigger than Ross and Darden combined or more than twice MIT

Recruitment % outside home country

90%

NA

20%

3.8%

NA

8.5%

Mean base salary ($)

116,200

NA

103,000

107,990

100,309

99,265

Median Salary

115,200

100,000

100,000

110,000

NA

95,000

Median Sign On bonus

23,500

30,000

25,000

NA

NA

20,000

Max Salary

360,000

300,000

167,000

161,800

168,000

135,000

Min Salary

19,500

46,500

22,000

65,000

58,500

43,000

INSEAD's highest/lowest variances are probably because it places many in high wage West Europe (UK, Germany) and in low wage countries (China, India). Part of the higher base for INSEAD could be due to the stronger euro/pound.

Biggest employer

McK (70)

McK (42)

McK (33)

McK (27)

NA

McK (13)

Consulting %

39.0%

21.1%

30.0%

37.2%

21.0%

31.0%

Finance %

28.0%

56.0%

24.4%

15.4%

31.0%

24.6%

Industry %

33.0%

26.9

45.6%

47.4%

48.0%

44.4%

INSEAD number for McKinsey excludes existing sponsored students. It's interesting to note that Chicago and Columbia are more skewed towards finance/industry than INSEAD is towards consulting. If INSEAD has to be called “Consulting school" then are Chicago and MIT "Industry schools" and is Columbia a "Finance” school?

PE/VC Median Salary

135,000

125,000

100,000

NA

108,167*

NA

PE/VC # selected**

46

40

28

NA

9

NA

Big-3 consulting #

123

61

64

70

NA

33

Big-3 as % class-size***

13.9%

8.6%

11.4%

18.7%

NA

7.7%

I added PE/VC just for kicks because people are so excited about these fields. I think these PE/VC numbers will change substantially year to year.

Many state that "INSEAD numbers to top 3 consulting schools is inflated because actually many of them are already sponsored from those schools." The data above, for INSEAD, EXCLUDES those sponsored.

* Not available – taken for finance general

**approximate calculation using % - numbers may not be very accurate

***This number is not fully accurate because a certain number outside the hired # are also part of the same companies. But it’s just to give a relative idea. INSEAD does have quite a few M/B/B within the class.

Biggest Finance Employer

Barclays (15)

Citi (24)

Lehman (19)

Lehman (9)

NA

Citi (9)

Google

7

4

5

8

NA

4

Apple

0

NA

5

NA

NA

NA

Avg entering age

29

28

28

28

28

28

Another interesting observation - people say INSEAD is for those much older. INSEAD is a 1 year program as compared to US 2 year -- this should mean that the average graduating age for US schools and INSEAD is same at 30

Offers 3 mo Post Grad

92.0%

95.6%

?

97.2%

97.0%

?

This is an area where INSEAD could do better - regardless of what reasons lie behind the 92% vs. the 95+ for US schools. I also feel (without having delved into it deeper) that the top US schools seem to have a larger number of companies and niche companies on campus as opposed to INSEAD - a topic for another post perhaps

I won’t get into a lengthy “deductive” commentary from the above numbers. You can draw your own conclusions or deductions, or if you have something interesting to share - leave a comment for everyone's benefit.


But what you can see in general is INSEAD compares well with the best of US schools, and in spite of being the biggest of the above lot, and pretty much having no access to the biggest MBA market and the largest single economy in the world – the US. I sometimes wonder how things could change when INSEAD brand picks up in the US. The school recently opened a marketing office in New York to push the brand.If we could get more US corporations to pay attention to INSEAD. That would be very interesting.


When attempting to get an MBA, it's important to ask yourself what you really want and tune down common held notions and spend some time looking deeper into details and you might find surprising results. Each school in the above list, whether Chicago, INSEAD, Columbia, MIT, Kellogg, Ross - is a terrific school with specific characteristics and strength -and they all compare well with each other. It's sort of a reaffirmation that if you are from a solid institution, you are likely to do well no matter where you are from.


With this data, the real differentiators sort of come down to

  1. Whether US is the desired, principal choice of work location*

  2. Opportunity cost and career-switching** options of 1-year @ INSEAD vs. 2-year program

  3. The kind of experience desired through the program – highly international vs. US-centric


*It is not easy to get a job in US from INSEAD – and it gets especially hard if you’re not a permanent resident or US citizen. Brand perception in the US is also weaker, so it takes more time and effort if you go outside the traditional blue chips/finance and consulting companies. The visa issues are the major stumbling block for the rest of those desiring to go to US, and this keeps many recruiters away.

**For finance switchers, INSEAD, especially the July promotion, makes it hard due to lack of internships.

Addressing specific questions


Isn’t INSEAD is a big MBA factory and therefore bad?


I don’t see how having about 800 of your class/year mates every year getting into top companies around the world (and you having access to a big alumni base) is a bad thing! Look at it this way, the INSEAD alumni grows at about 10 times the rate of IMD in Europe every year, and about three times that of LBS. It can’t be bad. In the same reasoning – Harvard and Wharton are US MBA factories, Google is an engineer dump-house, McKinsey is a consulting crap mill, P&G is a marketing sweatshop. You get the drift. When the institution is good, size is an advantage, not a disadvantage. It is not that you will sit in a classroom with 800 people. While you can have small groups and classes in a big school, you cannot magically have the large network and resources of a big school if you are not from one.


With 92% post-MBA recruitment numbers INSEAD is behind US schools, right?


Yes, it is. INSEAD should do better here. The only way this is a deal breaker is if you go into the school with the presumption that you will be one who falls into the 4% gap. But then, if you thought that way, you probably also worry that you would be one of those 3% in MIT Sloan who do not have a job 3 months after graduation.


But isn’t INSEAD Singapore a worse institution compared to INSEAD France? Am I doomed for eternity if I land up in INSEAD Singapore?


You really have no idea how INSEAD works, So I wrote something to address the INSEAD Singapore confusion - so read it here and this INSEAD Singapore vs. Fontainebleau post should help you understand the structure better.


Summary


There - that ends a "graphical" comparison how different schools look side-by-side. We could get into all sorts of details, but a numerical highlight is a good indicator of how schools fare finally. I believe in the strength of recruitment (quality of companies, opportunities available, compensation to graduates, alumni strength) as an excellent indicator to a school's value, reputation and brand - which in turn drives the best applicants to go there. You can see this evidence when you also include Harvard, Wharton and Stanford.


Coming next

INSEAD vs. Wharton - yeah! actually it's not a "vs." but more of how the two schools stand side-by-side on the broad metrics. You can see for yourself how strong Wharton is when it comes to recruiting (and whether it really is a finance school) - and it blends well with the argument of better the school's reputation among companies, the more impressive the recruitment looks. But wait, you'll also be pleasantly surprised to see how we hold against Wharton as well.


For comments and criticism

Given that I was looking at 6 reports, there may be little mistakes here and there, please point them to me if you are as "slacked" as I am and managed to spend time cross-checking my numbers.


Any helpful "my school is particularly good at" comments are very welcome - they will help readers understand the strength of specific programs much better. If you found some interesting insights from the data presented here, or if you dug something else interesting, please share them as well.


Any comments along the lines of "you suck...your/their school sucks..or this school sucks..but EIU ranking says" will simply be removed. I prefer to use numbers as presented by schools themselves. If you disagree completely with my correlation of recruitment strength with school strength, then this post was not for you and you can't really change my mind - there's a lot of evidence out there.


15 comments:

small said...

WOOOO HOOOOO!! bravo!!!
that was a job verrry well done!
The last table (comments included) should definitely be mailed to Business Week, FT and the oh-so American inclined U.S News. It was FANTASTIC!
As I type this, I rub my hands in glee, waiting for the next bit of analysis (INSEAD //le Wharton), like a child waiting for his next bit of candy!
:-)

Tarek said...

hi necro.. great post.. just wanted to point out that INSEAD's career report for 2007 is out on the website. I downloaded it yesterday..

necromonger said...

Small,


Thanks! :)

-n

Anonymous said...

wow, necromonger, great post! I am trying to research schools in europe, USA and was having a difficult time getting more detailed info. your blog is great in how much detail it gives and thsi post (and that HKUST post was very helpful) is really excellent in giving a much better clarity. for me lot of misconceptions are getting clarified...

Thanks! I have some questions..i hope you will answer later.

-carlkk

Anonymous said...

"For the purposes of this discussion, I am keeping Harvard, Wharton and Stanford out of discussion to avoid needless bickering" ... how do you mean?

Anonymous said...

Hey necro, I think you should consider currency considerations in your calculations (easier said than done proficiently). U$ dollar vs (I'm guessing) mostly ound/Euro can skew the data from the past few years. Maybe adjust for PPP based on destination? I mean if most US school grads went to work in London (which they don't based on your international placement numbers) the picture might be different.

necromonger said...

Anon,

PPP has distortionary effects (see my FT post). Besides, the Euro/Pound strength is not so large that if I adjusted them then the picture would change radically.

The argument of "if those from US went to London the picture might be different" is way too hypothetical. First, it won't happen. Second - one could argue the other way - if INSEADers could go to US without the work permit difficulties and if those who got lower than US averages in Asia went to US, then the picture might be different as well!

Anonymous said...

I've been reading your blogs for a year (almost) now. great analysis but you know, deciding which institution is better is not just determined by starting salaries or jobs. The quality of students, faculty, infrastructure, alumni - these all play a huge role too.

I can imagine everyone at INSEAD would be super kicked on reading this. But recognize this - INSEAD students get comparable salaries largely because of the paucity of competition in Europe. INSEAD remains a school known for its amazing focus on entrepreneurship, period.

btw, not meant as a rib, but for an MBA student at a top school, you seem to have a fair amount of time on your hand. kudos on time mgmt!

Why dont we see similar posts from Stanford/Wharton/Harvard/Chicago laboriously comparing themselves to other schools? Maybe because : a. they dont have the time and b. they dont need to?

necromonger said...

Anon,

Each one can draw their own conclusion :)

Anonymous said...

Necro:

So some more holes to poke since the discussion is only about placements:

1. Placement outside home country: how many students actually look actively for placement in France/how many jobs do French companies offer to Students? The graph on placement outside home country has no meaning - it should be a graph on 'placement outside France'.

2. Salaries: The analysis is flawed, as you admit, because of the exchange rate of Euro/Pound vs Dollar and Much higher cost of living in Europe.

Considering that 30% of the batch is placed in UK, you should have compared the salaries of US Bschool students placed in UK to INSEAD salaries. The differences would not have been as stark then - this to get over your reluctance regarding PPP. Or else you should look at salaries of any INSEAD students placed in US and compare them to US Bschool salaries.

You have massaged data by converting GBP/Pound salaries into Dollars. Thats exactly what some of those Indian Bschools do when they manage an international placement - it takes up the overall average.

3. Biggest employers: compare the numbers by percentage of class size and all schools look approximately the same. In fact, those numbers cannot be compared, because these people are not being recruited for the same offices. I suspect more of INSEAD students would be recruited for european offices in the Big-3 where there is hardly any competition from other European Bschools. Compare that to intense competition between US Bschools (admittedly for larger offices in US but still the competition is much more intense) and the numbers recruited from US Bschools looks much better.

7 for google from a class size of 800 vs 8 from an MIT-Sloan class size of approx half, is not really impressive.

It would actually be a more realistic comparison when INSEAD's marketing efforts in US increases. I suspect that the numbers would then compare to some of the lower ranked schools thank Ross/Sloan.

1-yr program vs 2-yr in B-schools: Some would be tempted to say that in 1 year, INSEAD students get what US Bschools give their students in 2 years. Two points: I have heard that in one year, INSEAD charges almost the same that US schools charge in 2 years. Also, the effect of a proper 2-year MBA will only be seen over a longer period of time because of significantly more networking, more attachment to the school and twice of everything that an MBA is about.

INSEAD started as a school for older people in the middle of their careers who needed to come back to school or people who needed to give their businesses a significant impetus. It was like an executive ed program for lateral placements or starting own businesses (like PGPex in IIM Ahmedabad in India).

The fact that the student body is approximately the same age as US Bschools is quite telling in that the curriculum/duration is then not matched to the real needs of the student body. It would also be interesting to explore as to what % of INSEAD students did not get admits to US Bschools and hence came here? Maybe that explains the younger batch?

I guess I may have stirred a hornet's nest, but I think it is a little silly to compare regional B schools with US Bschools. You would be adviced to take a look at IIM Ahmedabad's career report for 2008. Some high/low salary figures and largest employers by % are quite the same as INSEAD. Should we then compare INSEAD to IIM Ahmedabad where 40% of the class has no experience and still get similar salaries as INSEAD grads do? hmm.

A comparison b/w INSEAD/LBS/HEC/IMD is ok because students work in the same area. Compare between regions and you will be doing a comparison of apples to elephants.

necromonger said...

Anon,

The core of your argument is that I should not have compared US schools with INSEAD. That is your conclusion and I have no comment on that.

It is also a topic that I get lot of questions on - and one way to tackle it is by looking at career options. How you interpret the data is entirely up to you.

Anonymous said...

anon,

you make a lot of subjective statements..but what i found hilarious was that you said there is only insead does laborios comparison between insead and us b-schools. looks like you don't read businessweek forums - there are TONS of US school comparisons there, at least here necro just showed numbers without saying anything as a conclusion or writing random subjective statements (like "if that, if this"), but you did what exactly so many do on businessweek -- make all sorts of conclusions...to prove as usual that some us school is superior

for someone like me who wanted to know more about places outside US, this blog gave me tons of useful information...

Anonymous said...

necro: yep. all I said was that the data you used to compare insead with us b schools was not the right kind of data.

anon above: I dont see anything wrong with subjective statements - especially when looking at flaws in some statistical numbers which are obviously massaged:)

shwetz said...

Great! Shouldn't this be a paid report :)

Mats said...

Hi Necromonger,

Does the July batch face similar problem in getting consulting jobs as it faces in getting fiance jobs?

Many Thanks!

Regards,
Mats