Business school rankings must measure the ‘societal value added’
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writers are, respectively, dean of the USC Marshall School of Business, dean of the Berkeley Haas School of Business, and dean of the Cornell SC Johnson College of Business
In the past few months, a number of top US law schools and medical schools have withdrawn from the influential US News and World Report rankings. Some schools say these rankings do not focus sufficiently on matters such as the diversity of their student bodies; others that they ignore the affordability of their degrees and the societal contributions of their graduates.
As deans of three large US business schools, we share the concerns of our colleagues in law and medicine. Existing business school rankings do not capture well the societal value of the education we offer.
One important mission of business schools is to increase the upward socio-economic mobility of their students. Business school rankings should therefore measure this “societal value added”. Today, the rankings concentrate too much on the prior accomplishments of incoming students and too little on how much schools help to enhance their skills and improve their opportunities by the time they graduate.
The problems with existing rankings are all the more troubling given the reality of declining social mobility. According to Harvard’s Opportunity Insights, the chances of children in the US earning more than their parents have declined dramatically over the past half century: from 90 per cent in 1940 to only 50 per cent today.
The US also has greater income and wealth inequality than any other industrial country according to the OECD — and it is at its most extreme level in nearly a hundred years. Globally, Oxfam reports that two-thirds of the more than $42tn in new wealth created since 2020 has gone to the top 1 per cent.
Higher education has long been seen as playing a vital role in improving the life prospects of young people. But critics now argue that access and affordability challenges have reduced its societal impact.
Nevertheless, we believe business schools continue to play a vital role in increasing socio-economic mobility. Rankings of our schools should capture this role. While much of the attention on business schools concerns the MBA, we want to focus on undergraduate business programmes — the largest single sector of higher education, accounting for a fifth of all degrees awarded in the US and likely higher proportions in Asia and Europe.
What would better undergraduate business school rankings look like?
First, the rankings should focus on the “value added” of undergraduate business programmes in transforming the lives of the students they educate.
Second, they should use metrics based on readily accessible and comparable data that can be externally validated and verified independently.
Finally, they should limit emphasis on input measures (such as Grade Point Averages and SATs) reflecting the perceived quality of incoming students and focus on opportunities, outputs and longer-term outcomes.
We recommend that metrics on incoming students concentrate more on both access and affordability. Access measures could include the percentage of students from traditionally under-represented groups, who are the first in their families to attend university, receive government aid, and transfer to four-year universities from community colleges.
In order to assess the affordability of undergraduate business schools, we suggest rankings should compare the “sticker price” — ie, the nominal official price — of degrees with the net price after all scholarships, both need-based and merit-based, are taken into account.
Against this baseline of access and affordability, rankings should consider both the attributes of the education students receive and how well schools help students launch their post-graduation careers. That includes experiences students have outside the classroom and off-campus, their success in attaining internships, and the ease of securing business credentials beyond the core business degree — for example, through dual degrees and business-related minors.
We recommend that data on student outcomes include four-year graduation rates and placement in work or further education three months after graduation. We would also advocate that starting salaries be considered relative to the student debt burden on graduation.
We believe the furore over rankings reflects more a concern that they pay insufficient attention to the social mission of higher education institutions than a belief that evaluating the attributes of schools is a bad idea.
So, rather than throwing the baby out with the bathwater, we advocate a fundamental rethink to align rankings much more closely with the core social mobility mission of higher education. Given the sheer scale of undergraduate business programmes in the US and the relative paucity of rankings of them, compared with MBA programmes, we suggest they are a good place to start this rethink.
We are proud of the role that undergraduate programmes play in advancing social mobility for the greater good of society, and we intend to work with partners to ensure business school rankings better reflect this impact. We invite a coalition of the willing to join us.