MBA Salary Trends: by region, by demand, by function!

I came across an excellent blog post last week on MBA salary trends and I couldn’t resist myself from putting it here for all the perspective students!

In this article we plan to look at post-MBA salaries across various industries and sectors. Naturally, these depend on the number of years of work experience, the pre-MBA profile, how well defined are the aims of the candidate and the list goes on and on and on. In fact a company called Wetfeet publishes insider guides to dream companies like Mckinsey, BCG and Booz Allen Hamilton, just to give prospective hires a flavor of what they would be grilled on in at the interview. Enough said. Hence this article will be a summary of the various salaries offered to post MBA students, with a little comment here and there from yours truly.

All data are pertinent to the year(s) 2006-7.

Salaries by Region

Almost all MBA schools give an analysis of their salaries by region. There are six major “regions” in which most schools choose to divide their data. Western Europe, Eastern Europe, Asia Pacific, Latin America, Canada and the United States. They choose to leave out the entire continent of Africa and we would have been more satisfied had Asia Pacific included Australia and be labeled as Oceania. Surprisingly the middle east is left out too. Not much can be done about it anyways.

We could (instead of comparing salaries globally) compare salaries within one country region wise, e.g in the USA we could compare salaries among various regions as North East, Middle Atlantic, Midwest, South, South West and West. However even in a big country like USA, the local difference in starting post-MBA salaries is less than 2%.

After consulting various surveys and school reports an average estimation of the various salaries offered to post MBA students, region wise, is :

MBA Salary By Region

MBA Salary By Region

A point to be noted is that the above graph represents only the salaries and not the bonuses. To include the bonuses is not so simple. It depends on a number of factors like individual performance, functional area, sector, industry and so on. On wall street you might even end up with an annual bonus of half a million dollars (before 2008!!!) Hence bonuses are excluded due to the diverse and varied fluctuations in the same.
So, the regions of Western Europe and US offer among the highest salaries, and Asia Pacific among the lowest. Why? And what is the downside, if any?

A peek at the living expenses in these regions is the key to understanding the difference. In a country like UK, the expenses per month, for an average living is £1000 (US$ 1975). While in a country like India, you might have a comfortable living at INR 30,000 expense (US$ 700). Hence, the more developed the country, the more expensive is the living, and hence the higher are the salaries that MBAs command in these regions. The downside? Well, comfortable is a relative term. For me comfortable could be a log cabin in Canada, for you it might be a suite Burj-Al-Arab. Since this is an article on salaries and not individual tastes, we shall dispense with the formalities and keep the personal tastes to each his/her own.

Salaries by Demand (!?)

To put it simply, the more is the demand for MBAs in any region/function the more will be the salaries they command. The greater is the number of jobs that a country can generate the more will be the competition and hence the salaries will rise. On the other hand, the more people spend the more jobs will they generate.

An average picture of demand for MBAs all over the six major regions is:

MBA Demand By Region

MBA Demand By Region

Hence, as we can see, the US generates maximum number of jobs (followed closely by Western Europe) and hence the highest demand for MBAs, who in turn command higher salaries.

Salaries by Function

Consulting or IB? That is the question. A major factor deciding your salary post MBA would be the sector you are interested in. Not to say that some sectors are better than others, but simply that some have a higher inherent growth rate than others. A descriptive representation of the salaries commanded by MBAs in different functions is: (Note: Things have changed significantly since September 2008, high paying jobs such as Investment Banking are few and declining!)

MBA Salary By Function

MBA Salary By Function

This, again, is not exhaustive. It would depend on individual performance, pre-MBA salary, skills and other factors – some of them known to us, some not.

A region and sector wise comparison for US and Western Europe shows that in any particular sector the corresponding salaries in US are higher than those in W.Europe.

Local Analysis

In the first section we saw a global REGION analysis. However to get a closer picture lets see the salaries offered by companies according to the country the company is based in. We will leave the US and Canada as is.

MBA Salary By Country

MBA Salary By Country

The USA still leads, followed by UK as a close second. It would be interesting to see if this remains after the present economic downturn

Using the graphs

We can use the two graphs, Salaries by region and Salaries by country to our advantage to get a picture of comparison of salaries, cross-function and cross-country.

We will simply average the two figures.

Lets say I want a job in the Healthcare Sector in India. From the first graph the figure for healthcare is $87K and the figure for India is $22K. We add these and get $109K. Now we halve it (seems a good way to take average comparisons). So in the healthcare industry, after an international MBA one would be looking at a salary of $54500 in India. In the Indian currency this is about 23 Lakh rupees. Decent enough. However if the same person gets a healthcare job in Singapore, the salary one could expect to look at would be ($87K+$55K)/2 = $71K. The same job in UK would fetch $92K and so on. Try it, its pretty close!

This article, although not exhaustive, does present an accurate picture of salary figures post an international MBA. Moreover, its fun to actually see the average figures in the graphs for your own function/region/country. Feel free to comment!