Chron: In technology, getting an MBA pays

http://www.chron.com/cs/CDA/ssistory.mpl/business/3211564

Study also says women paid less for the same work
By BRIAN K. SULLIVAN
Bloomberg News

A man with a master of business administration will make the most money in the technology field, boosting a salary even more than experience will, according to a report released by the University of Michigan.

An MBA from a two-year program can increase a person's salary by 8.2 percent, according to the study by professor M.S. Krishnan and researcher Sunil Mithas of Michigan's Ross School of Business, which counts General Motors Corp. Chief Financial Officer John M. Devine among its alumni.

The study, which looked at more than 55,000 high-tech workers in the United States from 1999 to 2002, also showed women make 7.8 percent less than men with similar jobs, educations and work experience.

It comes at a time when business schools have been under fire for ethical lapses, and the value of MBA degrees have been questioned.


Competition fuels demand
"Ever-increasing competitive intensity is fueling the demand for executives with a good grounding in managerial competencies," Krishnan said in a statement issued by the Ann Arbor, Mich.-based school.

In the current issue of the Harvard Business Review, University of Southern California professors Warren Bennis and James O'Toole wrote an eight-page article that suggests business school curriculum has become too bogged down in academic theory and has ignored real-world experience of managers and business owners.

Krishnan and Mithas's study, though, says that an MBA beats experience when it comes to adding to earning power.

Two extra years of experience boosted a person's salary by 2.8 percent, falling short of the 8.2 percent boost MBA holders received. That held true even when the experience was gained at the company itself.

"In the context of this study, the most interesting thing is why companies are not rewarding internal experience," Krishnan said. "That also indicates that there is much more value for you to go outside and get a degree."


Theory and practice
The results of the survey, compiled with the help of Information Week magazine, show that as more and more businesses become dependent on technology, it is vital that the people running the computers understand business theory and practice, Krishnan said.

"It is going to become more important for IT professionals to understand what are the business goals," Krishnan said.

"Even though we did not factor the direct costs of getting an MBA, such as tuition and other expenses, into our calculations, the substantial difference in returns on an MBA degree vis-a-vis two extra years of IT experience provides favorable assessments of the benefits of having an MBA degree," Krishnan said in a prepared statement.

In addition to the boost an MBA degree can give, the study also found being a man can get a worker more money.

"Persistent gaps in salaries attributable to gender should serve as a wake-up call," Krishnan said. "There is a need for senior managers to take a critical look at their human resources policies and to assess the reasons for such wage inequities."

Krishnan stopped short of calling the gap discrimination.

"I would call it a bias," he said.