http://www.rotman.utoronto.ca/news/rankings.htm -SCHOOL RANKINGS Point of View: Dean Roger Martin MBA rankings have become an important measure of an institution's public perception. We may not like the methodology and results of some rankings, but they have taken on a life of their own as applicants, current students and alumni pay attention. On the whole, it is a good thing for the business school system that people care enough to attempt to measure performance and rank the schools. I may wish the rankings did a better job of ranking, but in many respects, the variety of rankings simply reflects the multitude of ways one can look at business school performance, and in every survey there are results that we can look towards with pride. Each ranking in which we agree to participate actually takes an enormous investment of time and resources. There is always an extensive internal survey that requires the compilation of data in a myriad of forms. But the biggest investment is always in the external surveys - surveys of graduates, recruiters and others. Because of the volume of e-mail spam and physical junk mail that graduates and recruiters receive on an ongoing basis, they tend to ignore messages, especially from intense direct-mailing media outlets such as the magazines and newspapers that do these surveys. As a result, there tends to be an enormous amount of work required by the schools to help draw attention to the surveys. This is an important issue, because the surveys are quite an imposition on our graduates and recruiters. In past years, for example, two media outlets wanted to survey the same class of alumni. We know that graduates are getting annoyed at the survey bombardment. With new surveys coming on stream every year, there are important decisions to be made as to how many surveys the Rotman School can and should invest in, and how much time we can reasonably ask our friends to spend on filling out surveys. Until a few years ago, business schools in Canada were only ranked once a year by Canadian Business magazine, and only U.S. business schools were surveyed by American magazines. All of the rankings focused on the Full-Time MBA program as the measure of quality at the business schools. The landscape dramatically changed in 1999 with the publication of the first global ranking of business schools by The Financial Times. This opened the flood gates, as American-based magazines began ranking Canadian schools, other media outlets began ranking Executive Education programs including the Executive MBA, and The Wall Street Journal launched a completely new ranking in 2001. As a result, the Rotman School has had to make important decisions as to the range of surveys in which to participate. Going forward, we have chosen to participate in the surveys of two publications: BusinessWeek and The Financial Times. BusinessWeek was the ‘first-mover’ and has been ranking MBA programs biannually since 1988 (versus 1999 for The Financial Times and 2001 for The Wall Street Journal). As such, it has a very large following. BusinessWeek surveys current graduates (i.e. spring 2004 graduates for the fall 2004 ranking) and takes into account the views of recruiters and assesses the research output of the schools, so it is quite comprehensive. The weakness of the BusinessWeek ranking is that it ranks U.S. and International schools separately ?- hardly an approach consistent with the global business economy. In 2004, we were ranked 9th in the top tier of International Schools in the BusinessWeek survey. While I am disappointed that our 2004 graduates and our recruiters ranked us lower this year than in the 2002 survey, I believe the Rotman School’s growing pains had a lot to do with it, as we literally doubled the size of the program to 270 students with the incoming class of 2002. However, those pains are now largely behind us: for the first year since 2001, the class of 2006 is no bigger than the previous class. We are now in the position of consolidating our gains. We have dramatically grown the breadth, depth and quality of our placement capacity in the CCC. We dramatically outperformed the North American market in terms of application growth for the classes of 2005 and 2006. I am very pleased that we have been able to maintain a 90 per cent placement rate while doubling the cohort from 2001 to 2004 ? that is another almost 100 high quality jobs for our graduates. Compared to the three other Canadian schools in the international top ten, we produced by far the greatest increase in absolute salary and were only second to Queen’s in average salary (by a mere US$3K), which is unsurprising given its miniscule graduating class of about 75 students. We were also 2nd only to LBS among the ten schools in percentage increase in salary. We have great geographical balance in the class of 2006. Net, I look forward to a considerably stronger showing in this ranking in 2006. We also participated in the BusinessWeek ranking of Executive Education programs in the fall of 2003. The Rotman School was ranked 18th in customized executive programs in the world. This was the first time that Rotman participated in this global survey of corporate managers and human resource executives. It is an important survey as it is based entirely on the opinions of the people who use our programs. We are also pleased that our Executive MBA Program ranked 3rd in the world in the teaching of strategy. The Financial Times has the most transparent and broad ranking system, featuring 20 measures across a wide variety of categories and an explicit weighting of each of the criteria. Importantly, it has ranked all schools on one list since its inception in 1999. The Rotman School has had significant upward momentum on The Financial Times ranking. Our ranking of 21st in the world for the second consecutive year in January 2004 reflects the School's rapid growth and improvement. Since the inception of the Financial Times ranking, the Rotman School has surpassed 33 schools, while being passed by none, giving it 'the best trajectory in the MBA universe'. We participated in The Wall Street Journal (WSJ) survey from 2002 to 2004. In the 2004 survey, Rotman was ranked 42nd, something that is largely flat from the last two years (though with changes to format and methodology, exact comparison is not possible). I have to say, however, that the 2004 survey took a substantial methodological step backward at a time that I was hoping it would move forward. WSJ split the rankings into three pools: National Schools (which is their list of the 19 leading American schools), Regional Schools (which is a list of 44 more American and Canadian Schools) and “International Schools” (which is an odd list of schools that show up as having recruiters in multiple countries). Sadly, this split into three categories represents a step backward. The separate ranking of US schools copies BusinessWeek’s big competitive weakness (two lists) versus The Financial Times (one unified list). The “International Schools” rating is based on the dubious premise that a school is better if it gets survey responses from recruiters in many countries. I have had two major problems with the WSJ rating since its inception, despite the fact that it keeps on saying nice things about us ? we were a “Hidden Gem” in 2002 and in 2004 we ranked ahead of Wharton by recruiters at management consulting firms. The fundamental problem is face validity. An experienced observer of the business school world has to be able to look at the rankings and be able to say: “That makes sense.” That has never been the case with the WSJ ratings and 2004 is no exception. University of Michigan and Carnegie-Mellon as #1 and #2 among US schools and Harvard as #13 has zero face validity. Erasmus University as #15, ahead of #16 Harvard among “International Schools” is simply laughable. Rotman’s #9 versus Wharton’s #10 versus Maryland’s #1 among management consulting recruiters flies in the face of the facts. According the same WSJ database, consulting firms hired 6 students from their favourite school Maryland and 94 from laggard tenth place Wharton. “Hold it,” you might say, “we can’t ignore what recruiters think and overall they like Michigan better than Harvard and consulting recruiters like Maryland better than Wharton”. Therein lays the second problem. How do recruiters like their graduates? Answer: they like them inexpensive. In their eyes, a good school is one that provides graduates that are great value for the money. Financial Times “ weighted salary three years after graduation” is the best source of data across the schools on salary. It is particularly useful because of the weighting which adjusts for salary levels across the mix of jobs ? from investment banking to non-profits. If we use that data, we see that Maryland is at $97K and Wharton is at $152K. So we can see why the consulting recruiters claim to really like Maryland graduates on the WSJ survey. They can get almost two for the price of one Wharton grad. So it makes sense that Maryland would be rated #1 on the survey. But when it comes to real actions rather than opinions on a survey, they chose 94 Wharton grads versus 6 Maryland grads, even at double the price. I think we can all agree that the goal to which business schools should aspire is not to make sure their graduates’ salaries stay low to improve their ranking in WSJ? No. It would be just the opposite: for whatever career the graduates choose from non-profit to investment banking, the business school should aspire to make the graduate as valuable to recruiters as possible, even if recruiters wished they didn’t have to pay so much. Harvard may be behind Erasmus in the rankings but its average is $162K (again weighted three years out) while Erasmus is $107K. I admire The Financial Times for continuously improving its survey every year to the point at which it reflects the broad array of features that many would agree make a great business school including research output, class diversity, student aims achieved and salary progression. WSJ has, if anything, done the reverse. It has failed to see the flaw in asking recruiter’s questions tainted by the reality of widely differential salaries those same recruiters will face when attempting to hire. It is hard for us to get excited about moving up the WSJ ranking from #42 to overtake #1 Purdue when recruiters already pay our graduates more than Purdue graduates ? they apparently like Purdue graduates way more but pay them less! In essence, the WSJ ranking is less a guide to help students decide where to go to School than it is a guide to recruiters as to where the hiring bargains are. Because there has been no progress on the quality of the WSJ survey over four years, we have dropped it from the list of surveys with which we comply. We will continue to cooperate with The Financial Times which is the most comprehensive and realistic survey as well as BusinessWeek, which is improving but still needs to enter the global village and convert to a single unified global list. Regarding other surveys, we will examine each one on a case-by-case basis and have declined to participate in surveys by Forbes and The Economist because they also wanted to conduct surveys of alumni. More importantly, we are going to develop our own set of metrics by which we would like to measure ourselves over the next five years. Great organizations should decide how to measure themselves and report on those measurements rather than accept only outside measurement. These metrics will measure such things as Knowledge Creation, Student Quality, Student Satisfaction, Profile and Employee Satisfaction. We will post these metrics on our website and update them on an annual basis so that we can be judged on our progress by prospective, current and past students. Please watch for our metrics and baseline performance in the New Year. Any inquiries regarding surveys should be directed to Ken McGuffin, Manager, Media Relations at mcguffin@rotman.utoronto.ca or by phone at (416) 946-3818, or to Suzanne Spragge, Assistant Dean, External Relations & Chief of Staff at spragge@rotman.utoronto.ca or by phone at (416) 978-4232.