Selections Interview with with Parminder Bahra, Senior Adviser on Education Projects, Financial Times

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Selections: Why does the Financial Times place so much emphasis on salaries?
Bahra: Ultimately, because it is such a good indicator of the value or the purchasing power of an MBA. The price mechanism, or the salaries, is fairly comprehensive. We feel that if you are going to embark on an MBA, you’re looking at investing anything up to $100,000 to $150,000. It [salary] has to be an important aspect of the decision-making process. Also, it is a very good indicator of the value of the degree from the various programs in the business community.

Selections: I know you go into this in some detail when discussing the methodology on the Financial Times Web site. But can you talk about the ways in which you standardize the salaries for comparison? Because you are looking at salaries across the world, where there can be quite a bit of variation in salaries, how do you make sure you’re comparing apples to apples?
Bahra: The first thing we do is to take all of the salary data and convert it to purchasing power parity in U.S. dollar rates. Purchasing power parity is a World Bank series that takes into account different price levels for living standards within countries. We take out any price differences. That is the first thing we do. Then, in the table itself, we publish two salaries. One is the salary today and one is weighted salary. The salary today is a straightforward salary. Where the sample is big enough, we will take away 15 percent of the figures on either side of the distribution. And that is to get rid of the extreme figures, getting rid of salaries such as those of students earning $3 million or $4 million. That would skew the figures somewhat. Where the sample is quite small and we cannot do that, we will put in a median value. The one that we actually use in the rankings is actually the weighted salary, where we take into account the sectoral salaries. What we do is divide the salaries into five sectors: IT, consultancy, finance/banking, telecom, and the consolidated other, which is all of the other salaries put together. We then calculate the average salaries within each of those sectors. We then take the global percentages for people who were in each of the sectors. This is much easier to explain with a diagram.

The salary data is supplied through the questionnaires supplied by each graduate. We ask the student to return salary figures for just prior to the MBA, upon graduation, and now.

Selections: What information do the schools supply themselves?
Bahra: There are three separate questionnaires that the schools complete. They provide us with information such as the employment after three months; the number of international students, faculty, and board members; the doctoral rating; and the number of faculty with doctorates.

Selections: Are there any steps you take to audit that information or make sure that everyone is supplying standardized data?
Bahra: This year, we will be looking into auditing the figures and maybe getting one of the consultancies to check with the business schools and actually audit the information formally. At the moment, the process is that we do some comparisons with previous years, just to make sure that they are in line. If any figures look like they could possibly be out of line, then we will go back to the business school to check to make sure it is correct. That is our formal check at the moment. But there is no formal auditing procedure at the moment. We are looking to introduce it in the next year or so.

Selections: You’ve been publishing your survey for three years now. What kinds of reaction are you receiving from schools, students, and the international business community?
Bahra: From the business schools, it depends where they come [in the rankings]. The higher they are, the happier they are. We’re definitely getting a lot more coverage than in the past. Definitely, a lot of third-party media organizations are interested in our rankings and are using and mentioning them. If I were to have done a search on the Web in Google two years ago for the Financial Times ranking, there wouldn’t have been a great deal of hits coming up. But if I do it now, there are many third-party organizations mentioning the Financial Times rankings.

We will get suggestions for improving or tightening up the table. Again, we’re only three years into the survey. There is still a degree of fine-tuning that must go on. Our research rating has changed somewhat from the first year, when we ran a peer-review-type rating. We asked the business schools to submit their top two papers in a particular area, and we got faculty at business schools to rate them. That proved to be not as successful as we would have liked.

Selections: Why is that?
Bahra: I just think it is very difficult to control. One, trying to get faculty to make a judgment on one or two papers is difficult. And it’s probably not the best way to make a judgment on a particular department, because most departments would want to submit six or seven papers. Most national research rankings are based on many articles, not just one or two. To ask faculty to look at 10, 15, 20 articles and rank them is, one, unfair, and, two, they don’t have to do it. I don’t think they were willing to spend that much time on it. So we looked at the research rating again, and that is why the new system has come about where we look across the journals. The first attempt didn’t work.

Selections: What are some of the other changes the Financial Times has made to make the business school rankings more transparent, accurate, and fair?
Bahra: This year, we included the international board or faculty. We looked across the board of governors or the boards within the business schools. We feel that, in a way, determines the learning environment of the program. Again, these are suggestions put forward by the business schools. There is some criticism . . . it’s actually more of a point that is made that diversity reflects the European business school strengths much better than they do the U.S. strengths. I think there is an issue there. I just happen to think that the European schools do better because they are from different, individual nations. So, the schools will provide a greater international influence because the nature of people moving from one country to another within Europe.

Selections: What are some of the biggest challenges you face in conducting this international ranking?
Bahra: The biggest issue is finding criteria that you can use internationally. As I said earlier, there is a criticism from American business schools that the diversity aspect is biased toward the European business schools because in America, you might consider a West Coast or East Coast school. Whereas in Europe, you may consider a school in the U.K. and a school in Spain. Using our methodology, looking at two European schools counts for more. So, finding criteria that you can actually employ internationally is one of the trickiest aspects.

The actual physical process of putting together the survey is much easier now than it was three years ago, and that is primarily because we use the Web a lot more. For the last three years, we have been entirely paper-based. So, everyone received a paper questionnaire. But we are moving almost all of our operations toward making them electronic. The actual procedure is actually getting much easier. And I think the business schools, as well, are much more geared toward having information ready for the surveys. I know from having spoken to so many business schools that it is something that takes up so much of their time. They have so many requests. But equally, they are much sharper now, in terms of getting their information together. Bear in mind that most of the publications ask them for different information, because they have different criteria. I’m quite impressed that they can actually do that. But that is something that is actually making our lives a lot easier.

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