The Master of Business Administration (MBA) degree is one of the most popular graduate degrees worldwide, providing graduates with valuable skills and knowledge in business administration. Many people choose to pursue an MBA in the hopes of increasing their earning potential, and it is well-known that MBA graduates typically earn higher salaries than those without an MBA. However, exactly how much of a salary increase can one expect after completing an MBA? In this blog, we will explore the data and research on salary increases with an MBA degree and discuss factors that can impact how much of a salary increase one can expect.

The Data: How Much of a Salary Increase Can You Expect with an MBA?

According to data from the Graduate Management Admission Council (GMAC), which conducts an annual survey of MBA graduates and employers, the median starting salary for MBA graduates in the United States in 2020 was $105,000. This represents a 25% increase over the median starting salary for bachelor’s degree holders in the same year, which was $84,000. Additionally, according to GMAC’s 2021 Corporate Recruiters Survey, 77% of companies planned to increase MBA starting salaries in 2021, with a median increase of 4.1%.

The GMAC data indicates that earning an MBA degree can lead to a significant increase in earning potential. However, it is important to note that salary increases can vary depending on a variety of factors, including the individual’s prior work experience, industry, geographic location, and the specific MBA program they completed.

The highest-paying industries for MBA graduates in India include consulting, finance, and technology. According to a report by the All-India Council for Technical Education (AICTE), MBA graduates in India can expect a median salary of around INR 4.5 lakh ($6,000) per annum. However, the report also notes that salaries can vary widely depending on the business school and the industry in which one is employed such as the Indian Institutes of Management (IIMs), can earn significantly higher salaries, with some graduates earning as much as INR 30 lakh ($40,000) per annum.

In addition to industry and experience, geographic location can also impact MBA salaries in India. According to a report published in Economic Times, Mumbai, Delhi, and Bangalore are among the highest-paying cities for MBA graduates in India, with salaries in these cities often significantly higher than the national average. However, as with any location-based salary analysis, it is important to factor in the cost of living and other regional considerations.

Finally, the specific MBA program completed can also impact earning potential in the Indian job market. The Indian School of Business (ISB), the Indian Institutes of Management (IIMs), and the Xavier School of Management (XLRI) are among the top-ranked MBA programs in India, with graduates from these programs often earning significantly higher salaries than those from lower-ranked programs.

Also read: Master of Business Administration (MBA) Career Paths

Factors Impacting Salary Increases with an MBA

Prior Work Experience: MBA programs often prefer candidates who have some work experience, and many MBA programs require applicants to have a minimum number of years of work experience. Students who enter MBA programs with several years of work experience typically have more leverage when it comes to negotiating their salaries after graduation. According to the GMAC, MBA graduates with three or more years of work experience had a median starting salary of $125,000 in 2020, compared to $95,000 for those with less than three years of work experience.

Industry: The industry in which an MBA graduate works can also impact their salary potential. According to the GMAC, the highest median starting salaries for MBA graduates in the United States in 2020 were in consulting ($145,000), finance and accounting ($125,000), and technology ($123,000). However, salaries can vary widely within industries, depending on factors such as company size, geographic location, and level of responsibility.

Geographic Location: The geographic location in which an MBA graduate works can also impact their salary potential. According to the GMAC, the highest median starting salaries for MBA graduates in the United States in 2020 were in the Northeast ($120,000), followed by the West ($110,000), the South ($105,000), and the Midwest ($100,000). However, it is important to note that cost of living can vary widely across regions, so a higher salary in one region may not necessarily equate to a higher standard of living.

MBA Program: The specific MBA program an individual completes can also impact their salary potential. According to the Financial Times’ Global MBA Ranking 2021, graduates from the top-ranked MBA programs typically earn higher salaries than those from lower-ranked programs. For example, graduates from the top-ranked Stanford Graduate School of Business earned a median salary of $180,000 in 2020, while graduates from the 100th-ranked Babson College F.W. Olin Graduate School of Business earned a median salary of $95,000 in the same year.

Negotiation Skills: Finally, an individual’s negotiation skills can also impact their salary potential. MBA graduates who are skilled negotiators are often able to secure higher salaries and better benefits than their peers who may not be as adept at negotiation. Negotiation skills can be developed through coursework or through seeking out opportunities to practice negotiation in a professional setting, such as through internships or networking events.

Conclusion

The data and research indicate that earning an MBA degree can lead to a significant increase in earning potential, with MBA graduates typically earning higher salaries than those without an MBA. However, salary increases can vary widely depending on factors such as prior work experience, industry, geographic location, the specific MBA program completed, and negotiation skills. Individuals considering pursuing an MBA should carefully consider these factors and do their research to determine if an MBA degree is the right choice for them and their career goals. With careful planning and preparation, an MBA degree can be a valuable investment in one’s career and earning potential.