If you’re thinking of a full-time MBA, chances are you’re looking to switch careers. If you’re like most people, that is – because an incredible 87% of all MBAs report switching careers by changing either their job function or industry. Even more incredible, 7 of 10 MBAs reported successfully switching both job function and industry.
These numbers are staggering, and validate the value proposition of the full-time MBA as one of the best mid-career reset buttons available. If you’re evaluating your career and looking to make a change or two, how else can you navigate the sometimes massive leap? A full-time MBA program is a costly, but apparently effective lever.
So, where do the switchers go, and what backgrounds do they come from? One of the most popular post-MBA function is consulting – in fact, many firms hire dozens or even hundreds of MBA associates each year. MBAs love the varied experience, mentorship, and high pay that many consulting firms offer. We took a deep dive to break down what switching into consulting looks like for a full-time MBA student or applicant.
Consultants tend to return to consulting, with bigger wallets and less debt
About 40% of pre-MBA consultants stay in consulting for their post-MBA gig. Many of these are sponsored by their firms, returning to their pre-MBA companies for a few years in exchange for a loan-free postgrad life. Most of these folks do enjoy a decent pay bump for their troubles, too – an additional +89% total compensation on average, including signing and performance bonuses.
But interestingly enough, those that leave consulting received a slightly higher pay increase of ~90%. Where do they go? Well, there’s no “clear winner” for those that leave the consulting roost: the highest ranked function is “corporate strategy” – probably attracting a lot of former consultants with much better work-life balance (49 hours/week vs. 57 in consulting) and lower travel (16% travel ratio vs. 46%).
This validates the high degree of optionality that attracts so many to consulting in the first place. We won’t say you can really go “anywhere” like some firms seem to promise, but the options do seem abundant based on the data.
Want to break into consulting?
What about those going into consulting, or desiring to? Well, a similarly varied set of backgrounds can lead you there post-MBA – the most popular pre-MBA careers for newly-minted consultants are operations and marketing, but it’s a fragmented field after that.
We would never make the claim that your pre-MBA background doesn’t matter to these firms, but those who break into consulting don’t fit any one specific mold (except, perhaps, that they can ace a case interview).
What about other functions?
Stop me if you’ve heard something like this before – either from an admit or a student: “My background is in [thing] and I really want to go into [completely unrelated thing] – is that possible?”
This is what we’re working at TransparentCareer. Giving students access to better compensation, satisfaction and work-life balance data is essential, but it’s not enough. Students need to understand what options an MBA program can open to them based on their background – plus, where their career path might take them two jobs down the line, or even three or four. It’s a data-driven world, and if you accept a job offer without knowing the options it could create (or reduce) in the future, you’re doing yourself a disservice.
You can sign up to get more data on this, but for now here are some data-driven anecdotes from our study:
- Private Equity confirms its reputation for being tough to break into. In our dataset, only former investment bankers, investment managers, and PE associates reported PE offers after getting their MBA.
- MBAs with technical backgrounds gravitate towards product management. We often get questions about whether a tech PM role is a realistic outcome for those without technical backgrounds. While it largely depends on the company – non-technical PM roles are more widely available at Amazon, but scarce at Google – our data shows that almost 50% of graduates who land PM positions do in fact come from technical roles pre-MBA.
- Investment Bankers come from almost anywhere – in fact, it’s almost evenly spread between former consultants, those in general management roles, and corporate finance. As long as you survive the recruiting process and can pull the hours (76 hours/week on average), banking appears to be a relatively accessible career path for MBAs of various backgrounds.
How much more will I earn post-MBA?
Salary is king, so let’s start there – the average full-time MBA grad reported a respectable 46% increase, or $41,000 higher salary, versus their prior job. Considering the cost of a full-time MBA (~$140,000 according to Investopedia), this may be more necessary than generous.
The average increase in total compensation – defined as salary, equity, performance bonus, signing bonus, relocation bonus, and other compensation – came in at a whopping +83%, or ~$95,000.
“Full-time MBA students graduated with an average salary increase of $95,000 from their previous job”
Much of this gap from the salary increase is due to larger companies with developed MBA hiring pipelines, which are able to recruit early and lure debt-laden students with large signing bonuses. The largest bumps came, predictably, in investment banking, with the average total compensation increase – driven by sizable performance bonus potential – clocking in at a ludicrous +265%, or $220,000. Other large increases in total compensation came in Venture Capital (+$200K increase), Investment Management (+$118K), and perhaps surprisingly, Sales (+$124K)
So, is an MBA worth it?
For TransparentCareer users, it appears so. While there are always outliers in a large data set, it’s easy to see a directionally ROI-positive picture, with payback period in year 5 after graduation based on our pre- and post-MBA average compensation. Granted, this assumes no debt burden – so factor that into your own ROI if you’re borrowing.
But perhaps the most interesting ROI calculation comes from the overall satisfaction scores we collected. MBA students and alumni report their happiness with their pre-MBA job at a paltry 4.9/10, but happiness ratings for their post-MBA gigs skyrocket an incredible 58% to 7.8/10 – an increase you can’t put a price on. And this is despite working 9% more hours – ~4 hours/week – than they did in their pre-MBA jobs.
“MBAs reported an incredible 58% increase in happiness with their post MBA jobs.”
Of course, whether an MBA is actually a good financial investment depends on you and your personal situation. Whether planned or not, MBAs overwhelmingly change their careers – so if that’s your goal, it’s worth entertaining the idea. And if you want access to more data like this, including company- and position-specific stats, sign up for free and start exploring more.
About the data:
TransparentCareer is a free platform allowing students and working professionals to evaluate the most granular career data possible. Use our intuitive dashboards to view compensation, satisfaction, and work-life balance data for the jobs you care about most – by industry, function, or even company.