Business School Rankings: The Financial Times’ Experience and Evolutions

Criticism and Challenges

Business education rankings have long been criticized (UN Global Compact, n.d.) for being reductive, and the FT’s among others for focusing on—and even by extension encouraging—high salaries as the purpose of business school training, at the expense of broader outcomes such as sustainability and social purpose.

This focus on salaries is partly a broader structural problem: as long as business schools charge tens or even hundreds of thousands of dollars for their programs, it is hardly surprising that students want guidance to understand the payback on the sacrifices in pay and the costs of tuition of studying in different schools. This provides a yardstick of “return on investment” on the high tuition fees and opportunity costs of giving up work to study.

Some criticism also arises because of inadequate understanding of the methodology. For example, some business schools argue that a focus on salary outcomes penalizes them in seeking to support students planning careers in the nonprofit and public sectors. While the FT rankings give significant weight to postgraduation salary and salary increase, they specifically remove from the calculation the pay of those working in these lower paid sectors. In other words, the remuneration score is not simply an average of all reported alumni salaries, which would “drag down” those institutions more focused on training for public service careers. Business schools can still perform well overall as long as they also train some students who enter sectors such as consultancy and finance jobs—in which high remuneration is a proxy for the perceived quality of graduates.

Furthermore, the criticism is based on the focus on the overall aggregated ordinal position of institutions, whereas the FT rankings include many multiple datapoints which can be analyzed in disaggregated form. These factors allow readers interested in, for example, gender diversity or corporate social responsibility, to scrutinize individual schools’ performance on these specific criteria rather than simply being limited to a single overall ordinal rank.

Ideally, future rankings would capture additional metrics to identify the business schools that provide, for example, the best training for graduates who take on influential roles with social impact—including in government and charities. However, the relative social impact of different organizations is debatable. For example, an alumnus in a high-paying job creating a climate fund for a private equity firm or advising a consumer goods company on sustainable packaging might have a greater overall role in tackling climate change than one working in a “green” charity or for a government environmental department. This also points to the broader challenge of finding outcome measures for jobs in which pay is not the best proxy for quality.

Alternative Rankings and Metrics

There is growing demand for business schools to focus on societal impact, with critiques of the status quo from organizations including the Responsible Research for Business and Management network and the Impact & Sustainable Finance Faculty Consortium. These demands are triggering the emergence of alternative rankings and other assessment mechanisms, each with their own limitations and challenges.

The leading accreditation bodies—the Association to Advance Collegiate Schools of Business (AACSB), the EFMD Quality Improvement System (EQUIS), and the Association of MBAs (AMBA)—have all stressed the importance of societal impact in their most recent criteria. Their scrutiny is tailored to each individual school being examined, which has considerable value in providing peer review and support for each institution measured against its own objectives and constraints. However, these judgments are not public and do not easily translate into clear, quantifiable metrics, let alone ones that could be easily compared between business schools.

The U.K.’s Research Excellence Framework provides another possible model, with universities submitting a selection of activities they themselves consider to have the greatest impact. But that is a very resource-intensive exercise, difficult to compare with varied approaches in other countries, conducted only every few years, and uses a methodology that changes with each cycle.

There have also been attempts to survey business school students’ own views, such as the Positive Impact Rating. These are valuable, but also partial: how can a student who has only ever experienced one MBA weigh it objectively against the many other courses that exist, especially when the full value of their learning may only become evident some years later?

Another promising approach includes Corporate Knights’ Better World MBA ranking, which is reliant on publicly disclosed data. Such initiatives need fresh, deeper, and consistent metrics around which business schools could align and report, just as some do with standards in the United States for careers services (MBA Career Services & Employer Alliance, n.d.), environmental standards (The Sustainability Tracking, Assessment & Rating System, n.d.), and diversity (Graduate Management Admission Council, n.d.).

The challenges cited above are not unique to business schools; measuring societal impact is complex in all fields. In the world of ESG investing, for example, there is a multiplicity of overlapping and inconsistent reporting standards. Companies and funds are frequently accused of, at best, succeeding in some areas while failing in others, and, at worst, of simply greenwashing and virtue-signaling. So, a wider reflection is required to find good measures that capture the societal impact and the processes that best contribute to it.

Measuring Societal Impact—Way Forward

Societal impact of business schools, like that of other higher education institutions more generally, is difficult to assess, in part because of the challenge of measuring the “value added” of education rather than the extent to which their prestige allows them to attract and filter high-quality candidates at the point of entry as a form of preselection for recruiters.

Some approaches have attempted to consider curriculum and research of business schools in their ranking, such as the extent to which sustainability is embedded in courses or giving credit to academic papers published in journals focused on the sustainable development goals (SDGs) and/or which make multiple references to the SDGs. However, this approach too is limited because it measures processes and throughput, not outcome. Just because a course includes themes on sustainability, is it effective in transforming the thinking or future actions of its participants? Do the publications genuinely advance thinking and deliver insights that can be implemented? And are they too broad to be meaningful, while also still trying to direct and constrict research?

The application of management summaries and other attempts to focus research and distill insights for a lay audience are a helpful start. They may be useful for those who seek to measure impact, even if they too are indicators of throughput and not outcome. Tracking is also difficult: there is no guarantee that managers who make relevant decisions will acknowledge and credit the underlying academic research.

Big data and artificial intelligence offer new opportunities for analysis. For example, the FT has been exploring the use of “altmetrics” (Jack, 2020a) to assess academic papers that are shared in social media and in policy documents; using content analysis with SDG references (Jack, 2020h) in high-quality peer-reviewed papers; and carbon footprint reporting (Jack, 2021c) and commitments to zero emissions by schools. These offer promising approaches despite the current gaps in coverage, limitations, and inconsistencies.

Complementing the quantitative metrics with qualitative assessments is another possibility. For example, in addition to rankings, the FT showcases innovations more qualitatively, reporting on individual examples of research impact (Jack, 2021e), student-led social impact projects (Jack, 2020d), and efforts to introduce sustainability (Jack, 2020b), empathy and emotional intelligence (Jack, 2021g) into the curriculum.

Keeping all these developments in mind, the FT has begun an extensive review of its business school rankings in consultation with faculties, students, alumni, and external organizations. The aim, through discussions and a survey (FT., n.d.) of its FT50 (Jack, 2020f) research output measures, is to identify new metrics and weightings to reflect growing calls for change including a greater focus on sustainability and responsible business education.

The challenge is to find robust, objective, outcomes-based metrics that measure impact comparably between schools; which are feasible to collect and analyze; which reflect the needs of a wide variety of users; and which balance quantitative assessments with wider and more qualitative ways to showcase and foster improved practices. The difficulty is that little consensus has emerged on how to do so. That is why it is necessary for business education stakeholders to have an active dialogue and develop meaningful approaches to define and capture societal impact.