You know the number we’re talking about. It’s the one you have in your head…
John Borrowman, CPC
Borrowman Baker LLC
Mark Twain (probably quoting Benjamin Disraeli) is credited with saying that there are three kinds of lies: lies, damn lies and statistics.
It’s wise to keep that in mind when using “recent MBA compensation” statistics to justify your own salary.
When we’re talking with BV professionals about their compensation expectations, it’s not uncommon for us to hear a reference to a statistic about the salaries being paid to recent MBA grads. Often, it’s a reference to a particular university; typically the one the person graduated from.
These statistics are skewed in at least two important ways:
Whether they are the median or the mean, they take no account of any differences in final GPA, the industry that the graduate went into, or the geographic market where the graduate landed.
There is a limited-time reporting window. The salaries which are included in any such reporting are those earned by graduates who accepted offers prior to a specific cut-off date. These graduates are most likely to be in the greatest demand and the salaries commensurately higher. Offers accepted after the cut-off date – and further out into the future – are not going to be as high.
If you were seeking guideline companies for your client, a family-owned restaurant that opened in 2004, you wouldn’t automatically rely on data from any family-owned restaurant that opened in 2004.
Don’t make the same mistake in thinking you can rely on “MBA starting salaries from ____ (pick a year).”