This year could be your best chance in a generation to get into an M7 business school like Harvard, Stanford GSB, Wharton or Columbia, according to my colleagues at Fortuna Admissions . As business industry experts and former MBA admissions directors to the world’s top MBA programs, we have been observing the changing political and economic cycles that influence application volume, including the historic uncertainty wrought by the pandemic and its uneven impacts around the world. Given our analysis of market forces and what we’re seeing in candidate activity, we believe the upcoming admissions season of 2022/23 to be a once-in-a-lifetime opportunity.
Why? Here’s the context: We saw near-record MBA application volume prior to the pandemic, nudging some 10,000 applications to Harvard Business School and over 8,000 to Stanford GSB. This was then pushed further across the rest of the world’s top business schools during the first wave of Covid lockdowns.
“None of us will forget March 2020 – it was like turning on a tap, and there was suddenly a deluge of people throwing their hats into the ring to apply to business school,” says Fortuna’s Caroline Diarte Edwards, former INSEAD Director of Admissions and Financial Aid. “When job security was reaching its most uncertain, anyone who had imagined pursuing an MBA in the future decided that moment had come.”
At Fortuna, we received a surge of demand from individuals looking to exit the workforce to pursue an MBA in the hopes of sharpening their skill sets, building their credentials, gaining broader experience, and building networks that would put them on stronger ground when the economy restabilized.
But now, a strong US job market is postponing domestic appetite for an MBA, and employers are working hard to keep their top talent. The Graduate Management Admission Council (GMAC) has indicates a decline of around 25% in GMAT test-taking volume. And though the GRE picks up some slack as an alternative standardized testing option, the number of US candidates planning to apply this year has clearly slowed.
The international picture is more mixed. At Fortuna we speak every year with MBA hopefuls from over 120 countries, and witness first-hand changing attitudes and ambitions. With a change of administration in the White House 18 months ago, and a more encouraging message about H1B visas, applications from India have soared; Fortuna estimates a more than 30% uptick in Indian demand for top US b-schools. Chinese applicants, however, haven’t come back yet and we may need to see more stable geopolitical relations for that to happen. And with such a strong US dollar, there’s fitful demand for US programs in the Latin American market, while European candidates seem happy with shorter programs in their back yard.
But here’s the big unknown. The volatility of the financial markets since the start of the year, with seven uninterrupted weeks of S&P 500 decline as I write this article, has many people asking if the Fed’s moves to tame inflation with a calendar of interest rate hikes will be the catalyst for a recession. And if that plays out in the second half of 2022, we’ll see applicant numbers to the top b-schools climb again. In the world of MBA admissions, there is often a marked counter-cycle: Broadly speaking, when the economy is thriving, people are reluctant to leave their jobs and aren’t necessarily motivated to pursue a business education. When the economy tanks, as it did when the dot-com bubble burst in 2001 or the financial crisis of 2008/09, people figure it is a great time to go back to school.
Fortuna’s Judith Silverman Hodara was Acting Director of Wharton Admissions when Lehman Brothers collapsed in 2008, kicking off an unprecedented global recession. “I remember that day incredibly well,” says Judith. “We all looked at each other and said, wow, hold on to your hats, because we are about to get a deluge of applications for the next cycle. A lot of people recognize that it’s a good place to park yourself for two years, and to gain some invaluable skills.”
It’s within this dynamic context that my Fortuna Admissions colleagues and I discussed application strategies for Round 1 in September 2022 versus Round 2 in January 2023 during our most recent MBA Admissions Masterclass.
Why This Year It’s Better to Apply in Round 1 vs. Round 2: Ride the Wave
While round 1 application volume will likely be down (unless you are an Indian male engineer), a recession in the second half of the year will see round 2 picking up again. But the MBA admissions offices of Boston, Palo Alto and Philadelphia can only work with what they have in front of them at any given time, and will still look to fill half of next year’s class in round 1 with the lower volumes they are likely to receive. Instead of a 1 in 10 chance at HBS your admissions odds may be considerably better.
“Again, this is a pretty unusual place that we’re in right now, where we see the pressure building in terms of applicant numbers,” explains my co-director, Caroline Diarte Edwards. “Now it’s as if you’re looking at it like an ocean, you’ve still got time to ride in the wave, before the bigger wave is coming in behind you.”
Right now in the final push for MBA classes starting in the Fall of 2022, schools are clearing more people than expected from the waitlists because others are hesitating about going off to business school. They’re getting promotions, they’re getting pay rises, they’re getting great job offers with a strong job market. If you’re a management consultant, or a back-office investment banker – both of which are overrepresented profiles in the MBA applicant pool – the strong job market is an indicator that fewer of your colleagues may be motivated to apply right now. This could be your chance to stand out in an otherwise crowded pool.
Caution: Don’t rush an unfinished application.
That said, while applying in round 1 may be an advantage, do not rush to submit a hurried and under-weight application. Can you credibly say that your application will be at its best in this round? If not, it’s far better to wait until round 2. As Caroline says, “The single most important thing you can do when you hit submit on your MBA application is to be confident that it’s the very best reflection of you and your candidacy – no matter which admissions round you’re targeting.” It’s not round 1 or never, and it’s important to keep some perspective.
If you start now on your MBA applications, you will need to set aside time to prepare and take the GMAT or the GRE, start the process of researching the schools and connecting with students or alumni, and dive into the self-reflection required to produce compelling applications for your top choice schools. You might decide you’re going to apply to just one or two of your top schools for round 1, and maybe one or two of your mid-tier schools in round 2 to spread your efforts out.
The Long-term ROI of Pursuing Your MBA Now
But stepping back for a moment, even if your company is trying to keep you with offers of promotion and a salary increase, is that really going to give you the momentum to change lives,change organizations, change the world, as Stanford GSB likes to put it?
Going to business school is one of the biggest decisions and investments you will make. But is also one of the most rewarding, not just financially, but in what you learn about yourself and what you can achieve, how you build your self-confidence and open new doors, and become part of an extraordinary network that is there to support you.
We know that McKinsey and others are now hiring associates with eye-watering starting salaries. Which can send an unspoken message – what’s the value of the MBA? That’s what’s giving some people pause about heading off to business school right now. Others are questioning whether it makes sense for them financially to go to business school.
So it’s essential to take a long-term perspective. In study after study, whether it’s in the short term or in the longer term – particularly if you go to a top program – you will see an impressive return financially over time. And that doesn’t factor myriad other benefits. In speaking with prospective candidates who are on the fence, I encourage them to think beyond the thrill of that extra $15,000 in salary that might entice them to stay put another year.
“There are a lot of unquantifiable aspects as well,” reminds Caroline. “For one, an MBA gives you the ability to change careers, not just when you come out of the MBA initially, but at any point in your career. It opens doors that otherwise might have remained closed and gives you a network of support. It also gives you a solid foundation of skills to tackle running any part of a business – you’re not stuck in a particular function, whether it’s finance or marketing – but you have the credibility and the confidence to tackle any challenge that comes your way.”
The current economic cycle is one of many still to come. Adds Caroline, “I’ve seen it myself with my own peer group from the INSEAD Class of ‘03, and also in my husband’s peer group, from the Stanford GSB Class of ’98. You imagine that your career is going to be this constant upward trajectory over time, but it’s often a roller coaster. Even for the best qualified people, and the most talented people, unexpected things happen. It’s incredibly valuable to have that strong foundation, that credential, and that network of people who are willing to help you when you when you face an unexpected challenge.”
When did it ever make sense to not invest in yourself?